Document:

Exhibit 10.2

 

LENDER REGISTRATION AGREEMENT

(Note Commitment, Purchase and Sale Agreement)

 

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

 

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

 

1.  Registration as a Prosper
Lender. You are
registering as a lender in the Prosper marketplace, so that you may be eligible
to post bids on listings displayed on Prosper’s online auction marketplace (the
“platform”) and purchase from Prosper Borrower Payment Dependent Notes (“Notes”)
issued by Prosper that are dependent for payment on payments we receive on the
corresponding borrower loans described in the listings (“borrower loans”). You
agree to comply with the terms and provisions of this Agreement, the Terms of
Use of the Prosper website, and the policies posted on the Prosper website, as
may be amended from time to time by Prosper in its sole discretion
(collectively, the “Prosper Terms and Conditions”).

 

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

 

2.  Posting of Bids. Upon registration, you may post bids on listings
displayed on the Prosper website. “Listings” are Prosper borrowers’ loan
requests, or descriptions of existing borrower loans that are offered for sale
by financial institutions registered with Prosper (referred to below as “originators”),
that are displayed on the Prosper website along with desired loan amount or
outstanding balance, offered interest rate, borrower credit grade, non-housing
debt-to-income ratio, credit information from the borrower’s credit report, the
borrower’s group affiliation (if any), the borrower’s self-reported (unless
otherwise indicated) annual income range, occupation and employment status, and
collateral (if any) securing the borrower loan. Borrowers are identified by a
Prosper user name but are not able to disclose their identity or contact
information to lenders.

 

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

 

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corresponding
borrower loan, and the minimum interest rate they are willing to receive. Lenders
must have funds in the amount of the bid on deposit in the Prosper funding
account (described below). Once a bid is placed, it is irrevocable, and during
the time a bid is a “winning” bid on the listing, the amount of the bid is not
permitted to be withdrawn from the lender’s Prosper funding account.  Lender bids become “winning” bids if such
bids are in the group of bids for Notes that, in the aggregate, correspond to
the principal amount or amount offered for of the corresponding borrower loan
and are in the lowest interest rate among all bids placed against the listing.

 

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

 

Types of Bids.
You can bid selectively by browsing through listings and placing a bid on the
listing or listings that you choose. You can also bid by making a “portfolio
plan” by indicating the aggregate amount of your funds to be bid on listings
that meet specified borrower criteria, the maximum amount that may be bid on one
listing, the type of listing, the minimum interest rate you are willing to
receive, and the specific borrower criteria such as the credit grade or grades
of your borrowers, credit, income or employment characteristics of your
borrowers, group affiliation or debt-to-income ratio. You may have more than
one portfolio plan in place at one time, and you may bid selectively while one
or more portfolio plans are in place.

 

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

 

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

 

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

 

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

 

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

 

3.  Matching of Bids and
Listings.

 

a.
In order to bid on a listing, you must bid an amount equal to or less than the
current auction interest rate for the listing. If you bid by making a portfolio
plan, Prosper’s auction platform will automatically match your bids with any
listings that offer an interest rate higher than your minimum acceptable
interest rate, and otherwise meet your designated criteria. Listings with the
highest current auction interest rates above your minimum interest rate will be
matched first, and thereafter your bid will be matched to listings with
incrementally lower current auction interest rates (but still at or above your
minimum acceptable interest rate) until all of your funds committed to
the portfolio plan are deployed.

 

b.
When you place a bid on a listing, your bid will be compared to other lender bids
placed against the listing, and will be considered to be “winning” to the
extent the interest rate specified in your bid is (i) lower than existing
bids against the listing, or (ii) equal to existing bids against the
listing, provided the listing has not already received a bid or bids totaling
the full amount requested by the borrower or financial institution that posted
the listing. Your bid remains outstanding on a listing until you are outbid, or
until the listing is withdrawn by the borrower or originator that posted the
listing or removed by Prosper in accordance with Section 10 below. If you
are outbid, or if the listing is withdrawn or removed, your bid will be
cancelled, and your funds that were committed to your bid will be available for
further bidding.

 

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

 

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

 

e.
In most instances a listing is matched with more than one bid, and you will be
one of several lenders who purchase a Note in a series of Notes that correspond
to the borrower loan described in the listing. 
Each series of Notes will correspond to a single borrower loan, as 

 

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described
in the listing, originated to a borrower or offered for sale through our
platform by an originator. Payments to the lenders who purchase the Notes are
dependent on payments received on the corresponding borrower loan.

 

f.
To safeguard your privacy rights and those of your borrowers, on all Notes and
promissory notes evidencing borrower loans, the identity and address of the borrower
will be shielded from your view, and your identity as the purchaser and owner
of Notes will be shielded from the borrowers. Only the borrower’s Prosper user
name will appear on listings, borrower loans and Notes for you to see, and only
your Prosper user name will appear with your bids.

 

4.  Funding of Borrower Loans.

 

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

 

b.
With respect to Prosper borrower listings, funding occurs
when loan proceeds are disbursed into the borrower’s designated deposit account. All borrower loans resulting from Prosper
borrower listings will be made to Prosper borrowers by WebBank from its own
funds and then subsequently sold and assigned by WebBank to Prosper, without
recourse. Each loan to the borrower is made from WebBank’s own funds, and will be evidenced by a promissory note, in
the form set forth on the attached Exhibit B, naming WebBank as the payee,
in the amount of the requested loan. On the day following the date loan
proceeds are disbursed to the borrower, the loan will be sold and assigned by
WebBank to Prosper without recourse to WebBank. As described in Section 5 below,
Prosper uses the proceeds of the sale of each series of Notes to purchase the
corresponding borrower loan.

 

c.
With respect to open market listings, funding occurs when the proceeds of the
sale of the borrower loan from the originator to Prosper are paid to the
originator. All loans offered for sale by originators as described in an open
market listings are sold and assigned by the originator to Prosper, without
recourse to the originator, at the end of the auction bidding period.  As described in Section 5 below, Prosper
uses the proceeds of the sale of each series of Notes to purchase the
corresponding borrower loan from the originator.

 

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

 

Terms
of the Notes. The Notes shall have the terms and conditions described
in the Prospectus, the Indenture and the Note. The Indenture and the Note are
reproduced in Exhibit A to this Agreement, and Prospectus is available for
you to review on the Prosper website. The form of promissory note evidencing
borrower loans is reproduced in Exhibit B to this Agreement. The specific interest
rate, maturity and other terms of the corresponding borrower loans are
described 

 

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in the listings on the Prosper website, and in the
promissory notes signed by the borrowers on the corresponding borrower loans. Subject
to the servicing standard set forth in Section 6 below, you understand and
agree that we may in our sole discretion, at any time and from time to time,
amend or waive any term of a borrower loan, and we may in our sole discretion charge
off any borrower loan that is more than 120 days delinquent.

 

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

 

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

 

6.  Servicing
and Collection of Borrower Loans. Prosper will use commercially reasonable efforts to service and collect
the borrower loans in accordance with industry standards customary for loans of
the same general type and character as the borrower loans.  We may refer a borrower loan to a collection
agency at any time after the borrower becomes more than 30 days delinquent on
any payment.  Also, we may, in our sole
discretion, elect to initiate legal action to collect a borrower loan or sell a
borrower loan to a third party debt buyer at any time after the borrower
becomes more than 120 days delinquent on any payment.

 

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

 

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

 

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

 

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

 

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

 

e.
In the event of a material default under a Note you purchase from Prosper under
this Agreement that is the result of verifiable identity theft of the named
borrower’s identity, Prosper 

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11.  No Guarantee of Returns or
Payments.

 

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

 

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

 

12.  Restrictions on Use. Except as provided in Section 14 below,
you are not authorized or permitted to use Prosper to bid or purchase Notes for
someone other than yourself. You must be an owner of the deposit account you
designate for electronic transfers of funds, with authority to direct that funds
be transferred to or from the account. Although you are registering as a lender,
you may also register and participate in the Prosper marketplace as a borrower
or a group leader. If you obtain one or more borrower loans through the
platform, amounts in your funding account are subject to set-off against any
delinquent amounts owing on your loans. If you choose to become a member of a
group, whether as a borrower or a group leader, you may bid on listings of members
of your group. Prosper may in its sole discretion, with or without cause and
with or without notice, restrict your access to the platform or the Prosper
website.

 

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

 

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

 

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

 

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with its terms, except as the enforcement thereof
may be limited by applicable bankruptcy, insolvency or similar laws.

 

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

 

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

 

a.
Represent yourself to any person, as a representative, employee, or agent of
Prosper, or purport to speak to any person on behalf of Prosper;

 

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

 

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

 

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

 

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

 

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

 

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

 

h.
Include or display any personally identifying information, including, without
limitation, name, address, phone number, email address, Social
Security number or driver’s license number, or bank account or credit card
numbers  of any Prosper member on your Prosper member
web page, or elsewhere on or off of the Prosper website, including but not
limited to on any forum, blog or website;

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

11

 

EXHIBIT A

 

INDENTURE

 

12

 

EXHIBIT B

 

PROMISSORY NOTE

 

Borrower Address:                                                                                             .

 

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

 

2.  Payments.  This
Note is payable in 36 monthly installments of $                      
each, consisting of principal and interest, commencing on the                 
day of                           ,
and continuing until the final payment date of                                     ,
which is the maturity date of this Note. The final payment shall consist of the
then remaining principal, unpaid accrued interest and other charges due under
this Note.  All payments will be applied
first to any late charges then due, then to any unpaid fees incurred as a
result of failed automated payments or returned checks or bank drafts as
provided in Paragraph 11, then to interest then due and then to principal. No
unpaid interest or charges will be added to principal.

