S-1

As filed with the Securities and Exchange Commission on October 30, 2007

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

PROSPER MARKETPLACE, INC.

(Exact name of registrant as specified in its charter)

Delaware	6199	73-1733867
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

111 Sutter Street, 22nd Floor

San Francisco, CA  94104

(415) 593-5400

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Edward A. Giedgowd, Esq.

Chief Compliance Officer and General Counsel

111 Sutter Street, 22nd Floor

San Francisco, CA  94104

(415) 593-5400

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Rodney R. Peck, Esq.

Patricia F. Young, Esq.

Pillsbury Winthrop Shaw Pittman LLP

P.O. Box 7880

San Francisco, CA 94120

(415) 983-1000

Approximate date of commencement of proposed sale to the public:    From time to time after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

CALCULATION OF REGISTRATION FEE

Title of each class of  securities to be registered	Amount to be registered	Proposed maximum offering price per unit	Proposed maximum aggregate offering price (2)	Amount of registration fee
Prosper Marketplace Lender Participant Rights and Borrower Non-Recourse Notes (1)	–	–	$500,000,000	$15,350

(1)   The Securities registered hereby consist of the Prosper Marketplace Lender Participant Rights and Borrower Non-Recourse Notes. Prosper Marketplace Lender Participant Rights (the “Lender Participant Rights”) consist of the obligations of Prosper Marketplace, Inc. (the “Registrant”) to seek to establish and maintain a secondary trading market online auction platform, and to provide administrative, clerical, recordkeeping, identity verification, payment processing, collection and other services, with respect to the Prosper Marketplace Borrower Non-Recourse Notes (the “Notes”) pursuant to that certain Lender Registration Agreement between the Registrant and the holders of the Notes from time to time, as more fully described in the prospectus included within this registration statement. The Notes represent the credit obligations of individual obligors. The Registrant is not obligated to pay principal of or interest or other charges on the Notes. Each Note may have a separate obligor, term, principal amount and applicable interest rate.

(2)   Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933.

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed.  We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective.  This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED OCTOBER 30, 2007

Prosper Marketplace Lender Participant Rights

$500,000,000 Prosper Marketplace Borrower Non-Recourse Notes

Prosper Marketplace, Inc., or Prosper, provides a person-to-person online credit auction platform, or the Platform, that facilitates loans to borrowers with interest rates set through auction-style competitive bidding among individuals or institutions willing to commit their funds to loans.

Prosper Marketplace Lender Participant Rights, or the Lender Participant Rights, represent the obligations of Prosper to seek to establish and maintain a secondary trading market online auction platform, and to provide various administrative, clerical, recordkeeping, identity verification, payment processing, collection and other services, with respect to the Prosper Marketplace Borrower Non-Recourse Notes, or the Notes.

The Notes are promissory notes representing three-to-five-year, unsecured, fully-amortizing credit obligations of individual borrowers. If and when a borrower listing placed on the Platform is matched with a bid in, or multiple bids totaling, the amount of a requested borrower loan, Prosper makes the loan to the borrower and evidences the borrower’s obligation by separate Notes in the amount of each individual winning bid. Each Note is thereafter sold and assigned by Prosper to each respective winning bidder (referred to on the Platform as a “lender”) without recourse to Prosper. Payments on the Notes are made by electronic transfer directly from, or electronic drafts drawn on, each borrower’s designated bank account into a servicing account maintained by Prosper at a commercial bank primarily for the benefit of the lender or lenders. The Notes are only available through the Platform.

Prior to the date of this prospectus, there has been no trading market for the Notes. As soon as practicable after the offering of the Notes covered by this prospectus commences, Prosper intends to establish a secondary trading market online auction platform, or the Resale Platform, on which the Notes may be resold after three months following the date that they are acquired from Prosper by the winning bidders.

The Notes represent credit obligations of individual borrowers. Prosper has no obligation for payment of principal of or interest or other charges on the Notes.

The Lender Participant Rights are associated with the $500,000,000 in aggregate principal amount of Notes to which this prospectus relates. This amount represents the aggregate principal amount of Notes that Prosper expects will be originated on the Platform during the one-year period beginning on the date of this prospectus together with the principal amount of Notes that have been originated on the Platform prior to the date of this prospectus.

The Notes are not the obligations of Prosper, any depository bank or any collection agency. The Notes are not guaranteed or issued by any governmental agency. The Notes represent unsecured credit obligations of individual borrowers. Investing in the Notes involves significant risks. See “Risk Factors” on page 15.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is                  , 2007.

TABLE OF CONTENTS

PROSPECTUS SUMMARY	1
Overview	1
Platform Participants	2
Depository	2
Collection Agencies	2
Credit Scoring and Identity Verification	3
The Securities	3
The Notes	3
The Lender Participant Rights	7
Resale of the Notes – The Resale Platform	7
Amendment of Fees	7
Material Tax Consequences of Note Ownership and Sale	7
Corporate Information	8
QUESTIONS AND ANSWERS	9
RISK FACTORS	15
Risks Related to Borrower Default	15
Risks Inherent in Investing in the Notes	19
Risks Related to Our Ability to Service the Notes	20
PROSPER MARKETPLACE, INC.	23
General	23
Management	23
Competition	24
OPERATION OF THE PLATFORM	26
Overview	26
Platform Participants	26
Registration on the Platform	27
Posting Listings	28
Bidding on Listings	29
Verification of Participant Information	29
Auction Process and Loan Funding	30
Depository	31
Servicing	31
Resale of the Notes	31
DESCRIPTION OF THE SECURITIES	35
General	35
The Notes	35
Borrower Finance Charges and Fees	37
Borrower Credit Quality	37
Borrower Default and Collection	38
Borrower Bankruptcy	39
The Lender Participant Rights	40
The Resale Platform	41
Amendment of Lender Registration Agreement	41
Regulatory Matters – Licensing and Consumer Protection Laws	41
Material Agreements – Platform Participants	43
Material Agreements – The Notes	45
Repurchase of the Notes by Prosper	47
SELECTED HISTORICAL LOAN PERFORMANCE DATA	48
U.S. FEDERAL INCOME TAX CONSEQUENCES	49
General	49
Internal Revenue Service Circular 230 Disclosure	49
Tax Characterization of the Notes	49
Stated Interest	49
Disposition of the Notes	49
Market Discount	50
Bond Premium	50
Information Reporting and Backup Withholding	50
LEGAL MATTERS	51
REPORTS AND ADDITIONAL INFORMATION	51

You should rely only on the information contained in this prospectus or to which we have referred you. We have not authorized anyone to provide you with information that is different. This prospectus may only be used where it is legal to offer these securities. The information in this prospectus may only be accurate on the date of this document.

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PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information you should consider before making an investment decision. To understand the terms of the Lender Participant Rights and the Notes (collectively referred to in this prospectus as the “Securities”), you should carefully read the entire prospectus. Investing in the Securities involves significant risks. Please carefully read all of the risks set forth under the heading “Risk Factors” beginning on page 15 before making an investment decision. References in this prospectus to “Prosper,” “we,” “us” and “our” refer to Prosper Marketplace, Inc.

Overview

Prosper Marketplace, Inc., or Prosper, provides a person-to-person online credit auction platform connecting individuals who wish to borrow money, or “Borrowers,” with individuals or institutions who wish to commit to purchase loans extended to Borrowers, referred to on the Platform as “Lenders.” Although the Platform uses the term “Lenders,” individuals or institutions who register as Lenders on the Platform do not lend money directly to Borrowers, but instead make purchase commitments and purchase Notes from Prosper representing a loan originally made by Prosper to a Borrower.

The Platform enables prospective Borrowers (who must be natural persons) to request personal, unsecured loans by posting anonymous “listings” on the Platform indicating the maximum interest rate the Borrower is willing to pay and the term of the desired loan. Prospective Borrowers are assigned a “credit grade” by Prosper based on the Borrower’s credit score that Prosper obtains from a credit reporting agency. Borrowers’ credit grades, debt-to-income ratios and other credit data are displayed with their listings and are available for viewing by Lenders on an anonymous basis.

Lenders access the Platform and “bid” the amount they are willing to commit to the purchase of a loan to the Borrower, the minimum interest rate they are willing to receive, and the credit and group characteristics of the Borrowers they are willing to finance. By making a bid on a Borrower’s listing, a Lender is committing to purchase from Prosper a Note in the principal amount of the Lender’s bid, representing a loan made by Prosper to the Borrower, should the listing receive bids totaling the Borrower’s requested loan amount. If a listing is matched with a Lender bid in, or Lender bids totaling, the amount of the requested loan and certain Borrower information can be verified by Prosper, the Borrower receives a three-to-five-year, unsecured, fully-amortizing loan, or a “Loan,” from Prosper, made by Prosper from its own funds.

Depending on the number of bids totaling the amount of the Loan, a Loan may be represented by one or more Notes each of which is sold to a Lender. Prosper currently receives a transaction fee of 1% or 2% of the amount of the Loan (depending on the Borrower’s credit grade), subject to a minimum fee of $25, payable from the Borrower’s Loan proceeds at the time of funding of the Loan. Borrowers may prepay their Loans at any time without penalty. Prosper also receives servicing fees at an annual rate of 1.0% of the outstanding principal balance of the Notes, which it deducts from each Lender’s share of Loan payments by the Borrower (except that no servicing fees are currently charged with respect to Loans made to Borrowers with a credit grade of AA).

The Platform also enables the formation of small community groups and allows individuals to participate on the Platform as a member of such a group. Groups can be any formal or informal collection of people with common interests, whether based on social, cultural, ethnic, professional, educational, geographical, athletic, religious or other affiliation. Lenders may bid on listings of Borrowers who belong to a group, or on listings of Borrowers who are not in a group. Lenders on the Platform have sole discretion over what groups and group members to which to direct their bids. Prosper plays no role in the decision-making process of any Lender.

The Platform operates as a “double-blind” system and neither the Lenders nor a Borrower are shown the identity of the other. The identities of Borrowers, Lenders and other Platform participants are known only to Prosper, unless an individual chooses to reveal his or her identity to another Platform participant. Lenders and Borrowers adopt “screen names” for the purposes of differentiating one another and communication on the Platform. The Lender Registration Agreement prohibits Lenders from directly contacting a Borrower without the Borrower’s consent.

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As soon as practicable after the date of this prospectus, Prosper intends to establish a secondary trading market online auction platform, or the “Resale Platform,” on which the Notes may be resold to other Lenders after three months following the date that the initial Lender acquired the Note from Prosper. After purchasing a Note on the Resale Platform, the Lender who purchased the Note will be permitted to resell such Note to another Lender on the Resale Platform at any time. Prior to the date of this prospectus, the Notes have been non-transferable except by assignment to a collection agency upon default. After the date of this prospectus, except for sales of Notes on the Resale Platform, the Notes will continue to be non-transferable except by assignment to a collection agency upon default.

Platform Participants

Prosper.   Prosper is a direct lender that operates an online credit auction platform for the registration of Borrowers, Lenders and group leaders, the receipt, display and matching of listings for Loans and bids for Notes and the servicing and collection of principal of and interest and other charges on the Notes, among other services.

Borrowers.   Borrowers are individuals (i.e., natural persons) who wish to obtain a Loan. Borrowers must be U.S. residents and must reside in a state where Prosper is licensed as a direct lender or otherwise authorized or permitted to make Loans. Borrowers may elect to participate on the Platform as part of a group; however, Borrowers do not need to have a group affiliation to post listings for Loans on the Platform.

Lenders.   Lenders are individuals or corporations, partnerships, limited liability companies or other entities (referred to in this prospectus as “institutions”) who commit their funds to Borrowers’ listings by bidding in amounts above a certain minimum amount, which is currently set at $50. A Lender who is among the winning bidders on a listing at the end of the auction period will purchase and take assignment of a Note, executed by the Borrower and initially made payable to Prosper, in the amount of his or her bid at the interest rate established by the Platform’s auction format. Although we refer to such holders of the Notes as “Lenders,” all of the Loans are made by Prosper to the Borrower from Prosper’s own funds and then the Notes representing each such Loan are sold and assigned by Prosper to the Lender or Lenders who were the winning bidders for the Loan. The term “Lender” is used for the sake of simplicity.

Group Leaders.   Group leaders are individuals who serve as the head of a group. With respect to Loans originated prior to September 2007, group leaders could receive compensation from Prosper for bringing Borrowers to the Platform, with the amount of compensation based on the payment performance of the group’s members. Group leaders will continue to receive compensation related to Loans that resulted from their members’ listings posted before September 13, 2007 (the date as of which Prosper discontinued the payment of compensation to group leaders for Loans originated on or after this date). Groups are rated by the collective Loan repayment performance of their members, and each group’s rating is displayed on the Platform, enabling Borrowers to join a group and use the group’s reputation in order to attract Lender bids. In order to participate on the Platform as a group leader, an individual must be registered as a Lender or as a Borrower.

Depository

When preparing to post a bid, a Lender transfers funds electronically, in an amount at least sufficient to cover the bid, into a funding account maintained by Prosper at an FDIC-insured depository institution, for the benefit of Lenders. Borrower payments are also deposited into this account after initially being deposited into a master servicing account. Amounts in the funding account are insured by the Federal Deposit Insurance Corporation, or FDIC, for the benefit of individual Lenders on a pass-through basis (i.e., up to $100,000 per individual). Lenders do not presently accrue interest on amounts in this account, or in any Platform account. Prosper maintains records of Loan distributions, repayments, delinquencies and defaults. Lenders may withdraw amounts from the funding account at any time. No funds in the funding account are ever commingled with Prosper’s own funds. Once a Loan has been funded by Prosper and Loan proceeds have been disbursed to the Borrower, and the Note or Notes have been sold to a Lender or Lenders, the servicing of the Loans is accomplished by Prosper through a master servicing account at an FDIC-insured depository institution.

Collection Agencies

If a Borrower becomes delinquent on his or her obligations on a Note, Prosper uses a collection agency to attempt to recover unpaid balances. On delinquent Loans to a given Borrower with multiple Lenders, Prosper will use the

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selected collection agency common to the Lender or Lenders who have the greatest ownership interest in the Loan to that Borrower. In the event of a tie among the Lenders as to their choice of collection agency, the agency will be selected at random by Prosper. All of the Lenders on the delinquent Loan will pay that agency’s fees out of any amounts collected. The collection agency’s fees are a pre-negotiated percentage of any amounts collected by the agency, and the collection agency’s fee is deducted from delinquent payments collected by the agency. Collection fees start at 15% of the amount recovered, and decrease as the delinquency persists. Additionally, these fees are subject to a 5% increase if the collection agency recovers the entire delinquent amount. If no amount is collected, Lenders do not pay collection fees.

As of the date of this prospectus, Prosper has contracted with Penncro Associates, Inc. and Firstsource LLC to provide collection services. Penncro is a diversified outsource provider in the accounts receivable industry, headquartered in Southampton, Pennsylvania. Firstsource is a global provider of collections and outsourcing solutions, headquartered in Mumbai, India, with U.S.-based collection agents trained to handle calls for early and late stage collections.

Credit Scoring and Identity Verification

Prosper assigns one of seven letter credit grades (AA, A, B, C, D, E and HR (High Risk)), based on the Borrower’s credit score, to each registered Borrower who posts a listing. Prosper currently uses Experian Scorex PLUS^SM credit scores, but may from time to time change the type or source of the credit scores it uses to determine credit grades. Experian is one of the three leading credit reporting agencies in the United States. The Experian Scorex PLUS^SM model is proprietary to Experian and is built for predicting risk on new accounts for all types of traditional consumer credit products. Experian’s databases hold information about the credit status of more than 300 million consumers and about 30 million businesses around the world. Experian collects this information from publicly available sources and from lending organizations. A credit score is a number that attempts to forecast the likelihood of a prospective borrower’s performance of its obligations with respect to extensions of credit. Scoring algorithms analyze historical data, such as a prospective borrower’s past credit history and payment records, and assign a numerical score to the prospective borrower. A higher number is indicative of greater likelihood that the prospective borrower will pay his or her credit obligations.

A Borrower’s credit grade, debt-to-income ratio and other credit data are displayed with a Borrower’s Loan listing on the Platform and are available for viewing by Lenders. When a Borrower initiates the process of posting a listing for a Loan on the Platform, Prosper checks to see if it already has a credit grade on file for that person and associates that credit grade with the listing. If Prosper does not have a credit grade for such Borrower on file which is sufficiently recent (currently less than 30 days old), Prosper will initiate an inquiry to retrieve a credit score for the Borrower and then assign the corresponding credit grade.

When a Borrower registers on the Platform, Prosper obtains his or her Social Security number, state driver’s license number and bank account information to verify the Borrower’s identity against data from credit reporting agencies and other identity and anti-fraud verification databases.

The Securities

The Securities to which this prospectus relates include the Lender Participant Rights, which are associated with the Notes, and the Notes. The Lender Participant Rights represent the obligations of Prosper to seek to establish and maintain the Resale Platform, and to provide various administrative, clerical, recordkeeping, identity verification, payment processing, collection and other services, with respect to the Notes, as described in this prospectus and as set forth in each Lender Registration Agreement. The Notes are promissory notes representing three-to-five-year, unsecured, fully-amortizing credit obligations of individual Borrowers. Prosper has no obligation for payment of principal of or interest or other charges on the Notes.

The Notes

General

The Notes represent unsecured fully-amortizing credit obligations of individual Borrowers. Each Note has a term of three-to-five years and may be prepaid by the Borrower at any time without penalty. Loans are currently available in amounts ranging from $1,000 to $25,000. Interest rates, terms and

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principal amounts vary among the Notes, but each of the Notes representing a single Loan to an individual Borrower have the same interest rate and term. The interest rate is determined in an auction format where prospective Borrowers post listings requesting Loans and indicate the principal amount they wish to obtain and the maximum interest rate they are willing to pay and the term of the desired Loan. Lenders can browse online on the Platform among available listings and competitively bid on the listings, with the Borrower getting the benefit of a potentially lower interest rate as a result of the bidding. Currently, Lenders may bid as little as $50 toward listings, and indicate the minimum interest rate they are willing to receive. By making a bid on a listing, a Lender is committing to purchase from Prosper a Note in the principal amount of the Lender’s bid, representing a Loan made by Prosper to a Borrower, should the listing receive bids totaling the Borrower’s requested Loan amount.

When a Borrower listing is matched with a Lender bid in, or Lender bids totaling, the amount of the requested Loan, the Borrower receives a three-to-five-year, unsecured, fully-amortizing Loan from Prosper. Each Loan is evidenced by separate Notes made payable to Prosper in the amount of each Lender’s winning bid, and each Note is sold and assigned by Prosper to each respective Lender without recourse to Prosper.

No Recourse to Prosper

The Notes represent unsecured credit obligations of individual Borrowers, without any right of recourse to Prosper. None of Prosper, any depository institution or any collection agency has any obligation for payment of principal of or interest or other charges on the Notes. The Notes are not guaranteed or issued by any governmental agency or any other third party.

Prosper is not obligated to repurchase any Note except in limited circumstances, such as material default under a Note resulting from verifiable theft of a Borrower’s identity, or in the event a Loan at origination fails to comply in material respects with applicable federal and state law. Additionally, the Lender Registration Agreement provides that, in the event of a material breach of Prosper’s representations and warranties regarding any Loan, Prosper must either cure the defect, repurchase the Note, or indemnify and hold the Lender harmless against losses resulting from the defect in the Note. If Prosper repurchases a Note in such circumstances, the outstanding principal balance will be returned to the Lender.

Interest Rates on the Notes

Interest rates vary among the Notes, but each of the Notes representing a single Loan to an individual Borrower has the same interest rate. Interest rates are determined in an auction format where prospective Borrowers indicate the maximum interest rate they are willing to pay and Lenders bid the minimum interest rate they are willing to receive. The interest rate for all Notes with respect to a Loan to a given Borrower is determined at the end of a listing period (typically between three and ten days). If a Borrower listing receives a Lender bid in, or Lender bids totaling, the amount of a requested Loan, the interest rate is fixed for the term of the Notes at the minimum interest rate acceptable to all Lenders who are the winning bidders for the Loan. Borrowers may elect to forego the potential benefits of auction bidding and designate their listing for “automatic funding,” in which case the bidding period will end automatically as soon as the listing receives bids totaling the amount of the requested Loan, and the interest rate will be fixed at the Borrower’s designated maximum interest rate.

Interest on the Notes accrues daily, on the basis of a 365-day year, based on the then current outstanding principal amount of the Loan. Interest rates may be limited by state consumer lending laws, some of which specify maximum interest rates at which money can be loaned to borrowers in that state. State interest rate limitations on the Platform are determined by reference to the laws of the Borrower’s state of residence or, in some instances, the rate limitations applicable in California.

Payments

Each Borrower is required to make monthly payments of principal of and interest on the Notes representing his or her Loan for the term of the Notes, unless he or she decides to prepay the Loan.

The Notes are payable in equal monthly installments throughout the term of the Note, consisting of principal and interest, with the final payment consisting of the then remaining principal, unpaid accrued interest and any other

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accrued but unpaid charges due on the Note. Although the monthly payment will stay constant for the term of each Note, the monthly principal and interest breakdown vary from month-to-month, with the principal portion of each payment increasing and the interest portion of each payment decreasing over the term of the Note. Because interest accrues on a simple interest basis, if payments are made before or after the scheduled payment due date, the final monthly payment amount may be less than or greater than the regular monthly payment amount, and early payments and prepayments may reduce the number of remaining payments on the Note.

Borrowers can choose one of two payment methods:

•Electronic funds transfer: Under this method, monthly payments are made electronically on the Automated Clearing House (ACH) banking network by preauthorized withdrawals from the Borrower’s designated payment account.

•Bank draft: Borrowers who choose the bank draft method of payment authorize Prosper to write a check on a monthly basis on their behalf to cover their payment each month.

The interest rates shown on listing pages on the Platform assume that a Borrower will choose the ACH method of transfer, and reflect a 1.0% reduction in the interest rate as an incentive to select this method of payment because payments made by ACH transfer are less costly for Prosper to administer. Borrowers who choose not to make payments by ACH transfer will not receive this discount. The amount of the 1.0% discount foregone by Borrowers who do not choose the ACH method of transfer will not be paid to Lenders, but will be retained by Prosper for processing bank draft payments.

As payments are made, they are 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 due to insufficient funds in the Borrower’s payment account (NSF fees), then to interest then due and then to unpaid principal balance. Borrower payments on a Loan are allocated pro rata to Lenders based on the principal amount of each Lender’s Note with respect to the Loan. Prosper’s servicing fee is deducted from monthly payments as they are received.

Borrowers have the option to pay all or part of the outstanding principal balance in advance of the due date, at any time and without any penalty. When a Borrower elects to prepay a Note in full, the principal balance along with interest and any fees accrued to the date on which the payment will be initiated (which may be one or more days in the future) will be added together to determine the amount required to pay off the Loan. If a Borrower makes a partial prepayment, the amount paid in excess of the amount then due is applied to the principal amount outstanding. Monthly payment amounts will not change but the term of the Loan may shorten as interest will only continue to accrue on the principal amount that remains outstanding.

Default and Collection

The Notes provide for late charges in the event monthly payments are not made when due. Late charges are assessed on delinquent payments after expiration of a 15-day grace period. The Notes also provide, to the extent permitted by applicable law, for the Borrower to pay any NSF fees. Any late charges received are paid to the Lender, and any permissible NSF fees are retained by Prosper as a servicing expense.

If a Borrower fails to make a monthly payment when due, Prosper will notify the Borrower of the payment delinquency. For Borrowers whose payments are made by preauthorized ACH transfer, Prosper will make two more attempts to complete the automated debit transfer from the Borrower’s payment account.

Under Prosper’s current policy, if the delinquency is not cured within 30 days after the due date of the delinquent payment, Prosper will assign the account to the collection agency selected by the applicable Lender or Lenders at the time of bidding. Since there is more than one collection agency from which Lenders may choose, on Loans to a given Borrower with multiple Lenders, there may be a conflict between the Lenders’ choice of collection agency. In these instances, Prosper will use the selected collection agency common to the Lender or Lenders who have the greatest ownership interest in the Loan. In the event of a tie among the Lenders as to their choice of a collection agency, the agency will be selected at random by Prosper.

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Upon receipt of the account, the collection agency will attempt to collect the delinquent amount. The collection agency’s percentage fee is a pre-negotiated percentage of any amounts collected by the agency, and the collection agency’s fees are deducted from the Lenders’ share of delinquent payments collected by the agency. Collection fees start at 15% of the amount recovered and decrease as the delinquency persists. Additionally, these fees are subject to a 5% increase if the collection agency recovers the entire delinquent amount. The collection agency deposits the net amounts collected into a master servicing account administered by Prosper primarily for the benefit of Lenders. During any period when a Loan which provides for group leader compensation based on the Borrower’s payment performance is more than 30 days past due, the group leader’s compensation with respect to the Notes representing that Loan is suspended, and the portion of the payment that would otherwise accrue to the group leader is reallocated to Lenders.

Except in the case of Borrower bankruptcy, delinquent Notes referred for collection that become more than 120 days past due are offered for sale to an unaffiliated third party debt purchaser in a debt sale and charged off. The Borrower on a Note that is sold in a debt sale and charged off is not permitted to post any further listings on the Platform. Prosper will also report such default to the credit reporting agencies.

Unsecured Obligations

All Notes issued through the Platform are unsecured credit obligations of individual Borrowers. This means that there is no collateral supporting any extension of a Loan that may be foreclosed upon in the event of default or in lieu of payment. The Notes are not guaranteed by any governmental agency or any other third party. Only the individual Borrower on the Notes has any obligation for payment of principal of or interest or other charges on the Notes. Prosper has no obligation for payment of principal of or interest or other charges on the Notes.

If a Borrower files for protection under the federal bankruptcy laws, or becomes the subject of an involuntary bankruptcy petition (or otherwise becomes subject to a bankruptcy proceeding), we will place the account in bankruptcy status. No further automated debit transfers or bank drafts for payment of monthly Loan payments will be initiated, and any collection activity on the account will cease. If the Borrower has excessive debt and insufficient income, the Borrower’s debts will most likely be discharged and extinguished in the bankruptcy without the Borrower making any further payments on the Note. Notes of Borrowers that are in bankruptcy will not be sold in a debt sale and charged off. Following Prosper’s establishment of the Resale Platform on which Notes may be resold (subject to certain conditions), Notes of Borrowers that are in bankruptcy will not be permitted to be resold on the Resale Platform.

Prosper Fees

For each Loan generated on the Platform, Prosper currently receives a transaction fee at the time of disbursement of Loan proceeds in the amount of either 1% (for Borrowers with credit grades AA through D) or 2% (for Borrowers with credit grades E through HR) of the amount of the Loan, subject to a $25 minimum transaction fee for Loans under $2,500. This amount is paid by the Borrower out of, or contemporaneously with disbursement of, the proceeds of the Loan. At the time a  Loan is funded, the Borrower receives the Loan proceeds, net of the transaction fee. The amount and method of charging the transaction fee is subject to adjustment to the extent required by applicable state law.

For Notes with Borrowers with credit grades A through HR, Prosper currently charges Lenders a servicing fee at an annual rate of 1.0% of the outstanding balance of the Notes. No servicing fees are currently charged for Notes with Borrowers with a credit grade of AA. The servicing fee is deducted from each Lender’s share of a Loan payment by the Borrower. Prosper also retains any returned check fees, failed payment or NSF fees or similar fees, except for late payment charges (which are passed on to Lenders). Prosper does not currently charge Borrowers any fee for posting a listing and does not charge Lenders any fee for making a bid on a Borrower’s listing. Prosper does not charge any registration fees to Borrowers, Lenders or group leaders to participate on the Platform.

If Prosper is able to establish the Resale Platform, Prosper intends to charge all selling Lenders a nonrefundable resale listing fee of $0.25 per Note being listed for auction resale, or $0.50 per Note being listed for resale with an automatic sale feature. Listing fees will be charged and collected at the time the listing is posted on the Resale Platform by deducting the resale listing fee from the selling Lender’s funding account. Prosper also intends to

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charge the selling Lender a resale transaction fee equal to 1.0% of the resale price, subject to a minimum fee of $0.50, which will be deducted from the resale proceeds.

The Lender Participant Rights

Pursuant to the form of the Lender Registration Agreement, as amended as of the date of this prospectus, Prosper undertakes to seek to establish and maintain the Resale Platform and to provide various administrative, clerical, recordkeeping, identity verification, payment processing, collection and other services with respect to the Notes. The Notes are recorded on Prosper’s books and the account and repayment performance are reported by Prosper to the credit reporting agencies, without displaying the identity of the individual Lender or Lenders who own the Notes. Borrowers’ payments are made from each Borrower’s payment account into a master servicing account maintained at an FDIC-insured depository institution and administered by Prosper primarily for the benefit of the individual Lenders. Prosper maintains electronic records of Loan disbursements and payments and provides monthly account statements in electronic format to Borrowers and Lenders. All collections, less Prosper’s servicing fee, are delivered via electronic transfer from a master servicing account to the Lender’s funding account.