 

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

 

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

 

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

 

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

 

7. Method of Payment.  I will pay the principal, interest, and any
late charges or other fees on this loan when due. Those amounts are called “payments”
in this Note.  To ensure that my payments
are processed in a timely and efficient manner, you have given me the choice of
making my monthly payments (i) by automated withdrawal from an account
that I designate 

 

13

 

using an automated clearinghouse (ACH) or other electronic fund
transfer, or (ii) by bank drafts drawn by you on my behalf on my account
each month; and I have chosen one of these methods. If I close my account or if
my account changes or is otherwise inaccessible such that you are unable to
withdraw my payments from that account or draw bank drafts on the account, I
will notify you at least three (3) days prior to any such closure, change
or inaccessibility of my account, and authorize you to withdraw my payments
from, or draw bank drafts on, another account that I designate.

 

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

 

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

 

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

 

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

 

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

 

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

 

13.
Assignment.  I may not assign any of my obligations under
this Note without your written permission.  You do not have to give me
your permission.  You may assign this Note at any time 

 

14

 

without
my permission. Unless prohibited by applicable law, you may do so without
telling me.  My obligations under this Note apply to all of my heirs and
permitted assigns. Your rights under this Note apply to each of your successors
and assigns.

 

14.  Notices. 
All notices
and other communications hereunder shall be given in writing and shall be
deemed to have been duly given and effective (i) upon receipt, if
delivered in person or by facsimile, email or other electronic transmission, or
(ii) one day after deposit prepaid for overnight delivery with a national
overnight express delivery service.  Such
notices must be properly addressed to the parties at the addresses set forth
below unless a different address for notice is later provided in writing by giving
notice pursuant to this Paragraph.

 

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

 

16. 
Miscellaneous.   No provision of this Note shall be modified
or limited except by a written agreement signed by both you and me. The
unenforceability of any provision of this Note shall not affect the
enforceability or validity of any other provision of this Note.

 

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

 

(a)   In this Resolution of Disputes provision:

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

(i)   I understand that I may reject this
Resolution of Disputes provision, in which case neither you nor I will have the
right to elect arbitration.  Rejection of
this provision will not affect the remaining parts of this Agreement.  To reject this Resolution of Disputes
provision, I must send us written 

 

16

 

notice
of my rejection within 30 days after the date that this Note was made.  I must include my name, address, and account
number.  The notice of rejection must be
mailed to WebBank, c/o Prosper Marketplace, Inc., 111 Sutter Street, 22nd
Floor, San Francisco, CA 94104, Attention: Legal Department.  This is the only way that I can reject this
Resolution of Disputes provision.

 

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

 

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

 

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

 

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

 

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

 

	
  Date: 

  	
   

  	
   

  
	
   

  
	
  [Borrower]

  
	
   

  
	
   

  
	
  Last
  Updated:

  	
   

  	
   

  
				

 

17Exhibit 10.3

 

Executed: 04/14/2008

 

CONFIDENTIAL
TREATMENT REQUESTED BY PROSPER MARKETPLACE, INC.

 

WEBBANK

 

and

 

PROSPER MARKETPLACE, INC.

 

LOAN ACCOUNT PROGRAM AGREEMENT

 

Dated as of April 14, 2008

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  PROGRAM
  MARKETING AND SERVICES

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  EXTENSION
  OF CREDIT

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  CONSUMER
  DOCUMENTS AND CREDIT POLICY

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  LOAN
  ACCOUNT PROCESSING AND ORIGINATION

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  FUNDING
  LOANS; PAYMENT OF SERVICING FEE

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  OTHER
  RELATIONSHIPS WITH BORROWERS

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  INDEMNIFICATION

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  TERM
  AND TERMINATION

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  CONFIDENTIALITY

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  PROPRIETARY
  MATERIAL

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  RELATIONSHIP
  OF PARTIES

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  EXPENSES

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  EXAMINATION

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  INSPECTION;
  REPORTS

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  GOVERNING
  LAW; WAIVER OF JURY TRIAL

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  SEVERABILITY

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
   

  	
  ASSIGNMENT

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
   

  	
  THIRD
  PARTY BENEFICIARIES

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
   

  	
  NOTICES

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22.

  	
   

  	
  AMENDMENT
  AND WAIVER

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
   

  	
  ENTIRE
  AGREEMENT

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24.

  	
   

  	
  COUNTERPARTS

  	
   

  	
  15

  

 

 

	
  25.

  	
   

  	
  INTERPRETATION

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26.

  	
   

  	
  AGREEMENT
  SUBJECT TO APPLICABLE LAWS

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  27.

  	
   

  	
  FORCE
  MAJEURE

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  28.

  	
   

  	
  JURISDICTION;
  VENUE

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  29.

  	
   

  	
  INSURANCE

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  30.

  	
   

  	
  COMPLIANCE
  WITH APPLICABLE LAWS; PROGRAM COMPLIANCE MANUAL

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  31.

  	
   

  	
  PROHIBITION
  ON TIE-IN FEES

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  32.

  	
   

  	
  NOTICE
  OF CONSUMER COMPLAINTS

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  33.

  	
   

  	
  HEADINGS

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  34.

  	
   

  	
  PRIVACY
  LAW COMPLIANCE

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  35.

  	
   

  	
  MANNER
  OF PAYMENTS

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  36.

  	
   

  	
  REFERRALS

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  37.

  	
   

  	
  AUDITED
  FINANCIAL STATEMENTS

  	
   

  	
  18

  

 

 

SCHEDULES AND EXHIBITS

 

	
  SCHEDULE
  1

  	
   

  	
  Definitions

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  A

  	
   

  	
  The
  Program Website

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  B

  	
   

  	
  Credit
  Policy

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  C

  	
   

  	
  Form of
  Application

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  D

  	
   

  	
  Loan
  Account Documentation

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  E

  	
   

  	
  Sample
  Funding Statement

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  F

  	
   

  	
  Insurance
  Requirements

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  G

  	
   

  	
  Program
  Compliance Manual

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  H

  	
   

  	
  Third-Party
  Service Contractors

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  I

  	
   

  	
  Bank
  Secrecy Act Policy

  

 

 

THIS LOAN ACCOUNT
PROGRAM AGREEMENT (this “Agreement”), dated as of April 14, 2008
(“Effective Date”), is made by and between WEBBANK, a Utah-chartered industrial
bank having its principal location in Salt Lake City, Utah (“Bank”), and
PROSPER MARKETPLACE, INC., a Delaware corporation, having its principal
location in San Francisco, California (“Company”).

 

WHEREAS, Company
is in the business of providing certain services necessary for the origination
of consumer installment loans;

 

WHEREAS, Bank is in the business
of originating various types of consumer loans, including installment loans;
and

 

WHEREAS, the Parties
desire to develop a program pursuant to which Company shall market and provide
an online interface and certain operations services in connection with, and
Bank shall originate, installment loans for qualifying consumers identified by
Company.

 

NOW, THEREFORE, in
consideration of the foregoing and the terms, conditions and mutual covenants
and agreements herein contained, and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Bank and Company
mutually agree as follows:

 

1.                                       Definitions.
The terms used in this Agreement shall be defined as set forth in Schedule 1.

 

2.                                       Program
Marketing and Services.

 

(a)                                Bank hereby retains Company to serve as
Bank’s marketing and operations vendor for the Program. As such, Company shall
perform the following services for Bank and the Program:

 

(1)                                  Company shall promote and otherwise
market the Program and the Loan Accounts at Company’s own cost and in its sole
discretion. In performing such promotion and other marketing services, Company
may use any form of media and may devote such monetary and other resources as
it deems appropriate in its sole discretion. Company’s promotion and marketing
efforts shall not be required to produce any minimum number of Loan Accounts or
other benefits to the Program during the Term of this Agreement or any year,
month, or other period under this Agreement. Company may refer to Bank and the Program
in promotional and marketing materials, including marketing scripts, upon the
condition that any references to Bank and/or the Program in any such materials
must receive the prior written approval of Bank, which approval shall not to be
unreasonably withheld or delayed. Company shall ensure that all promotional and
marketing materials shall be accurate and not misleading in all material
respects. Company shall ensure that all promotional and marketing materials and
strategies comply with Applicable Laws.

 

(2)                                  Company shall host and maintain the
Program Website and provide customer support, regulatory compliance,
administrative, and other operational services to support Bank’s origination of
Loan Accounts and the Program generally. Company shall provide such services in
a manner consistent with Company obligations specified in this Agreement and as
the Parties may mutually agree in writing from time to time.

 

1

 

	
   

  	
   

  	
  (b)

  	
  Bank acknowledges and agrees that (i) pursuant
  to Section 12 of this Agreement, Company is licensing to Bank valuable
  Proprietary Material of Company for use in the marketing and operation of the
  Program, which includes but is not limited to use of the Program Website;
  (ii) because the value of such Proprietary Material may be affected by
  Bank’s lending activities under the Program, Company requires Bank to perform
  and Bank hereby agrees to perform Bank’s lending activities under the Program
  with due regard to Company’s interests in such Proprietary Material and in
  close coordination with Company as specified hereafter in this Agreement; and
  (iii) the compensation to be paid by Bank to Company under this
  Agreement is in consideration of Company’s licensing of such Proprietary
  Material to Bank as well as Company’s marketing and operational services to
  Bank and the Program under this Agreement.