Resale of the Notes – The Resale Platform

Prior to the date of this prospectus, the Notes have been non-transferable except by assignment to a collection agency upon default. As soon as practicable after the date of this prospectus, Prosper intends to establish a Resale Platform on which the Notes may be resold to other Lenders after three months following the date that the initial Lender acquired the Note from Prosper. After the three-month holding period, if a Lender desires to resell a Note prior to the end of the Note’s term, the selling Lender may post the Note on the Resale Platform for resale in a similar auction format as a Borrower listing. If another Lender purchases the Note, the Note will be transferred through the Resale Platform to the purchasing Lender. Unlike the origination of Loans and the sale of Notes to Lenders through the Platform, a Note sold through the Resale Platform must be purchased in its entirety by a single Lender. Once a Note has been resold through the Resale Platform to a subsequent Lender, the Note may again be resold through the Resale Platform without any required holding period. Except for sales of Notes on the Resale Platform, the Notes will continue to be non-transferable except by assignment to a collection agency upon default.

Notes outstanding prior to the date of this prospectus will become transferable through the Resale Platform as a result of the amendment to the Lender Registration Agreement, effective as of the date of this prospectus. Previously, the Notes were non-transferable except by assignment to a collection agency upon default.

Amendment of Fees

Prosper reserves the right in its agreements with Platform participants to make prospective changes to the fees collected by Prosper (including the transaction and servicing fees), the information displayed in Borrower listings, the length of the term of Loans and the minimum and maximum allowable Loan amounts available on the Platform, and similar other terms relating to servicing, payment processing, collection and other services provided by Prosper. Fees and other terms described in this prospectus are current as of the date of this prospectus, but are subject to change. Platform participants will be notified of any material changes to such fees or other terms and Lenders will be provided a prospectus supplement to update the information contained in this prospectus.

Material Tax Consequences of Note Ownership and Sale

The Notes should be treated as debt for U.S. federal, state and local income and franchise tax purposes. It is expected that the stated interest on each Note will constitute “qualified stated interest” under applicable Treasury Regulations. If you use the cash method of accounting for U.S. federal income tax purposes, you generally will be taxed on the interest on your Note at the time you receive it. Alternatively, if you use the accrual method of accounting for U.S. federal income tax purposes, you generally will be taxed on the interest on your Note at the time it accrues. In general, you will recognize gain or loss upon the sale, exchange, retirement or other taxable disposition of your Note measured by the difference between: (i) the amount of cash and the fair market value of any property received for the Note, other than the amount attributable to, and taxable as, accrued interest; and (ii) your tax basis in the Note, which generally is your original cost, as increased by market discount, including de minimis

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amounts, that you previously included in income, and decreased by any deductions previously allowed to you for amortizable premium and by any payments reflecting principal that you received with respect to the Note.

You should consult your own tax advisors regarding the tax consequences to you of the purchase, ownership and disposition of the Notes.

Corporate Information

Prosper was incorporated in the State of Delaware in March 2005, and its principal executive offices are located at 111 Sutter Street, 22nd Floor, San Francisco, California 94104. Prosper’s telephone number at that location is (415) 593-5400. Prosper’s website address is www.prosper.com.

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QUESTIONS AND ANSWERS

Q:Who is Prosper?

A:Prosper is a direct lender that operates a person-to-person online credit auction platform for the registration of Borrowers, Lenders and group leaders, the receipt, display and matching of listings for Loans and bids for Notes and the servicing and collection of principal of and interest and other charges payable on the Notes. Prosper is licensed as a direct lender or is otherwise authorized or permitted to make Loans in the states where Borrowers reside, and makes all Loans originated through the Platform.

Q:What is the Platform?

A:The Platform is an online marketplace for credit that facilitates Loans to Borrowers with interest rates set through auction-style competitive bidding among individuals or institutions who wish to commit to purchase Loans extended to Borrowers. The Platform enables Borrowers to request Loans by posting listings indicating the principal amount requested, the maximum interest rate they are willing to pay and the term of the desired Loan. Lenders search for and select these listings based on the Borrower’s credit grade, credit profile, group and other characteristics. Lenders bid on listings by indicating the amount they are willing to commit to the purchase of a Loan to the Borrower and a minimum interest rate they are willing to receive. Although a Lender may bid the entire requested Loan amount and be the sole winning bidder on a listing, Lenders may bid in lower increments, and listings are frequently matched with multiple bids from different Lenders.

When a listing is matched with a Lender bid in, or Lender bids totaling, the amount of the requested Loan, Prosper makes the Loan to the Borrower and evidences the Borrower’s obligation by separate Notes in the amount of each winning bid. Prosper thereafter sells and assigns each Note to the respective Lender without recourse to Prosper. Prosper collects the Borrower’s payments on the Notes and forwards the payments received, minus any applicable fees, to the Lenders who own the Notes.

Q:What is a listing?

A:A listing is a request for a Loan in a specified amount, at an interest rate equal to the maximum interest rate set forth in the listing. A listing is also a commitment by the Borrower to obtain a Loan from Prosper, for purchase by Lenders whose bids are matched with the listing. In addition to the Borrower’s requested Loan amount and maximum interest rate, listings contain the Borrower’s credit grade and debt-to-income ratio, summary information from the Borrower’s credit report, and self-reported occupation, employment status and range of income, and may include photos or the Borrower’s narrative description of why the Loan is being requested. Listings may only be created by individuals registered as Borrowers on the Platform. Listings are displayed publicly on the Platform, although certain information is only viewable by registered Lenders.

Q:What is a bid?

A:A bid by a Lender is the Lender’s commitment to purchase a Note in the principal amount of the Lender’s bid, representing a Loan made by Prosper to the Borrower, should the listing receive an amount of bids totaling the amount of the Borrower’s requested Loan. Lenders “bid” the amount they are willing to commit to the purchase of a Loan to the Borrower, and the minimum interest rate they are willing to receive. Currently, a bid may be between $50 and the full amount of the listing. 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 funding account. Lender bids become “winning” bids if such bids are in the group of bids that total the amount of the requested Loan and are in the lowest interest rate among all bids placed against the listing. All Loans originated through Prosper are made by Prosper from its own funds, and then sold by Prosper to the winning bidder or bidders for the Loan.

Q:What are the Securities?

A:The Securities consist of the Notes and the Lender Participant Rights related to the Notes.

Q:What are the Notes?

A:Notes represent Loans made by Prosper to a Borrower, and are the unsecured credit obligations of the individual Borrowers. Loans to Borrowers are evidenced by as many Notes as there are winning bids for the Loan, with each Note in the amount of the winning bid. All Notes are initially made payable to Prosper, and Prosper then sells and assigns the Notes without recourse to each Lender who was a winning bidder on the listing.

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Q:What are the Lender Participant Rights?

A:Lender Participant Rights represent the obligations of Prosper to seek to establish and maintain the Resale Platform, and to provide various administrative, clerical, recordkeeping, identity verification, payment processing, collection and other services, with respect to the Notes.

Q:Who are the Borrowers?

A:A Borrower may be any person who is a U.S. resident in a state where Prosper is licensed or otherwise authorized or permitted to lend, with a bank account and a Social Security number. After passing Prosper’s anti-fraud and identity verification process, Borrowers can request unsecured Loans at rates which are determined by an auction process. Prosper allows Borrowers to post listings on the Platform regardless of their income. Prosper reserves the right to restrict access to the Platform by setting minimum credit or other guidelines for Borrowers. Currently, a Borrower must have an Experian Scorex PLUS^SM credit score of at least 520 in order to post a listing on the Platform.

Q: How does Prosper verify a Borrower’s identity?

A:  When a Borrower registers on the Platform, Prosper obtains his or her name, address, Social Security number, state driver’s license number and bank account information to verify the Borrower’s identity against data from credit reporting agencies and other identity and anti-fraud verification databases. See “Operation of the Platform – Registration on the Platform” on page 27 and “– Verification of Participant Information” on page 29 for more information.

Q:What are Lenders?

A:Lenders are individuals and institutions that register to bid on listings. Lenders are not lenders in the literal sense, as they do not actually lend their money directly to Borrowers; instead, Lenders make purchase commitments and purchase Notes representing Loans from Prosper to the Borrower. All Notes originated through the Platform are made by Prosper from its own funds, and then sold by Prosper to the Lender or Lenders who were the winning bidder or bidders on the listing that resulted in the Loan. Prosper uses the term “Lender” instead of “loan purchaser” or “note holder” for the sake of brevity and simplicity.

Q:Who can be a Lender and place bids on the Platform?

A:Any person who is a U.S. resident with a bank account and a Social Security number or any institution with a taxpayer identification number can be a Lender and place bids on the Platform. In order to bid on a listing, a Lender must have funds on deposit in a Prosper funding account in at least the amount of the Lender’s bid.

Q:Do Lenders need to be licensed as a consumer lender or finance company?

A:The Platform is designed and structured in a manner such that the activities performed by Lenders on the Platform do not trigger state lending or finance company licensing requirements. States that have lending or finance company licensing laws normally require a lending license for persons who engage in the business of making loans. All Loans originated on the Platform are made by Prosper from Prosper’s own funds, and Prosper is the named lender on all Notes representing Loans. Prosper performs its identity and anti-fraud verification process on all Loans and sets the general credit underwriting parameters for Loans. All Loans are closed, disbursed and serviced by Prosper. Prosper is the originating lender for licensing and regulatory reasons and is licensed or otherwise authorized or permitted to make Loans in all states where Borrowers reside. Persons who register as Lenders do not lend money, but rather make conditional commitments to purchase Notes evidencing Loans made by Prosper when they bid on listings, and purchase Notes when they are a winning bidder at the close of a listing’s auction bidding period. Lenders’ funds are paid to Prosper as consideration for the purchase of Notes and are not disbursed to Borrowers. A few states require licensing for purchasing or making commitments to purchase loans made to state residents; in such states Prosper either does not permit borrowing or limits borrowing to loan types or amounts that are not subject to the licensing requirement. See “Description of the Securities – Regulatory Matters – Licensing and Consumer Protection Laws” on page 41 and “Risk Factors – Risks Inherent in Investing in the Notes” beginning on page 19 for more information.

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Q:What kinds of loans are available on Prosper?

A:Borrowers can request three-to-five-year, closed-end, unsecured, fully-amortizing fixed-rate Loans, with payments due monthly. Borrowers can repay the full amount of the Loan or make partial prepayments of principal at any time; there are no early payment or prepayment penalties associated with the Notes.

Q:What Loan amounts are available on the Platform?

A:Borrowers may currently request Loans in amounts ranging from $1,000 to $25,000, with some variations based on applicable state laws and Prosper’s lending authority in a particular state.

Q:Can Borrowers have more than one Loan outstanding at any one time?

A:Borrowers may have up to two Loans outstanding at any one time, provided that the aggregate outstanding principal balance of both Loans does not exceed the maximum Loan amount for the Borrower’s state of residence. To be eligible to obtain a second Loan, Borrowers must be current on their existing Loan, and must not have been delinquent in making their two most recent monthly Loan payments. Also, Borrowers may not post a listing for a second Loan within six months following the date of origination of their existing Loan.

Q:How are interest rates and payments calculated?

A:The interest rate on a Note is the rate determined by the Platform’s auction system and is fixed at the minimum interest rate acceptable to all Lenders who are the winning bidders for the Loan at the expiration of the auction bidding period. Payments on each Note are due each month, based on a fully-amortized repayment schedule over a three-to-five-year period (depending upon the Note’s term). Each monthly payment on a Note is the same, except that the final payment includes the then remaining principal, unpaid accrued interest, and unpaid late fees and NSF fees due on the Note. See “Description of the Securities – The Notes” beginning on page 35 for more information.

Q:How much money can Lenders bid on the Platform?

A:The Platform currently allows Lenders to bid as little as $50 and as much as the full amount of any particular listing, up to an aggregate amount of $5,000,000 for individuals and $50,000,000 for institutions.

Q:What are credit grades?

A:A credit grade is a letter grade that Prosper assigns to a Borrower based on the Borrower’s credit score, for use solely on the Platform. Prosper obtains the Borrower’s credit score from an independent credit reporting agency and assigns one of seven letter credit grades, corresponding to seven credit score tiers, with more favorable credit grades assigned to the higher scores. A Borrower’s credit grade is displayed with his or her listing and is available for viewing by Lenders who consider bidding on the listing. The numerical credit score is not displayed or disclosed to anyone (including the Borrower). See “Description of the Securities – The Notes – Borrower Credit Quality” beginning on page 37 for more information.

Q:What is a debt-to-income ratio?

A:Part of a Borrower’s credit profile displayed in listings is a debt-to-income ratio (or DTI). DTI is a measurement of the Borrower’s ability to take on additional debt. This number takes into consideration how much debt the Borrower had prior to requesting a Loan in addition to what the Borrower’s debt will be if the requested Loan is made. The DTI is expressed as a percentage and is calculated by dividing the Borrower’s annual income (before taxes) into his or her annual non-housing debt payments. Borrower income is self-reported, and (with limited exceptions) Prosper does not verify any Borrower’s income when calculating DTI for the listings.

Q:Does Prosper verify the information provided by Borrowers in listings?

A:When a Borrower registers on the Platform, Prosper obtains his or her Social Security number, state driver’s license number and bank account information in an effort to verify the Borrower’s identity against data from credit reporting agencies and other identity and anti-fraud verification databases.

In most instances, Prosper does 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 DTI is determined by Prosper 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. Prosper does not verify any statements by Borrowers as to how Loan proceeds are to be used and does not confirm after 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; if the report reflects an active mortgage loan, the Borrower is presumed to be a homeowner. In connection with Prosper’s identity and anti-fraud verification

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of Borrowers, Prosper verifies the Borrower’s bank account to determine that the Borrower is the holder of record of the account.

Prosper reserves the right in the Borrower Registration Agreement to verify at any time all statements and information provided by Borrowers in listings, and Prosper has the right to cancel listings or refuse to make a Loan if material misstatements or inaccuracies are found in a listing or other information provided by a Borrower. In instances where Prosper chooses to verify the income, employment and occupation or other information provided by Borrowers in listings, the verification is normally done at the pre-funding stage, after the listing has already been created and bidding has ended. In such cases, the results of Prosper’s verification would not be reflected in the listings themselves.

Q:Are the Notes secured by any collateral?

A:No. All Notes are unsecured credit obligations of individual Borrowers, which means that there is no guarantee that a Note will be repaid and there is no collateral upon which you may foreclose in the case of a default. Neither Prosper nor any third party has any obligation to pay principal of or interest or other charges on the Notes. Investments in the Notes are not insured in any way. See “Risk Factors – Risks Related to Borrower Default” beginning on page 15 for more information.

Q: How do Lenders receive payments on the Notes?

A:  Each Borrower is required to make monthly payments of principal of and interest on the Notes representing his or her Loan for the term of the Notes, unless he or she decides to prepay the Loan. Borrowers can pay by electronic funds transfer or by bank drafts. Prosper collects all Loan payments, and allocates amounts received, less any fees retained by Prosper, pro rata to the Lenders who own the Notes. See “Description of the Securities – The Notes” beginning on page 35 for more information.

Q:What happens if a Borrower misses a payment or does not repay a Note?

A:Borrowers who miss payments face the same consequences as they would if they missed payments on any form of bank or other commercial credit obligation, including the reporting of late payments to credit reporting agencies. Borrowers also incur late fees for missed or delinquent payments, to the extent allowed by applicable law. Such late fees are collected by Prosper and passed on to the Lender or Lenders who own the Notes representing the Loan.

When a Borrower’s payment is late, Prosper communicates directly with the Borrower to encourage repayment. After 30 days, Prosper refers the Loan to a nationally-licensed collection agency, which makes further attempts to collect delinquent amounts and have the Borrowers bring the account current. Except in the case of Borrower bankruptcy, at 120 days past due, the Notes are offered for sale to an unaffiliated third-party debt purchaser and charged off. At that point, the Borrower’s credit report is negatively impacted with a default and they are not permitted to post any further listings on the Platform. See “Description of the Securities – The Notes – Borrower Default and Collection” beginning on page 38 for more information.

Q:What guarantees do Lenders have that a Note will be paid?

A:There are no guarantees that a Note will be paid. See “Risk Factors – Risks Related to Borrower Default” beginning on page 15 for more information.

Q:Can Lenders collect on late payments themselves?

A:No. Under the Lender Registration Agreement, each Lender agrees that under no circumstances may a Lender attempt collection of a late payment themselves.

Q:What happens if a Borrower repays early?

A:Borrowers can make extra payments or prepay the Notes in part or entirely at any time without penalty. See “Description of the Securities – The Notes” beginning on page 35 for more information.

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Q:Do Lenders have to pay taxes on the interest collected on the Notes?

A:Loan interest is normally classified as taxable income. Every tax year that a Lender earns more than $600 in interest (or such other amount as provided by applicable state law), Prosper will send each such Lender tax forms summarizing taxable interest income earnings. Whether or not such a form is sent, Lenders are required to report their interest income to the IRS. See “U.S. Federal Income Tax Consequences” beginning on page 49 for more information.

Q:What is a group?

A:A group can be any collection of people with common interests, including social, cultural, ethnic, professional, educational, athletic, religious, or any other official or unofficial affiliation. Groups may consist of Borrowers, Lenders or registered Prosper users who have not taken a role, or any combination of the above. Groups allow people to join together for the common goal of borrowing money at better rates and give Borrowers an additional incentive – the group’s reputation – to meet their obligation to repay a Loan.

Q:What are the benefits of group membership?

A:Borrower listings identify the group, if any, to which the Borrower belongs. Groups are rated according to the collective repayment performance of the group’s members on Loans, and the group ratings are displayed on the Platform. Prosper believes that highly-rated groups (i.e., those with members who reliably repay their Loans) may draw more favorable bids from Lenders, resulting in Loans with lower interest rates for the group’s Borrowers. Prosper also believes that the group structure may positively influence Borrowers’ Loan repayment performance, in that  Borrowers in groups may be less likely to default since default would negatively affect the group to which they belong.

Q:Do groups guarantee their members’ Loans?

A:No. Groups do not guarantee their members’ obligations on the Notes in any way, nor do group members guarantee the Loans of fellow group members. Borrowers are fully responsible for their own credit obligations.

Q:Do groups make lending decisions or set rates for their members’ Loans?

A:No. Groups do not make lending decisions or set interest rates, although members of groups can affect rates by bidding on their fellow group members’ listings.

Q:How is Prosper regulated?

A:Lending activities on the Platform and the servicing of Notes are subject to state and federal regulation. Prosper and the Loans it makes must comply with applicable state usury and lending laws, including interest rate and fee limitations, and licensing and disclosure requirements. In addition, Prosper must comply with the federal Consumer Credit Protection Act, including, as applicable, the Truth-in-Lending Act, Equal Credit Opportunity Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act and Electronic Fund Transfer Act, as well as the federal Electronic Signatures in Global and National Commerce Act (ESIGN) and other federal and state laws governing privacy and data security and prohibiting unfair or deceptive business practices. Prosper is subject to examination, supervision, and potential regulatory investigations and enforcement actions by state agencies that regulate consumer lenders and other financial institutions, and federal agencies, such as the Federal Reserve Board and the Federal Trade Commission, that administer the federal consumer protection laws. See “Description of the Securities – Regulatory Matters – Licensing and Consumer Protection Laws” beginning on page 41 for more information.

Q:How does Prosper make money from the Platform?

A:Each time a Loan is funded, Prosper charges the Borrower a transaction fee of 1% or 2% of the amount of the Loan (depending on the Borrower’s credit grade), subject to a $25 minimum transaction fee for Loans under $2,500, and subject to any further limitations imposed by applicable state law. The transaction fee is paid by the Borrower out of, or contemporaneously with disbursement of, the proceeds of the Loan at the time the Loan is funded. In addition, Prosper currently charges Lenders a servicing fee at an annual rate of 1%

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of the outstanding balance of the Notes, which it deducts from each Lender’s share of Loan payments made by a Borrower (except that no servicing fees are currently charged with respect to Loans made to Borrowers with a credit grade of AA). If Prosper establishes the Resale Platform on which the Notes may be resold, Prosper intends to charge all Lenders selling a Note a nonrefundable resale listing fee of $0.25 per Note being listed for auction resale, or $0.50 per Note being listed for resale with an automatic sale feature. Listing fees will be charged and collected at the time the listing is posted on the Resale Platform by deducting the resale listing fee from the selling Lender’s funding account. Prosper also intends to charge the selling Lender a resale transaction fee equal to 1.0% of the resale price, subject to a minimum fee of $0.50, which will be deducted from the resale proceeds.

Q:What if Prosper were to go out of business?

A:No new Loans would be created and, provided Prosper can assign its servicing obligations to a suitable third party loan servicer, all existing Notes would be serviced to completion by such third party loan servicer. The third party loan servicer would take over the administrative responsibilities related to the Notes such as the collection and transfer of monthly payments, providing timely payment notices, monthly Lender statements and required tax documentation, overseeing the collection of delinquent Notes on behalf of the Lenders, and reporting payment performance to credit reporting agencies. If Prosper is unable to assign its servicing obligations to a suitable third party loan servicer, Borrowers would still be obligated to make payments on their Notes, but Lenders’ ability to collect on the Notes may be substantially impaired. Prosper has formed an entity to be managed by employees of Prosper experienced in the Platform’s operation to service the Notes through their term and to maintain the Resale Platform through the term of the then outstanding Notes in the event that Prosper becomes unable to fulfill its servicing obligations and is unable to assign its servicing obligations to a suitable third party loan servicer. There can be no assurance that such company will be able to adequately perform the servicing of outstanding Notes or maintain the operation of the Resale Platform in such event. See “Risk Factors – Risks Related to Our Ability to Service the Notes” beginning on page 20 for more information.

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RISK FACTORS

You should carefully consider the risks described below before making a decision to invest in the Securities. The risks and uncertainties described below are not the only ones you may face. If any of the following risks actually occurs, you might lose all or part of your investment in the Securities. You should also refer to the individual Borrower profiles and Borrower credit information provided on the Platform.

Risks Related to Borrower Default

The Notes are risky and speculative investments for suitable investors only.

You should be aware that the Notes offered through the Platform are risky and speculative investments suitable only for investors of adequate financial means. If you cannot afford to lose the entire amount of money you plan to bid and commit to Borrower listings on the Platform, you should not attempt to invest in the Notes. You should not assume that a Note is an appropriate investment for you because it is listed on the Platform.

Some of the Borrowers on the Platform have “subprime” credit ratings, are considered higher than average credit risks, and may present a high risk of loan delinquency or default.

Some of the Borrowers on the Platform are people who have had difficulty receiving loans from banks and other financial institutions on favorable terms, or on any terms at all, due to credit problems, limited credit histories, adverse financial circumstances, or high debt-to-income ratios. Therefore, acquiring Notes representing Loans to such Borrowers may present a high risk of loan delinquency or default. Selected historical default rates on the Notes can be found in this prospectus under the heading “Selected Historical Loan Performance Data” beginning on page 48. There can be no assurance that such historical default rates will be indicative of future default rates or the likelihood of the delinquency or default on any Note of a particular Borrower.

Borrowers’ credit scores and the credit grades assigned on the Platform may differ from the credit scores that other credit reporting services might assign to such Borrowers and Borrower credit scores may not reflect Borrower creditworthiness.

We currently use a credit scoring model called Experian Scorex PLUS^SM developed by the Experian credit reporting agency, and we assign a letter credit grade based upon specific credit score ranges. While the credit score ranges are similar to FICO™ or VantageScore ^SM credit scores (which many financial lenders use to determine credit risk), Experian does not use the same algorithm used for FICO™ or VantageScore ^SM credit scores. Experian employs a predictive model which may result in credit scores that may differ considerably from the credit score that would have been assigned had we used FICO™ or VantageScore ^SM credit scores to compute Borrower credit grades due to the weight that is assigned to different types of debt. Any credit score or credit grade assigned to a Borrower may not reflect a Borrower’s creditworthiness, and may not reflect information about a Borrower which may have resulted in a credit score or credit grade that would differ considerably from the credit score or credit grade assigned. Neither Prosper nor any credit reporting agency is liable for any errors or omissions in credit reporting or credit scores. See “Description of the Securities – The Notes – Borrower Credit Quality” beginning on page 37 for more information.

Additionally, we currently only retrieve a subsequent credit score for a Borrower after the previous credit score is more than 30 days old. Therefore, there is a risk that a Borrower may have become delinquent in a payment, defaulted on a debt obligation, taken on more personal debt since the last credit score was retrieved, or sustained other adverse financial events, and the credit grade assigned to the Borrower may not accurately reflect the Borrower’s actual current creditworthiness.

While we take many precautions to prevent Borrower fraud, it is possible that fraud may occur and adversely affect a Lender’s ability to collect upon the Notes or delay the recoupment of a Lender’s investment.

We use identity and fraud checks with external databases to authenticate each Borrower’s identity and credit history. Although we use diligent efforts in this regard, there is a risk that our fraud checks could fail and fraud may occur. Additionally, Borrowers may misrepresent their intentions for the Loan proceeds or other information that we do not

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attempt to verify. While we will repurchase Notes in limited circumstances, such as material default on a Note resulting from verifiable theft of a Borrower’s identity, or in the event a Loan fails to comply at origination in material respects with applicable federal and state law, we are not obligated to repurchase a Note from you if your investment is not realized in whole or in part due to fraud (other than verifiable identity theft) in connection with a listing, or due to false or inaccurate statements or omissions of fact in a Borrower’s listing, whether in credit data, Borrower’s representations, user endorsements, group affiliations or similar indicia of Borrower intent and ability to repay the Loan. If Prosper repurchases a Note, only the outstanding principal balance will be returned to the Lender. See “Description of the Securities – Repurchase of the Notes by Prosper” beginning on page 47 for more information.

If a Borrower defaults upon a Note, you will have limited ability to collect on the Note because the Notes are not secured by any collateral or guaranteed by any third party.

All Notes are unsecured credit obligations of individual Borrowers, which means that there is no guarantee that a Loan will be repaid and there is no collateral upon which you may foreclose in the case of a default. The Notes represent unsecured credit obligations of individual Borrowers, without any right of recourse to Prosper. Neither Prosper nor any third party has any obligation to pay principal of or interest or other charges on the Notes. The Notes are not guaranteed or issued by any governmental agency or other third party. Investments in the Notes are not insured in any way.

If payments on a Note remain delinquent for more than 30 days, you will not realize the full value of your investment due to third party recovery fees and you may not recover any of your investment.

If a delinquency persists on a Note for 30 days, the Loan will be assigned to a third party collection agency selected by the majority in interest of the collective Lenders for each such Loan. Third party collection agencies receive a percentage of any recovered funds as a service fee for the recovery of the payments due upon the Notes, and such fee will be paid before you receive any proceeds. Collection fees start at 15% of the amount recovered and decrease as the delinquency persists. Additionally, these fees are subject to a 5% increase if the collection agency recovers the entire delinquent amount.

There is a significant risk that the collection agency may not be able to recover the unpaid balance of a Note. If the designated collection agency is unable to recover the payments due upon a Note and the Note becomes 120 days past due, the Note will be deemed uncollectible and offered for sale at a steep discount to an unaffiliated third-party debt buyer, and you may recover only a small portion of the Note and your investment. In some cases, Notes cannot be sold at any price, and you will not recover any portion of your investment in the Notes. You must rely on Prosper and the designated collection agency and may not attempt to collect payments on the Notes in any other manner.

The Notes do not impose any restrictions on the ability of Borrowers to incur additional unsecured or secured indebtedness. If Borrowers incur additional indebtedness of any kind, it may impair the ability of Borrowers to make payments on the Notes and may impair your ability to realize any of your investment in the Notes.

The Notes do not limit the ability of Borrowers to incur additional debt after the Notes have been issued, and we cannot assure you that a Borrower’s debt-to-income ratio will remain fixed during the term of the Note. If a Borrower incurs additional indebtedness, it may adversely affect the ability of the Borrower to meet his or her payment obligations on the Notes and the Borrower’s creditworthiness generally, and could result in the bankruptcy of the Borrower.

The Notes represent unsecured credit obligations of individual Borrowers, and if a Borrower incurs additional secured indebtedness, the Notes will be effectively subordinated to existing and future secured indebtedness to the extent of the value of any assets securing such indebtedness. In addition, a Borrower may decide to repay his or her obligations under secured indebtedness before his or her obligations under the Notes due to the unsecured nature of the Notes. A Lender will not be made aware of any additional indebtedness incurred by a Borrower unless and until the Borrower defaults on a Note, if at all. When a Note is offered for resale on the Resale Platform, the resale listing will display the Borrower’s credit grade, credit data and other information that appeared in the Borrower’s original listing. The Borrower’s credit grade, credit data and other information will not be updated for listings on the Resale Platform.