  
	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Extension of Credit. Company
  acknowledges that approval of an Application creates a creditor-borrower
  relationship between Bank and Borrower which involves, among other things,
  the disbursement of Loan Proceeds. Nothing in this Agreement shall obligate
  Bank to extend credit to an Applicant or disburse Loan Proceeds if Bank
  determines that doing so would be an unsafe or unsound banking practice or that
  such extension of credit would be in violation of the Credit Policy. Bank
  shall use reasonable commercial efforts to provide Company prior notice of a
  decision not to extend credit to an Applicant or disburse Loan Proceeds in
  reliance on the preceding sentence and, in all instances where Bank does not
  provide such prior notice, Bank shall provide Company prompt notice after
  making a decision not to extend credit to an Applicant or disburse Loan
  Proceeds in reliance on the preceding sentence.

  
	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Consumer Documents and Credit Policy.
  The following documents, terms and procedures (“Consumer Finance Materials”)
  that have been approved by Bank and that will be used by Bank initially with
  respect to the Loan Accounts are attached to this Agreement: (i) the
  Program Website (screen shots of each page of the Program Website) as Exhibit A; (ii) Credit
  Policy as Exhibit B;
  (iii) form of Application, including disclosures required by Applicable
  Laws, as Exhibit C;
  and (iv) form of Loan Account Agreement, privacy policy and privacy
  notices, and all other Applicant and Borrower communications as Exhibit D. The Consumer Finance
  Materials shall not be changed without the prior written consent of both
  Parties, which consent shall not be unreasonably withheld or delayed;
  provided, however, that Bank may change the Consumer Finance Materials upon
  written notice provided to Company but without Company’s prior written
  consent, to the extent that such change is required by Applicable Laws or
  necessitated by safety and soundness concerns, provided that, as between Bank
  and Company, Bank shall be solely responsible for each such change and any
  adverse legal or other consequences arising from it. The Parties acknowledge
  that each Loan Account Agreement and all other documents referring to the
  creditor for the Program shall identify Bank as the creditor for the Loan
  Accounts. Company shall ensure that the Consumer Finance Materials comply
  with Applicable Laws.

  
	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Loan Account Processing and Origination.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
  On behalf of Bank, Company shall process
  Applications received from Applicants via the Program Website (including
  retrieving credit reports) to determine whether the Applicant meets the
  eligibility criteria set forth in the Credit Policy and Bank’s “Know Your Customer”
  and anti-money laundering criteria (collectively, the “Bank Secrecy Act
  Policy”), which is attached hereto as Exhibit I, and which may be
  updated by Bank from time to time and such updates shall be effective upon
  notice to Company as set forth herein. Company shall respond to all inquiries
  from Applicants regarding the application

  

 

2

 

	
   

  	
   

  	
  process.

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Company shall forward to Bank mutually agreed
  information including name, address, social security number and date of
  birth, regarding Applicants who meet the eligibility criteria set forth in
  the Credit Policy. Company shall have no discretion to override the Credit
  Policy with respect to any Applications.

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Subject to the terms of this Agreement, Bank shall
  establish Loan Accounts with respect to Applicants who meet the eligibility
  criteria set forth in the Credit Policy.

  
	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  Pursuant to procedures mutually agreed to by the
  Parties, Company shall deliver adverse action notices to Applicants who do
  not meet Credit Policy criteria or are otherwise denied by Bank.

  
	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  Company shall deliver Program privacy notices and
  Loan Account Agreements to Borrowers.

  
	
   

  	
   

  	
   

  
	
  (f)

  	
   

  	
  Company shall hold and maintain, as custodian for
  Bank, all documents of Bank pertaining to Loan Accounts. Company shall
  periodically provide to Bank copies of records required to be maintained
  under the Bank Secrecy Act Policy and such other documents regarding Loan
  Accounts as requested by Bank, at intervals mutually agreed to by the
  Parties, but no less frequently than monthly.

  
	
   

  	
   

  	
   

  
	
  (g)

  	
   

  	
  Company shall perform the obligations described in
  this Section 5 and deliver any customer communications to Applicants and
  Borrowers as necessary to carry on the Program, all at Company’s own cost and
  in accordance with Applicable Laws.

  
	
   

  	
   

  	
   

  
	
  (h)

  	
   

  	
  Pursuant to Section 16, as Bank reasonably
  requires and upon reasonable advance written notice to Company, Bank may
  periodically audit Company for compliance with the terms of this
  Section 5 and the Agreement as a whole, including compliance with the
  standards set forth herein for Loan Account origination.

  

 

6.                                       Funding
Loans; Payment of Servicing Fee.

 

	
  (a)

  	
   

  	
  Company shall provide a Funding Statement to Bank by
  e-mail or as otherwise mutually agreed by the Parties by 5:00 PM Mountain
  Time on the Business Day prior to each Funding Date. Each Funding Statement
  shall (i) identify those Applicants whose Applications satisfy the
  requirements of the Credit Policy and with respect to whom Company requests
  that Bank establish Loan Accounts, and (ii) provide the Funding Amount
  to be disbursed by Bank on such Funding Date. The Funding Statement shall be
  in the form of Exhibit E.

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Subject to timely receipt of the Funding Statement,
  Bank shall transfer the Funding Amount from the Funding Account to the
  Disbursement Account by ACH transfers originated by Company on each Funding
  Date. Company shall provide Bank the account number and routing number for
  the Disbursement Account prior to the first Funding Date.

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Subject to timely receipt of the Funding Amount,
  Company shall disburse Loan Proceeds to Borrowers by ACH transfers from the
  Disbursement Account in accordance with the

  

 

3

 

	
   

  	
   

  	
  Funding Statement on the Funding Date. Bank
  authorizes Company to deduct and retain from the Funding Amount the aggregate
  amount of the Origination Fees set forth on the Funding Statement as a
  Program servicing fee.

  

 

7.                                       Representations
and Warranties.

 

	
  (a)

  	
   

  	
  Bank hereby represents and warrants, as of the
  Effective Date, or covenants, as applicable, to Company that:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1)

  	
  Bank is an FDIC-insured Utah-chartered industrial
  bank, duly organized, validly existing under the laws of the State of Utah
  and has full corporate power and authority to execute, deliver, and perform
  its obligations under this Agreement; the execution, delivery and performance
  of this Agreement have been duly authorized, and are not in conflict with and
  do not violate the terms of the charter or bylaws of Bank and will not result
  in a material breach of or constitute a default under, or require any consent
  under, any indenture, loan or agreement to which Bank is a party;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (2)

  	
  All approvals, authorizations, licenses,
  registrations, consents, and other actions by, notices to, and filings with,
  any Person that may be required in connection with the execution, delivery,
  and performance of this Agreement by Bank, have been obtained (other than
  those required to be made to or received from Borrowers and Applicants);

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (3)

  	
  This Agreement constitutes a legal, valid, and
  binding obligation of Bank, enforceable against Bank in accordance with its
  terms, except (i) as such enforceability may be limited by applicable
  bankruptcy, insolvency, reorganization, moratorium, receivership,
  conservatorship or other similar laws now or hereafter in effect, including
  the rights and obligations of receivers and conservators under 12 U.S.C. §§
  1821 (d) and (e), which may affect the enforcement of creditors’ rights
  in general, and (ii) as such enforceability may be limited by general
  principles of equity (whether considered in a suit at law or in equity);

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (4)

  	
  There are no proceedings or investigations pending
  or, to the best knowledge of Bank, threatened against Bank (i) asserting
  the invalidity of this Agreement, (ii) seeking to prevent the
  consummation of any of the transactions contemplated by Bank pursuant to this
  Agreement, (iii) seeking any determination or ruling that, in the
  reasonable judgment of Bank, would materially and adversely affect the
  performance by Bank of its obligations under this Agreement,
  (iv) seeking any determination or ruling that would materially and
  adversely affect the validity or enforceability of this Agreement or
  (v) would have a materially adverse financial effect on Bank or its
  operations if resolved adversely to it;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (5)

  	
  Bank is not Insolvent;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (6)

  	
  The execution, delivery and performance of this
  Agreement by Bank comply with Utah and federal banking laws specifically
  applicable to Bank’s operations; provided that Bank makes no representation
  or warranty regarding compliance with Utah or federal banking laws relating
  to consumer protection, consumer

  

 

4

 

	
   

  	
   

  	
   

  	
  lending, usury, loan collections, anti-money
  laundering, data security or privacy as they apply to the operation of the
  Program;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (7)

  	
  The Proprietary Materials Bank licenses to Company
  pursuant to Section 12, and their use as contemplated by this Agreement,
  do not violate or infringe upon, or constitute an infringement or
  misappropriation of, any U.S. patent, copyright or U.S. trademark, service
  mark, trade name or trade secret of any person or entity and Bank has the
  right to grant the licenses set forth in Section 12 below; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (8)

  	
  Bank shall comply with Title V of the
  Gramm-Leach-Bliley Act and the implementing regulations of the FDIC,
  including but not limited to applicable limits on the use, disclosure,
  storage, safeguarding and destruction of Applicant information, and shall
  maintain commercially reasonable data security and disaster recovery
  protections that, at the least, are consistent with industry standards for
  the consumer lending industry.