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A Borrower may request that his or her bank “chargeback” a payment on a Note and request a refund on that payment, resulting in a delinquency on the payment and a possible negative cash balance in your funding account.

A Borrower chargeback is a process by which a Borrower who has made a payment on a Note has his or her bank cancel the payment or request a refund of that payment. If such a chargeback occurs within four business days of the initiation of the payment, the payment will be canceled or refunded and declared delinquent. Payment is posted to Lenders’ accounts after four business days. If the chargeback occurs between four and 60 days after the initiation of payment, you must rely on us to contest the chargeback if we deem it appropriate. If a Borrower successfully processes a chargeback between four and 60 days after initiation of payment, such payment will be deducted from your Prosper account, and if you have withdrawn funds in the interim, a negative cash balance may result.

The Platform is a new concept, and the failure of Borrowers to perform according to the terms of their Notes may impair your ability to realize all or any of your investment in the Notes.

The investment return on the Notes depends on Borrowers fulfilling their payment obligations in a timely and complete manner. Because the Platform is a new concept, we do not have significant historical performance data regarding Borrower performance on the Notes. Borrowers may not view person-to-person lending obligations originated on the Platform as having the same significance as other credit obligations arising under more traditional circumstances, such as loans from banks or other commercial financial institutions. If a Borrower neglects his or her payment obligations on a Note or chooses not to repay a Note entirely, you may not be able to recover any portion of your investment in a Note.

Additionally, the anticipated addition of the Resale Platform on which the Notes may be resold to other Lenders may not materialize or Lenders may not be drawn to it. In such cases, your investment may not produce the rate of return that you originally anticipated and you may not be able to find Lenders who will buy a Note that you list for resale.

The Platform may fail to comply with borrower protection laws such as state usury laws, other interest rate limitations or federal consumer protection laws such as the Truth in Lending Act, the Equal Credit Opportunity Act and the Fair Credit Reporting Act. Borrowers may make counterclaims against us, any collection agency or you after collection actions have commenced.

Applicable state laws generally regulate interest rates and other charges and require certain disclosures. In addition, other state laws, public policy and general principles of equity relating to the protection of consumers, unfair and deceptive practices and debt collection practices may apply to the origination, servicing and collection of the Notes. The Notes are also subject to federal laws, including, without limitation,  the federal Truth-in-Lending Act and Regulation Z promulgated thereunder, which require certain disclosures to the Borrowers regarding the terms of the Notes; the federal Equal Credit Opportunity Act and Regulation B promulgated thereunder, which prohibit discrimination on the basis of age, race, color, sex, religion, marital status, national origin, receipt of public assistance or the exercise of any right under the Consumer Credit Protection Act, in the extension of credit; and the federal Fair Credit Reporting Act, which regulates the use and reporting of information related to each Borrower’s credit history. We may not always have been and may not always be in compliance with these laws. Failure to comply with the laws and regulatory requirements applicable to our business may, among other things, limit our, or a collection agency’s, ability to collect all or part of the principal of or interest on the Notes and, in addition, could subject us to damages, revocation of required licenses or other authorities, class action lawsuits, administrative enforcement actions, and civil and criminal liability, which may harm our business and ability to maintain the Platform and may result in Borrowers rescinding their Loans against either us or the Lenders on the Notes. See “Description of the Securities – Regulatory Matters – Licensing and Consumer Protection Laws” beginning on page 41 for more information about regulatory matters.

Prosper regularly reviews the requirements of these laws and takes measures aimed at ensuring that the Loans originated on the Platform meet the requirements of all applicable laws. For example, Prosper will not fund Loans if it determines that the interest rate on that Loan would exceed the limit provided for under the law applicable to the Loan. However, determining compliance with all applicable laws is a complex matter and it is possible that Prosper’s determination may be inaccurate or incorrect. Also, changes in law, either due to court decisions, regulatory interpretations or rulings, or new legislation, may adversely affect the collectibility of a Loan.

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States may impose licensing requirements on Lenders under consumer finance or similar laws, and the failure or inability to comply with any such requirements may impair your ability to realize any of your investment in the Notes.

Many states have lending or finance company licensing laws that require a lending license or similar registration for persons who engage in the business of making loans. Although Prosper believes that the activities of Lenders on the Platform do not trigger these state license requirements and that Lenders are not required to hold such licenses, this determination on the part of Prosper is subject to state licensing authorities or courts taking a contrary position. Prosper has not obtained rulings on this issue from the relevant authorities in the states where the Borrowers reside. Lenders should consult with their own legal advisors with respect to whether their particular activities or circumstances, including their own acquisition of Loans pursuant to the Platform, may subject them to licensing requirements. If a state authority were to determine that Lenders acquiring Loans on the Platform must be licensed, this could impair the collectibility of Loans and could result in Lenders incurring costs and expense to become licensed and to comply with the requirements of the regulatory authority in order to continue to participate as Lenders on the Platform.

Borrowers may seek the protection of debtor relief under federal bankruptcy or state insolvency laws, which may result in the loss of your investment in the Notes.

If a Borrower is unable to make payments on a Note, he or she may be able to successfully seek judicial intervention based upon a variety of debtor protection laws. Additionally, there is a risk that existing debtor relief or consumer protection laws could change during the term of the Note, which may impair collection upon default.

If we receive notice that a Borrower has filed for protection under the federal bankruptcy laws, or has become the subject of an involuntary bankruptcy petition, we will put the account into a bankruptcy status. No further monthly payments will be initiated and any collection activity on the account will cease. Whether any payment will be made or received on a Note after a bankruptcy petition is filed depends on the Borrower’s particular financial situation. In most cases involving the bankruptcy of a Borrower, unsecured creditors, such as Lenders, will receive only a fraction of any amount outstanding on any Notes, if anything. Prosper will forward any amounts received to the Lenders on a pro rata basis.

Notes of Borrowers that are in bankruptcy will not be sold in a debt sale and charged off. Following Prosper’s establishment of the Resale Platform on which Notes may be resold (subject to certain conditions), Notes of Borrowers that are in bankruptcy will not be able to be resold on the Resale Platform.

Borrowers may not be able to make payments on the Notes due to being called to active military service. In such cases, the interest amount on such Notes will be decreased during the length of deployment.

Borrowers may be called to active military service which may result in a delay or impairment of your ability to collect upon the Notes. In compliance with the Servicemembers Civil Relief Act (SCRA), the interest rate on the Notes for Borrowers on active duty and other military personnel who qualify for relief must be adjusted to 6% for the duration of their active military duty. During this period, you will not recover the difference between 6% and the interest rate that was established for the Loan by the auction bidding system on the Platform.

The Notes do not contain any cross-default or similar provisions. If a Borrower is in default on his or her obligations other than under the Notes, your ability to collect on the Notes may be substantially impaired.

The Notes do not contain cross-default or similar provisions. A cross-default provision provides that a default on certain obligations of a Borrower would constitute a default on other obligations of a Borrower. Because the Notes do not have cross-default provisions, the Notes will not be placed in default upon a Borrower’s default on any of his or her other obligations, unless independent grounds exist for declaring a default on the Notes. The Notes will not be referred to a third-party collection agency for collection, accelerated, or sold to a debt buyer because of a Borrower’s default on obligations other than the Notes. If a Borrower defaults on his or her obligations to a third party, and continues to satisfy his or her payment obligations under the Notes, such third-party may seize the Borrower’s assets or pursue other legal action against the Borrower before he or she defaults on the Notes. Your ability to collect on the Notes may be substantially impaired if the Borrower subsequently defaults on the Notes, and you may be unable to recover any portion of your investment in the Notes.

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The death of a Borrower may substantially impair your ability to realize any of your investment in the Notes.

If a Borrower with outstanding obligations under Notes originated on the Platform dies while the Notes are outstanding, we will work with the executor of the estate of the Borrower, but there can be no assurance that Prosper can collect the outstanding balance of such Notes, or any amount of your investment in the Notes.

The Platform allows a Borrower to prepay a Loan at any time without penalty. Borrower prepayments will extinguish or limit your ability to receive any additional interest payments upon the Note.

Prepayment occurs when Borrowers decide to pay the balance due on a Loan earlier than originally scheduled. A Borrower may decide to prepay all or a portion of the remaining Loan balance at any time without penalty. In the event of a prepayment of the entire remaining unpaid principal balance, interest will only accrue to the date on which the payment is made. If a Borrower prepays a portion of the remaining unpaid principal balance, monthly payment amounts will not change but the term of the Loan may shorten as interest will only continue to accrue on the principal amount that remains outstanding. If a Borrower prepays his or her Note in full or in part, you will not realize the return expected on the Notes and you may not be able to find a similar rate of return on another investment at the time at which the Note is repurchased or prepaid. See “Description of the Securities – The Notes” beginning on page 35 and “- Repurchase of the Notes by Prosper” beginning on page 47 for more information.

Prosper is not obligated to repurchase any Notes except in limited circumstances. If Prosper is unable to meet its repurchase obligations, you may lose your entire investment in the Notes.

Prosper is not obligated to repurchase any Note except in limited circumstances, such as material default on a Note resulting from verifiable theft of a Borrower’s identity, or in the event a Loan fails to comply at origination in material respects with applicable federal and state law. Additionally, the Lender Registration Agreement provides that, in the event of a material breach of Prosper’s representations and warranties, Prosper must either cure the defect, repurchase the Note, or indemnify and hold the Lender harmless against losses resulting from the defect in the Note. However, Prosper is not obligated to repurchase a Note from a Lender if his or her investment is not realized in whole or in part due to fraud (other than verifiable identity theft) in connection with a listing, or due to false or inaccurate statements or omissions of fact in a Borrower’s listing, whether in credit data, Borrower representations, user endorsements, group affiliations or similar indicia of Borrower intent and ability to repay the Notes. Even if Prosper is obligated to repurchase a Note, there can be no assurance that Prosper will be able to meet its repurchase obligation. If a Borrower’s payment obligations are not performed on a Note that Prosper is obligated to repurchase and Prosper is unable to meet its repurchase obligations with respect to such Note you may lose all of your investment in such Note. See “Description of the Securities – Repurchase of the Notes by Prosper” beginning on page 47 for more information regarding Prosper’s repurchase obligations.

Risks Inherent in Investing in the Notes

If you do not diversify your investments in the Notes by Borrower and credit type, you may increase your risk of Borrower defaults.

Your expected return on your investment in the Notes depends on the performance of the Borrowers on their respective obligations under the Notes. There are a wide range of credit grades and Borrower listings on the Platform. Because some Borrowers may default on their Notes, it may be desirable to diversify your portfolio in order to reduce the risk that you could lose your entire investment due to a single default, or a small number of defaults. However, diversification does not eliminate the risk that you may lose some, or all, of your investment in the Notes.

Prevailing interest rates may change during the terms of the Notes. If this occurs, your investment in the Notes may become less valuable in comparison to other investment options. Additionally, Borrowers may prepay their Notes due to such changes in interest rates and you may not be able to find sufficient alternative investments to realize the expected return on the Notes.

All of the Notes have a term of three-to-five years and bear a fixed, not floating, rate of interest. If prevailing interest rates increase, any return on your Notes might be less than the return you could earn on other investments.

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While you may still receive a return on your investment in the Notes, if prevailing interest rates exceed the rate of interest payable on your Notes, the payments you receive during the term of the Notes may not reflect the full opportunity cost to you when you take into account factors such as the time value of money.

If prevailing interest rates on consumer loans decrease, Borrowers may choose to prepay their Notes with money they borrow from other sources or other resources, and you may not realize the return expected on the Notes or be able to find sufficient alternative investments to realize a similar rate of return at the time at which the Note is prepaid. There is no prepayment penalty for Borrowers.

If the Resale Platform fails to develop, or if the Resale Platform develops but you cannot find a purchaser for the Notes that you wish to resell, you will be forced to hold the Notes for their remaining term.

Prior to the date of this prospectus, the Notes have been non-transferable except by assignment to a collection agency upon default. As soon as practicable after the date of this prospectus, Prosper intends to establish the Resale Platform on which the Notes may be resold to Lenders after a minimum of three months following the date that the selling Lender acquired the Note from Prosper (or immediately if the selling Lender purchased the Note on the Resale Platform). We cannot guarantee that a resale market will develop for the Notes.

A Note for resale must be purchased in its entirety by a single Lender. If your original investment was for a large principal amount or for any of the other relevant reasons discussed in this prospectus, you may find it difficult or impossible to find Lenders willing to buy the Note from you.

In either of the above situations, you will be forced to hold the Note for its remaining term. After the date of this prospectus, except for sales on the Resale Platform, the Notes will continue to be non-transferable except to a collection agency upon default.

If you choose to post your Notes for resale on the Resale Platform, you may not realize the expected return on your investment due to changes in the creditworthiness of the Borrower on your Note or changes in interest rates.

The ability to resell your Note on the Resale Platform (should the Resale Platform be successfully developed) does not guarantee that you will be able to find a Lender willing to buy the Note at a price acceptable to you, or at all. If the Borrower on your Note has become delinquent in payments upon his or her Note, your ability to resell the Note on the Resale Platform will be substantially impaired. You may have to offer the Note for sale at a substantial discount, and there is no guarantee that you will receive the expected value of the Note or any value at all. Additionally, Lenders may be less willing to bid for and purchase your Note if prevailing interest rates have changed or other investing activities have proven more attractive while you have held the Note.

Risks Related to Our Ability to Service the Notes

We have a limited operating history. As an online company in the early stages of development, we face increased risks, uncertainties, expenses and difficulties.

As the number of Borrowers, Lenders and Loans originated on the Platform increases, we will need to increase our facilities, personnel and infrastructure in order to accommodate the greater servicing obligations and demands on the Platform. Additionally, as soon as practicable after the date of this prospectus, Prosper intends to establish the Resale Platform on which the Notes may be resold to Lenders after a minimum of three months following the date that the selling Lender acquired the Note from Prosper (or immediately if the selling Lender purchased the Note on the Resale Platform). Although we cannot guarantee that a resale market will develop for the Notes, we expect that such addition to the Platform may significantly increase the amount of Loan origination and sale activity on the Platform. The Platform is dependent upon our website in order to maintain current listings and transactions in the Notes. We must constantly add new hardware and update our software and website, expand our customer support services, and add new employees to maintain the operations of the Platform as well as to satisfy our servicing obligations on the Notes. If we are unable to increase the capacity of the Platform and maintain the necessary infrastructure, you may experience delays in receipt of payments on your Notes and periodic downtime of our systems.

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We are subject to extensive federal, state and local regulation. There can be no guarantee that we will be able to continue our servicing obligations.

We are subject to extensive federal, state and local regulation, non-compliance with which may expose us to adverse consequences. Additionally, new laws and regulations could be enacted that could have a negative impact on our ability to service the Notes, provide a resale market for the Notes, or maintain the Platform. We could suffer adverse consequences if we were to fail to comply, even inadvertently, with these laws and regulations.

Additionally, we are licensed as a finance lender under the California Finance Lenders Law and are regulated and examined by the California Department of Corporations. We hold similar lending licenses or authorizations in 24 other states, which also supervise and examine our activities. If we do not comply with applicable laws, we could lose one or more of our licenses or authorizations, which may have an adverse effect on our ability to continue to perform our servicing obligations or to maintain the Platform. See “Description of the Securities – Regulatory Matters – Licensing and Consumer Protection Laws” beginning on page 41 for more information regarding governmental regulation of the Platform.

The federal Fair Debt Collection Practices Act and similar state debt collection laws regulate debt collection practices by “debt collectors” and prohibit debt collectors from engaging in certain practices in collecting, and attempting to collect, outstanding consumer loans. For example, debt collectors are prohibited from contacting debtors at unreasonable times, revealing or discussing the nature of the debt with third parties, making false representations in association with efforts to collect the debt, seeking collection fees or other charges not permitted under contract or by state law, making threats of arrest or legal action without actual intention of action on the threat, and using abusive or profane language in the course of collection on the debt. While Prosper obligates its collection agencies to comply with applicable law in their efforts to collect Loans made on the Platform, it is possible that improper collection practices may occur which could adversely impact the collectability of particular Loans originated through the Platform.

We do not have patent protection for all of our proprietary technology. It may be difficult and costly to protect our intellectual property rights, and we may not be able to ensure their protection.

Our ability to maintain the Platform and perform our servicing obligations depends, in part, upon our proprietary technology. We have applied for one patent covering various aspects of the operation of the Platform; however, there can be no assurance that it will be granted, or if a patent were issued, that a third party may not be successful in challenging it. Additionally, we may not protect our proprietary technology effectively, which would allow competitors to duplicate our products and adversely affect our ability to compete with them. A third party may attempt to reverse engineer or otherwise obtain and use our proprietary technology without our consent. In addition, the Platform may infringe upon claims of third-party patents and we may face intellectual property challenges from such other parties. We may not be successful in defending against any such challenges or in obtaining licenses to avoid or resolve any intellectual property disputes. Furthermore, our technology may become obsolete, and there is no guarantee that we will be able to successfully develop, obtain or use new technologies to adapt the Platform to compete with other person-to-person lending platforms, should they develop. If we cannot protect the  proprietary technology embodied in and used by the Platform from intellectual property challenges, or if the Platform becomes obsolete, our ability to maintain the Platform and our ability to perform our servicing obligations on the Notes could be adversely affected.

We rely on a third-party commercial bank to process transactions. If we are unable to continue utilizing these services, our business and ability to service the Notes may be adversely affected.

Because we are not a bank, we cannot belong to and directly access the Automated Clearing House (ACH) payment network. As a result, we currently rely on an FDIC-insured depository institution to process our transactions. If we cannot continue to obtain such services from this institution or elsewhere, or if we cannot transition to another processor quickly, our ability to process payments will suffer and your ability to collect on the Notes will be delayed or impaired.

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We may not realize enough fees from our services to offset the cost of maintaining the Platform. In the event that we should fail to maintain operations, you may experience a delay in realizing your investment or an inability to resell the Notes or Borrowers may default on their Notes.

If we are unable to generate sufficient revenues from the fees we receive from Borrowers and Lenders as a result of the Notes originated on the Platform and proposed to be resold on the Resale Platform (should it develop), our ability to maintain operations may be adversely affected. If we were to fail or become insolvent, there would be no resale market for your Notes, and we would attempt to transfer our servicing obligations on the Notes to a third party pursuant to our contractual agreements with Lenders. Additionally, we have formed an entity to be managed by employees of Prosper experienced in the Platform’s operation to provide backup loan servicing for the remaining term of the Notes in the event that Prosper fails to maintain operations and is unable to assign its servicing obligations to a suitable third party loan servicer and to maintain the Resale Platform through the term of the then outstanding Notes. There can be no assurance that such company will be able to adequately perform the servicing of the outstanding Notes or maintain the operation of the Resale Platform in such event. Additionally, transferring these servicing obligations to a third-party may result in delays in the processing and recovery of information with respect to amounts owed on the Notes or, if the Platform becomes inoperable, may directly result in many Borrowers defaulting on their Notes. If a third party servicer is not able to effectively service the Notes, Lenders’ ability to collect on the Notes may be substantially impaired.

Our ability to service the Notes may be adversely affected by computer viruses, physical or electronic break-ins and similar disruptions.

The Platform may be vulnerable to computer viruses, physical or electronic break-ins and similar disruptions. If a “hacker” were able to infiltrate the Platform, you would be subject to the increased risk of fraud or Borrower identity theft and may experience losses on, or delays in the recoupment of amounts owed on, a fraudulently induced purchase of a Note. Additionally, if a hacker were able to access our secured files, he or she might be able to gain access to your personal information. While we have taken steps to prevent such activity from affecting the Platform, if we are unable to prevent such activity, the value of your investment in the Notes and our ability to fulfill our servicing obligations and to maintain the Platform would be adversely affected.

Events beyond our control may damage our ability to maintain adequate records, maintain the Platform or perform our servicing obligations. If such events result in a system failure, your ability to collect on the Notes would be substantially harmed.

If a catastrophic event resulted in a Platform outage and physical data loss, our ability to perform our servicing obligations would be materially and adversely affected. Such events include, but are not limited to: fires, earthquakes, terrorist attacks, natural disasters, computer viruses and telecommunications failures. We store backup records in an offsite facility located in San Francisco, California. If our electronic data storage and backup data storage system are affected by such events, we cannot guarantee that you would be able to recoup your investment in the Notes.

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PROSPER MARKETPLACE, INC.

General

Prosper Marketplace, Inc., which operates the Platform, was incorporated in the State of Delaware on March 22, 2005, under the name JC Capital Solutions, Inc. Prosper’s principal executive offices are located at 111 Sutter Street, 22nd Floor, San Francisco, California 94104. Prosper’s telephone number at that location is (415) 593-5400. Prosper’s website address is www.prosper.com.

Prosper was established based on the belief that a peer-to-peer Internet credit auction platform could be established as a trusted marketplace that would constitute a safe, predictable and fair environment for extending and obtaining consumer credit. Consumer Internet auctions have grown very rapidly in recent years as consumers and businesses have grown comfortable with buying and selling products directly from one another. Prosper believes that individuals with funds to invest desire an opportunity to obtain a better return on available funds than they can obtain from commercial bank deposits or money market funds, while consumer borrowers desire lower rates on their loans and credit cards balances than many can typically obtain through the existing consumer finance and credit markets.

In addition to operating the Platform, Prosper is the original payee and lender on the Notes. Prosper makes the Loan to each Borrower and evidences the Borrower’s obligation by separate Notes in the amount of each individual  winning bid. Each Note is thereafter sold and assigned to each respective Lender without recourse to Prosper. Prosper retains certain administrative, clerical, recordkeeping, identity verification, payment processing, collection and other obligations related to the Notes, which are referred to in this prospectus as the Lender Participant Rights. Through September 30, 2007, over $89 million in principal of Notes had been originated on the Platform. For more information about the Securities, see “Description of the Securities” beginning on page 35.

Management

The following table shows information about Prosper’s executive officers and directors as of September 30, 2007:

Name	Age	Position(s)
Christian A. Larsen	46	Chief Executive Officer, President and Director
John B. Witchel	39	Chief Technology Officer, Secretary and Director
Kirk T. Inglis	40	Chief Financial Officer
James W. Breyer	46	Director
Lawrence W. Cheng	32	Director
Paul M. Hazen	65	Director
Robert C. Kagle	51	Director

Christian A. Larsen co-founded Prosper and has been its Chief Executive Officer and President, and one of its directors since inception. Prior to Prosper, Mr. Larsen co-founded E-LOAN, Inc. in 1996, and served as one of its directors from 1996 until its acquisition in October 2005, and as its Chairman from March 2001 until October 2005. From 1999 to February 2005, Mr. Larsen served as Chief Executive Officer of E-LOAN, and from 1996 to 1998 and from January 2004 to June 2004,  Mr. Larsen served as President of E-LOAN. From 1992 to 1996, Mr. Larsen was the President of Palo Alto Funding Group, a mortgage brokerage he co-founded in 1992 and E-LOAN’s predecessor  company. Prior to attending business school, Mr. Larsen held positions at Chevron Corporation and NASA Ames Research Center. Mr. Larsen holds an M.B.A. from Stanford University and a B.S. from San Francisco State University.

John B. Witchel co-founded Prosper and has been its Chief Technology Officer and Secretary, and one of its directors since inception. Prior to Prosper, from 2002 to 2005, Mr. Witchel developed BrowserCam, a patent-pending online tool for testing the cross-browser compatibility of websites. From 1999 to 2001, Mr. Witchel was the Chief Executive Officer of Red Gorilla, a pioneer in online application syndication. Prior to Red Gorilla, in 1994, Mr. Witchel founded XCom Corporation, a web consultancy company that was acquired by USWeb/CKS in 1996, where Mr. Witchel served as a managing partner from 1996 to 1999. Mr. Witchel holds an M.S. from the University of San Francisco and a B.A. from Stanford University.

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Kirk T. Inglis has been the Chief Financial Officer of Prosper since November 2006. Prior to joining Prosper, from June to November 2006, Mr. Inglis worked as a consultant for Wells Fargo Bank, N.A., consulting on the effectiveness of their online marketing programs. From 1994 to 2003, Mr. Inglis served in various positions with Providian Financial Corporation. At Providian, Mr. Inglis served as President of First Select Corporation, the largest purchaser of charged-off credit card debt in the United States, from 2000 to 2001. In addition, he served as Chief Financial Officer of GetSmart.com following its acquisition by Providian in 1999. Mr. Inglis also developed the financial planning and control infrastructure for Providian Financial Corporation following the spin-off from its parent company in 1996. Mr. Inglis holds an M.B.A. from Memphis State University and a B.A. from the University of Texas at Austin.

James W. Breyer has served as one of Prosper’s directors since April, 2005. Mr. Breyer has been a Partner of Accel Partners, a venture capital firm, since 1990. Mr. Breyer has served on the board of Wal-Mart Stores, Inc., a world-wide operator of retail stores, since 2001, on the board of RealNetworks, Inc., a creator of digital media services and hardware, since 1995, and on the board of Marvel Entertainment, Inc., a character-based entertainment company, since June 2006. He also serves on the boards of other privately held companies. Mr. Breyer is a member of the Board of Dean’s Advisors to Harvard Business School and is Chairman of the Stanford Engineering Venture Fund. Mr. Breyer holds a B.S. from Stanford University and an M.B.A. from Harvard University, where he was named a Baker Scholar.

Lawrence W. Cheng has served as one of Prosper’s directors since July 2006. Mr. Cheng has been a Partner at Fidelity Ventures, a venture capital firm, since June 2007, and a Principal since February 2005. Mr. Cheng has served on the boards of Mindshift Technologies, Inc., an IT services provider, since September 2005, and of eCredit.com, Inc., a provider of business information to credit and collection professionals, since December 2006. From February 2000 to January 2005, Mr. Cheng was a senior associate at Battery Ventures, from 1998 to 2000, he was an associate of Bessemer Ventures, and from 1996 to 1998, he was an associate consultant at Corporate Decisions, Inc. Mr. Cheng holds a B.A. from Harvard College.

Paul M. Hazen has served as one of Prosper’s directors since July 2006. Mr. Hazen is the chairman of the board of directors of KKR Financial Holdings LLC. Mr. Hazen joined Wells Fargo & Company in 1970, serving as Chairman of Wells Fargo from February 1997 to May 2001, Chairman and Chief Executive Officer from February 1997 to November 1998, Chief Executive Officer from January 1995 to February 1997, President and Chief Operating Officer from 1984 to 1995 and Vice Chairman from 1981 to 1984. Mr. Hazen is also the former President of Wells Fargo Real Estate Investment Trust, a publicly traded REIT, from 1973 to 1978. Mr. Hazen retired after he left his post as Chairman of Wells Fargo in May 2001. During his retirement, Mr. Hazen acted  as Chairman of Accel-KKR Company, Deputy Chairman and Lead Independent Director of Vodafone PLC and Lead Independent Director of Safeway, Inc. Mr. Hazen is currently the Lead Independent Director of Safeway, Inc., the Chairman of Accel-KKR Company and KKR Financial Corp., and a director of Xstrata plc. Mr. Hazen attended Amherst College and holds a B.S. in Finance from the University of Arizona and an M.B.A. from the University of California at Berkeley.

Robert C. Kagle has served as one of Prosper’s directors since April 2005. Mr. Kagle has been a Member of Benchmark Capital, the General Partner of Benchmark Capital Partners, L.P. and Benchmark Founders’ Fund, L.P., since its founding in May 1995. He has also served as a General Partner with Technology Venture Investors since 1984. Mr. Kagle has served on the board of Ebay Inc., an operator of an online commerce platform, since June 1997. He has served on the board of Jamba, Inc., and its predecessor, the Jamba Juice Company, a retailer of blended beverages and healthy snacks, since 1994. Since 1999, he has served as a director of ZipRealty, Inc., a residential real estate brokerage firm. Mr. Kagle also serves on the boards of other privately held companies. Mr. Kagel holds a B.S. from General Motors Institute (renamed Kettering University) and an M.B.A. from Stanford University.

Competition

The primary competitors of the Platform are major credit card companies such as JPMorgan Chase Bank, Bank of America, Citibank, other commercial banks, savings banks and consumer finance companies. In addition, an online

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lending company called Lending Club began operating in May 2007, and certain other peer-to-peer lending platforms appear to be preparing to commence operations. One of these, Zopa Limited, is already operating in the United Kingdom and is reportedly preparing to commence operations in the United States.