  
	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Company hereby represents and warrants, as of the Effective
  Date, or covenants, as applicable, to Bank that:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1)

  	
  Company is a corporation, duly organized and validly
  existing in good standing under the laws of the State of Delaware, and has
  full power and authority to execute, deliver, and perform its obligations
  under this Agreement; the execution, delivery, and performance of this
  Agreement have been duly authorized, and are not in conflict with and do not
  violate the terms of the articles or bylaws of Company and will not result in
  a material breach of or constitute a default under or require any consent
  under any indenture, loan, or agreement to which Company is a party;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (2)

  	
  All approvals, authorizations, consents, and other
  actions by, notices to, and filings with any Person required to be obtained
  for the execution, delivery, and performance of this Agreement by Company,
  have been obtained;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (3)

  	
  This Agreement constitutes a legal, valid, and
  binding obligation of Company, enforceable against Company in accordance with
  its terms, except (i) as such enforceability may be limited by
  applicable bankruptcy, insolvency, reorganization, moratorium, or other
  similar laws now or hereafter in effect, which may affect the enforcement of
  creditors’ rights in general, and (ii) as such enforceability may be
  limited by general principles of equity (whether considered in a suit at law
  or in equity);

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (4)

  	
  There are no proceedings or investigations pending
  or, to the best knowledge of Company, threatened against Company
  (i) asserting the invalidity of this Agreement, (ii) seeking to
  prevent the consummation of any of the transactions contemplated by Company
  pursuant to this Agreement, (iii) seeking any determination or ruling
  that, in the reasonable judgment of Company, would materially and adversely
  affect the performance by Company of its obligations under this Agreement,
  (iv) seeking any determination or ruling that would materially and
  adversely affect the validity or enforceability of this Agreement, or
  (v) would have a materially adverse financial effect on Company or its
  operations if resolved adversely to it;

  

 

5

 

	
   

  	
   

  	
  (5)

  	
  Company is not Insolvent;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (6)

  	
  The execution, delivery and performance of this
  Agreement by Company, the Consumer Finance Materials and the promotional and
  marketing materials and strategies shall all comply with Applicable Laws; except
  that if Company requests that Bank change the Bank Secrecy Act Policy to
  cause it to include any measures needed to comply with the Bank Secrecy Act
  or the USA Patriot Act and Bank does not do so, then Company provides no
  representations or warranties regarding any elements of the Bank Secrecy Act
  or the USA Patriot Act compliance affected by the unchanged provisions.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (7)

  	
  The Proprietary Materials Company licenses to Bank
  pursuant to Section 12, and their use as contemplated by this Agreement,
  do not violate or infringe upon, or constitute an infringement or
  misappropriation of, any U.S. patent, copyright or U.S. trademark, service
  mark, trade name or trade secret of any person or entity and Company has the
  right to grant the license set forth in Section 12 below; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (8)

  	
  Company shall comply with Title V of the
  Gramm-Leach-Bliley Act and the implementing regulations of the FDIC,
  including but not limited to applicable limits on the use, disclosure,
  storage, safeguarding and destruction of Applicant information, and shall
  maintain commercially reasonable data security and disaster recovery
  protections that at the least are consistent with industry standards for the
  consumer lending industry.

  
	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Bank hereby represents and warrants to Company as of
  each Funding Date that the Loan Proceeds that Bank is required to disburse on
  the Funding Date are being provided by Bank from its own resources, such as
  deposits, warehouse lines of credit, or other credit facilities of Bank.

  
	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  Company hereby represents and warrants to Bank as of
  each Funding Date that:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1)

  	
  For each Loan Account and each disbursement of Loan
  Proceeds: (i) to the best of Company’s knowledge, all information in the
  related Application is true and correct, provided, however, that Company’s
  representation and warranty in this regard shall be subject to the following
  limitations: (A) Company does not verify the self-reported income,
  employment and occupation or other information provided by Applicants in
  listings, (B) each Applicant’s debt-to-income ratio is determined by
  Company from a combination of the Applicant’s self-reported income and information
  from the Applicant’s credit report and not otherwise verified by Company,
  (C) credit data that appears in Applications is taken directly from a
  credit report obtained on the Applicant from a credit reporting agency,
  without any review or verification by Company, (D) Company does not
  verify any statements by Applicants as to how Loan Proceeds are to be used
  and does not confirm after loan disbursement how Loan Proceeds were used, and
  (E) Applicants’ home ownership status is not verified by Company but is
  derived from the Applicant’s credit report, in that if the credit report
  reflects an active mortgage loan the Applicant is presumed to be a homeowner;
  (ii) the Loan Account is fully enforceable and all required disclosures
  to Borrowers have been delivered in compliance with Applicable Laws;
  (iii) the Loan Account Agreement and all other Loan Account documents
  are genuine and legally

  

 

6

 

	
   

  	
   

  	
   

  	
  binding and enforceable, conform to the requirements
  of the Program and were prepared in conformity with the Program Compliance
  Manual; (iv) all necessary approvals required to be obtained by Company
  have been obtained; (v) nothing exists that would prohibit the sale of
  the Loan Accounts by Bank to Company under the Loan Sale Agreement, provided
  that Bank has taken no action (independent of action taken by Company on
  Bank’s behalf) that would prohibit the sale of the Loan Accounts by Bank to
  Company under the Loan Sale Agreement; and (vi) Bank is the sole owner
  of the Loan Accounts prior to any such sale of the Loan Accounts to Company,
  provided that Bank has taken no action (independent of action taken by
  Company on Bank’s behalf) that diminishes Bank’s ownership rights in the Loan
  Accounts;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (2)

  	
  Each Borrower listed on a Funding Statement is
  eligible for a Loan Account under the Credit Policy; and each Borrower has
  submitted an Application; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (3)  

  	
  The information on each Funding Statement is true
  and correct in all respects.

  
	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  The representations and warranties of Bank and
  Company contained in this Section 7, except those representations and
  warranties contained in subsections 7(a)(4) and 7(b)(4), are made
  continuously throughout the term of this Agreement. In the event that any
  investigation or proceeding of the nature described in subsections
  7(a)(4) and 7(b)(4) is instituted or threatened against either
  Party, such Party shall promptly notify the other Party of the pending or
  threatened investigation or proceeding.

  

 

8.                                       Other
Relationships with Borrowers.

 

	
  (a)

  	
   

  	
  Separate from the obligation to market Loan Accounts
  offered by Bank, and subject to the Program privacy policy and Applicable
  Laws, Company shall have the right, at its own expense, to solicit Applicants
  and/or Borrowers with offerings of other goods and services from Company and
  parties other than Bank, provided, however, that in the event that Company
  uses Bank’s name and/or Proprietary Materials in connection with such
  offerings, Company shall obtain Bank’s prior approval for such use.

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Except as necessary to carry out its rights and
  responsibilities under this Agreement and the Loan Sale Agreement, Bank shall
  not use Applicant and/or Borrower information and shall not provide or
  disclose any Applicant and/or Borrower information to any Person, except to
  the extent required to do so under Applicable Laws or legal process.

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Notwithstanding subsection 8(b), (i) Bank may
  make solicitations for goods and services to the public, which may include
  one or more Applicants or Borrowers; provided that Bank does not
  (A) target such solicitations to specific Applicants and/or Borrowers,
  (B) use or permit a third party to use any list of Applicants and/or
  Borrowers in connection with such solicitations or (C) refer to or otherwise
  use the name of Company; and (ii) Bank shall not be obligated to redact
  the names of Applicants and/or Borrowers from marketing lists acquired from
  third parties (e.g.,
  subscription lists) that Bank uses for solicitations.

  
	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  The terms of this Section 8 shall survive the
  expiration or earlier termination of this Agreement.

  

 

7

 

9.                                       Indemnification.

 

	
  (a)

  	
   

  	
  Bank agrees to defend, indemnify, and hold harmless
  Company and its Affiliates, and the officers, directors, employees,
  representatives, shareholders, agents and attorneys of such entities (the
  “Company Indemnified Parties”) from and against any and all third party
  claims and actions, and all liability, judgments, damages, costs and
  expenses, including reasonable attorneys’ fees arising there from (together
  with third party claims and actions, “Losses”) to the extent arising from its
  (i) gross negligence, willful misconduct or breach of any of Bank’s
  representations, warranties, obligations or undertakings under this Agreement
  by Bank, or (ii) violation by Bank of any Utah or federal banking law
  specifically applicable to Bank’s operations other than Applicable Laws
  regarding consumer protection, consumer lending, usury, loan collection,
  anti-money laundering, data protection or privacy as they apply to the
  operation of the Program.

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Company agrees to defend, indemnify, and hold
  harmless Bank and its Affiliates, and the officers, directors, employees,
  representatives, shareholders, agents and attorneys of such entities (the
  “Bank Indemnified Parties”) from and against any and all Losses to the extent
  arising from Company’s participation in the Program as contemplated by the
  Program Documents (including Losses arising from a violation of Applicable
  Laws or a breach by Company or its agents or representatives of any of
  Company’s representations, warranties, obligations or undertakings under the
  Program Documents), unless such Loss results from (i) the gross
  negligence or willful misconduct of Bank or (ii) a breach by Bank of any
  of Bank’s representations, warranties, obligations or undertakings under this
  Agreement.

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  The Company Indemnified Parties and the Bank
  Indemnified Parties are sometimes referred to herein as the “Indemnified
  Parties,” and Company or Bank, as an indemnitor hereunder, is sometimes
  referred to herein as the “Indemnifying Party.”

  
	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  Any Indemnified Party seeking indemnification
  hereunder shall promptly notify the Indemnifying Party, in writing, of any
  notice of the assertion by any third party of any claim or of the
  commencement by any third party of any legal or regulatory proceeding,
  arbitration or action, or if the Indemnified Party determines the existence
  of any such claim or the commencement by any third party of any such legal or
  regulatory proceeding, arbitration or action, whether or not the same shall
  have been asserted or initiated, in any case with respect to which the
  Indemnifying Party is or may be obligated to provide indemnification (an
  “Indemnifiable Claim”), specifying in reasonable detail the nature of the
  Loss, and, if known, the amount, or an estimate of the amount, of the Loss,
  provided that failure to promptly give such notice shall only limit the
  liability of the Indemnifying Party to the extent of the actual prejudice, if
  any, suffered by such Indemnifying Party as a result of such failure. The
  Indemnified Party shall provide to the Indemnifying Party as promptly as
  practicable thereafter information and documentation reasonably requested by
  such Indemnifying Party to defend against the Indemnifiable Claim.

  
	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  The Indemnifying Party shall have ten (10) days
  after receipt of any notification of an Indemnifiable Claim (a “Claim
  Notice”) to notify the Indemnified Party of the Indemnifying Party’s election
  to assume the defense of the Indemnifiable Claim and, through counsel of its
  own choosing, and at its own expense, to commence the settlement or defense
  thereof, and the Indemnified Party shall cooperate with the Indemnifying

  

 

8

 

Party in connection therewith if such cooperation is so requested and
the request is reasonable; provided that the Indemnifying Party shall hold the
Indemnified Party harmless from all its reasonable out-of-pocket expenses,
including reasonable attorneys’ fees, incurred in connection with the
Indemnified Party’s cooperation.  If the
Indemnifying Party assumes responsibility for the settlement or defense of any
such claim, (i) the Indemnifying Party shall permit the Indemnified Party
to participate at its expense in such settlement or defense through counsel
chosen by the Indemnified Party; provided that, in the event that both the
Indemnifying Party and the Indemnified Party are defendants in the proceeding
and the Indemnified Party shall have reasonably determined and notified the
Indemnifying Party that representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them, then the fees and expenses of one such counsel for all Indemnified Parties
in the aggregate shall be borne by the Indemnifying Party; and (ii) the
Indemnifying Party shall not settle any Indemnifiable Claim without the
Indemnified Party’s consent, which consent shall not be unreasonably withheld
or delayed for any reason if the settlement involves only payment of money and
releases the Indemnified Party from any and all liability related to such
claim, and which consent may be withheld for any reason if the settlement
involves more than the payment of money, including any admission by the
Indemnified Party.  So long as the
Indemnifying Party is reasonably contesting any such Indemnifiable Claim in
good faith, the Indemnified Party shall not pay or settle such claim without
the Indemnifying Party’s consent, which consent shall not be unreasonably
withheld or delayed.  The Indemnified
Party may pay or settle any such Indemnifiable Claim at any time if it waives
its right to indemnification hereunder.

 

(f)            If the Indemnifying Party
does not notify the Indemnified Party within ten (10) days after receipt
of the Claim Notice that it elects to undertake the defense of the
Indemnifiable Claim described therein, or if the Indemnifying Party fails to
contest vigorously any such Indemnifiable Claim, the Indemnified Party shall
have the right, upon notice to the Indemnifying Party, to contest, settle or
compromise the Indemnifiable Claim in the exercise of its reasonable
discretion; provided that the Indemnified Party shall notify the Indemnifying
Party prior thereto of any compromise or settlement of any such Indemnifiable
Claim.  No action taken by the
Indemnified Party pursuant to this paragraph (f) shall deprive the
Indemnified Party of its rights to indemnification pursuant to this Section 9.

 

(g)           The terms of this Section 9
shall survive the expiration or earlier termination of this Agreement.

 

10.           Term and Termination.

 

(a)           This Agreement shall have an
initial term beginning on the Effective Date and ending twenty-four (24) months
thereafter (the “Initial Term”) and shall renew automatically for two (2) successive
terms of one (1) year each (each a “Renewal Term,” collectively, the
Initial Term and Renewal Term(s) shall be referred to as the “Term”),
unless either Party provides notice of non-renewal to the other Party at least
ninety (90) days prior to the end of the Initial Term or any Renewal Term or
this Agreement is earlier terminated in accordance with the provisions hereof.

 

(b)           This Agreement shall
terminate immediately upon the expiration or earlier termination of the Loan
Sale Agreement.

 

9

 

(c)           Either Party may terminate
this Agreement without cause upon ninety (90) days’ prior written notice to the
other party.

 

(d)           A Party shall have a right
to terminate this Agreement immediately upon written notice to the other Party
in any of the following circumstances:

 

(1)           any representation or warranty made by the other
Party in this Agreement shall be incorrect in any material respect and shall
not have been corrected within thirty (30) Business Days after written notice
thereof has been given to such other Party;

 

(2)           the other Party shall default in the performance of
any obligation or undertaking under this Agreement and such default shall
continue for thirty (30) Business Days after written notice thereof has been
given to such other Party;

 

(3)           the other Party shall commence a voluntary case or
other proceeding seeking liquidation, reorganization, or other relief with
respect to itself or its debts under any bankruptcy, insolvency, receivership,
conservatorship or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, conservator, custodian, or
other similar official of it or any substantial part of its property, or shall
consent to any such relief or to the appointment of a trustee, receiver,
liquidator, conservator, custodian, or other similar official or to any
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail generally to pay
its debts as they become due, or shall take any corporate action to authorize
any of the foregoing;

 

(4)           an involuntary case or other proceeding, whether
pursuant to banking regulations or otherwise, shall be commenced against the
other Party seeking liquidation, reorganization, or other relief with respect
to it or its debts under any bankruptcy, insolvency, receivership,
conservatorship or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, conservator, custodian, or
other similar official of it or any substantial part of its property; or an
order for relief shall be entered against either Party under the federal
bankruptcy laws as now or hereafter in effect; or

 

(5)           there is a materially adverse change in the
financial condition of the other Party.

 

(e)           Bank shall not be obligated
to approve Applications or establish new Loan Accounts after termination of
this Agreement; provided, that Bank shall originate Loan Accounts to Applicants
to whom Bank has issued a lending commitment prior to termination, unless this
Agreement is terminated pursuant to subsection 10(b) or by Bank pursuant
to subsection 10(d).

 

(f)            The termination of this
Agreement either in part or in whole shall not discharge any Party from any
obligation incurred prior to such termination.

 

(g)           Upon termination of this
Agreement, Company shall purchase all Loan Accounts established by Bank prior
to and on the date of termination that have not already been

 

10

 

purchased by Company.  After termination, Company shall purchase all
Loan Accounts originated by Bank pursuant to subsection 10(e).

 

(h)           The terms of this Section 10
shall survive the expiration or earlier termination of this Agreement.

 

11.           Confidentiality.

 

(a)           Each Party agrees that
Confidential Information of the other Party shall be used  by
such Party solely in the performance of its obligations and exercise of its
rights pursuant to the Program Documents. 
Except as required by Applicable Laws or legal process, neither Party
(the “Restricted Party”) shall disclose Confidential Information of the other
Party to third parties; provided, however, that the Restricted Party may
disclose Confidential Information of the other Party (i) to the Restricted
Party’s Affiliates, agents, representatives or subcontractors for the sole
purpose of fulfilling the Restricted Party’s obligations under this Agreement
(as long as the Restricted Party exercises reasonable efforts to prohibit any
further disclosure by its Affiliates, agents, representatives or
subcontractors), provided that in all events, the Restricted Party shall be
responsible for any breach of the confidentiality obligations hereunder by any
of its Affiliates, agents, representatives or subcontractors, (ii) to the
Restricted Party’s auditors, accountants and other professional advisors, or to
a Regulatory Authority or (iii) to any other third party as mutually
agreed by the Parties.

 

(b)           A Party’s Confidential
Information shall not include information that:

 

(1)           is generally available to the public;

 

(2)           has become publicly known, without fault on the part
of the Party who now seeks to disclose such information (the “Disclosing Party”),
subsequent to the Disclosing Party acquiring the information;

 

(3)           was otherwise known by, or available to, the
Disclosing Party prior to entering into this Agreement; or

 

(4)           becomes available to the Disclosing Party on a
non-confidential basis from a Person, other than a Party to this Agreement, who
is not known by the Disclosing Party after reasonable inquiry to be bound by a
confidentiality agreement with the non-Disclosing Party or otherwise prohibited
from transmitting the information to the Disclosing Party.

 

(c)           Upon written request or upon
the termination of this Agreement, each Party shall, within thirty (30) days,
return to the other Party all Confidential Information of the other Party in
its possession that is in written form, including by way of example, but not limited
to, reports, plans, and manuals; provided, however, that either Party may
maintain in its possession all such Confidential Information of the other Party
required to be maintained under Applicable Laws relating to the retention of
records for the period of time required thereunder or stored on such Party’s
network as part of standard back-up procedures (provided that such information
shall remain subject to the confidentiality provisions of this Section 11).

 

11

 

(d)           In the event that a
Restricted Party is requested or required (by oral questions, interrogatories,
requests for information or documents, subpoena, civil investigative demand or
similar process) to disclose any Confidential Information of the other Party,
the Restricted Party shall provide the other Party with prompt notice of such
request(s) so that the other Party may seek an appropriate protective
order or other appropriate remedy and/or waive the Restricted Party’s
compliance with the provisions of this Agreement.  In the event that the other Party does not
seek such a protective order or other remedy, or such protective order or other
remedy is not obtained, or the other Party grants a waiver hereunder, the
Restricted Party may furnish that portion (and only that portion) of the
Confidential Information of the other Party which the Restricted Party is
legally compelled to disclose and shall exercise such efforts to obtain
reasonable assurance that confidential treatment shall be accorded any
Confidential Information of the other Party so furnished as the Restricted
Party would exercise in assuring the confidentiality of any of its own
Confidential Information.