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OPERATION OF THE PLATFORM

Overview

The Platform is a person-to-person online credit auction forum that enables prospective Borrowers to place and display listings for Loans, and enables Lenders who wish to commit to purchase Loans extended to Borrowers to bid on those listings, typically in amounts less than the entire Loan amount being requested by the listing. Lenders are able to choose among Borrower listings based upon a Borrower’s credit grade, debt-to-income ratio, proposed interest rate, user profile, group affiliation and other characteristics.

The Platform also allows for the formation of community groups and allows Borrowers to participate on the Platform as a member of a group. Although Borrowers do not need to join a group in order to request Loans on the Platform, group affiliation may provide Lenders additional information about a Borrower and may motivate Borrower payment performance.

If a Borrower’s listing is matched with a bid in, or in most cases several bids totaling, the amount of the Loan requested and certain Borrower information can be verified, the Borrower receives a three-to-five-year, unsecured, fully-amortizing Loan from Prosper to the Borrower. Each Loan to a Borrower is evidenced by separate Notes made payable to Prosper, in the amount of each winning bid, and each Note is thereafter sold and assigned by Prosper to the respective Lender without recourse. Prosper retains certain administrative, clerical, recordkeeping, identity verification, payment processing, collection and other obligations related to the Notes.

Prosper currently receives a transaction fee of 1% or 2% of the Loan amount at the time that it is funded, depending on the Borrower’s credit grade, subject to a minimum fee of $25, payable from the Borrower’s Loan proceeds. Prosper also receives a servicing fee from Lenders from the monthly payments on the Notes and may assess additional failed payment charges.

If Prosper is successful in establishing the Resale Platform, Prosper intends to charge all selling Lenders a nonrefundable resale listing fee of $0.25 per Note being listed for auction resale, or $0.50 per Note being listed for resale with an automatic sale feature. Prosper also intends to charge the selling Lender a resale transaction fee equal to 1.0% of the resale price, subject to a minimum fee of $0.50, if the note is resold on the Resale Platform.

See “Description of the Securities – The Notes – Borrower Finance Charges and Fees” beginning on page 37 and “–The Lender Participant Rights” beginning on page 40 for more information regarding compensation to and fees collected by Prosper.

Platform Participants

Borrowers. Borrowers are individuals (i.e., natural persons) who wish to obtain a Loan on the Platform. Borrowers must be U.S. residents, must reside in a state where Prosper is licensed as a direct lender or otherwise authorized or permitted to make Loans, and must be registered on the Platform. Borrowers may elect to participate on the Platform as part of a community group; however, Borrowers do not need a group affiliation to register and post listings on the Platform. Prospective Borrowers with a credit score of less than 520 and Borrowers with “no credit” (due to limited information or no recent activity on their credit report) are currently not allowed to post listings on the Platform. Additionally, Borrowers who obtain a Loan through the Platform and have their Loan charged off as a result of the Borrower’s default are not eligible to post any further listings on the Platform.

Lenders. Lenders are individuals or institutions who participate on the Platform by committing their funds to Borrowers’ listings by bidding on such listings. Although we refer to these participants as “Lenders,” the Loans are made by Prosper and then sold to such participants, making them loan purchasers. We use the term “Lenders” instead of “loan purchasers” or “note holders” for the sake of brevity and simplicity. Lenders must also register on the Platform. They are not required to give credit information to the same extent as Borrowers, but they are required to provide their Social Security number or taxpayer identification number and other personal details in order to allow us to verify their identity. Lenders may also join a group on the Platform, but are not required to do so. Prior to bidding on a listing, Lenders must transfer funds to an account maintained on the Platform, referred to in this

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prospectus as a funding account, in which Lender’s funds supporting bids are held and into which amounts due to Lenders from payments on the Notes are deposited.

Group Leaders. Group leaders are individuals who serve as the head of a group of Borrowers or prospective Borrowers on the Platform. Group leaders are able to condition membership on personal facts and characteristics that may not be available to Lenders generally. Group leaders are notified of any delinquent payments by Borrowers in their group, but are not allowed to take any collection actions. Prior to September 2007, group leaders could receive compensation from Prosper based on the payment performance of Loans obtained on the Platform by their group’s members. Group leaders will continue to receive compensation related to Loans that resulted from their members’ listings posted before September 13, 2007 (the date as of which Prosper discontinued the payment of compensation to group leaders for Loans originated on or after this date). Group leaders may only act as a leader of one group. Group leaders may also participate in the marketplace as Lenders and bid on listings of Borrowers within or outside of their group. Group leaders may also act as Borrowers and request Loans as an “ungrouped” individual or as a member of a group other than their own.

Prosper. Prosper operates the Platform. Prosper also services the Notes by collecting the monthly payments and distributing those payments to the Lenders, attempting to collect on delinquent payments, referring Notes to third party collection agencies and selling Notes in default to third party debt buyers. Prosper is licensed or otherwise authorized or permitted to make Loans in the states where Borrowers reside.

Registration on the Platform

All Platform participants must register with Prosper and agree to the Platform rules and Terms of Use, including consent to receipt of disclosures electronically. At the time of registration, individuals or authorized institutional agents must provide their name, address and an email address. After responding to an email verification, registrants must agree to the terms and conditions (including the applicable registration agreement) for the specific role for which they are registering. See “Description of the Securities – Material Agreements – Platform Participants” beginning on page 43 for more information.

Borrowers. Borrowers must provide their Social Security number, state driver’s license number and bank account information so that Prosper can verify the Borrower’s identity against data from credit reporting agencies and other identity and anti-fraud verification databases. Those who pass authentication are assigned one of seven “credit grade” credit score bands (AA, A, B, C, D, E, and HR (High Risk)) based on the credit score obtained by Prosper from an independent credit reporting agency. See “Description of the Securities – The Notes – Borrower Credit Quality” beginning on page 37 for more information.

Prosper also allows individuals to post listings on the Platform as a member of a group. Borrowers who are not already members of a group may request membership in a group in order to be eligible to post listings on the Platform as part of a group. Borrowers’ group membership requests are forwarded by Prosper to the applicable group leader, who determines and communicates whether the Borrower has been accepted into the group. A Borrower may only belong to one group at a time. Once accepted into a group, Borrowers are eligible to post listings on the Platform as part of the group.

Lenders. Lenders must provide, in the case of individuals, their Social Security number and state driver’s license number, or, in the case of institutions, their taxpayer identification number, to Prosper. At the time a Lender registers with Prosper, the Lender must agree to the rules, limitations, processes and procedures established by Prosper for originating, servicing, collecting and transferring Loans through the Platform, including a uniform collection process. At the time of registration, the Lender must select a collection agency to be used in the event the Loan goes into default. Lenders may change their collection agency preference at any time they bid on a listing on the Platform. See “Description of the Securities – The Notes – Borrower Default and Collection” beginning on page 38 for more information.

Lenders must deposit funds into a funding account prior to bidding on any listing on the Platform. No funds in the Lender’s funding account are ever commingled with Prosper’s own funds.

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Group Leaders. An individual must be registered as a Borrower or a Lender on the Platform in order to register as a group leader. Groups can be any formal or informal collection of people with common interests, including social, cultural, ethnic, professional, education-based, geographical, athletic, religious or any other official or unofficial affiliation. There is currently no minimum or maximum number of members a group may have, but Prosper currently limits the number of listings new groups may have on the Platform at one time. Prosper reserves the right to limit, or change the limits on, the number of a group's members or listings. Group leaders also have the ability, if they so choose, to review and approve their group members’ listings before they are posted on the Platform for bidding. Prior to September 2007, group leaders could receive compensation from Prosper based on the payment performance of Loans obtained on the Platform by their group’s members. Group leaders will continue to receive compensation related to Loans that resulted from their members’ listings posted before September 13, 2007 (the date as of which Prosper discontinued the payment of compensation to group leaders for Loans originated on or after this date).

Posting Listings

Once registered, Borrowers may use the Platform to request Loans in amounts ranging from $1,000 to $25,000, subject to variations based on applicable state laws and Prosper's lending authority in a particular state. In addition to the amount of the requested Loan, Borrowers indicate the maximum interest rate they are willing to pay. Borrowers’ requests for Loans – referred to as “listings” – are displayed and offered for auction on the Platform by credit grade, debt-to-income ratio, Borrower location and other characteristics drawn from the Borrower’s credit report. Borrowers may also provide a picture and a narrative describing personal characteristics or motivations which they believe may persuade Lenders to bid on their listing. Borrowers can specify a listing duration of between three and ten days, or they can designate their listing for “automatic funding,” whereby the listing will close as soon as the Borrower’s requested Loan amount is met by one or more Lender bids. Borrowers may withdraw their listing without charge at any time prior to expiration of the listing.

Borrowers’ credit grades are posted with their listings, along with additional summary credit data from the Borrower’s credit report, including the number and aggregate amount of currently-delinquent accounts, the number of 90-day delinquencies in the last seven years, the number of negative public records (e.g., bankruptcies, liens and judgments) on the Borrower’s credit report over the last ten years, the date the Borrower’s first reported credit line was opened, the total number of credit lines appearing on the credit report, along with the number that are open and current, the total balance on all of the Borrower’s open revolving credit lines, the Borrower’s bank credit card utilization ratio, expressed as a percentage, reflecting the ratio of the total balance used to the aggregate credit limit on all open bank credit cards, and the number of inquiries made by creditors to the Borrower’s credit report in the last six months. If a new listing is posted more than 30 days after the Borrower’s credit grade was last determined from the Borrower’s credit report, Prosper will initiate an inquiry to obtain another credit report in order to update the Borrower’s credit grade and other credit data. See “Description of the Securities – The Notes – Borrower Credit Quality” beginning on page 37 for more information.

Listings also display an estimate of the Borrower’s non-housing debt-to-income ratio (or DTI) that would result if the listing were matched and the Loan were to be funded. In calculating a Borrower’s DTI, Prosper includes as debt the Loan they are requesting through the Platform and uses existing non-housing debt as shown on the Borrower’s credit report, but relies (without verification) on the Borrower’s statement of income. Listings also display the Borrower’s self-reported occupation, employment status and range of income, and indicate whether the Borrower is a homeowner. In most instances, homeownership status is derived from the Borrower’s credit report; if the report reflects an active mortgage loan, the Borrower is presumed to be a homeowner (although Borrowers may also provide proof of homeownership to establish homeownership status). Listings also display the Borrower’s group affiliation, if any, and the group’s rating and other characteristics.

Borrowers may have up to two Loans outstanding at any one time, provided that the aggregate outstanding principal balance of both Loans does not exceed the maximum Loan amount for the Borrower’s state of residence. To be eligible to obtain a second Loan, Borrowers must be current on their existing Loan, and must not have been delinquent in making their two most recent monthly Loan payments. Also, Borrowers may not post a listing for a second Loan within six months following the origination date of their existing Loan. Borrowers may have only one listing outstanding at a time.

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Bidding on Listings

Prosper provides for two types of Lender bids. Lenders can bid selectively, by browsing through and bidding on one or more Borrower listings. Lenders can also bid by making a “standing order” by indicating the amount the Lender is willing to commit to Borrower listings, the interest rate and Borrower and group criteria and other characteristics of the Notes or Borrower that the Lender would bid on if available. Lenders can employ either or both methods of bidding. Currently, the minimum amount a Lender may bid is $50, and the maximum amount a Lender may bid on a listing is the amount of the requested Loan. The maximum aggregate amount an individual Lender may bid on the Platform is currently $5,000,000 for individuals and $50,000,000 for institutions.

To bid selectively, Lenders may browse online on the Platform through available Borrower listings displayed on the Platform by desired Loan amount, current auction interest rate, Borrower credit grade, non-housing debt-to-income ratio, and group and other Borrower characteristics. A Lender can bid on as many Borrower listings as the Lender desires, subject to the aggregate bidding limit.

To bid using standing orders, the Lender enters an aggregate amount the Lender desires to bid, the maximum amount that may be bid on one Borrower listing, the minimum interest rate the Lender is willing to receive, the acceptable Borrower credit grade or grades, the acceptable range of DTIs and other Borrower credit characteristics. When a Lender makes a standing order, bids will automatically be placed on any then active Borrower listings meeting the criteria selected. Borrower listings with the highest current auction rates above the Lender’s minimum will be matched first, and thereafter the Lender’s bid will be matched to Borrower listings with incrementally lower current auction rates (but still at or above the Lender’s minimum acceptable rate) until all of the Lender’s funds committed to the standing order are placed. Lenders can pause or cancel standing orders, and can direct that, as new funds are deposited into the Lender’s funding account from Loan payments or transfers of new funds, they be applied to the standing order and automatically bid on listings that meet the criteria of the standing order.

Both the selective and standing order bidding methods enable Lenders to diversify the risk of Borrower default if they elect to do so. It is solely up to the individual Lenders to select their bidding method and the credit characteristics which are acceptable to the Lender and to determine a diversification strategy. Prosper plays no role in the decision-making process of any Lender.

To ensure that listings can be matched with winning bids as soon as listings expire, at the time a Lender makes a bid (whether selectively or through a standing order) the Lender must have funds on deposit in the Lender’s funding account in at least the amount of the Lender’s outstanding bids. Lenders may not withdraw bids once they are posted on a listing. Bids expire automatically when they are no longer “winning” – i.e., when the bidding Lender is outbid – or when a listing expires without having received bids in the amount of the requested Loan or is withdrawn by a Borrower.

At the time listings or bids are posted, the Borrower or Lender, as applicable, electronically signs an agreement committing the party to the terms of a Loan, should a bid and listing be matched. Listings and bids are not guaranteed to be accepted or matched. The Borrower’s commitment when posting a listing is to make payments in accordance with the terms of the Note or Notes evidencing the Loan should the listing receive a sufficient amount of bids to result in Prosper’s funding of the requested Loan. The Lender’s bid is a commitment to purchase a Note in the principal amount of the Lender’s bid, should the listing receive a bid or bids totaling the Borrower’s requested Loan amount.

Verification of Participant Information

Prosper reserves the right in the Borrower Registration Agreement to verify the accuracy of all statements and information provided by Borrowers, Lenders and group leaders in connection with listings, bids and Loans. 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 Loan. If Prosper is unable to verify material information with respect to a Borrower, listing or bid, Prosper may cancel or refuse to post a listing, or cancel any or all bids against a listing. Prosper may also delay funding of a Loan in order to enable Prosper to verify the accuracy of information provided by a Borrower, a Lender or a group leader in connection with the listing or bids, and to determine whether there are any irregularities with respect to the listing or bids. Prosper may also refuse to make a Loan, even if the listing garners a sufficient amount of bids to otherwise support the funding of the Loan, if material misstatements or inaccuracies are found in the listing or in other information provided by the Borrower.

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In most instances, Prosper does not verify the income, employment and occupation or other information provided by Borrowers in listings. The Borrower’s income, employment and occupation is self-reported, and the Borrower’s DTI is derived by Prosper 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 of verification by Prosper. Prosper does not verify any statements by Borrowers as to how Loan proceeds are to be used and does not confirm after Loan funding how Loan proceeds were used. Although Borrowers may provide proof of homeownership to establish homeownership status, in most instances homeownership status is derived from the Borrower’s credit report, but is not verified by Prosper; if the credit report reflects an active mortgage loan, the Borrower is presumed to be a homeowner.

Prosper reserves the right in the Borrower Registration Agreement to verify all statements and information provided by Borrowers in listings at any time. If material misstatements or inaccuracies are found, Prosper has the right to cancel listings or refuse to make a Loan. In instances where Prosper chooses to verify the income, employment and occupation or other information provided by Borrowers in listings, the verification is normally done at the pre-funding stage, after the listing has been already been created and bidding has ended. In such cases, the results of Prosper’s verification are not reflected in the listings themselves.

In connection with Prosper’s identity and anti-fraud verification of Borrowers, Prosper verifies the deposit account from which the Borrower will make payments, to determine that the Borrower is the holder of record of the account. Even if a listing receives bids in the total amount requested, Prosper will cancel the listing without funding the requested Loan if Prosper is unable to verify the Borrower's account. While Prosper attempts to authenticate each Platform participant’s identity, Prosper’s fraud checks could fail to detect identity theft, fraud and inaccuracies. See “Risk Factors – Risks Related to Borrower Default” beginning on page 15 for more information.

Auction Process and Loan Funding

When a Lender places a bid, the amount of that bid is placed on hold in the Lender’s funding account pending the completion of the auction, or until such time that the bid is no longer winning or expires. If an auction has been completed and a Lender’s bid determined to be a “winning bid,” Prosper will provide the Loan proceeds to the Borrower from Prosper’s own funds. Loan funding occurs when Prosper disburses Loan proceeds into the Borrower’s designated deposit account, using the ACH banking network for transmission of the funds. On the day following the date Loan proceeds are disbursed to the Borrower, the Lender’s funds in the amount of his or her bid are transferred from the Lender’s funding account to Prosper by the depository bank. In the event that a Lender’s bid is not a winning bid, the hold on the funds will be released, and the funds in the amount of the bid will be available for further bidding by the Lender.

If a listing gets a bid or bids in an amount totaling the amount of the requested Loan, the bids that are winning bids at the time the listing expired are matched with the listing, and Prosper delivers the requested Loan amount to the Borrower (less Prosper’s transaction fee) in exchange for separate Notes in the amount of each winning bid. Although a Lender may bid the entire requested Loan amount and be the sole winning bidder on a listing, Lenders may bid in lower increments, and listings are frequently matched with multiple bids from different Lenders. It is up to each Lender to decide whether and to what degree the Lender will seek to diversify the risk of Borrower default through the Lender’s bidding strategy. See “Risk Factors – Risks Inherent in Investing in the Notes” beginning on page 19 for more information.

Each Loan is evidenced by separate Notes, each in the amount of each  winning bid, and each Note is sold and assigned without recourse by Prosper to the respective Lender. For example, if a Borrower requests a $1,500 Loan and there are 15 winning bids of $100 each on the Borrower’s listing at the time the listing expires, the Borrower will electronically sign 15 separate Notes, each in the principal amount of $100. All Loans are originated by Prosper from its own funds, and the Notes evidencing the Loan to the Borrower are thereafter sold to the Lenders whose bids have been matched with the Borrower’s listing. When the auction bidding period expires, Prosper completes its pre-funding verification prior to disbursement of Loan proceeds. Loans are funded from Prosper’s own account, and the Loan proceeds are transferred into the Borrower’s designated account via electronic transfer. Prosper’s transaction fee is paid by the Borrower out of, or contemporaneously with disbursement of, the proceeds of the Loan at the time the Loan is funded.

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Borrowers are provided with legally-required disclosures at each stage of the process. Borrowers do not have any right to rescind any Loan that results from the matching of their listing with winning bids. Although all Notes are originated and sold without recourse by Prosper, Prosper represents and warrants to the Lenders who are the winning bidders on a listing that as of the date a Loan is sold to the Lender, (1) Prosper has complied in all material respects with applicable federal, state and local laws in originating the Loan, (2) the proceeds of the Loan have been fully disbursed to the Borrower from Prosper’s own funds prior to the Lender’s purchase of the Note, and (3) Prosper has made commercially reasonable efforts to authenticate the identity of the Borrower, and based on such authentication, to the best of Prosper’s knowledge: (i) the Borrower had full legal capacity to execute and deliver the Note, and (ii) each Note is the legal, valid and binding obligation of the Borrower, and is enforceable in accordance with its terms. The Lender Registration Agreement provides that, in the event of a material breach of Prosper’s representations and warranties, Prosper must either cure the defect, repurchase the Note, or indemnify and hold the Lender harmless against losses resulting from the defect in the Note. See “Description of the Securities – Material Agreements – Platform Participants” beginning on page 43 and           “– Repurchase of the Notes by Prosper” beginning on page 47 for more information.

Depository

When posting a bid, a Lender transfers funds electronically into the Lender’s funding account, an account maintained by Prosper at an FDIC-insured depository institution, for the benefit of the Lender. Subsequent Borrower payments on a Note are also deposited into the funding account, after initially being deposited into a master servicing account. Once a Loan is made and Loan proceeds have been disbursed to the Borrower, the servicing of the Loans is accomplished by Prosper through a master servicing account at an FDIC-insured depository institution.

Based on its interpretation of certain rulings of the FDIC, Prosper has structured the Platform accounts such that the funds in the accounts at the FDIC-insured depository institution that belong to Platform participants are protected by FDIC deposit insurance up to $100,000 per individual on a pass-through basis. In the period of time while any funds are awaiting application to acquire a Loan or distribution to a Lender or Borrower, they are protected from loss by the FDIC insurance coverage and federal bank regulation. Pass-through deposit coverage is contingent upon Prosper maintaining accurate account records. Prosper maintains records of Loan distributions, repayments, delinquencies and defaults. Platform participants do not currently accrue interest on amounts held in the Prosper accounts. No funds in the Lender’s funding account are ever commingled with Prosper’s own funds. Except for funds in the Lender’s funding account subject to pending bids, a Lender may withdraw amounts from his or her funding account at any time.

Servicing

Prosper is obligated to provide certain administrative, clerical, recordkeeping, identity verification, payment processing, collection and other services with respect to the Notes. The Notes are recorded on Prosper’s books and the account and repayment performance are reported by Prosper to the credit reporting agencies without displaying the identity of the individual Lender or Lenders who own the Notes. Borrowers’ Loan payments are made by electronic transfers or bank draft directly from each Borrower’s designated payment account into a master servicing account maintained at an FDIC-insured depository institution and administered by Prosper primarily for the benefit of the individual Lenders. Prosper maintains electronic records of Loan disbursements and Borrowers’ payments and provides monthly account statements in electronic format to Borrowers and Lenders. All collections, less Prosper’s servicing fee, are delivered via electronic transfer from the master servicing account to the Lender’s funding account. See “Description of the Securities – The Lender Participant Rights” beginning on page 40 for more information.

Resale of the Notes

Prior to the date of this prospectus, the Notes have been non-transferable except by assignment to a collection agency upon default. As soon as practicable after the date of this prospectus, Prosper intends to establish a secondary trading market online auction platform, or the Resale Platform, on which the Notes may be resold to other Lenders after three months following the date that a selling Lender acquired the Note from Prosper (or immediately if the selling Lender acquired the Note on the Resale Platform). After the three-month holding period, if a selling Lender desires to sell a Note prior to the end of the Note’s term, the selling Lender may post the Note for sale on the

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Resale Platform for resale in a similar auction format as a Borrower listing. If a Lender purchases the Note, then the Note will be transferred through the Resale Platform to the Lender. A Note resold through the Resale Platform must be purchased in its entirety by a single Lender. Once a Note has been resold through the Resale Platform to a subsequent Lender, the Note may again be resold through the Resale Platform without any required holding period. After the date of this prospectus, except for sales of Notes on the Resale Platform, the Notes will continue to be non-transferable except by assignment to a collection agency upon default.

Notes outstanding prior to the date of this prospectus will become transferable through the Resale Platform as a result of the amendment to the Lender Registration Agreement, effective as of the date of this prospectus. Previously, the Notes were non-transferable except by assignment to a collection agency upon default.

Notes Subject to Resale by Lenders. The Resale Platform will enable Lenders to resell Notes originated on the Platform as well as Notes purchased from other Lenders through the Resale Platform. In order for Notes to be eligible for resale by a selling Lender, the selling Lender must have held them for a minimum of three months following the date that a selling Lender acquired the Note from Prosper (or immediately if the selling Lender acquired the Note through the Resale Platform). Notes that have been previously resold through the Resale Platform may be resold by the purchasing Lender without any required holding period. Notes on which Borrowers have become delinquent will be eligible for resale on the Resale Platform. There is no limit on the number of times Notes may be resold on the Resale Platform, so long as they are outstanding.

Creation of Resale Listings. Lenders who want to sell one or more of their Notes may offer them for resale on the Resale Platform by creating and posting a “resale listing.” Lenders may offer to sell any or all of the Notes they own and may offer to resell more than one Note at the same time.

The Lender will designate a minimum sale price the Lender is willing to receive for the Note. The lowest minimum sale price Lenders may offer in a resale listing will be $0.50. The minimum offered sale price may not exceed the sum of (i) the total of all remaining monthly payments of principal and interest on the Note, plus (ii) accrued but unpaid late charges.

Selling Lenders who post resale listings will be able to specify a listing duration of three, five or seven days. Selling Lenders may also, for an additional fee, add an “automatic sale” feature to their resale listing, which would allow the selling Lender to set an automatic sale price in addition to their minimum offered sale price. This feature would close a resale listing immediately after the listing receives an initial bid equal to the automatic sale price, and the Note would be immediately sold to the Lender who posted the bid.

It is anticipated that Lenders who post resale listings will pay Prosper a nonrefundable resale listing fee of $0.25 per Note being listed for resale in the auction format. Lenders who post resale listings designated for resale with an automatic sale feature will have to pay Prosper a nonrefundable resale listing fee of $0.50 per Note being listed for resale. Resale listing fees will be deducted from the Lender’s funding account at the time the resale listing is posted on the Resale Platform.

Resale listings will be able to be withdrawn by the selling Lender, without charge (other than the loss of the resale listing fee, which is non-refundable) at any time prior to expiration of the auction bidding period, or in the case of resale listings designated for immediate sale, at any time before a winning bid is received.

Display of Resale Listings. It is anticipated that resale listings will be displayed for auction on the Resale Platform, and include the selling Lender’s screen name, the offered sale price of the Note, the interest rate on the Note and the remaining term of the Note, and the effective rate that corresponds to the offered sale price. Resale listings will also include the repayment status on the Note (i.e., current or delinquent), a summary of the Borrower’s payment history and the next scheduled payment on the Note. The repayment status will be updated as payments come due while the resale listing is open for bidding. Resale listings will also include the remaining duration of the resale listing, and whether the resale listing has an automatic sale feature.

Resale listings will include a link to the original Borrower listing (including the listing title, description, credit data, endorsements, questions and answers, and original bidding history) that corresponds to the Note being offered for

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resale. Although resale listings will be displayed publicly on the Resale Platform, the corresponding Borrower listings will be viewable only by registered Lenders.

The selling Lender’s offered sale price of the Note will be displayed as a dollar amount. Resale listings will also display an effective rate that corresponds to the offered sale price, based on a comparison of the sale price to the remaining principal balance and remaining term of the Note. For example, if a selling Lender designates a $90 sale price for a Note that bears interest at 12% and has a remaining principal balance of $90, the listing will display the sale price of $90 and a corresponding effective interest rate of 12%. However, if the Lender specified a sale price of $95, the corresponding effective interest rate displayed would be less than 12%. Conversely, if the Lender specified a sale price of $80, the corresponding effective interest rate displayed would be greater than 12%. The display of the corresponding effective interest rate is included for the benefit of bidders who are more interested in expected rate of return than the remaining principal amount of the Note.

Bidding on Resale Listings. Only registered Lenders are eligible to bid for and purchase Notes listed for resale on the Resale Platform. Lenders may bid for and purchase one or more Notes from selling Lenders. As with bidding on Borrower listings, Lenders who bid on resale listings must have funds on deposit in the Lender’s funding account in at least the amount of the Lender’s bid or bids; Lender withdrawals from the Lender’s funding account are prohibited to the extent any such withdrawal would reduce the balance below the aggregate amount of the Lender’s pending bids on Borrower listings and resale listings. Lenders are not eligible to bid on their own resale listings.

Lenders bidding on resale listings must bid for the full amount of the Note being sold, and there may be only one winning bidder for a Note offered for resale by a selling Lender.

Lenders bidding on resale listings can bid selectively, by browsing through and choosing one or more resale listings that appeal to the Lender. Lenders can also bid by making a “standing order,” by pre-selecting bid parameters such as the amount the Lender is willing to bid, the effective rate and the remaining term of the Note being offered for sale. Lenders bidding on resale listings can employ either or both methods of bidding.

Bids may be made by Lenders until the end of the auction period specified in the resale listing. The selling Lender may, however, end the auction bidding period early at any time after a winning bid is made. The winning bidder is the Lender who has bid the highest price as of the end of the auction bidding period (or the automatic sale price with respect to a resale listing with such a feature).

Proxy Bidding. The Resale Platform will employ an automated proxy bidding system that enables bidding Lenders to place a bid higher than the then current bid, and have bids continually applied against a resale listing, up to a specified maximum bid amount. The maximum bid amount is hidden from view until competing bids push the current sale price higher until the maximum bid is met.

Close of Bidding and Resale of Loans. When a resale listing ends with a winning bidder, the final sale price is immediately withdrawn from the winning Lender’s funding account to pay the selling Lender. Prosper intends to charge the selling Lender a resale transaction fee equal to 1.0% of the sale price, subject to a minimum fee of $0.50. Prosper’s resale transaction fee is deducted from sale proceeds prior to the sale proceeds being transferred to the selling Lender’s funding account.

Upon the selling Lender’s receipt of the final net sale proceeds, the Note is sold, transferred and assigned by the selling Lender to the winning bidder without recourse. All further Borrower payments made on the Note will be credited to the account of the Lender who purchased the Note from a previous holder. The purchasing Lender may retain ownership of the Note for the remainder of its term, or list the Note for resale on the Resale Platform. The electronic original Note is kept in the possession and control of Prosper, as servicer of the Note, for the remaining term of the Note, or until a Note in default is sold to a third-party debt buyer.

Resale Fees. Prosper intends to charge all selling Lenders a nonrefundable resale listing fee of $0.25 per Note being listed for auction sale, or $0.50 per Note being listed for auction with an automatic sale feature. Listing fees will be charged and collected at the time the listing is posted on the Resale Platform by deducting the resale listing fee from the selling Lender’s funding account.

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Prosper also intends to charge the selling Lender a resale transaction fee equal to 1.0% of the sale price, subject to a minimum fee of $0.50, which will be deducted from the sale proceeds at the time a Note is sold to a subsequent Lender. Prosper will collect its resale transaction fee only if the Note is sold. In addition, Prosper will continue to receive its monthly loan servicing fee on the Note. See “Description of the Securities – The Lender Participant Rights” on page 40 for more information regarding servicing fees payable to Prosper.

Broker-Dealer. In connection with establishing the Resale Platform, Prosper intends to either enter into an agreement with a broker-dealer registered under the Securities Exchange Act of 1934 to effect the transfer of the Securities on the Resale Platform or to establish a subsidiary which would be so registered.

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DESCRIPTION OF THE SECURITIES

General

The Securities to which this prospectus relates include the Lender Participant Rights, which are associated with the Notes, and the Notes. The Lender Participant Rights represent the obligations of Prosper to seek to establish and maintain the Resale Platform, and to provide various administrative, clerical, recordkeeping, identity verification, payment processing, collection and other services, with respect to the Notes, as described in this Prospectus and as set forth in each Lender Registration Agreement. The Notes are promissory notes representing three-to-five-year, unsecured, fully-amortizing credit obligations of individual Borrowers. Prosper has no obligation for payment of principal of or interest or other charges on the Notes.

The Notes

The Notes represent unsecured fully-amortizing credit obligations of individual Borrowers on the Platform. Each Note has a term of three-to-five years, and may be prepaid by the Borrower at any time without penalty. Interest rates, principal amount and term vary among the Notes. Notes representing a single Loan to a Borrower will have the same interest rate and term, but may be in different principal amounts. The applicable interest rates on the Notes are determined in an auction format where prospective Borrowers post listings requesting Loans and indicate the maximum interest rate they are willing to pay and the term of the desired Loan, and Lenders “bid” the amount they are willing to commit to the purchase of the Notes and the minimum interest rate they are willing to receive.

When a Borrower’s Loan listing is matched with a Lender bid in, or Lender bids totaling, the amount of the Loan requested by the Borrower, the Borrower receives a three-to-five-year, unsecured, fully-amortizing Loan from Prosper. Each Loan is evidenced by separate Notes in the amount of each winning bid, and each Note is thereafter sold and assigned by Prosper to each respective Lender without recourse to Prosper. See “Operation of the Platform – Auction Process and Loan Funding” on page 30 for more information regarding the matching of bids and listings, the origination  of Loans and the issuance of the Notes.

Interest. Except in the case of Notes that represent a single Loan to a Borrower, interest rates vary among the Notes. Interest rates are determined in an auction format where prospective Borrowers indicate the maximum interest rate they are willing to pay and Lenders bid the minimum interest rate they are willing to receive. The interest rate for all Notes with respect to a Loan is determined at the end of a listing period (between three and ten days). If a Borrower listing receives a bid in, or bids totaling, the amount of a requested Loan, the interest rate is fixed for the term of the Notes at the minimum interest rate acceptable to all Lenders who are the winning bidders for the Loan at the expiration of the auction bidding period. Borrowers may elect to forego the potential benefits of auction bidding and designate their listing for “automatic funding,” in which case the bidding period will end automatically as soon as the listing receives bids totaling the requested Loan amount, and the interest rate will be the Borrower’s designated maximum interest rate.

Interest is charged on unpaid principal until the full amount of principal has been paid, beginning on the origination date of the Loan. Interest on the Notes accrues daily, on the basis of a 365-day year, based on the then current outstanding principal amount of the Loan. While payments are divided into equal monthly installments for the term of each Note, a greater amount of each payment is applied to interest at the beginning of the Note’s term, while an increasing amount of each payment is applied to principal towards the end of the Note’s term. As the principal balance drops over the course of the Note’s term, the rate of accrual will also slow over the term of a Note. The applicable interest rate will not change as a result of late payments or any default. Because interest accrues on a simple interest basis, if payments are made before or after the scheduled payment due date, the final monthly payment amount may be less than or greater than the regular monthly payment amount, and early payments and prepayments may reduce the number of remaining payments on the Note.

Interest rates may be limited by state consumer lending laws, some of which specify maximum interest rates at which money can be loaned to borrowers in that state. State interest rate limitations on the Platform are determined by reference to the laws of the Borrower’s state of residence, or in some instances, the rate limitations applicable in California. The state interest rate limitations do not apply to Lenders. Lenders from any state can bid at interest rates

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up to the maximum interest rate specified by any Borrower. When a Borrower posts a listing on the Platform, the maximum interest rate the Borrower can indicate he or she is willing to receive on the listing is capped at the maximum interest rate allowed under state interest rate limitations applicable to the Borrower.

Payments. The Notes are payable in equal monthly installments throughout the term of the Note, consisting of principal and interest, with the final payment consisting of the then remaining principal, unpaid accrued interest and any other accrued but unpaid charges due on the Note. Borrowers are required to make monthly payments for the duration of the Notes, unless they decide to prepay the Loan. Loans originate on a particular day of the month and have monthly payments due that same day of future months. Loans which originate on a day of a month which doesn’t exist in future months will have monthly payments due on the closest possible day of future months. For example, a Loan with an origination date of January 31 will have its monthly payments due on February 28 (during non-leap years), March 31, April 30, etc.

Borrowers can choose one of two payment methods:

•Electronic funds transfer: Under this method monthly payments are made electronically on the Automated Clearing House (ACH) banking network by preauthorized withdrawals from the Borrower’s designated payment account.

•Bank draft: Borrowers who choose the bank draft method of payment are authorizing Prosper to write a check on a monthly basis on their behalf to cover their payment each month.

The interest rates shown on listing pages on the Platform assume that a Borrower will choose the ACH method of transfer, and reflect a 1.0% reduction in the interest rate as an incentive to select this method of payment because payments made by ACH transfer are less costly for Prosper to administer. Borrowers who choose not to make payments by ACH transfer will not receive this discount. The amount of the 1.0% discount foregone by Borrowers who do not choose the ACH method of transfer will not be paid to Lenders, but will be retained by Prosper for processing bank draft payments.

As payments are made, they are applied first to any late charges then due, then to any unpaid NSF fees, then to interest then due and then to unpaid principal balance. Borrower payments on a Loan are allocated pro rata to Lenders based on the principal amount of each Lender’s Note with respect to the Loan. Prosper’s servicing fee is deducted from monthly payments as they are received.

Borrowers have the option to pay all or part of the outstanding principal balance in advance of the due date at any time and without any penalty. For a Borrower to prepay a Note in full, the principal balance along with interest and any fees accrued to the date on which the payment will be initiated (which may be one or more days in the future) will be added together to determine the amount required to pay off the Loan. If a Borrower makes a partial prepayment, the amount paid in excess of the amount then due is applied to the principal amount outstanding. Monthly payment amounts will not change but the term of the Loan may shorten as interest will continue to accrue only on the principal amount that remains outstanding.

Borrower Chargebacks. It is possible that a Borrower who has made a Loan payment can have his or her bank cancel and request a refund on that payment. This is referred to as a chargeback. A Borrower chargeback is initiated outside of Prosper. Because Prosper imposes a waiting period of four business days on incoming payments from the initiation of the payment before any portion of such payment is credited to a Lender’s funding account, payment failures and cancellations that occur within four business days of payment initiation have no impact on the Lender’s funding account balance.

Beyond the four business day waiting period, however, the rules governing funds transfers through the ACH banking network provide that Borrowers have up to 60 days to request a chargeback on their Loan payments. Prosper will contest chargebacks when we deem it appropriate.

If a chargeback is processed successfully between four and 60 days after the payment was initiated:

•The full amount of the chargeback will be withdrawn from Lenders’ funding accounts. This may cause a Lender to have a negative cash balance.

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•Prosper Lender servicing fees will be refunded to the Lender commensurate with the amount of the chargeback (except to the extent a Lender has a negative cash balance in his or her funding account).

•The amount of the chargeback representing a payment toward principal will begin accruing interest again in the Borrower’s Loan balance.

•Applicable late fees will be assessed to the Borrower, to the extent allowed by applicable law, based on the effect of the chargeback on the Borrower’s payment status.

Unsecured Obligations; No Recourse to Prosper. All Notes issued on the Platform are unsecured credit obligations of individual Borrowers. This means that there is no collateral supporting any extension of a Loan to a Borrower that may be foreclosed upon in the event of default or in lieu of payment. There is no right of recourse to Prosper on the Notes. None of Prosper, any depository bank or any collection agency has any obligation for payment of principal of or interest or other charges on the Notes. The Notes are not guaranteed by any person, entity or governmental agency or other third party. Only the individual Borrower on a Note has any obligation for payment of principal of or interest or other charges on the Note.

Governing Law. In most cases, the Notes by their terms are governed by the laws of the state in which the applicable Borrower on the Notes resides, as reflected in Borrower registration records maintained by Prosper. Borrowers are obligated to notify Prosper of any change in their state of residence. For Borrowers who are residents of Alaska or Minnesota, Notes representing their obligations are governed by the laws of the State of California.

Borrower Finance Charges and Fees

Transaction Fees. Prosper charges a transaction fee each time a Loan is funded. The transaction fee is currently either 1% or 2% of the Loan amount, depending on a particular Borrower’s credit grade, or $25, whichever is greater. The transaction fee is paid by the Borrower out of, or contemporaneously with disbursement of, the Loan proceeds at the time a Loan is funded. The amount and method of charging the transaction fee is subject to adjustment to the extent required by applicable state law.

Failed Payment Fees (NSF fees). If an automatic monthly payment fails due to insufficient funds or because a Borrower closes his or her bank account and fails to notify Prosper, the Borrower will be charged $15 on the first failed payment of each billing period. This fee may vary, or may not be charged at all, depending on applicable laws of the Borrower’s state of residence. This fee is retained by Prosper to cover Prosper’s administrative expenses for processing failed payments.

Late Payment Fees. If a monthly payment is 15 days late, the Borrower will be charged a late fee. Late fees are passed on to Lenders once collected. Late fee amounts may vary, and late fees may not be charged at all, depending on the law applicable to the Borrower’s Loan.

If payments are paid late, payments will be first applied against accrued failed payment fees and late payment fees, and a greater portion of the payment will be applied to accrued interest, and a lesser portion (if any) will be applied to principal reduction, which will result in the Loan not amortizing as originally scheduled.

Borrower Credit Quality

Prosper assigns one of seven letter credit grades (AA, A, B, C, D, E and HR (High Risk)), based on the Borrower’s credit score, to each registered Borrower who posts a listing. Prosper currently uses Experian Scorex PLUS^SM credit scores, but may from time to time change the type or source of the credit scores it uses to determine credit grades. Experian is one of the three leading credit reporting agencies in the United States. The Experian Scorex PLUS^SM model is proprietary to Experian and is built for predicting risk on new accounts for all types of traditional consumer credit products. Experian’s databases hold information about the credit status of more than 300 million consumers and

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about 30 million businesses around the world. Experian collects this information from publicly available sources and from lending organizations.

A credit score is a number that attempts to forecast the likelihood of a prospective borrower’s performance of its obligations with respect to extensions of credit. Scoring algorithms analyze historical data, such as a prospective borrower’s past credit history and payment records, and assign a numerical score of the prospective borrower, ranging from a high of 900 to a low of 300. A higher number is indicative of greater likelihood that the prospective borrower will pay his or her credit obligations. Prosper’s seven letter credit grades correspond to seven credit score tiers, with more favorable credit grades assigned to the higher scores. Therefore, a prospective Borrower with a credit grade of AA is the most likely to make timely payments on his or her Loan and a prospective Borrower with a credit grade of HR is the most likely to become delinquent on his or her payment obligations.

The following table shows the equivalent Borrower Experian Scorex PLUS^SM credit scores for Prosper letter credit grades:

Credit Grade	AA	A	B	C	D	E	HR
Experian Scorex PLUSSM Credit Score	760 and up	720-759	680-719	640-679	600-639	560-599	520-559

Prosper does not allow individuals with an Experian Scorex PLUS^SM credit score below 520 to post listings on the Platform.

When a Borrower initiates the process of posting a listing for a Loan on the Platform, Prosper checks to see if it already has a credit grade on file for that person and associates that credit grade with the listing. Currently, if Prosper does not have a credit grade on file for such Borrower less than 30 days old, Prosper initiates an inquiry to retrieve a credit score on the Borrower and then assigns the corresponding credit grade. Borrowers’ credit grades are displayed with their listings and are available for viewing by Lenders. The Experian Scorex PLUS^SM numerical credit score is not displayed or disclosed to anyone (including the Borrower).

Borrowers’ credit grades are posted with their listings, along with additional summary credit data from the Borrower’s credit report, including the number and aggregate amount of currently-delinquent accounts, the number of 90-day delinquencies in the last seven years, the number of negative public records (e.g., bankruptcies, liens and judgments) on the Borrower’s credit report over the last ten years, the date the Borrower’s first reported credit line was opened, the total number of credit lines appearing on the credit report, along with the number that are open and current, the total balance on all of the Borrower’s open revolving credit lines, the Borrower’s bank credit card utilization ratio, expressed as a percentage, reflecting the ratio of the total balance used to the aggregate credit limit on all open bank credit cards, and the number of inquiries made by creditors to the Borrower’s credit report in the last six months. In addition to this credit data, the credit profile includes the Borrower’s self-reported employment status, occupation and income range, and if the Borrower’s credit report reflects an active mortgage loan, the listing indicates that the Borrower is a homeowner.

Part of a Borrower’s credit profile is a debt-to-income ratio (or DTI). DTI is a measurement of the Borrower’s ability to take on additional debt. This number takes into consideration how much debt the Borrower had prior to requesting a Loan, in addition to what the Borrower’s debt will be if the requested Loan is made. The DTI is expressed as a percentage and is calculated by dividing the Borrower’s annual income (before taxes) into his or her annual non-housing debt payments as shown on the Borrower’s credit report. It is expressed as a percentage. Borrower income is self-reported, and Prosper does not verify any Borrower’s income when calculating DTI for listings.

Borrower Default and Collection

Delinquency. The Notes provide for late charges in the event monthly payments are not made when due. Late charges are assessed on delinquent payments after expiration of a 15-day grace period. The Notes also provide, to the extent permitted by applicable law, for the Borrower to pay any fees incurred as a result of failed automated payments or returned checks or bank drafts due to insufficient funds in the Borrower’s payment account (NSF fees).

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If a Borrower who elected to make payments by automatic ACH withdrawals fails to make a monthly payment when due, Prosper will notify the Borrower of the payment delinquency. For Borrowers whose payments are made by preauthorized ACH transfers, Prosper will make two more attempts to complete the automated debit transfer from the Borrower’s payment account.

Collection. If a Borrower fails to make a payment and the delinquency is not cured within 30 days after the due date of the delinquent payment, Prosper assigns the account to the collection agency selected by the Lender or Lenders on the Loan at the time of bidding. Since there is more than one collection agency from which Lenders may choose, on Loans to a given Borrower with multiple Lenders, there may be a conflict between the Lenders’ choice of collection agency. In these instances, Prosper will use the selected collection agency common to the Lender or Lenders who have the greatest ownership interest in Loan. In the event of a tie among the Lenders as to their choice of a collection agency, the agency will be selected at random by Prosper.

As of the date of this prospectus, Prosper has contracted with Penncro Associates, Inc. and Firstsource LLC to provide collection services. Penncro is a diversified outsource provider in the accounts receivable industry, headquartered in Southampton, Pennsylvania. Firstsource is a global provider of collections and outsourcing solutions, headquartered in Mumbai, India, with U.S.-based collection agents trained to handle calls for early and late stage collections.

Upon receipt of the account, the collection agency will attempt to collect the delinquent amount. The collection agency’s fees are a pre-negotiated percentage of any amounts collected by the agency, and the collection agency’s percentage fee is deducted from the Lender’s share of delinquent payments collected by the agency. Collection fees start at 15% of the amount recovered and decrease as the delinquency persists. Additionally, these fees are subject to a 5% increase if the collection agency recovers the entire delinquent amount. The collection agency deposits the net amounts collected into a master servicing account administered by Prosper primarily for the benefit of the Lenders. During any period when a Loan involving group leader compensation based on the Borrower’s payment performance is more than 30 days past due, the group leader’s compensation with respect to the Notes representing that Loan is suspended, and the portion of the payment that would otherwise accrue to the group leader is reallocated to Lenders.

Default Sales. Except in the case of Borrower bankruptcy, delinquent Notes that become more than 120 days past due are offered for sale to an unaffiliated third-party debt purchaser and charged off. Because debt purchasers buy many past-due Notes at once, Notes that are in default might not be sold at the point at which they are exactly 120 days past due, but may remain unsold for some period after they are 120 days past due. Collection efforts will continue until the Note is sold to a debt purchaser.

When a defaulted Loan is sold to a debt purchaser, all proceeds of the sale will be paid to the Lender or Lenders who are the owners of the Loan at the time of sale. No portion of the proceeds of a defaulted Loan sale will be paid to any group leader. Any accrued but unpaid NSF fees on the Loan that would otherwise be retained by Prosper will be waived so that as much of the sale proceeds as possible can be recovered by Lenders. Debt purchasers typically buy past-due Notes at significant discounts, and Lenders should not expect to receive much of their original investment. In some cases, Notes cannot be sold at any price. The Borrower on a Note that is sold and charged off is not permitted to post any further listings on the Platform. Prosper will also report such default to the credit reporting agencies.

Borrower Bankruptcy

If we receive notice that a Borrower has filed for protection under the federal bankruptcy laws, or has become the subject of an involuntary bankruptcy petition, his or her account is placed in bankruptcy status. No further automated debit transfers or bank drafts for payment of monthly Loan payments will be initiated, and any collection activity on the account will cease. If requested by the bankruptcy court, Prosper will file a proof of claim with the bankruptcy court in the amount of the total outstanding balance owed on a Note as of the date the bankruptcy petition is filed.

Whether any payment will be made on a Note after a bankruptcy petition is filed by or against the Borrower depends on the Borrower’s particular financial situation. If the Borrower has excessive debt and insufficient income, the

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Borrower’s debts will most likely be discharged and extinguished in the bankruptcy without the Borrower making any further payments on the Note. In most cases involving the bankruptcy of a Borrower, Lenders, as unsecured creditors, will receive only a fraction of any amount outstanding on any Notes, or nothing at all. Prosper will forward any amounts received to the Lenders on a pro rata basis.

Notes of Borrowers that are in bankruptcy will not be sold in a debt sale. Following Prosper’s establishment of the Resale Platform on which Notes may be resold (subject to certain conditions), Notes of Borrowers that are in bankruptcy will not be able to be resold on the Resale Platform.

The Lender Participant Rights

The Securities offered by this prospectus include the Lender Participant Rights, which represent the obligations of Prosper to seek to establish and maintain the Resale Platform, and to provide various administrative, clerical, recordkeeping, identity verification, payment processing, collection and other services, with respect to the Notes.

Servicing. Prosper acts as the servicer of all Loans originated on the Platform and has done so on all Loans originated on the Platform since it became active in February 2006. As of September 30, 2007, Prosper was servicer for approximately $68,172,781 in aggregate outstanding principal balance of the Notes. Pursuant to the Lender Registration Agreement, Prosper may not assign its servicing rights and obligations except under specific limited circumstances. Prosper is permitted to utilize subcontractors or other third parties to perform its servicing duties and functions. If Prosper is unable to service the Loans, Prosper has a contractual obligation to Lenders to assign the servicing rights to an unaffiliated third-party loan servicer with at least three years’ experience servicing receivables similar to the Notes. There can be no assurance that Prosper will be able to assign the servicing rights to a suitable third party loan servicer. Prosper has formed an entity to be managed by employees of Prosper experienced in the Platform’s operations to service the Notes through their term and to maintain the Resale Platform through the term of the then outstanding Notes in the event that Prosper becomes unable to fulfill its servicing obligations and is unable to assign its servicing obligations to a suitable third party loan servicer. There can be no assurance that this company will be able to adequately perform the servicing of outstanding Notes or maintain the operation of the Resale Platform in such event. See “Risk Factors — Risks Related to Our Ability to Service the Notes” beginning on page 20.

Recordkeeping and Reporting. Prosper provides various administrative, clerical, recordkeeping, identity verification, payment processing, collection and other services with respect to the Notes. The Notes are recorded on Prosper’s books and the account and repayment performance are reported by Prosper to the credit reporting agencies without displaying the identity of the individual Lender or Lenders who own the Notes. Prosper maintains electronic records of Loan disbursements and Borrower payments and provides monthly account statements in electronic format to Borrowers and Lenders, itemizing any payments received, and fees or charges incurred. Prosper also sends Lenders who have earned more than $600 in interest income (or such other amount as provided by applicable state law) in any year tax forms setting forth the amount of taxable interest income that the Lenders must report to the IRS. See “U.S. Federal Income Tax Consequences” on page 49 for additional information concerning the tax consequences of acquiring the Notes.

Billing and Payment Procedures. Borrowers’ payments are made by automated transfers directly from the Borrower’s payment account, or by bank drafts drawn on the Borrower’s payment account, into a master servicing account maintained by Prosper primarily for the benefit of individual Lenders at an FDIC-insured depository institution. All immediately available collections of principal, interest and late fees, less NSF fees, group leaders’ compensation (if applicable) and our servicing fee deducted from each Loan payment, will be delivered via automated transfer from the master servicing account into the Lender’s funding account at the end of each business day. Prosper maintains electronic records of Loan disbursements and Borrower payments. Lenders do not presently  accrue interest on amounts in the servicing account or the Lender’s funding account.

Servicing Fees. Prosper currently charges Lenders a servicing fee at an annual rate of 1.0% of the outstanding balance of the Notes, except that no servicing fees are currently charged with respect to Loans made to Borrowers with a credit grade of AA. The servicing fee is payable monthly by deduction from each Lender’s share of a Loan payment. This fee is accrued the same way that regular interest is accrued on a Loan. Prosper also retains any

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returned check fees, failed payment or NSF fees and similar fees, except for late payment fees (which are passed on to Lenders).

The Resale Platform

Notes Previously Nontransferable. Prior to the date of this prospectus, the Notes have been non-transferable except by assignment to a collection agency upon default.

The Resale Platform. As soon as practicable after the date of this prospectus, Prosper intends to establish a Resale Platform on which the Notes may be resold after a selling Lender has held them for a minimum of three months following the date the selling Lender acquired the Note from Prosper. If a selling Lender desires to resell a Note prior to the end of the Note’s term, the selling Lender may post the Note for resale on the Resale Platform in a similar auction format as a Borrower listing. If a Lender purchases the Note, then the Note will be transferred through the Resale Platform to the purchasing Lender. A Note resold through the Resale Platform must be purchased in its entirety by a single Lender.

When a Note is offered for resale on the Resale Platform, the resale listing will display the Borrower’s credit grade, credit data and other information that appeared in the Borrower’s original listing. The Borrower’s credit grade, credit data and other information will not be updated for listings on the Resale Platform.

Once a Note has been resold through the Resale Platform to a subsequent Lender, the Note may again be resold by the purchasing Lender through the Resale Platform without any required holding period. Except for sales of Notes on the Resale Platform, the Notes will continue to be non-transferable except by assignment to a collection agency upon default. See “Operation of the Platform – Resale of the Notes” beginning on page 31 for more information on resales of the Notes.

Resale Fees. Prosper intends to charge all Lenders a nonrefundable resale listing fee of $0.25 per Note being listed for auction resale, or $0.50 per Note being listed for resale with an automatic sale feature. Prosper also intends to charge the selling Lender a resale transaction fee equal to 1.0% of the sale price, subject to a minimum fee of $0.50, which will be deducted from the sale proceeds.

Amendment of Lender Registration Agreement

Concurrently with the effectiveness of the registration statement of which this prospectus is a part, Prosper will amend the Lender Registration Agreement to allow transferability of previously originated Notes on the Resale Platform to other Lenders registered on the Platform.

Regulatory Matters – Licensing and Consumer Protection Laws

Loan origination activities on the Platform and the servicing of Notes are subject to state and federal regulation. Prosper and the Loans it makes must comply with applicable state usury and lending laws, including interest rate and fee limitations, and licensing and disclosure requirements. In addition, Prosper must comply with the federal Consumer Credit Protection Act, including, without limitation, the Truth-in-Lending Act, Equal Credit Opportunity Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act and Electronic Fund Transfer Act, as well as the federal Electronic Signatures in Global and National Commerce Act (ESIGN) and other federal and state laws governing privacy and data security and prohibiting unfair or deceptive business practices. Prosper is subject to examination, supervision, and potential regulatory investigations and enforcement actions by state agencies that regulate consumer lenders and other financial institutions, and federal agencies, such as the Federal Reserve Board and the Federal Trade Commission, that administer the federal consumer protection laws.

State Licensing Requirements. Prosper is licensed as a finance lender under the California Finance Lenders Law and holds similar lending licenses or authorizations in 24 other states. Prosper is subject to supervision and examination by the state regulatory authorities that administer the state lending laws. The licensing statutes vary from state to state and variously prescribe or impose recordkeeping requirements; restrictions on loan origination and servicing practices, including limits on finance charges and the type, amount and manner of charging fees; disclosure requirements; requirements that licensees submit to periodic examination; surety bond and minimum specified net worth requirements; periodic financial reporting requirements; notification requirements for changes in principal

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officers, stock ownership or corporate control; restrictions on advertising; and requirements that loan forms be submitted for review.

State Usury Limitations. Although several states have licensing laws that apply to all types of consumer lending, in a number of states no license is required to make consumer loans as long as the lender charges interest at rates below the state’s usury limit. In some instances, state licensing or usury laws apply only to loans for personal, family or household purposes, but not to business-purpose loans. In such states, Prosper seeks to ensure its compliance with applicable state law by restricting the rates it charges on Loans to Borrowers to the applicable interest rate ceiling, or by limiting the types of Loans offered, based on the individual Borrower’s representation as to the intended use of the Loan proceeds.

State Disclosure Requirements and Other Lending Regulations. In addition to state licensing requirements and usury limits, Prosper is subject to and seeks to comply with state laws and regulations applicable to consumer lending, including requirements relating to loan disclosure, credit discrimination, credit reporting, debt collection and unfair or deceptive business practices.

Truth-in-Lending Act. The Truth-in-Lending Act (TILA), and the regulation issued by the Federal Reserve Board implementing TILA, Regulation Z, require disclosure of, among other things, the annual percentage rate, the finance charge, the amount financed, the number of payments, and the amount of the monthly payment on consumer loans. Prosper provides Borrowers with a TILA disclosure form when Loans are originated and seeks to comply with TILA’s disclosure requirements relating to credit advertising.

Equal Credit Opportunity Act. The federal Equal Credit Opportunity Act (ECOA) and the regulation issued by the Federal Reserve Board implementing ECOA, Regulation B, prohibit discrimination in any aspect of a credit transaction, on the basis of race, color, religion, national origin, sex, marital status, age (with certain limited exceptions); because all or part of the applicant’s income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. Prosper complies with ECOA’s nondiscrimination requirements, and the Lender Registration Agreement requires Lenders to comply with ECOA in their bidding practices. Prosper also requires individual group leaders who form groups on Prosper to comply with ECOA in that they are prohibited from excluding individuals from membership in a group on a prohibited basis.

ECOA also requires creditors to provide consumers with notice of adverse action taken on credit applications, giving the consumer the principal reasons why adverse action was taken. Prosper provides prospective Borrowers who attempt but fail to obtain a Loan through the Platform with an adverse action notice in compliance with the ECOA’s requirements.

Fair Credit Reporting Act. The federal Fair Credit Reporting Act (FCRA), administered by the Federal Trade Commission, promotes the accuracy, fairness and privacy of information in the files of consumer reporting agencies. In addition to requirements on credit bureaus, the FCRA requires that users of consumer credit reports have a permissible purpose to obtain a credit report on a consumer and that persons who furnish loan payment information to credit bureaus report such information accurately. The FCRA also has disclosure requirements for creditors who take adverse action on credit applications based on information contained in a credit report. Prosper has a permissible purpose for obtaining credit reports on its customers and reports loan payment and delinquency information to the credit bureaus in compliance with the FCRA. Prosper’s adverse action notices contain the disclosures required by the FCRA.