 

(e)           The terms of this Section 11
shall survive the expiration or earlier termination of this Agreement.

 

12.           Proprietary Material.

 

(a)           Each Party (“Licensing
Party”) hereby provides the other Party (“Licensee”) with a non-exclusive right
and license to use and reproduce the Licensing Party’s name, logo, registered
or other trademarks and service marks (collectively, “Marks”) on the
Applications, Loan Account Agreements, and other Consumer Finance Materials
(including the Program Website), Program marketing materials, and any other
publicly distributed or available Program materials, and to otherwise use the
Marks and such copyrights, patents, and other intellectual property as the
Licensing Party may designate or otherwise make available from time to time in
the Licensing Party’s sole discretion (collectively with the Marks, “Proprietary
Material”) for the purposes of or otherwise in connection with the fulfillment
of Licensee’s obligations under this Agreement; provided, however, that (i) the
Licensee shall at all times comply with any and all written instructions
provided by the Licensing Party from time to time regarding the use of the
Licensing Party’s Proprietary Material, and (ii) each Licensee
acknowledges that, except for the license specifically provided in this
Agreement, it shall acquire no interest in the Licensing Party’s Proprietary
Material.  Upon termination of this
Agreement, each such license will terminate, and the Licensee shall cease using
the Licensing Party’s Proprietary Material. Neither Party may use the other
Party’s Marks in any press release without the prior written consent of the
other Party.

 

(b)           Bank hereby
acknowledges and agrees that, as between Bank and Company (i) as of the
Effective Date, Company is the sole and exclusive owner of all pre-existing
Marks, copyrights, patents, other intellectual property rights, software, other
technology, and other tangible and intangible property used on or in connection
with the Program Website, and its Company run predecessors;  and (ii) Company shall be the sole and
exclusive owner of any and all modifications to such tangible and intangible
property during the Term of this Agreement, including but not limited to any
and all trademark, service mark, copyright, patent, and other intellectual
property rights in and to such modifications, except as the Parties may otherwise
agree in writing.  For avoidance of
doubt, Company shall not obtain any rights in Bank’s Marks (other than the
license described in subsection 12(a)) by virtue of incorporation of Bank’s
Marks into the

 

12

 

Program Website.

 

13.           Relationship of Parties.  The Parties agree that in performing their
responsibilities pursuant to this Agreement, they are in the position of
independent contractors.  This Agreement
is not intended to create, nor does it create and shall not be construed to
create, a relationship of partner or joint venturer or any association for
profit between Bank and Company.

 

14.           Expenses.

 

(a)           Except as set forth herein,
each Party shall bear the costs and expenses of performing its obligations
under this Agreement.

 

(b)           Company shall pay all wire
transfer and ACH costs for transfers by Bank under the Program.  Company shall reimburse Bank for all third
party fees incurred by Bank in connection with the performance of this
Agreement.  Bank shall provide Company
with notice of third party fees to be incurred by Bank in connection with
performance of this Agreement as soon as practicable after Bank becomes aware
of such fees.

 

(c)           Company shall pay all costs
of any credit reports it obtains on Applicants or Borrowers and any adverse
action notices it delivers to Applicants or Borrowers in accordance with
Company’s Application processing and Loan Account servicing responsibilities
under this Agreement.

 

(d)           Bank acknowledges receipt of
[**] from Company as
a one-time, fully earned payment to compensate Bank for costs associated with
the start-up of the Program.  This fee is
non-refundable.

 

(e)           Each Party shall be
responsible for payment of any federal, state, or local taxes or assessments
associated with the performance of its obligations under this Agreement and for
compliance with all filing, registration and other requirements with regard
thereto.

 

(f)            Company shall pay for Bank’s out-of-pocket legal
fees and expenses incurred as of the Effective Date for due diligence in
connection with, and negotiation and drafting of, the Program Documents in an
amount not to exceed[**].  Bank acknowledges receipt of [**] as an advance toward such legal fees and expenses.  Bank shall present to Company periodic invoices
reflecting such legal fees and expenses incurred.  Bank shall deduct such amounts from the
advance.  Bank shall promptly remit back
to Company any unused portion of the advance after execution of the Program
Documents.  If, after the Effective Date,
Company requests a change to the Program Documents or Consumer Finance
Materials that requires legal review by Bank, Bank shall invoice Company for
all out-of-pocket legal fees and expenses incurred as a result of such review.  Company shall pay such invoice within thirty
(30) days of receipt of such invoice.

 

(g)           Company shall reimburse Bank for all reasonable
costs associated with Bank’s assignment to Company of Loan Accounts pursuant to
Section 10.

 

(h)           Company shall pay Bank [**] on the
Effective Date as a one-time, fully earned payment to compensate Bank for the
establishment and implementation of the Program.  This fee is non-refundable.

 

** Confidential Treatment Requested

 

13

 

15.           Examination.  Each Party agrees to submit to any
examination that may be required by a Regulatory Authority having jurisdiction
over the other Party, during regular business hours and upon reasonable prior
notice, and to otherwise provide reasonable cooperation to the other Party in
responding to such Regulatory Authority’s inquiries and requests related to the
Program.

 

16.           Inspection; Reports.  Each Party, upon reasonable prior notice from
the other Party, agrees to submit to an inspection of its books, records,
accounts, and facilities relevant to the Program, from time to time, during
regular business hours subject to the duty of confidentiality each Party owes
to its customers and banking secrecy and confidentiality requirements otherwise
applicable to each Party under Applicable Laws. 
All expenses of inspection shall be borne by the Party conducting the
inspection.  Notwithstanding the
obligation of each Party to bear its own expenses of inspection, Company shall
reimburse Bank for reasonable out of pocket expenses incurred by Bank in the
performance of quarterly, on site reviews of Company’s financial condition,
operations and internal controls, not to exceed the maximum amount per visit of
[**]. 
Company shall store all documentation and electronic data related to its
performance under this Agreement and shall make such documentation and data
available during any inspection by Bank or its designee.  With such reasonable frequency and in such
reasonable manner as mutually agreed by the Parties, Company shall report to Bank
regarding the performance of its obligations.

 

17.           Governing Law; Waiver of Jury Trial.  This Agreement shall be interpreted and
construed in accordance with the laws of the State of Utah, without giving
effect to the rules, policies, or principles thereof with respect to conflicts
of laws.  THE PARTIES HEREBY EXPRESSLY
WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING HEREUNDER.

 

18.           Severability.  Any provision of this Agreement which is
deemed invalid, illegal or unenforceable in any jurisdiction, shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining portions hereof in
such jurisdiction or rendering such provision or any other provision of this
Agreement invalid, illegal, or unenforceable in any other jurisdiction.

 

19.           Assignment.  This Agreement and the rights and obligations
created under it shall be binding upon and inure solely to the benefit of the
Parties and their respective successors, and permitted assigns.  Neither Party shall be entitled to assign or
transfer any interest under this Agreement (including, without limitation, by
operation of law) without the prior written consent of the other Party, which shall
not be unreasonable withheld or delayed. 
No assignment made in conformity with this Section 19 shall relieve
a Party of its obligations under this Agreement.  Company may use subcontractors in the
performance of its obligations under this Agreement, subject to Bank’s prior
written approval of each such subcontractor, which approval shall not be
unreasonably withheld or delayed.  A list
of subcontractors already approved by Bank is attached in the form of Exhibit H hereto.

 

20.           Third Party Beneficiaries.  Nothing contained herein shall be construed
as creating a third-party beneficiary relationship between either Party and any
other Person.

 

21.           Notices.  All notices and other communications that are
required or may be given in connection with this Agreement shall be in writing
and shall be deemed received (a) on the day delivered, if delivered by
hand; (b) on the day transmitted, if transmitted by facsimile or e-mail
with receipt confirmed; or (c)  three (3) business days after the
date of mailing to the other Party, if mailed

 

** Confidential Treatment Requested

 

14

 

first-class postage prepaid, at the following address, or such other
address as either Party shall specify in a notice to the other:

	
   

  	
   

  
	
  To
  Bank:

  	
  WebBank

  
	
   

  	
  6440
  S Wasatch Blvd.

  
	
   

  	
  Suite 300

  
	
   

  	
  Salt
  Lake City, UT 84121

  
	
   

  	
  Attn:
  Gerry Smith

  
	
   

  	
  E-mail
  Address: gerry@webbank.com

  
	
   

  	
  Telephone:
  (801) 993-5001

  
	
   

  	
  Facsimile:
  (801) 993-5015

  
	
   

  	
   

  
	
  To
  Company:

  	
  Prosper
  Marketplace, Inc.

  
	
   

  	
  111
  Sutter Street, 22nd Floor

  
	
   

  	
  San
  Francisco, CA 94104

  
	
   

  	
  Attn:
  Kirk T. Inglis

  
	
   

  	
  E-mail
  Address: kirk@propser.com

  
	
   

  	
  Telephone:
  (415) 593-5432

  
	
   

  	
  Facsimile:
  (415) 362-7233

  

 

22.           Amendment and Waiver.  This Agreement may be amended only by a
written instrument signed by each of the Parties.  The failure of a Party to require the
performance of any term of this Agreement or the waiver by a Party of any
default under this Agreement shall not prevent a subsequent enforcement of such
term and shall not be deemed a waiver of any subsequent breach.  All waivers must be in writing and signed by
the Party against whom the waiver is to be enforced.