Fair Debt Collection Practices Act. The federal Fair Debt Collection Practices Act (FDCPA) provides guidelines and limitations on the conduct of third party debt collectors in connection with the collection of consumer debts. The FDCPA limits certain communications with third parties, imposes notice and debt validation requirements, and prohibits threatening, harassing or abusive conduct in the course of debt collection. While the FDCPA applies to third party debt collectors, debt collection laws of certain states, including California, impose similar requirements on creditors who collect their own debts. In order to ensure compliance with the FDCPA, Prosper has contracted with professional third party debt collection agencies from which Lenders may select at the time they register with Prosper. Prosper’s agreements with Lenders and group leaders prohibit registered Lenders and group leaders from

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attempting to directly collect on the Notes, and Prosper has established procedures to ensure that Lenders and group leaders do not attempt to collect on the Notes themselves.

Servicemembers Civil Relief Act. The federal Servicemembers Civil Relief Act (SCRA) allows military members to suspend or postpone certain civil obligations so that the military member can devote his or her full attention to military duties. In accordance with the SCRA, Prosper must adjust the interest rate of Borrowers on active duty and other military personnel who qualify for and request relief. If a Borrower with an outstanding Loan is called to active military duty and can show that such military service has materially affected his or her ability to make payments on the Loan, Prosper will reduce the interest rate on the Loan to 6% for the duration of the Borrower’s active duty. During this period, the Lenders on the Loan will not receive the difference between 6% and the interest rate that was established for the Loan by the auction bidding system on the Platform. If the Borrower is a member of a group that receives group leader rewards, the group leader will not receive any rewards during the period in which the Borrower is on active duty.

Electronic Funds Transfer Act. The federal Electronic Funds Transfer Act (EFTA) and the regulation issued by the Federal Reserve Board implementing the EFTA, Regulation E, place guidelines and restrictions on the electronic transfer of funds from consumers’ bank accounts, including preauthorized electronic fund transfers from consumers’ accounts to make loan payments. Most transfers of funds in connection with the origination and repayment of Notes and bidding on the Platform are done by Automated Clearing House (ACH) electronic transfers of funds subject to detailed timing and notification rules and guidelines administered by the National Automated Clearinghouse Association (NACHA). Transfers of funds on the Platform are done in conformity with the EFTA and its regulations, as well as NACHA guidelines.

Electronic Signatures in Global and National Commerce Act. The federal Electronic Signatures in Global and National Commerce Act (ESIGN) and similar state laws authorize the creation of legally binding and enforceable agreements, including electronic loan agreements, utilizing electronic records and electronic signatures. ESIGN imposes special requirements on businesses that want to use electronic records or signatures in consumer transactions and requires businesses to obtain from consumers electronic consent or confirmation to receive information electronically that a law requires to be in writing. When a Platform participant registers on the Platform, Prosper obtains his or her consent to transact business electronically and maintains electronic records in compliance with ESIGN requirements.

Privacy and Data Security Laws. The federal Gramm-Leach-Bliley Act (GLBA) limits the disclosure of nonpublic personal information about a consumer to nonaffiliated third parties and requires financial institutions to disclose certain privacy policies and practices with respect to its information sharing with both affiliates and nonaffiliated third parties. A number of states have enacted privacy and data security laws requiring safeguards on the privacy and security of consumers’ personally identifiable information. Prosper’s privacy policy conforms to GLBA requirements, and Prosper maintains Platform participants’ personal information securely, and does not sell, rent or share such information with third parties for marketing purposes.

Bank Secrecy Act. Prosper checks customer names against the list of Specially Designated Nationals maintained by the Office of Foreign Assets Control (OFAC) pursuant to the USA PATRIOT Act amendments to the Bank Secrecy Act (BSA), and its implementing regulation. Prosper also has instituted procedures to voluntarily comply with the anti-money laundering requirements of the USA PATRIOT Act and the BSA, even though the Financial Crimes Enforcement Network, the office of the Department of Treasury charged with issuing regulations and enforcing these laws, has not yet issued a specific regulation requiring finance companies to establish an anti-money laundering program.

Material Agreements – Platform Participants

Lender Registration Agreement. The Lender Registration Agreement is a loan commitment, sale and servicing agreement entered into between individuals or institutions registering as Lenders and Prosper. Under the terms of the Lender Registration Agreement, in order to post bids on Borrower listings on the Platform, a Lender must agree to comply with the terms and provisions of the Lender Registration Agreement, the Terms of Use of Prosper’s website, and the Prosper Policies posted on Prosper’s website. The Lender Registration Agreement further provides that a bid on a listing is the Lender’s commitment to purchase each and every Note that results from all or a portion of the bid being

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matched with the listing, and that the Lender may not cancel, withdraw or reduce the amount of a bid that has been matched with a listing. The Lender Registration Agreement limits the total aggregate amount that any Lender can extend through the Platform, which, including a Lender’s aggregate amount of bids, may not currently exceed $5,000,000 for individuals, or $50,000,000 for institutions.

The Lender Registration Agreement provides that Notes representing a Loan made by Prosper to a Borrower are sold to Lenders with a winning bid on the Borrower’s listing, and that Prosper will retain certain servicing rights and obligations. The Lender Registration Agreement sets forth the terms under which Notes are to be serviced by Prosper, including Prosper’s servicing compensation, reporting obligations and indemnification obligations. Prosper provides certain representations and warranties in the Lender Registration Agreement with respect to the Notes, including a warranty that the Notes sold comply in material respects with applicable federal and state law and an agreement by Prosper to repurchase Notes that default as the result of verifiable identity theft. The Lender Registration Agreement provides for alternative remedies of cure, repurchase or indemnification for breach of Prosper’s warranties and representations with respect to Notes sold.

Prosper does not warrant or guarantee that Lenders will receive any rate of return or any minimum amount of principal or interest, and does not guarantee payment on any Note. Prosper has the right to verify the accuracy of all information provided in connection with listings, bids and Loans, and may delay or cancel inaccurate or unverifiable listings or delay funding a Loan. Under the Lender Registration Agreement, Lenders are prohibited from charging or accepting kickbacks or things of value in exchange for bids, taking any action to collect, or attempt to collect, any amount from any Borrower or any friend or endorser of a Borrower on any Note, and from discriminating against Borrowers on any prohibited basis. Lenders are required to indemnify Prosper for violations of the Lender Registration Agreement. Prosper may terminate the registration of any Lender who fails to comply with the terms of the Lender Registration Agreement.

Borrower Registration Agreement. The Borrower Registration Agreement is entered into between individuals registering as Borrowers and Prosper. In order to request Loans on the Platform, a prospective Borrower must agree to comply with the terms and provisions of the Borrower Registration Agreement, the Terms of Use of Prosper’s website, and the Prosper Policies posted on Prosper’s website. Under the Borrower Registration Agreement, a prospective Borrower authorizes Prosper to obtain a credit report and credit score from a credit reporting agency for authentication purposes, and for the display of the prospective Borrower’s credit information in listings posted on the Platform. The Borrower Registration Agreement restricts prospective Borrowers from including any personally identifying information in listings or elsewhere on the Platform and authorizes Prosper to display Borrower listings publicly.

Pursuant to the terms of the Borrower Registration Agreement, a Borrower listing is both (i) a request for a Loan in the amount specified in the listing, at an interest rate equal to the maximum interest rate set forth in the listing, and (ii) a commitment and promise to obtain a Loan from Prosper, for purchase by Lenders whose bids are matched with the listing. Borrowers may post a subsequent listing if a listing is not funded by bids or once the Borrower has paid a Loan in full, but Borrowers may only have one listing outstanding at a time. Borrowers have the right to withdraw a listing at any time prior to expiration of the listing, and Prosper reserves the right to limit the number of listings Borrowers may post on the Platform. Subject to certain eligibility requirements, Borrowers may have up to two Loans outstanding at any one time, provided that the aggregate outstanding principal balance of both Loans does not exceed the maximum Loan amount for the Borrower’s state of residence. Prosper does not warrant or guarantee that listings will be matched with any bids, and does not guarantee payment on any Note.

Borrowers agree that they will refrain from making false statements or omissions of material fact in listings, and from offering kickbacks or things of value in exchange for bids. Prosper has the right to verify the accuracy of all information provided in connection with listings, bids and loans, and may cancel inaccurate or unverifiable listings or delay funding a Loan. The Borrower Registration Agreement also sets forth the finance charges and fees associated with the funding of a Loan. See “Description of the Securities – The Notes – Borrower Finance Charges and Fees” beginning on page 37 for more information. The Borrower Registration Agreement requires that all Borrower communications regarding Loans be made to Prosper, and sets forth the mechanics of payments on the Notes by Borrowers.

Group Leader Registration Agreement. The Group Leader Registration Agreement is entered into between individuals registering as group leaders and Prosper. The Group Leader Registration Agreement provides that, in

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order to host a group and act as a group leader on the Platform, the group leader must agree to comply with the terms and provisions of the Group Leader Registration Agreement, the Terms of Use of Prosper’s website, and the Prosper Policies posted on Prosper’s website. The Group Leader Registration Agreement describes the various activities to be performed by group leaders, such as setting up a group, inviting and considering requests to join the group from individuals who meet the group’s eligibility criteria, and protecting the integrity and reputation of the group.

The Group Leader Registration Agreement prohibits group leaders from engaging in certain activities, such as charging or accepting kickbacks or things of value from Borrowers or others in connection with serving as a group leader; offering or giving any kickback or thing of value to any Lender in exchange for such Lender’s bid on any listing; acting as a loan broker or counseling Borrowers on credit issues or loan options; underwriting Loans; taking any action to collect, or attempt to collect, any amount from any Borrower or any friend or endorser of a Borrower on any Loan or Note; discriminating against Borrowers on any prohibited basis; or displaying material on group pages that violates trademark rights or other laws. Group leaders also agree not to disclose the identity of any Borrower or group member to any Lender. Group leaders do not guarantee any loan.

Pursuant to the Group Leader Registration Agreement, for Loans originated prior to September 2007, group leaders could receive compensation from Prosper for bringing Borrowers to the Platform, with the amount of their compensation based on the payment performance of Loans obtained on the Platform by the group’s members. Group leaders will continue to receive compensation related to Loans that resulted from their members’ listings posted before September 13, 2007 (the date as of which Prosper discontinued the payment of compensation to group leaders for Loans originated on or after this date). Group leaders do not act as Prosper’s agent. The Group Leader Registration Agreement requires group leaders to indemnify Prosper for violations of the Group Leader Registration Agreement, and authorizes Prosper to terminate the registration of group leaders who fail to comply with the terms of the Group Leader Registration Agreement.

Website Terms of Use. Prosper’s Terms of Use set forth the terms and conditions for the use of the Platform and the Prosper website. All Platform participants and other users of the Prosper website are subject to the Terms of Use. Prosper reserves the right to amend the Terms of Use and to terminate, suspend, change or restrict access to all or any part of the Platform and the Prosper website at any time without notice or liability. The Terms of Use provide that Platform participants must be at least 18 years of age. Users of the Prosper website agree to use the Platform and the Prosper website only for lawful purposes, and that eligibility for particular products or services is subject to determination by Prosper. The Terms of Use prohibit users from posting any private or personally identifiable information of any Prosper member or other third party, or transmitting any unsolicited or unauthorized advertising, promotional materials or “junk mail.”  In the Terms of Use, Prosper reserves the right to restrict the number of emails which a member may send to other members.

The Terms of Use provide that the Platform and the Prosper website are provided on an as-is basis, with no express or implied warranties, and that Prosper is not liable for consequential or incidental damages relating to use of the Platform or the Prosper website. Users agree to indemnify and hold Prosper harmless from liability arising from use of the Platform and the Prosper website in violation of the Terms of Use. Prosper has no responsibility for the accuracy of information on third party sites that are accessible from links on the Platform and the Prosper website. Prosper has the right, but not the obligation, to monitor the Platform and the Prosper website. All discussions, ideas, concepts, or other submissions communicated to Prosper through the Platform and the Prosper website will be deemed and remain the property of Prosper. The Terms of Use are governed by California law.

Material Agreements – The Notes

Promissory Note. The Notes represent three-to-five-year, unsecured, fully-amortizing credit obligations of individual Borrowers. Each individual Note sets forth the principal amount of such Notes and applicable interest thereon. Interest on each Note is calculated as simple interest at a specified annual rate, with interest to accrue daily on the basis of a 365-day year. The Notes provide for equal monthly installment payments of principal and interest throughout the term of the Note. Monthly loan payments are in equal amounts sufficient to fully amortize the loan over the term of the Note, with the final payment consisting of the then remaining principal amount, unpaid accrued interest and other charges due under the Note. Payments are due on the same day of each month. When payments are made they are applied first to any late charges then due, then to any unpaid NSF fees, then to interest then due and then to principal. The Notes allow prepayment by the Borrower at any time without penalty.

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Monthly payments on the Notes may be made either by automated withdrawals from the Borrower’s designated payment account using an automated clearinghouse (ACH) transfer, or by bank drafts drawn by Prosper on the Borrower’s behalf on the Borrower’s payment account each month. The Notes provide that the Borrower has the right to stop payment of a preauthorized automatic withdrawal or revoke the Borrower’s prior authorization for automatic withdrawals with regard to further Loan payments, by notifying Prosper and the Borrower’s financial institution. The Notes also give Prosper the right to add 1.0% to the interest rate on the Note, with respect to Borrowers who had received a 1.0% reduction in the interest rate for electing to have payments made by preauthorized automatic withdrawals, but later withdraw that authorization or if payments are otherwise no longer able to be made by automatic withdrawal.

The Notes allow for acceleration of all principal, interest and other charges in the event one or more payments under the Note is at least 120 days past due, or if the Borrower makes a material misrepresentation in connection with a Loan. The Notes require that Borrowers be given 30 days prior notice of acceleration. The Notes provide for late charges and NSF fees in accordance with state limits and contain disclosures required by state lending laws. Notes are governed by the laws of the state of the Borrower’s residence. In the case of Borrowers who are residents of the States of Alaska or Minnesota, Notes representing their obligations are governed by the laws of the State of California.

Collection Agency Agreements. Prosper has entered into Collection Services Agreements with Penncro Associates, Inc. and Firstsource, LLC, governing the manner in which delinquent Notes are collected. At the time individuals register as Lenders, and at each time a Lender posts a bid, the Lender selects one of these collection agencies to handle collection of delinquent amounts in the event the bid results in a Note that becomes delinquent. The Collection Services Agreements contain identical material terms with respect to collection authority and compensation arrangements.

The Collection Services Agreements provide that accounts that become 30 days past-due shall be referred to the agencies for collection of past-due principal, interest, late charges and NSF fees. These agreements require the agencies to use reasonable best efforts and customary and usual third party deficiency collection procedures to recover delinquent amounts and to act in full compliance with all applicable federal, state and local laws. The Collection Services Agreements clarify that when accounts are referred for collection the agencies do not receive any ownership interest in the accounts, and provide that accounts will be recalled by Prosper when the delinquency is cured or at Prosper’s discretion.

The collection agencies are authorized to accept payments from Borrowers in the form of cash, check, wire and consumer-generated ACH and are required to wire transfer payments immediately upon receipt to Prosper’s servicing account, with the agencies bearing the cost of electronic transmission of funds. The collection agencies do not have the right to commence or participate in legal proceedings to collect accounts and are not authorized to offer or accept settlement of an account for less than the full balance then owing without Prosper’s consent. The Collection Services Agreements provide that all communications regarding accounts must be with Prosper and that the agencies may not contact any Lender on a Note that has been referred for collection. The agreements require the collection agencies to notify Prosper of any claims or threats of litigation, bankruptcy notices or indications of identity theft regarding accounts.

Compensation to the collection agencies is derived solely from amounts collected, and is in an amount equal to 15% of amounts collected, decreasing as the delinquency persists. Additionally, the collection agency will receive a 5% increase in its percentage fee if it is able to collect the entire delinquent amount. The Collection Services Agreements have a one-year renewable term and provide that either party may terminate the agreement without cause upon 90 days’ prior written notice, or upon fewer days notice in the event of a party’s default. The Collection Services Agreements set forth the reporting obligations of the collection agencies, and require Prosper to account for payments it receives while accounts are with an agency for collection. The collection agencies are required to maintain errors and omissions coverage and an industry standard blanket crime insurance policy covering their representatives who handle funds and documents relating to the accounts referred for collection. The Collection Services Agreements contain mutual indemnification provisions and confidentiality provisions requiring each party to keep confidential all proprietary information concerning the other party as well as nonpublic personal information, including all personally identifiable financial information, of Borrowers.

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Repurchase of the Notes by Prosper

Prosper is not obligated to repurchase any Note except in limited circumstances, such as material default under a Note resulting from verifiable theft of a Borrower’s identity, or in the event a Loan fails to comply at origination in material respects with applicable federal and state law. Additionally, the Lender Registration Agreement provides that, in the event of a material breach of Prosper’s representations and warranties regarding any Note, Prosper must either cure the defect, repurchase the Note, or indemnify and hold the Lender harmless against losses resulting from the defect in the Note.

Prosper is not obligated to repurchase a Note from a Lender if his or her investment is not realized in whole or in part due to fraud (other than verifiable identity theft) in connection with a listing or due to false or inaccurate statements or omissions of fact in a Borrower’s listing, whether in credit data, Borrower representations, user endorsements, group affiliations or similar indicia of Borrower intent and ability to repay the Notes. If Prosper repurchases a Note, the outstanding principal balance will be returned to the Lender.

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SELECTED HISTORICAL LOAN PERFORMANCE DATA

The performance of Loans originated on the Platform is a function of the credit quality of the Borrowers and the risk and return preferences of the Lenders. Lenders can choose to pursue a variety of bidding strategies including strategies that may or may not maximize the return on their investment. When making bidding decisions, Lenders consider Borrowers’ credit grades, debt-to-income ratios and other credit data and information displayed with listings. The performance of loans to date has been consistent with the credit information presented to Lenders. The following table shows Loans originated and default performance by credit grade for Loans originated between February 6, 2006 and September 30, 2007.

Loans Originated between February 5, 2006 and September 30, 2007 by Credit Grade^†

	Total			AA			A			B			C			D			E			HR			NC
Principal Amount of Loans Originated	$	89,949,977		$	12,337,633		$	12,864,129		$	16,011,977		$	18,324,793		$	15,013,761		$	8,553,868		$	6,521,998		$	321,818
Number of Loans Originated	14,759			1,476			1,398			1,828			2,569			2,677			2,191			2,480			140
Principal Amount of Loans Defaulted*	$	4,825,334		$	133,144		$	253,188		$	406,996		$	781,599		$	747,721		$	1,097,988		$	1,275,874		$	128,824
Number of Loans Defaulted*	1,243			12			25			47			108			151			297			547			56
Default Rate Based on Principal Amount of Loans Defaulted	5.36		%	1.08		%	1.97		%	2.54		%	4.27		%	4.98		%	12.84		%	19.56		%	40.03		%
Default Rate Based on Number of Loans Defaulted	8.42		%	0.81		%	1.79		%	2.57		%	4.20		%	5.64		%	13.56		%	22.06		%	40.00		%

†The “NC” credit grade category was discontinued on February 12, 2007. Prospective Borrowers with an “NC” credit grade were not allowed to post a listing beginning on such date. On February 12, 2007, the Experian Scorex PLUS^SM credit scores associated with the “HR” and “E” credit grades were reassigned. Beginning on February 12, 2007, the “HR” credit grade category was associated with Experian Scorex PLUS^SM credit scores of 520 through 559 (prior to such date, the “HR” credit grade category was associated with Experian Scorex PLUS^SM credit scores of below 540). Beginning on February 12, 2007, the “E” credit grade category was associated with Experian Scorex PLUS^SM credit scores of 560 through 599 (prior to such date, the “E” credit grade category was associated with Experian Scorex PLUS^SM credit scores of 540 through 599).

*Represents Loans that have defaulted and been sold by Prosper to a debt buyer, or discharged or otherwise determined to be non-collectible in bankruptcy, plus Loans that are currently four or more months delinquent.

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U.S. FEDERAL INCOME TAX CONSEQUENCES

General

The following discussion is a general summary of the material U.S. federal income tax consequences of the purchase, ownership, and disposition of the Notes by Lenders. This discussion is not a complete analysis of all potential U.S. federal income tax consequences and does not address any tax consequences arising under any state, local or foreign tax laws or U.S. federal estate or gift tax laws. This summary is based on the Internal Revenue Code of 1986, as amended, U.S. Treasury Regulations promulgated thereunder, judicial decisions and published rulings and administrative pronouncements of the Internal Revenue Service, all as in effect on the date of this prospectus. We cannot assure you that the IRS will agree with the conclusions in this summary, and we have not sought and will not seek a ruling from the IRS as to any of the expected federal tax consequences described herein. Subsequent legislative, judicial or administrative changes which may or may not apply retroactively could result in tax consequences different from those discussed below. This summary only applies to a purchaser of a Note who purchases the Note at its issue price and holds the Note as a capital asset within the meaning of Section 1221 of the Internal Revenue Code (generally, property held for investment). Except as specifically set forth below, this summary does not address all U.S. federal income tax consequences that may be relevant to investors in light of their own particular circumstances or to investors subject to special treatment under the federal income tax laws, including: a person that is not a citizen or resident of the U.S. for U.S. federal income tax purposes or otherwise not a U.S. person for such purposes; insurance companies; tax-exempt organizations; financial institutions; broker-dealers; regulated investment companies; real estate investment trusts; traders in securities that have elected the mark-to-market method of accounting for their securities; persons liable for the alternative minimum tax; pass-through entities and persons who are investors in such pass-through entities; “controlled foreign corporations”; “passive foreign investment companies”; U.S. expatriates; U.S. persons that have a functional currency other than the U.S. dollar; or persons that hold Notes as part of a hedge, straddle or conversion transaction or other integrated transaction.

We recommend that you consult your own tax advisors about the U.S. federal, state, local and foreign tax consequences to you of purchasing, owning and disposing of the Notes.

Internal Revenue Service Circular 230 Disclosure

Pursuant to Internal Revenue Service Circular 230, we hereby inform you that the description set forth herein with respect to United States federal tax issues was not intended or written to be used, and such description cannot be used, by any taxpayer for the purpose of avoiding any penalties that may be imposed on the taxpayer under the Internal Revenue Code. Taxpayers should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

Tax Characterization of the Notes

The Notes should be treated as debt for U.S. federal, state and local income and franchise tax purposes.

Stated Interest

It is expected that the stated interest on each Note will constitute “qualified stated interest” under applicable Treasury Regulations. If you use the cash method of accounting for U.S. federal income tax purposes, you generally will be taxed on the interest on your Note at the time you receive it. Alternatively, if you use the accrual method of accounting for U.S. federal income tax purposes, you generally will be taxed on the interest on your Note at the time it accrues.

Disposition of the Notes

In general, you will recognize gain or loss upon the sale, exchange, retirement or other taxable disposition of your Note measured by the difference between: (i) the amount of cash and the fair market value of any property received for the Note, other than the amount attributable to, and taxable as, accrued interest; and (ii) your tax basis in the

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Note, which generally is your original cost, as increased by any market discount, including de minimis amounts, that you previously included in income, and decreased by any deductions previously allowed to you for amortizable premium and by any payments reflecting principal that you received with respect to the Note.

Subject to the market discount rules discussed below, if you hold your Note for more than one year before its taxable disposition, any gain or loss generally will be long-term capital gain or loss. The deductibility of capital losses is subject to limitations. The excess of net long-term capital gains over net short-term capital losses may be taxed at a lower rate than ordinary income for individuals, estates and trusts.

Market Discount

The resale of a Note purchased on the Resale Platform may be subject to the “market discount” rules of the Internal Revenue Code. For this purpose, the market discount on a Note acquired by a Lender on the Resale Platform generally will equal the amount, if any, by which the outstanding principal amount of the Note exceeds the purchasing Lender’s adjusted tax basis in the Note immediately after its acquisition. Subject to a de minimis exception that generally applies if the market discount is less than 0.25 percent of the Note’s principal amount multiplied by the weighted average remaining life of the Note, generally taking into account the number of full years from the  purchase date to each expected principal payment date, gain on the sale or other taxable disposition of a Note and on partial principal payments on a Note are treated as ordinary income to the extent of accrued market discount. The market discount rules also provide for deferral of interest deductions with respect to debt incurred to purchase or carry a Note that has market discount. The purchasing Lender may elect to include market discount in income as the discount accrues, in which case the rules described above will generally not apply. This election to include market discount in income over the life of the Note, once made by a holder, applies to all market discount obligations acquired by such holder on or after the first taxable year to which the election applies and may not be revoked without the consent of the IRS.

Bond Premium

If you buy a Note for more than its outstanding principal amount, you may elect to amortize the premium against interest income over the term of the Note in accordance with the provisions of Section 171 of the Internal Revenue Code. If the election is made, it automatically applies to all debt instruments with bond premium owned during or after the taxable year for which the election is made, unless the IRS permits you to revoke the election.

Information Reporting and Backup Withholding

Information with respect to payments on the Notes and proceeds from the taxable disposition of a Note generally will be required to be furnished to you and the IRS. Backup withholding also may apply to these payments if you are not otherwise exempt and:  (i) you fail to provide your taxpayer identification number;  (ii) you provide an incorrect taxpayer identification number; (iii) Prosper is notified by the IRS that you are subject to backup withholding because you have failed to report properly payments of interest or dividends; or (iv) you fail to certify, under penalties of perjury, that you have provided your correct taxpayer identification number and that the IRS has not notified you that you are subject to backup withholding.

You should consult your tax advisor regarding qualification for an exemption from backup withholding and the procedures for obtaining an exemption, if applicable. Backup withholding is not an additional tax. Taxpayers may use amounts withheld as credit against their U.S. federal income tax liability or may claim a refund if they timely provide certain information to the IRS.

The U.S. federal income tax discussion set forth above may not be applicable depending upon your particular tax situation, and does not purport to address the issues described with the degree of specificity that may be provided by your own tax advisor. Accordingly, we suggest that you consult your own tax advisors regarding the tax consequences to you of the purchase, ownership and disposition of the Notes.

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LEGAL MATTERS

The validity of the Securities offered by this prospectus has been passed upon by Pillsbury Winthrop Shaw Pittman LLP, San Francisco, California. Pillsbury Winthrop Shaw Pittman LLP owns a common stock interest in Prosper which represents approximately 0.08% of the outstanding common stock of Prosper on a fully diluted basis.

REPORTS AND ADDITIONAL INFORMATION

We have filed with the Securities and Exchange Commission a registration statement under the Securities Act of 1933 with respect to the Securities offered by this prospectus. This prospectus does not contain all of the information set forth in the registration statement and the exhibits to the registration statement. Please refer to the registration statement and exhibits for further information with respect to the Securities offered by this prospectus. Statements contained in this prospectus regarding the contents of any agreement or other document are only summaries. With respect to any agreement or document filed as an exhibit to the registration statement, you should refer to the exhibit for a copy of the agreement or document, and each statement in this prospectus regarding that agreement or document is qualified by reference to the exhibit. A copy of the registration statement and its exhibits and schedules may be inspected without charge at the Securities and Exchange Commission’s public reference room, located at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at (800) SEC-0330 for further information on the public reference room.

The Platform to which this prospectus relates can be found at www.prosper.com. You should refer to the individual Borrower listings contained on the Platform, and carefully consider the individual credit information for each Borrower prior to bidding on any listing.

Upon the effectiveness of this registration statement, we will be subject to the information reporting requirements of the Securities Exchange Act of 1934, and we intend to file reports and other information with the SEC. These reports and other information will be available for inspection and copying at the SEC’s public reference room and from the SEC’s website at www.sec.gov.

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Part II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 16. Exhibits and Financial Statement Schedules.

(a)  Exhibits

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation of the Registrant.
3.2	Bylaws of the Registrant, dated March 22, 2005.
4.1	Form of Promissory Note.
5.1*	Opinion of Pillsbury Winthrop Shaw Pittman LLP.
10.1	Form of Borrower Registration Agreement.
10.2	Form of Lender Registration Agreement.
10.3	Form of Group Leader Registration Agreement.
10.4	Collection Services Agreement dated as of September 13, 2005 between the Registrant and Penncro Associates, Inc., as amended.
10.5	Collection Services Agreement dated as of January 11, 2007 between the Registrant and Account Solutions Group, LLC.
10.6	Website Terms of Use.
23.1*	Consent of Pillsbury Winthrop Shaw Pittman LLP (included in Exhibit 5.1).
24.1	Power of Attorney (see page II- 4 of this registration statement).

*To be filed by amendment.

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Item 17. Undertakings.

The undersigned Registrant hereby undertakes:

1. To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

i.To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

ii.To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price

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set forth in the “Calculation of Registration Fee” table in the effective registration statement.

iii.To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

2.  That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

3.  To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

4.  That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, if the Registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

5.  That, for the purpose of determining liability of the Registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

i.Any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;

ii.Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;

iii.The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and

iv.Any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.

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6.  Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Francisco, State of California, on the 30th day of October, 2007.

PROSPER MARKETPLACE, INC.
By	/s/ Christian A. Larsen
	Christian A. Larsen Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Edward A. Giedgowd and Christian A. Larsen and each of them, his true and lawful attorneys in fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments, including post-effective amendments, to this Registration Statement, and any registration statement relating to the offering covered by this Registration Statement and filed pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys in fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

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Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.

Name	Title	Date
/s/ Christian A. Larsen	Chief Executive Officer (Principal	October 30, 2007
Christian A. Larsen	Executive Officer); Director
/s/ Kirk T. Inglis	Chief Financial Officer (Principal	October 30, 2007
Kirk T. Inglis	Financial and Accounting Officer)
/s/ John B. Witchel
John B. Witchel	Director	October 30, 2007
/s/ James W. Breyer
James W. Breyer	Director	October 30, 2007
/s/ Lawrence W. Cheng
Lawrence W. Cheng	Director	October 30, 2007
/s/ Paul M. Hazen
Paul M. Hazen	Director	October 30, 2007
/s/ Robert C. Kagle
Robert C. Kagle	Director	October 30, 2007

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EXHIBIT INDEX

Exhibit
Number	Description
3.1	Amended and Restated Certificate of Incorporation of the Registrant.
3.2	Bylaws of the Registrant, dated March 22, 2005.
4.1	Form of Promissory Note.
5.1*	Opinion of Pillsbury Winthrop Shaw Pittman LLP.
10.1	Form of Borrower Registration Agreement.
10.2	Form of Lender Registration Agreement.
10.3	Form of Group Leader Registration Agreement.
10.4	Collection Services Agreement dated as of September 13, 2005 between the Registrant and Penncro Associates, Inc., as amended.
10.5	Collection Services Agreement dated as of January 11, 2007 between the Registrant and Account Solutions Group, LLC.
10.6	Website Terms of Use.
23.1*	Consent of Pillsbury Winthrop Shaw Pittman LLP (included in Exhibit 5.1).
24.1	Power of Attorney (see page II- 4 of this registration statement).

*To be filed by amendment.

EX-3.1

Exhibit 3.1

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF

PROSPER MARKETPLACE, INC.

ARTICLE I

The name of the Corporation is Prosper Marketplace, Inc.

ARTICLE II

The purpose of this corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.

ARTICLE III

The address of the Corporation’s registered office in the State of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle, 19801. The name of the registered agent at such address is The Corporation Trust Company.

ARTICLE IV

The total number of shares of stock that the corporation shall have authority to issue is 25,397,939, consisting of 16,000,000 shares of Common Stock, $0.001 par value per share, and 9,397,939 shares of Preferred Stock, $0.001 par value per share, 4,023,999 of which are designated as “Series A Preferred Stock,” 3,310,382 of which are designated as “Series B Preferred Stock,” and 2,063,558 of which are designated as “Series C Preferred Stock.”

ARTICLE V

The terms and provisions of the Common Stock and Preferred Stock are as follows:

1.Definitions. For purposes of this ARTICLE V, the following definitions shall apply:

(a)“Conversion Price” shall mean $1.875 per share for the Series A Preferred Stock, $3.776 per share for the Series B Preferred Stock, and $9.692 per share for the Series C Preferred Stock (subject to adjustment from time to time for Recapitalizations and as otherwise set forth elsewhere herein).

(b)“Convertible Securities” shall mean any evidences of indebtedness, shares or other securities convertible into or exchangeable for Common Stock.

(c)“Corporation” shall mean Prosper Marketplace, Inc.

(d)“Distribution” shall mean the transfer of cash or other property without consideration whether by way of dividend or otherwise, other than dividends on Common Stock payable in Common Stock, or the purchase or redemption of shares of the Corporation for cash or property other than: (i) repurchases of Common Stock issued to or held by employees, officers, directors or consultants of the Corporation or its subsidiaries upon termination of their employment or services pursuant to agreements providing for the right of said repurchase, (ii) repurchases of Common Stock issued to or held by employees, officers, directors or consultants of the Corporation or its subsidiaries pursuant to rights of first refusal contained in agreements providing for such right, (iii) repurchase of capital stock of the Corporation in connection with the settlement of disputes with any stockholder that is approved by the Board of Directors or (iv) any other repurchase or redemption of capital stock of the Corporation approved by the holders of at least a majority of the Common and at least a majority of the Preferred Stock of the Corporation voting as separate classes, on an as-converted to Common Stock basis.

(e)“Dividend Rate” shall mean an annual rate of eight percent (8%) per share for the Series A Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock.

(f)“Liquidation Preference” shall mean $1.875 per share for the Series A Preferred Stock, $3.776 per share for the Series B Preferred Stock, and $9.692 per share for the Series C Preferred Stock (subject to adjustment from time to time for Recapitalizations as set forth elsewhere herein).

(g)“Options” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.

(h)“Original Issue Price” shall mean $1.875 per share for the Series A Preferred Stock, $3.776 per share for the Series B Preferred Stock, and $9.692 per share for the Series C Preferred Stock (subject to adjustment from time to time for Recapitalizations as set forth elsewhere herein).

(i)“Preferred Stock” shall mean the Series A Preferred Stock, the Series B Preferred Stock, and Series C Preferred Stock.

(j)“Recapitalization” shall mean any stock dividend, stock split, combination of shares, reorganization, recapitalization, reclassification or other similar event.

2.Dividends.

(a)Preferred Stock. In any calendar year, the holders of outstanding shares of Preferred Stock shall be entitled to receive dividends, when, as and if declared by the Board of Directors, out of any assets at the time legally available therefor, at the Dividend Rate specified for such shares of Preferred Stock payable in preference and priority to any declaration or payment of any Distribution on Common Stock of the Corporation in such calendar year. No Distributions shall be made with respect to the Common Stock until all declared dividends on the Preferred Stock have been paid or set aside for payment to the Preferred Stock holders. Payment of any dividends to the holders of the Preferred Stock shall be on a pro rata, pari passu basis in proportion to the Dividend

Rates for each series of Preferred Stock. The right to receive dividends on shares of Preferred Stock shall not be cumulative, and no right to such dividends shall accrue to holders of Preferred Stock by reason of the fact that dividends on said shares are not declared or paid in any calendar year.

(b)Common Stock. After payment of such dividends, any additional dividends or distributions shall be distributed among all holders of Common Stock and Preferred Stock in proportion to the number of shares of Common Stock that would be held by each such holder if all shares of Preferred Stock were converted to Common Stock at the then effective conversion rate.

3.Liquidation Rights.

(a)Liquidation Preference. In the event of any Liquidation Event (as defined below), either voluntary or involuntary, the holders of the Preferred Stock shall be entitled to receive, prior and in preference to any Distribution of the proceeds of such Liquidation Event (the “Proceeds”) to the holders of the Common Stock by reason of their ownership of such stock, an amount per share for each share of Preferred Stock held by them equal to the greater of (i) the sum of (A) the Liquidation Preference specified for such share of Preferred Stock and (B) all declared but unpaid dividends (if any) on such share of Preferred Stock or (ii) such amount per share of Series A Preferred Stock, Series B Preferred Stock, or Series C Preferred Stock as applicable, as would have been payable had each such share been converted into Common Stock immediately prior to such Liquidation Event. If upon any Liquidation Event, the assets of the Corporation legally available for distribution to the holders of the Preferred Stock are insufficient to permit the payment to such holders of the full amounts specified in this Section 3(a), then the entire assets of the Corporation legally available for distribution shall be distributed with equal priority and pro rata among the holders of the Preferred Stock in proportion to the full amounts they would otherwise be entitled to receive pursuant to this Section 3(a).

(b)Remaining Assets. After the payment or setting aside for payment to the holders of Preferred Stock of the full amounts specified in Section 3(a) above, the entire remaining Proceeds legally available for distribution shall be distributed pro rata to holders of the Common Stock of the Corporation in proportion to the number of shares of Common Stock held by them.

(c)Shares not Treated as Both Preferred Stock and Common Stock in any Distribution. Shares of Preferred Stock shall not be entitled to be converted into shares of Common Stock in order to participate in any Distribution, or series of Distributions, as shares of Common Stock, without first foregoing participation in the Distribution, or series of Distributions, as shares of Preferred Stock.

(d)Liquidation Event. A “Liquidation Event” shall be deemed to be occasioned by, or to include, each of the following events unless the holders of at least sixty percent (60%) of the voting power of all then outstanding shares of Preferred Stock elect otherwise by written notice sent to the Corporation at least 5 days prior to the effective date of any such event: (i) the acquisition of the Corporation by another entity by means of any transaction or series of related transactions (including, without limitation, any stock acquisition, reorganization, merger or consolidation but excluding any sale of stock for capital raising purposes) other than a transaction or series of transactions in which the holders of the voting securities of the Corporation outstanding immediately

prior to such transaction continue to retain in the same relative proportions as to each other (either by such voting securities remaining outstanding or by such voting securities being converted into voting securities of the surviving entity), as a result of shares in the Corporation held by such holders prior to such transaction, at least fifty percent (50%) of the total voting power represented by the voting securities of the Corporation or such surviving entity outstanding immediately after such transaction or series of transactions; (ii) a sale, lease, transfer, exclusive license or other conveyance (in a single transaction or series of related transactions) of all or substantially all of the assets of the Corporation and its subsidiaries taken as a whole; (iii) the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Corporation if substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to the Corporation or to a wholly owned subsidiary of the Corporation; or (iv) any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary.

(e)Valuation of Non-Cash Consideration. If any Proceeds distributed to stockholders in connection with any Liquidation Event are other than cash, then the value of such assets shall be their fair market value as determined in good faith by the Board of Directors, except that any publicly-traded securities to be distributed to stockholders in a Liquidation Event shall be valued as follows:

(i)Securities not subject to an investment letter:

(1)If the securities are then traded on a national securities exchange or the Nasdaq Stock Market (or a similar national quotation system), then the value of the securities shall be deemed to be the average of the closing prices of the securities on such exchange or system over the twenty (20) trading day period ending five (5) trading days prior to the Distribution; or

(2)if the securities are actively traded over-the-counter, then the value of the securities shall be deemed to be the average of the closing bid prices of the securities over the twenty (20) trading day period ending five (5) trading days prior to the Distribution.

(ii)The method of valuation of securities subject to an investment letter shall be to make an appropriate discount from the market value determined as above in (i)(1), or (2) to reflect the approximate fair market value thereof, as mutually determined by this corporation and the holders of at least a majority of the voting power of all then outstanding shares of such Preferred Stock.

(iii)The foregoing methods for valuing non-cash consideration to be distributed in connection with a Liquidation Event shall, upon approval by the stockholders of the definitive agreements governing a Liquidation Event, be superseded by any determination of such value set forth in the definitive agreements governing such Liquidation Event.

In the event of a merger or other acquisition of the Corporation by another entity, the Distribution date shall be deemed to be the date such transaction closes.

4.Conversion. The holders of the Preferred Stock shall have conversion rights as follows:

(a)Right to Convert. Each share of Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share at the office of the Corporation or any transfer agent for the Preferred Stock, into that number of fully-paid, nonassessable shares of Common Stock determined by dividing the Original Issue Price for the relevant series by the Conversion Price for such series. (The number of shares of Common Stock into which each share of Preferred Stock of a series may be converted is hereinafter referred to as the “Conversion Rate” for each such series.)  Upon any decrease or increase in the Conversion Price for any series of Preferred Stock, as described in this Section 4, the Conversion Rate for such series shall be appropriately increased or decreased.

(b)Automatic Conversion. Each share of Preferred Stock shall automatically be converted into fully-paid, non-assessable shares of Common Stock at the then effective Conversion Rate for such share (i) immediately prior to the closing of a firm commitment underwritten initial public offering at a per share price of not less than $19.384 (subject to adjustment from time to time for Recapitalizations and as otherwise set forth elsewhere herein) and with aggregate proceeds to the Corporation of at least $30,000,000 (after deducting underwriters commissions and expenses), pursuant to an effective registration statement filed under the Securities Act of 1933, as amended (the “Securities Act”), covering the offer and sale of the Corporation’s Common Stock, or (ii) upon the receipt by the Corporation of a written request for such conversion from the holders of more than sixty percent (60%) of the voting power of all then outstanding shares of Preferred Stock, or, if later, the effective date for conversion specified in such requests; provided, however, that the Series C Preferred Stock shall not be so converted in the event of a merger or acquisition of the Corporation if the holders of Series C Preferred Stock would receive less consideration in such merger or acquisition as holders of Common Stock than they would as holders of Series C Preferred Stock, unless the holders of at least seventy percent (70%) of the voting power of all then outstanding shares of Series C Preferred Stock consent to such conversion (each of the events referred to in (i) and (ii) are referred to herein as an “Automatic Conversion Event”).

(c)Mechanics of Conversion. No fractional shares of Common Stock shall be issued upon conversion of Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the then fair market value of a share of Common Stock as determined by the Board of Directors. For such purpose, all shares of Preferred Stock held by each holder of Preferred Stock shall be aggregated, and any resulting fractional share of Common Stock shall be paid in cash. Before any holder of Preferred Stock shall be entitled to convert the same into full shares of Common Stock, and to receive certificates therefor, such holder shall either (A) surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Preferred Stock or (B) notify the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and execute an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates, and shall give written notice to the Corporation at such office that such holder elects to convert the same; provided, however, that on the date of an Automatic Conversion Event, the outstanding shares of Preferred Stock shall be converted automatically without any further action by the holders of such shares and whether or not the

certificates representing such shares are surrendered to the Corporation or its transfer agent; provided further, however, that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such Automatic Conversion Event unless either the certificates evidencing such shares of Preferred Stock are delivered to the Corporation or its transfer agent as provided above, or the holder notifies the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates. On the date of the occurrence of an Automatic Conversion Event, each holder of record of shares of Preferred Stock shall be deemed to be the holder of record of the Common Stock issuable upon such conversion, notwithstanding that the certificates representing such shares of Preferred Stock shall not have been surrendered at the office of the Corporation, that notice from the Corporation shall not have been received by any holder of record of shares of Preferred Stock, or that the certificates evidencing such shares of Common Stock shall not then be actually delivered to such holder.

(d)Adjustments to Conversion Price for Diluting Issues.

(i)Special Definition. For purposes of this paragraph 4(d), “Additional Shares of Common” shall mean all shares of Common Stock issued (or, pursuant to paragraph 4(d)(iii), deemed to be issued) by the Corporation after the filing of this Amended and Restated Certificate of Incorporation, other than issuances or deemed issuances of:

(1)prior to June 15, 2008, up to 1,879,468 shares, or such greater number of shares approved by the holders of at least a majority of the outstanding shares of Series C Preferred Stock, of Common Stock and options, warrants or other rights to purchase Common Stock issued to employees, officers or directors of, or consultants or advisors to the Corporation or any subsidiary pursuant to restricted stock purchase agreements, stock option plans or similar arrangements approved by the Board of Directors of the Corporation;

(2)after June 15, 2008, Common Stock and options, warrants or other rights to purchase Common Stock issued to employees, officers or directors of, or consultants or advisors to the Corporation or any subsidiary pursuant to restricted stock purchase agreements, stock option plans or similar arrangements approved by the Board of Directors of the Corporation;

(3)shares of Common Stock issued upon the exercise or conversion of Options or Convertible Securities outstanding as of the date of the filing of this Amended and Restated Certificate of Incorporation;

(4)shares of Common Stock issued or issuable as a dividend or distribution on Preferred Stock in accordance with the provisions of Section 2 hereof or pursuant to any event for which adjustment is made pursuant to paragraph 4(e), 4(f) or 4(g) hereof;

(5)shares of Common Stock issued in an initial registered public offering under the Securities Act in which all Preferred Stock converts to Common Stock;

(6)shares of Common Stock issued or issuable pursuant to the acquisition of another corporation by the Corporation by merger, purchase of substantially all of the assets or other reorganization or to a joint venture agreement, provided, that such issuances are approved by the Board of Directors (including a majority of the directors elected by the Series A Preferred Stock and Series B Preferred Stock pursuant to Section (5)(d) of this Article V (the “Preferred Directors”));

(7)shares of Common Stock issued or issuable pursuant to a strategic transaction, other than for primarily equity financing purposes, provided, that such issuances are approved by the Board of Directors (including a majority of the Preferred Directors);

(8)shares of Common Stock issued or issuable to banks, equipment lessors or other financial institutions pursuant to a debt financing or commercial leasing transaction other than for primarily equity financing purposes approved by the Board of Directors (including a majority of the Preferred Directors);

(9)shares of Common Stock issued or issuable in connection with any settlement of any action, suit, proceeding or litigation approved by the Board of Directors (including a majority of the Preferred Directors);

(10)shares of Common Stock issued or issuable in connection with sponsored research, collaboration, technology license, development, OEM, marketing or other similar agreements or strategic partnerships approved by the Board of Directors (including a majority of the Preferred Directors);

(11)shares of Common Stock issued or issuable to suppliers or third party service providers in connection with the provision of goods or services pursuant to transactions approved by the Board of Directors (including a majority of the Preferred Directors); and

(12)securities deemed issued pursuant to the operation of paragraph (iii) below.

(ii)No Adjustment of Conversion Price. No adjustment in the Conversion Price of a particular series of Preferred Stock shall be made in respect of the issuance of Additional Shares of Common unless the consideration per share (as determined pursuant to paragraph 4(d)(v)) for an Additional Share of Common issued or deemed to be issued by the Corporation is less than the Conversion Price in effect on the date of, and immediately prior to such issue, for such series of Preferred Stock.

(iii)Deemed Issue of Additional Shares of Common. In the event the Corporation at any time or from time to time after the date of the filing of this Amended and Restated Certificate of Incorporation shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto without regard to any provisions contained therein for a subsequent adjustment of such number) of Common Stock issuable upon the exercise of such Options or, in the

case of Convertible Securities, the conversion or exchange of such Convertible Securities or, in the case of Options for Convertible Securities, the exercise of such Options and the conversion or exchange of the underlying securities, shall be deemed to have been issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided that in any such case in which shares are deemed to be issued:

(1)no further adjustment in the Conversion Price of any series of Preferred Stock shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock in connection with the exercise of such Options or conversion or exchange of such Convertible Securities;

(2)if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any change in the consideration payable to the Corporation or in the number of shares of Common Stock issuable upon the exercise, conversion or exchange thereof (other than a change pursuant to the anti-dilution provisions of such Options or Convertible Securities such as this Section 4(d) or pursuant to Recapitalization provisions of such Options or Convertible Securities such as Sections 4(e), 4(f) and 4(g) hereof), the Conversion Price of each series of Preferred Stock and any subsequent adjustments based thereon shall be recomputed to reflect such change as if such change had been in effect as of the original issue thereof (or upon the occurrence of the record date with respect thereto);

(3)no readjustment pursuant to clause (2) above shall have the effect of increasing the Conversion Price of a series of Preferred Stock to an amount above the Conversion Price that would have resulted from any other issuances of Additional Shares of Common and any other adjustments provided for herein between the original adjustment date and such readjustment date;

(4)upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the Conversion Price of each Series of Preferred Stock computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto) and any subsequent adjustments based thereon shall, upon such expiration, be recomputed as if:

(a)in the case of Convertible Securities or Options for Common Stock, the only Additional Shares of Common issued were the shares of Common Stock, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Corporation for the issue of such exercised Options plus the consideration actually received by the Corporation upon such exercise or for the issue of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by the Corporation upon such conversion or exchange; and

(b)in the case of Options for Convertible Securities, only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the Corporation for the Additional Shares of Common deemed to have been then issued was the consideration actually received by the

Corporation for the issue of such exercised Options, plus the consideration deemed to have been received by the Corporation (determined pursuant to Section 4(d)(v)) upon the issue of the Convertible Securities with respect to which such Options were actually exercised; and

(5)if such record date shall have been fixed and such Options or Convertible Securities are not issued on the date fixed therefor, the adjustment previously made in the Conversion Price which became effective on such record date shall be canceled as of the close of business on such record date, and thereafter the Conversion Price shall be adjusted pursuant to this paragraph 4(d)(iii) as of the actual date of their issuance.

(iv)Adjustment of Conversion Price Upon Issuance of Additional Shares of Common. In the event this Corporation shall issue Additional Shares of Common (including Additional Shares of Common deemed to be issued pursuant to paragraph 4(d)(iii)) without consideration or for a consideration per share less than the applicable Conversion Price of a series of Preferred Stock in effect on the date of and immediately prior to such issue, then, the Conversion Price of the affected series of Preferred Stock shall be reduced, concurrently with such issue, to a price (calculated to the nearest cent) determined by multiplying such Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of shares which the aggregate consideration received by the Corporation for the total number of Additional Shares of Common so issued would purchase at such Conversion Price, and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of such Additional Shares of Common so issued. Notwithstanding the foregoing, the Conversion Price shall not be reduced at such time if the amount of such reduction would be less than $0.01, but any such amount shall be carried forward, and a reduction will be made with respect to such amount at the time of, and together with, any subsequent reduction which, together with such amount and any other amounts so carried forward, equal $0.01 or more in the aggregate. For the purposes of this Subsection 4(d)(iv), all shares of Common Stock issuable upon conversion of all outstanding shares of Preferred Stock and the exercise and/or conversion of any other outstanding Convertible Securities and all outstanding Options shall be deemed to be outstanding.

(v)Determination of Consideration. For purposes of this Subsection 4(d), the consideration received by the Corporation for the issue (or deemed issue) of any Additional Shares of Common shall be computed as follows:

(1)Cash and Property. Such consideration shall:

(a)insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation before deducting any reasonable discounts, commissions or other expenses allowed, paid or incurred by the Corporation for any underwriting or otherwise in connection with such issuance;

(b)insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board of Directors; and

(c)in the event Additional Shares of Common are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (a) and (b) above, as reasonably determined in good faith by the Board of Directors.

(2)Options and Convertible Securities. The consideration per share received by the Corporation for Additional Shares of Common deemed to have been issued pursuant to paragraph 4(d)(iii) shall be determined by dividing

(x)the total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities by

(y)the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities.

(e)Adjustments for Subdivisions or Combinations of Common Stock. In the event the outstanding shares of Common Stock shall be subdivided (by stock split, by payment of a stock dividend or otherwise), into a greater number of shares of Common Stock, the Conversion Price of each series of Preferred Stock in effect immediately prior to such subdivision shall, concurrently with the effectiveness of such subdivision, be proportionately decreased. In the event the outstanding shares of Common Stock shall be combined (by reclassification or otherwise) into a lesser number of shares of Common Stock, the Conversion Prices in effect immediately prior to such combination shall, concurrently with the effectiveness of such combination, be proportionately increased.

(f)Adjustments for Subdivisions or Combinations of Preferred Stock. In the event the outstanding shares of Preferred Stock or a series of Preferred Stock shall be subdivided (by stock split, by payment of a stock dividend or otherwise), into a greater number of shares of Preferred Stock, the Dividend Rate, Original Issue Price and Liquidation Preference of the affected series of Preferred Stock in effect immediately prior to such subdivision shall, concurrently with the effectiveness of such subdivision, be proportionately decreased. In the event the outstanding shares of Preferred Stock or a series of Preferred Stock shall be combined (by reclassification or otherwise) into a lesser number of shares of Preferred Stock, the Dividend Rate, Original Issue Price and Liquidation Preference of the affected series of Preferred Stock in effect immediately prior to such combination shall, concurrently with the effectiveness of such combination, be proportionately increased.

(g)Adjustments for Reclassification, Exchange and Substitution. Subject to Section 3 above (“Liquidation Rights”), if the Common Stock issuable upon conversion of the

Preferred Stock shall be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than a subdivision or combination of shares provided for above), then, in any such event, in lieu of the number of shares of Common Stock which the holders would otherwise have been entitled to receive each holder of such Preferred Stock shall have the right thereafter to convert such shares of Preferred Stock into a number of shares of such other class or classes of stock which a holder of the number of shares of Common Stock deliverable upon conversion of such series of Preferred Stock immediately before that change would have been entitled to receive in such reorganization or reclassification, all subject to further adjustment as provided herein with respect to such other shares.

(h)Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price pursuant to this Section 4, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of any holder of Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Price at the time in effect and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of Preferred Stock.

(i)Waiver of Adjustment of Conversion Price. Notwithstanding anything herein to the contrary, any downward adjustment of the Conversion Price of any series of Preferred Stock may be waived by the consent or vote of the holders of at least a majority of the outstanding shares of such series either before or after the issuance causing the adjustment. Any such waiver shall bind all future holders of shares of such series of Preferred Stock.

(j)Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the conversion of the shares of the Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all then outstanding shares of the Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

5.Voting.

(a)Restricted Class Voting. Except as otherwise expressly provided herein or as required by law, the holders of Preferred Stock and the holders of Common Stock shall vote together and not as separate classes.

(b)No Series Voting. Other than as provided herein or required by law, there shall be no series voting.

(c)Preferred Stock. Each holder of Preferred Stock shall be entitled to the number of votes equal to the number of shares of Common Stock into which the shares of Preferred Stock held by such holder could be converted as of the record date. The holders of shares of the Preferred Stock shall be entitled to vote on all matters on which the Common Stock shall be entitled to vote. Holders of Preferred Stock shall be entitled to notice of any stockholders’ meeting in accordance with the Bylaws of the Corporation. Fractional votes shall not, however, be permitted and any fractional voting rights resulting from the above formula (after aggregating all shares into which shares of Preferred Stock held by each holder could be converted), shall be disregarded.

(d)Election of Directors. So long as at least 1,000,000 shares (as adjusted for Recapitalizations) of Series A Preferred Stock remains outstanding, the holders of shares of Series A Preferred Stock, voting as a separate class, shall be entitled to elect two (2) members of the Corporation’s Board of Directors at each meeting or pursuant to each consent of the Corporation’s stockholders for the election of directors. So long as at least 1,000,000 shares (as adjusted for Recapitalizations) of Series B Preferred Stock remains outstanding, the holders of shares of Series B Preferred Stock, voting as a separate class, shall be entitled to elect one (1) member of the Corporation’s Board of Directors at each meeting or pursuant to each consent of the Corporation’s stockholders for the election of directors. The holders of Common Stock, voting as a separate class, shall be entitled to elect two (2) members of the Corporation’s Board of Directors at each meeting or pursuant to each consent of the Corporation’s stockholders for the election of directors. Any additional members of the Corporation’s Board of Directors shall be elected by the holders of Common Stock, Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, voting together as a single class. If a vacancy on the Board of Directors is to be filled by the Board of Directors, only directors elected by the same class or classes of stockholders as those who would be entitled to vote to fill such vacancy shall vote to fill such vacancy.

(e)Adjustment in Authorized Common Stock. Notwithstanding the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware to the contrary, the number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares of Common Stock then outstanding) by an affirmative vote of the holders of a majority of the votes applicable to the then outstanding stock of the Corporation.

(f)Common Stock. Each holder of shares of Common Stock shall be entitled to one vote for each share thereof held.

6.Amendments and Changes.

(a)As long as at least 1,000,000 shares (as adjusted for Recapitalizations) of the Series C Preferred Stock shall be issued and outstanding, the Corporation shall not (by amendment, consolidation, merger or otherwise), without first obtaining (in addition to any other vote required by law or the Certificate of Incorporation) the approval by vote or written consent as provided by law of the holders of at least a majority of the outstanding shares of the Series C Preferred Stock, (i) amend, alter or repeal any provision of the Certificate of Incorporation or Bylaws of the Corporation, whether by merger or otherwise, if such action would adversely alter the rights, preferences, privileges or powers of, or restrictions provided for the benefit of the Series C Preferred Stock unless the rights, preferences, privileges and powers of, and restrictions provided for the benefit of the

Series A Preferred Stock and Series B Preferred Stock, are altered in the same relative manner (it being understood that a series of Preferred Stock shall be altered in the same relative manner if any differences in the changes made arise out of differences in the original issue price vis-a-vis other series of Preferred Stock and result in proportional differences, for example, in the amounts of respective dividend prices, liquidation preferences or anti-dilution adjustments) or (ii) increase or decrease (other than for decreases resulting from conversion of the Preferred Stock) the authorized number of shares of Series C Preferred Stock.