 

23.           Entire Agreement.  The Program Documents, including this
Agreement and its schedules and exhibits (all of which schedules and exhibits
are hereby incorporated into this Agreement), constitute the entire agreement
between the Parties with respect to the subject matter hereof, and supersede
any prior or contemporaneous negotiations or oral or written agreements with
regard to the same subject matter.

 

24.           Counterparts.  This Agreement may be executed and delivered
by the Parties in any number of counterparts, and by different parties on
separate counterparts, each of which counterpart shall be deemed to be an
original and all of which counterparts, taken together, shall constitute but
one and the same instrument.

 

25.           Interpretation.  The Parties acknowledge that each Party and
its counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments thereto, and the same shall be construed neither for nor against
either Party, but shall be given a reasonable interpretation in accordance with
the plain meaning of its terms and the intent of the Parties.

 

26.           Agreement Subject to Applicable Laws.  If (a) either Party has been advised by
legal counsel of a change in Applicable Laws or any judicial decision of a
court having jurisdiction over such Party or any interpretation of a Regulatory
Authority that, in the view of such legal counsel, would have a materially
adverse effect on the rights or obligations of such Party under this Agreement
or the financial condition of such Party, (b) either Party receives a
request of any Regulatory

 

15

 

Authority having jurisdiction over such Party, including any letter or
directive of any kind from any such Regulatory Authority, that prohibits or
restricts such Party from carrying out its obligations under this Agreement, or
(c) either Party has been advised by legal counsel that there is a
material risk that such Party’s or the other Party’s continued performance
under this Agreement would violate Applicable Laws, then the Parties shall meet
and consider in good faith any modifications, changes or additions to the
Program or the Program Documents that may be necessary to eliminate such
result.  Notwithstanding any other
provision of the Program Documents, including Section 10 hereof, if the
Parties are unable to reach agreement regarding such modifications, changes or
additions to the Program or the Program Documents within ten (10) Business
Days after the Parties initially meet, either Party may terminate this
Agreement upon five (5) days’ prior written notice to the other
Party.  A Party may suspend performance
of its obligations under this Agreement, or require the other Party to suspend
its performance of its obligations under this Agreement, upon providing the
other Party advance written notice, if any event described in subsections
26(a), (b) or (c) above occurs.

 

27.           Force Majeure.  If any Party is unable to carry out the whole
or any part of its obligations under this Agreement by reason of a Force
Majeure Event, then the performance of the obligations under this Agreement of
such Party as they are affected by such cause shall be excused during the
continuance of the inability so caused, except that should such inability not
be remedied within thirty (30) days after the date of such cause, the Party not
so affected may at any time after the expiration of such thirty (30) day
period, during the continuance of such inability, terminate this Agreement on
giving written notice to the other Party and without payment of a termination
fee or other penalty.  To the extent that
the Party not affected by a Force Majeure Event is unable to carry out the
whole or any part of its obligations under this Agreement because a
prerequisite obligation of the Party so affected has not been performed, the
Party not affected by a Force Majeure Event also is excused from such
performance during such period.  A “Force
Majeure Event” as used in this Agreement shall mean an unanticipated event that
is not reasonably within the control of the affected Party or its
subcontractors (including, but not limited to, acts of God, acts of
governmental authorities, strikes, war, riot and any other causes of such
nature), and which by exercise of reasonable due diligence, such affected Party
or its subcontractors could not reasonably have been expected to avoid,
overcome or obtain, or cause to be obtained, a commercially reasonable
substitute therefore.  No Party shall be
relieved of its obligations hereunder if its failure of performance is due to
removable or remediable causes which such Party fails to remove or remedy using
commercially reasonable efforts within a reasonable time period.  Either Party rendered unable to fulfill any
of its obligations under this Agreement by reason of a Force Majeure Event
shall give prompt notice of such fact to the other Party, followed by written
confirmation of notice, and shall exercise due diligence to remove such
inability with all reasonable dispatch.

 

28.           Jurisdiction; Venue.  The Parties consent to the personal
jurisdiction and venue of the federal and state courts in Salt Lake City, Utah
for any court action or proceeding.  The
terms of this Section 28 shall survive the expiration or earlier
termination of this Agreement.

 

29.           Insurance. 
Company agrees to maintain insurance coverage on the terms and
conditions specified in Exhibit F
at all times during the term of this Agreement and to notify Bank promptly of
any cancellation or lapse of any such insurance coverage.

 

30.           Compliance with Applicable Laws; Program Compliance
Manual.  Company shall comply with Applicable Laws,
the Bank Secrecy Act Policy and the Program Compliance Manual in its
performance of this Agreement, including Loan Account solicitation, Application
processing and

 

16

 

preparation of
Loan Account Agreements and other Loan Account documents.  Except as required by Applicable Laws,
Company may not amend or otherwise modify the Program Compliance Manual without
the prior written consent of Bank, which consent shall not be unreasonable
withheld or delayed.  A copy of the
Program Compliance Manual is attached hereto as Exhibit G. 
Without limiting the foregoing, Company shall:

 

(a)           apply to all Applicants customer identification
procedures that comply with Section 326 of the USA PATRIOT Act of 2001 (“Patriot
Act”) and the implementing regulations applicable to Bank (31 C.F.R. §
103.121);

 

(b)           retain for five (5) years
after a Loan Account is purchased from Bank, and deliver to Bank upon request: (i) the
Applicant’s name, address, social security number, and date of birth obtained
pursuant to such customer identification procedures; (ii) a description of
the methods and the results of any measures undertaken to verify the identity of
the Applicant; and (iii) a description of the resolution of any
substantive discrepancy discovered when verifying the identifying information
obtained;

 

(c)           screen all Applicants
against the Office of Foreign Assets Control list of Specially Designated Nationals
and Blocked Persons, and reject any Applicant whose name appears on such list
and notify Bank thereof;

 

(d)           monitor, identify and report to Bank any suspicious
activity that meets the thresholds for submitting a Suspicious Activity Report
under the Bank Secrecy Act and the implementing regulations applicable to Bank
(31 C.F.R. § 103.18);

 

(e)           implement an anti-money
laundering program to assist Bank in its compliance with Section 352 of
the Patriot Act and the implementing regulations applicable to Bank (31 C.F.R.
§ 103.120);

 

(f)            in addition to the
information retained pursuant to subsection (b) above, retain the account
number identifying a Borrower’s Loan Account for at least one (1) year
after purchasing the Borrower’s Loan Account from Bank;

 

(g)           upon receipt of a government
information request forwarded by Bank to Company, (i) compare the names,
addresses, and social security numbers on such government list provided by Bank
with the names, addresses, and social security numbers of Borrowers for all
Loan Accounts purchased from Bank within the prior twelve (12) months, and (ii) within
one (1) week of receipt of such an information request, deliver to Bank a
certification of completion of such a records search, which shall indicate
whether Company located a name, address, or social security number match and,
if so, provide for any such match: the name of the Borrower, the account number
identifying the Borrower’s Loan Account, and the Borrower’s social security
number, date of birth, address, or other similar identifying information
provided by the Borrower, to assist Bank in its compliance with Section 314(a) of
the Patriot Act and the implementing regulations applicable to Bank (31 C.F.R.
§ 103.100); and

 

(h)           provide to Bank electronic copies of the information
retained pursuant to subsections (b) and (g) above as mutually agreed
to by the Parties, immediately

 

17

 

upon request.

 

Company will also provide to
Bank an annual certification letter that it is complying with its obligations
under this section.  Bank will comply
with any reporting requirements of the Utah Department of Financial
Institutions or the FDIC applicable to Bank’s performance of this Agreement.

 

31.           Prohibition on Tie-In Fees.  Company shall not directly or indirectly
impose or collect any fees, charges or remuneration relating to the processing
or approval of an Application, the establishment of a Loan Account, or the
disbursement of Loan Proceeds, unless such fee, charge or remuneration is set
forth in the Consumer Finance Materials or approved by Bank.

 

32.           Notice
of Consumer Complaints.  Each Party
shall notify the other Party if it receives any consumer complaint or if it
becomes aware of any investigations or proceedings by any governmental
authority relating to any aspect of the Program within five (5) days of receipt
of such complaint or upon becoming aware of such investigation or proceeding,
and each Party shall provide the other Party with all related documentation
thereof, subject to any legal prohibitions on disclosure of such investigation
or proceeding.

 

33.           Headings.  Captions and headings in this Agreement are
for convenience only, and are not to be deemed part of this Agreement.

 

34.           Privacy Law Compliance.  Subject to Applicable Laws, Bank and Company
shall comply with the privacy policy agreed upon by both Parties with respect
to Applicants and Borrowers.

 

35.           Manner of Payments.  Unless the manner of payment is expressly
provided herein, all payments under this Agreement shall be made by ACH
transfer to the bank accounts designated by the respective Parties.  Notwithstanding anything to the contrary
contained herein, neither Party shall fail to make any payment required of it under
this Agreement as a result of a breach or alleged breach by the other Party of
any of its obligations under this Agreement or any other agreement, provided
that the making of any payment hereunder shall not constitute a waiver by the
Party making the payment of any rights it may have under the Program Documents
or by law.

 

36.           Referrals.  Neither Party has agreed to pay any fee or
commission to any agent, broker, finder, or other person for or on account of
such person’s services rendered in connection with this Agreement that would
give rise to any valid claim against the other Party for any commission, finder’s
fee or like payment.

 

37.           Audited Financial Statements.  Within ninety (90) days following the end of
Company’s fiscal year, Company shall deliver to Bank a copy of Company’s
audited financial statements, prepared by an independent certified public
accountant in accordance with generally accepted accounting principles.

 

18

 

IN
WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their
duly authorized officers as of the date first written above.

 

WEBBANK

 

	
  By:

  	
  /s/
  Gerry J. Smith

  	
   

  
	
  Name:

  	
  Gerry
  J. Smith

  	
   

  
	
  Title:

  	
  President
  and CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PROSPER
  MARKETPLACE, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Kirk Inglis

  	
   

  
	
  Name:

  	
  Kirk
  Inglis

  	
   

  
	
  Title:

  	
  Chief
  Financial Officer

  	
   

  

 

19

 

Schedule 1

 

Definitions

 

(a)                                  “ACH” means the
Automated Clearinghouse.

 

(b)                                 “Affiliate”
means, with respect to a Party, a Person who directly or indirectly controls,
is controlled by or is under common control with the Party.  For the purpose of this definition, the term “control”
(including with correlative meanings, the terms controlling, controlled by and
under common control with) means the 
power to direct the management or policies of such Person, directly or
indirectly, through the ownership of twenty-five percent (25%) or more of a
class of voting securities of such Person.

 

(c)                                  “Applicable
Laws” means all federal, state and local laws, statutes,  regulations
and orders applicable to a Party or relating to or affecting any aspect of the
Program including, without limitation, the Loan Accounts, the Program
promotional and marketing materials and the Consumer Finance Materials, and all
requirements of any Regulatory Authority having jurisdiction over a Party, as
any such laws, statutes, regulations, orders and requirements may be amended
and in effect from time to time during the term of this Agreement.

 

(d)                                 “Applicant”
means an individual who is a consumer who requests a Loan Account from Bank by
posting a listing on the Program Website.

 

(e)                                  “Application”
means any request from an Applicant for a Loan Account in the form required by
Bank including such requests received through the Program Website.

 

(f)                                    “Bank”
shall have the meaning set forth in the introductory paragraph of this
Agreement.

 

(g)                                 “Bank Indemnified
Parties” shall have the meaning set forth in subsection 9(b).

 

(h)                                 “Borrower”
means an Applicant or other Person for whom Bank has established a Loan Account
and/or who is liable, jointly or severally, for amounts owing with respect to a
Loan Account.

 

(i)                                     “Business
Day” means any day, other than (i) a Saturday or Sunday, or (ii) a
day on which banking institutions in the State of Utah are authorized or
obligated by law or executive order to be closed.

 

(j)                                     “Claim
Notice” shall have the meaning set forth in subsection 9(e).

 

(k)                                  “Company
Indemnified Parties” shall have the meaning set forth in subsection 9(a).

 

(l)                                     “Confidential
Information” means the terms and conditions of this Agreement, and any
proprietary information or non-public information of a Party, including a Party’s
proprietary marketing plans and objectives, that is furnished to the other
Party in connection with this Agreement.

 

(m)                               “Consumer
Finance Materials” shall have the meaning set forth in Section 4.

 

 

(n)                                 “Credit
Policy” means the minimum requirements of income, residency, employment
history, credit history, and/or other such considerations that Bank uses to
approve or deny an Application and to establish a Loan Account.

 

(o)                                 “Disbursement
Account” means an account established and owned by Company and held at the
Disbursement Institution against which wire transfers and ACH transfers are
settled for payment of Loan Proceeds to Borrowers.

 

(p)                                 “Disbursement
Institution” means the depository institution at which the Disbursement
Account is established, which initially shall be Wells Fargo Bank, N.A. and may
be changed upon mutual agreement of the Parties.

 

(q)                                 “Disclosing
Party” shall have the meaning set forth in subsection 11(b)(2).

 

(r)                                    “Effective
Date” shall have the meaning set forth in the introductory paragraph of
this Agreement.

 

(s)                                  “Force
Majeure Event” shall have the meaning set forth in Section 27.

 

(t)                                    “Funding
Account” means an account established and owned by Bank and held at the
Funding Institution against which wire transfers or ACH transfers are settled
for the payment of Loan Proceeds and Origination Fees to Company.

 

(u)                                 “Funding
Amount” means the aggregate amount, as listed on a Funding Statement, of
all Loan Proceeds to be disbursed by Bank to Borrowers through Company’s
Disbursement Account on each Funding Date and the related Origination Fees.

 

(v)                                 “Funding
Date” means the Business Day on which any pending Applications are
approved.

 

(w)                               “Funding
Institution” means the depository institution at which the Funding Account
is established, which initially shall be Zions First National Bank and may be
changed upon mutual agreement of the Parties.

 

(x)                                   “Funding
Statement” means the statement prepared by Company on a Business Day that
contains (i) a list of all Applicants who meet the eligibility criteria
set forth in the Credit Policy, for whom Bank is requested to establish Loan
Accounts; and (ii) the computation of the Funding Amount and all
information necessary for the transfer of Loan Proceeds and Origination Fees
from the Funding Account to the Disbursement Account and distribution by
Company of the Loan Proceeds to the accounts designated by the corresponding
Borrowers, including depository institution names, routing numbers and account
numbers; and (iii) such other information as shall be reasonably requested
by Bank and mutually agreed to by the Parties.

 

(y)                                 “Indemnifiable
Claim” shall have the meaning set forth in subsection 9(d).

 

(z)                                   “Insolvent”
means the failure to pay debts in the ordinary course of business, the
inability to pay its debts as they come due or the condition whereby the sum of
an entity’s debts is greater than the sum of its assets.

 

2

 

(aa)                            “Licensee”
shall have the meaning set forth in Section 12.

 

(bb)                          “Licensing
Party” shall have the meaning set forth in Section 12.

 

(cc)                            “Loan
Account” means a consumer installment loan account established by Bank
pursuant to the Program.

 

(dd)                          “Loan
Account Agreement” means the document containing the terms and conditions
of a Loan Account including all disclosures required by Applicable Laws.

 

(ee)                            “Loan Sale
Agreement” means that Loan Sale Agreement, dated as of April 14, 2008,
between Bank and Company, pursuant to which Bank agrees to sell to Company, and
Company agrees to purchase from Bank, the Loan Accounts.

 

(ff)                                “Loan
Proceeds” means the funds disbursed to a Borrower pursuant to a Loan
Account established by Bank under the Program.

 

(gg)                          “Losses”
shall have the meaning set forth in subsection 9(a).

 

(hh)                          “Marks”
shall have the meaning set forth in subsection 12(a).

 

(ii)                                  “Origination
Fee” means the up-front fee a Borrower pays to Bank under the Loan Account
Agreement for origination of a Loan Account in the form of a pre-paid finance
charge.

 

(jj)                                  “Party”
means either Company or Bank and “Parties” means Company and Bank.

 

(kk)                            “Person”
means any legal person, including any individual, corporation, limited
liability company, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, governmental entity, or other
entity of similar nature.

 

(ll)                                  “Program”
means the installment loan program pursuant to which Bank shall establish Loan
Accounts and disburse Loan Proceeds to Borrowers pursuant to the terms of this
Agreement, initially as described in Exhibit A
attached hereto.

 

(mm)                      “Program
Compliance Manual” means the policies and procedures for the implementation
of the Program by Company, including the policies and procedures regarding the (i) solicitation
and receipt of Applications, (ii) underwriting of Loan Accounts, (iii) processing
of Applications, (iv) requirements of the USA PATRIOT Act Customer
Identification Program, and (iv) initial and periodic Office of Foreign
Assets Control screenings.

 

(nn)                          “Program Documents”
means this Agreement and the Loan Sale Agreement.

 

(oo)                          “Program
Website” means the website located at www.prosper.com, together with any
other website on which the Program is offered to public, which shall be hosted
and maintained by Company.

 

(pp)                          “Proprietary
Material” shall have the meaning set forth in subsection 12(a).

 

3

 

(qq)                          “Regulatory
Authority” means any federal, state or local regulatory agency or other
governmental agency or authority having jurisdiction over a Party and, in the
case of Bank, shall include, but not be limited to, the Utah Department of
Financial Institutions and the Federal Deposit Insurance Corporation.

 

(rr)                                “Restricted
Party” shall have the meaning set forth in subsection 11(a).

 

4

 

Exhibit A

 

The Program Website

(screen shots of each page of the
Program Website)

 

[**]

 

** Confidential Treatment Requested

 

 

Exhibit B

 

Credit Policy

 

[**]

 

** Confidential Treatment Requested

 

 

Exhibit C

 

Form of Application

 

[**]

 

** Confidential Treatment Requested

 

 

Exhibit D

 

Loan Account Documentation

 

[**]

 

** Confidential Treatment Requested

 

 

Exhibit E

 

Sample Funding Statement

 

[**]

 

** Confidential Treatment Requested

 

 

Exhibit F

 

Insurance Requirements

 

[**]

 

** Confidential Treatment Requested

 

 

Exhibit G

 

Program Compliance Manual

 

[**]

 

** Confidential Treatment Requested

 

 

Exhibit H

 

Third-Party
Service Contractors

 

[**]

** Confidential Treatment Requested

 

 

Exhibit I

 

Bank
Secrecy Act Policy

 

[**]

 

** Confidential Treatment Requested

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