(b)As long as at least 1,000,000 shares (as adjusted for Recapitalizations) of the Preferred Stock shall be issued and outstanding, the Corporation shall not (by amendment, consolidation, merger or otherwise), without first obtaining (in addition to any other vote required by law or the Certificate of Incorporation) the approval by vote or written consent as provided by law of the holders of at least a majority of the voting power of all then outstanding shares of Preferred Stock:

(i)amend, alter or repeal any provision of the Certificate of Incorporation or Bylaws of the Corporation, whether by merger or otherwise, if such action would adversely alter the rights, preferences, privileges or powers of, or restrictions provided for the benefit of the Preferred Stock or any series thereof;

(ii)increase or decrease (other than for decreases resulting from conversion of the Preferred Stock) the authorized number of shares of Common Stock or Preferred Stock or any series thereof;

(iii)authorize or create (by reclassification, merger or otherwise), or permit any subsidiary to authorize or create, any new class or series of shares having rights, preferences or privileges with respect to dividends, redemption or payments upon liquidation senior to or on a parity with any series of Preferred Stock or having voting rights other than those granted to the Preferred Stock generally;

(iv)take any action, or permit any subsidiary to take any action, resulting in the repurchase or redemption of shares of Common Stock or Preferred Stock, other than the repurchase of shares of Common Stock or Preferred Stock issued to or held by employees, officers, directors or consultants of or to the Corporation or any of its subsidiaries upon termination of their employment or services approved by the Board of Directors or pursuant to agreements providing for the right of such repurchase between the Corporation and such persons, provided such purchase is at cost;

(v)consummate a Liquidation Event;

(vi)declare or pay, or permit any subsidiary to declare or pay, any Distribution with respect to the Preferred Stock or Common Stock of the Corporation or the capital stock of any subsidiary, unless such Distribution is made to the Corporation or any of its wholly owned subsidiaries;

(vii)take any action resulting in the increase or decrease of the authorized size of the Board of Directors;

(viii)create, or hold capital stock in, any subsidiary that is not wholly owned (either directly or through one or more other subsidiaries) by the Corporation, or sell, transfer or otherwise dispose of any capital stock of any direct or indirect subsidiary of the Corporation, or permit any direct or indirect subsidiary to sell, lease, transfer, exclusively license or otherwise dispose (in a single transaction or series of related transactions) all or substantially all of the assets of such subsidiary, unless such sale, transfer, license or disposal is to the Corporation or any of its wholly owned subsidiaries; or

(ix)amend this Section 6.

7.Redemption. The Preferred Stock is not redeemable.

8.Notices. Any notice required by the provisions of this ARTICLE V to be given to the holders of Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to each holder of record at such holder’s address appearing on the books of the Corporation.

ARTICLE VI

The Corporation is to have perpetual existence.

ARTICLE VII

Elections of directors need not be by written ballot unless a stockholder demands election by written ballot at the meeting and before voting begins or unless the Bylaws of the Corporation shall so provide.

ARTICLE VIII

Unless otherwise set forth herein, the number of directors which constitute the Board of Directors of the Corporation shall be designated in the Bylaws of the Corporation.

ARTICLE IX

Except as set forth herein, in furtherance and not in limitation of the powers conferred by statute, the Board of Directors of the Corporation is expressly authorized to make, alter, amend or repeal the Bylaws of the Corporation.

ARTICLE X

1.To the fullest extent permitted by the Delaware General Corporation Law as the same exists or as may hereafter be amended, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director.

2.The Corporation may indemnify to the fullest extent permitted by law any person made or threatened to be made a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that he, his testator or intestate is or was a director, officer or employee of the Corporation or any predecessor of the Corporation or serves or served at any other enterprise as a director, officer or employee at the request of the Corporation or any predecessor to the Corporation.

3.Neither any amendment nor repeal of this ARTICLE X, nor the adoption of any provision of this Corporation’s Certificate of Incorporation inconsistent with this ARTICLE X, shall eliminate or reduce the effect of this ARTICLE X, in respect of any matter occurring, or any action or proceeding accruing or arising or that, but for this ARTICLE X, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision.

ARTICLE XI

Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside of the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation.

In the event that any member of the Corporation’s Board of Directors who is not an employee of the Corporation, including any member of the Board of Directors who is also a partner or employee of an entity that is a holder of Preferred Stock (or Common Stock issued upon conversion thereof) and that is in the business of investing and reinvesting in other entities, or an employee of an entity that manages such an entity (each, a “Fund”), acquires knowledge of a potential transaction or other matter other than directly in connection with such individual’s service as a member of the Board of Directors (including, if applicable, in such individual’s capacity as a partner or employee of the Fund or the manager or general partner of a Fund) that may be an opportunity of interest for both the Corporation and such individual or Fund (a “Corporate Opportunity”), then, provided, that such director has acted in good faith, the Corporation: (i) renounces any interest or expectancy that such director or Fund offer an opportunity to participate in such Corporate Opportunity to the Corporation, and (ii) to the fullest extent permitted by law, waives any claim that such opportunity constituted a Corporate Opportunity that should have been presented by such director or Fund to the Corporation or any of its affiliates.

EX-3.2

Exhibit 3.2

BYLAWS OF

PROSPER MARKETPLACE, INC.

Adopted March 22, 2005

TABLE OF CONTENTS

			Page
ARTICLE I — MEETINGS OF STOCKHOLDERS			1
	1.1	Place of Meetings	1
	1.2	Annual Meeting	1
	1.3	Special Meeting	1
	1.4	Notice of Stockholders’ Meetings	2
	1.5	Manner of Giving Notice; Affidavit of Notice	2
	1.6	Quorum	2
	1.7	Adjourned Meeting; Notice	2
	1.8	Conduct of Business	2
	1.9	Voting	3
	1.10	Stockholder Action by Written Consent Without a Meeting	3
	1.11	Record Date for Stockholder Notice; Voting; Giving Consents	4
	1.12	Proxies	5
	1.13	List of Stockholders Entitled to Vote	5
ARTICLE II — DIRECTORS			5
	2.1	Powers	5
	2.2	Number of Directors	5
	2.3	Election, Qualification and Term of Office of Directors	5
	2.4	Resignation and Vacancies	6
	2.5	Place of Meetings; Meetings by Telephone	6
	2.6	Conduct of Business	7
	2.7	Regular Meetings	7
	2.8	Special Meetings; Notice	7
	2.9	Quorum	7
	2.10	Board Action by Written Consent Without a Meeting	8
	2.11	Fees and Compensation of Directors	8
	2.12	Approval of Loans to Officers	8
	2.13	Removal of Directors	8
ARTICLE III — COMMITTEES			8
	3.1	Committees of Directors	8
	3.2	Committee Minutes	9
	3.3	Meetings and Action of Committees	9
ARTICLE IV — OFFICERS			9
	4.1	Officers	9
	4.2	Appointment of Officers	9
	4.3	Subordinate Officers	10

			Page
	4.4	Removal and Resignation of Officers	10
	4.5	Vacancies in Offices	10
	4.6	Representation of Shares of Other Corporations	10
	4.7	Authority and Duties of Officers	10
ARTICLE V — RECORDS AND REPORTS			10
	5.1	Maintenance and Inspection of Records	10
	5.2	Inspection by Directors	11
	5.3	Annual Report	11
ARTICLE VI — GENERAL MATTERS			11
	6.1	Stock Certificates; Partly Paid Shares	11
	6.2	Special Designation on Certificates	12
	6.3	Lost Certificates	12
	6.4	Construction; Definitions	12
	6.5	Dividends	12
	6.6	Fiscal Year	12
	6.7	Seal	12
	6.8	Stock Transfer Agreements	12
	6.9	Registered Stockholders	13
	6.10	Waiver of Notice	13
ARTICLE VII — NOTICE BY ELECTRONIC TRANSMISSION			13
	7.1	Notice by Electronic Transmission	13
	7.2	Definition of Electronic Transmission	14
	7.3	Inapplicability	14
ARTICLE VIII — INDEMNIFICATION			14
	8.1	Indemnification of Directors and Officers	14
	8.2	Indemnification of Others	14
	8.3	Prepayment of Expenses	15
	8.4	Determination; Claim	15
	8.5	Non-Exclusivity of Rights	15
	8.6	Insurance	15
	8.7	Other Indemnification	15
	8.8	Amendment or Repeal	15
ARTICLE IX — AMENDMENTS			16

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BYLAWS

ARTICLE I — MEETINGS OF STOCKHOLDERS

1.1Place of Meetings.  Meetings of stockholders of Prosper Marketplace, Inc. (the “Company”) shall be held at any place, within or outside the State of Delaware, determined by the Company’s board of directors (the “Board”). The Board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the Delaware General Corporation Law (the “DGCL”). In the absence of any such designation or determination, stockholders’ meetings shall be held at the Company’s principal executive office.

1.2Annual Meeting.  An annual meeting of stockholders shall be held for the election of directors at such date and time as may be designated by resolution of the Board from time to time. Any other proper business may be transacted at the annual meeting. The Company shall not be required to hold an annual meeting of stockholders, provided that (i) the stockholders are permitted to act by written consent under the Company’s certificate of incorporation and these bylaws, (ii) the stockholders take action by written consent to elect directors and (iii) the stockholders unanimously consent to such action or, if such consent is less than unanimous, all of the directorships to which directors could be elected at an annual meeting held at the effective time of such action are vacant and are filled by such action.

1.3Special Meeting.  A special meeting of the stockholders may be called at any time by the Board, Chairperson of the Board, Chief Executive Officer or President (in the absence of a Chief Executive Officer) or by one or more stockholders holding shares in the aggregate entitled to cast not less than 10% of the votes at that meeting.

If any person(s) other than the Board calls a special meeting, the request shall:

(i)be in writing;

(ii)specify the time of such meeting and the general nature of the business proposed to be transacted; and

(iii)be delivered personally or sent by registered mail or by facsimile transmission to the Chairperson of the Board, the Chief Executive Officer, the President (in the absence of a Chief Executive Officer) or the Secretary of the Company.

The officer(s) receiving the request shall cause notice to be promptly given to the stockholders entitled to vote at such meeting, in accordance with the provisions of sections 1.4 and 1.5 of these bylaws, that a meeting will be held at the time requested by the person or persons calling the meeting. No business may be transacted at such special meeting other than the business specified in such notice to stockholders. Nothing contained in this paragraph of this section 1.3 shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the Board may be held.

1.4Notice of Stockholders’ Meetings.  All notices of meetings of stockholders shall be sent or otherwise given in accordance with either section 1.5 or section 7.1 of these bylaws not less than 10 or more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, if any, date and hour of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.

1.5Manner of Giving Notice; Affidavit of Notice.  Notice of any meeting of stockholders shall be given:

(i)if mailed, when deposited in the United States mail, postage prepaid, directed to the stockholder at his or her address as it appears on the Company’s records; or

(ii)if electronically transmitted as provided in section 7.1 of these bylaws.

An affidavit of the Secretary or an Assistant Secretary of the Company or of the transfer agent or any other agent of the Company that the notice has been given by mail or by a form of electronic transmission, as applicable, shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

1.6Quorum.  Except as otherwise provided by law, the certificate of incorporation or these bylaws, at each meeting of stockholders the presence in person or by proxy of the holders of shares of stock having a majority of the votes which could be cast by the holders of all outstanding shares of stock entitled to vote at the meeting shall be necessary and sufficient to constitute a quorum. If, however, such quorum is not present or represented at any meeting of the stockholders, then either (i) the chairperson of the meeting, or (ii) the stockholders entitled to vote at the meeting, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, in the manner provided in section 1.7, until a quorum is present or represented.

1.7Adjourned Meeting; Notice.  Any meeting of stockholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Company may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

1.8Conduct of Business.  Meetings of stockholders shall be presided over by the Chairperson of the Board, if any, or in his or her absence by the Vice Chairperson of the Board, if any, or in the absence of the foregoing persons by the Chief Executive Officer, or in

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the absence of the foregoing persons by the President, or in the absence of the foregoing persons by a Vice President, or in the absence of the foregoing persons by a chairperson designated by the Board, or in the absence of such designation by a chairperson chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his or her absence the chairperson of the meeting may appoint any person to act as secretary of the meeting. The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of business.

1.9Voting.  The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of section 1.11 of these bylaws, subject to Section 217 (relating to voting rights of fiduciaries, pledgors and joint owners of stock) and Section 218 (relating to voting trusts and other voting agreements) of the DGCL.

Except as may be otherwise provided in the certificate of incorporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of capital stock held by such stockholder which has voting power upon the matter in question. Voting at meetings of stockholders need not be by written ballot and, unless otherwise required by law, need not be conducted by inspectors of election unless so determined by the holders of shares of stock having a majority of the votes which could be cast by the holders of all outstanding shares of stock entitled to vote thereon which are present in person or by proxy at such meeting. If authorized by the Board, the requirement of a written ballot for the election of directors shall be satisfied by a ballot submitted by electronic transmission (as defined in section 7.2 of these bylaws), provided that any such electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder or proxy holder.

At all meetings of stockholders for the election of directors a plurality of the votes cast shall be sufficient to elect. All other elections and questions shall, unless otherwise provided by law, the certificate of incorporation or these bylaws, be decided by the vote of the holders of shares of stock having a majority of the votes which could be cast by the holders of all shares of stock entitled to vote thereon which are present in person or represented by proxy at the meeting.

1.10Stockholder Action by Written Consent Without a Meeting.  Unless otherwise provided in the certificate of incorporation, any action required by the DGCL to be taken at any annual or special meeting of stockholders of a corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice, and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the Company as provided in Section 228 of the DGCL. In the event that the action which is consented to is such as would have required the filing of a certificate under any provision

3

of the DGCL, if such action had been voted on by stockholders at a meeting thereof, the certificate filed under such provision shall state, in lieu of any statement required by such provision concerning any vote of stockholders, that written consent has been given in accordance with Section 228 of the DGCL.

1.11Record Date for Stockholder Notice; Voting; Giving Consents.  In order that the Company may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board and which record date:

(i)in the case of determination of stockholders entitled to notice of or to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by law, not be more than sixty nor less than ten days before the date of such meeting;

(ii)in the case of determination of stockholders entitled to express consent to corporate action in writing without a meeting, shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board; and

(iii)in the case of determination of stockholders for any other action, shall not be more than sixty days prior to such other action.

If no record date is fixed by the Board:

(i)the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held;

(ii)the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting when no prior action of the Board is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Company in accordance with applicable law, or, if prior action by the Board is required by law, shall be at the close of business on the day on which the Board adopts the resolution taking such prior action; and

(iii)the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, provided that the Board may fix a new record date for the adjourned meeting.

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1.12Proxies.  Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL.

1.13List of Stockholders Entitled to Vote.  The officer who has charge of the stock ledger of the Company shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The Company shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least 10 days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the Company’s principal executive office. In the event that the Company determines to make the list available on an electronic network, the Company may take reasonable steps to ensure that such information is available only to stockholders of the Company. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.

ARTICLE II — DIRECTORS

2.1Powers.  Subject to the provisions of the DGCL and any limitations in the certificate of incorporation or these bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the Company shall be managed and all corporate powers shall be exercised by or under the direction of the Board.

2.2Number of Directors.  The number of directors shall be determined from time to time by resolution of the Board, provided that the Board shall consist of at least one member. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.

2.3Election, Qualification and Term of Office of Directors.  Except as provided in section 2.4 of these bylaws, directors shall be elected at each annual meeting of stockholders to hold office until the next annual meeting. Directors need not be stockholders unless so required by the

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certificate of incorporation or these bylaws. The certificate of incorporation or these bylaws may prescribe other qualifications for directors. Each director, including a director elected to fill a vacancy, shall hold office until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal.

2.4Resignation and Vacancies.  Any director may resign at any time upon notice given in writing or by electronic transmission to the Company. When one or more directors so resigns and the resignation is effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this section in the filling of other vacancies.

Unless otherwise provided in the certificate of incorporation or these bylaws:

(i)Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director.

(ii)Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected.

If at any time, by reason of death or resignation or other cause, the Company should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the certificate of incorporation or these bylaws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the DGCL.

If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least 10% of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the DGCL as far as applicable.

2.5Place of Meetings; Meetings by Telephone.  The Board may hold meetings, both regular and special, either within or outside the State of Delaware.

Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any

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committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

2.6Conduct of Business.  Meetings of the Board shall be presided over by the Chairperson of the Board, if any, or in his or her absence by the Vice Chairperson of the Board, if any, or in the absence of the foregoing persons by a chairperson designated by the Board, or in the absence of such designation by a chairperson chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his or her absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.

2.7Regular Meetings.  Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board.

2.8Special Meetings; Notice.  Special meetings of the Board for any purpose or purposes may be called at any time by the Chairperson of the Board, the Chief Executive Officer, the President, the Secretary or any two directors.

Notice of the time and place of special meetings shall be:

(i)delivered personally by hand, by courier or by telephone;

(ii)sent by United States first-class mail, postage prepaid;

(iii)sent by facsimile; or

(iv)sent by electronic mail,

directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, as the case may be, as shown on the Company’s records.

If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or (iii) sent by electronic mail, it shall be delivered or sent at least 24 hours before the time of the holding of the meeting. If the notice is sent by United States mail, it shall be deposited in the United States mail at least four days before the time of the holding of the meeting. Any oral notice may be communicated to the director. The notice need not specify the place of the meeting (if the meeting is to be held at the Company’s principal executive office) nor the purpose of the meeting.

2.9Quorum.  At all meetings of the Board, a majority of the total number of directors shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board, except as may be otherwise specifically provided by statute, the certificate of incorporation or these bylaws. If a quorum is not present at any meeting of the Board, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.

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A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.

2.10Board Action by Written Consent Without a Meeting.  Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

2.11Fees and Compensation of Directors.  Unless otherwise restricted by the certificate of incorporation or these bylaws, the Board shall have the authority to fix the compensation of directors.

2.12Approval of Loans to Officers.  The Company may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the Company or of its subsidiary, including any officer or employee who is a director of the Company or its subsidiary, whenever, in the judgment of the Board, such loan, guaranty or assistance may reasonably be expected to benefit the Company. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board shall approve, including, without limitation, a pledge of shares of stock of the Company.

2.13Removal of Directors.  Unless otherwise restricted by statute, the certificate of incorporation or these bylaws, any director or the entire Board may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors.

No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director’s term of office.

ARTICLE III — COMMITTEES

3.1Committees of Directors.  The Board may designate one or more committees, each committee to consist of one or more of the directors of the Company. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board or in these bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company, and may authorize the seal of the Company to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders,

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any action or matter expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the Company,

3.2Committee Minutes.  Each committee shall keep regular minutes of its meetings and report the same to the Board when required.

3.3Meetings and Action of Committees.  Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:

(i)section 2.5 (Place of Meetings; Meetings by Telephone);

(ii)section 2.7 (Regular Meetings);

(iii)section 2.8 (Special Meetings; Notice);

(iv)section 2.9 (Quorum);

(v)section 2.10 (Board Action by Written Consent Without a Meeting); and

(vi)section 6.10 (Waiver of Notice)

with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board and its members. However:

(vii)the time of regular meetings of committees may be determined either by resolution of the Board or by resolution of the committee;

(viii)special meetings of committees may also be called by resolution of the Board; and

(ix)notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The Board may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.

ARTICLE IV — OFFICERS

4.1Officers.  The officers of the Company shall be a President and a Secretary. The Company may also have, at the discretion of the Board, a Chairperson of the Board, a Vice Chairperson of the Board, a Chief Executive Officer, one or more Vice Presidents, a Chief Financial Officer, a Treasurer, one or more Assistant Treasurers, one or more Assistant Secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may be held by the same person.

4.2Appointment of Officers.  The Board shall appoint the officers of the Company, except such officers as may be appointed in accordance with the provisions of sections 4.3 and 4.5 of these bylaws, subject to the rights, if any, of an officer under any contract of employment.

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4.3Subordinate Officers.  The Board may appoint, or empower the Chief Executive Officer or, in the absence of a Chief Executive Officer, the President, to appoint, such other officers and agents as the business of the Company may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the Board may from time to time determine.

4.4Removal and Resignation of Officers.  Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the Board at any regular or special meeting of the Board or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board.

Any officer may resign at any time by giving written notice to the Company. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Company under any contract to which the officer is a party.

4.5Vacancies in Offices.  Any vacancy occurring in any office of the Company shall be filled by the Board or as provided in section 4.2.

4.6Representation of Shares of Other Corporations.  Unless otherwise directed by the Board, the President or any other person authorized by the Board or the President is authorized to vote, represent and exercise on behalf of the Company all rights incident to any and all shares of any other corporation or corporations standing in the name of the Company. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.

4.7Authority and Duties of Officers.  Except as otherwise provided in these bylaws, the officers of the Company shall have such powers and duties in the management of the Company as may be designated from time to time by the Board and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board.

ARTICLE V — RECORDS AND REPORTS

5.1Maintenance and Inspection of Records.  The Company shall, either at its principal executive office or at such place or places as designated by the Board, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these bylaws as amended to date, accounting books, and other records.

Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the Company’s stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably

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related to such person’s interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent so to act on behalf of the stockholder. The demand under oath shall be directed to the Company at its registered office in Delaware or at its principal executive office.

5.2Inspection by Directors.  Any director shall have the right to examine the Company’s stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his or her position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the Company to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper.

5.3Annual Report.  The Company shall cause an annual report to be sent to the stockholders of the Company to the extent required by applicable law. If and so long as there are fewer than 100 holders of record of the Company’s shares, the requirement of sending of an annual report to the stockholders of the Company is expressly waived (to the extent permitted under applicable law).

ARTICLE VI — GENERAL MATTERS

6.1Stock Certificates; Partly Paid Shares.  The shares of the Company shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Company. Notwithstanding the adoption of such a resolution by the Board, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the Company by the Chairperson of the Board or Vice Chairperson of the Board, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Company representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Company with the same effect as if he were such officer, transfer agent or registrar at the date of issue.

The Company may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, upon the books and records of the Company in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the Company shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.

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6.2Special Designation on Certificates.  If the Company is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the Company shall issue to represent such class or series of stock; provided that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the Company shall issue to represent such class or series of stock a statement that the Company will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

6.3Lost Certificates.  Except as provided in this section 6.3, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Company and cancelled at the same time. The Company may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Company may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Company a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

6.4Construction; Definitions.  Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person.

6.5Dividends.  The Board, subject to any restrictions contained in either (i) the DGCL, or (ii) the certificate of incorporation, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property, or in shares of the Company’s capital stock.

The Board may set apart out of any of the funds of the Company available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Company, and meeting contingencies.

6.6Fiscal Year.  The fiscal year of the Company shall be fixed by resolution of the Board and may be changed by the Board.

6.7Seal.  The Company may adopt a corporate seal, which shall be in such form as may be approved from time to time by the Board. The Company may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

6.8Stock Transfer Agreements.  The Company shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the Company to

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restrict the transfer of shares of stock of the Company of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.

6.9Registered Stockholders.  The Company:

(i)shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner;

(ii)shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares; and

(iii)shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

6.10Waiver of Notice.  Whenever notice is required to be given under any provision of the DGCL, the certificate of incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the certificate of incorporation or these bylaws.

ARTICLE VII — NOTICE BY ELECTRONIC TRANSMISSION

7.1Notice by Electronic Transmission.  Without limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the DGCL, the certificate of incorporation or these bylaws, any notice to stockholders given by the Company under any provision of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Company. Any such consent shall be deemed revoked if:

(i)the Company is unable to deliver by electronic transmission two consecutive notices given by the Company in accordance with such consent; and

(ii)such inability becomes known to the Secretary or an Assistant Secretary of the Company or to the transfer agent, or other person responsible for the giving of notice.

However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.

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Any notice given pursuant to the preceding paragraph shall be deemed given:

(i)if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;

(ii)if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice;

(iii)if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and

(iv)if by any other form of electronic transmission, when directed to the stockholder.

An affidavit of the Secretary or an Assistant Secretary or of the transfer agent or other agent of the Company that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

7.2Definition of Electronic Transmission.  An “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

7.3Inapplicability.  Notice by a form of electronic transmission shall not apply to Sections 164, 296, 311, 312 or 324 of the DGCL.

ARTICLE VIII — INDEMNIFICATION

8.1Indemnification of Directors and Officers.  The Company shall indemnify and hold harmless, to the fullest extent permitted by the DGCL as it presently exists or may hereafter be amended, any director or officer of the Company who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”) by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director, officer, employee or agent of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person in connection with any such Proceeding. The Company shall be required to indemnify a person in connection with a Proceeding initiated by such person only if the Proceeding was authorized by the Board.

8.2Indemnification of Others.  The Company shall have the power to indemnify and hold harmless, to the extent permitted by applicable law as it presently exists or may hereafter be amended, any employee or agent of the Company who was or is made or is threatened to be made a party or is

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otherwise involved in any Proceeding by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was an employee or agent of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person in connection with any such Proceeding.

8.3Prepayment of Expenses.  The Company shall pay the expenses incurred by any officer or director of the Company, and may pay the expenses incurred by any employee or agent of the Company, in defending any Proceeding in advance of its final disposition; provided that the payment of expenses incurred by a person in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the person to repay all amounts advanced if it should be ultimately determined that the person is not entitled to be indemnified under this Article VIII or otherwise.

8.4Determination; Claim.  If a claim for indemnification or payment of expenses under this Article VIII is not paid in full within sixty days after a written claim therefor has been received by the Company the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Company shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law.

8.5Non-Exclusivity of Rights.  The rights conferred on any person by this Article VIII shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the certificate of incorporation, these bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

8.6Insurance.  The Company may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Company would have the power to indemnify him or her against such liability under the provisions of the DGCL.

8.7Other Indemnification.  The Company’s obligation, if any, to indemnify any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or non-profit entity shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture, trust, enterprise or non-profit enterprise.

8.8Amendment or Repeal.  Any repeal or modification of the foregoing provisions of this Article VIII shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification.

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ARTICLE IX — AMENDMENTS

These bylaws may be adopted, amended or repealed by the stockholders entitled to vote. However, the Company may, in its certificate of incorporation, confer the power to adopt, amend or repeal bylaws upon the directors. The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal bylaws.

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EX-4.1

Exhibit 4.1

FORM OF PROMISSORY NOTE

Borrower Address:                                                                                              .

1. Promise to Pay. In return for a loan I have received, I promise to pay to the order of Prosper Marketplace, Inc. (“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 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

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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 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.

I understand that if I have elected to have my payments made by automatic withdrawals from my account:

a. The interest rate set forth in this Note, and the Annual Percentage Rate and related disclosures set forth in my Truth-in-Lending Disclosure Statement include the one percent (1.00%) reduction in my interest rate (the “Preferred Rate”) that I received as an incentive to make my payments by preauthorized automatic withdrawals.

b. I will no longer be eligible for the Preferred Rate, and I must make my monthly payments using bank drafts drawn by you on my behalf on my account each month, if (i) I withdraw my authorization to make payments by automatic withdrawals, (ii) I cancel or close my account without establishing a new account at least three (3) days before the next monthly payment due date, or (iii) on two occasions during the term of this Note, my entire monthly payment cannot be made by automatic withdrawal  from my account on the due date because of insufficient funds in the account, or for any other reason (other than an error by you).

c. If I become ineligible for the Preferred Rate, you have the right to add one percent (1.00%) to the interest rate on this Note. If you exercise this right, the increased interest rate will become effective on the due date of the next monthly payment due under this Note, and will continue for the remainder of the term of the Note. The increase in the interest rate on my Note will result in a higher monthly payment amount, equal to the amount that would be sufficient to repay in full the unpaid principal I owe as of the effective date of the increased interest rate, on the maturity date at the increased interest rate in substantially equal monthly payments. I must pay the higher monthly payment amount beginning on the first monthly payment due date after the increased interest rate becomes effective.

d. I understand that if the interest rate on my Note is increased as set forth in this Paragraph, the Preferred Rate will not be reinstated for any reason, even if I continue making my payments by automatic withdrawals.

8. Default and Remedies. If I fail to make any payment when due in the manner required by Paragraph 7, or if receivership or insolvency proceedings or any assignment for the benefit of creditors is instituted by or against me; I die, I fail to keep any promise or meet any other obligations in this Note, or I make a material misrepresentation in connection with my loan, 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 not do so until one or more payments under this Note is at least 120 days past due, and you will give me at least 30 days prior notice of acceleration; provided, however, that if my default is the result of a material misrepresentation you do not need to wait until one or more payments is past due, and you do not need to give me any prior notice of acceleration.

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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 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. Except as provided below, this Note is governed by the laws of the State of my residence, as reflected in your registration records, at the time this loan is made. I will promptly notify you of any changes in my State of residence. For borrowers who are residents of Alaska and Minnesota, this Note is entered into in California and is governed by the laws of California, where Prosper Marketplace, Inc. is located.

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.

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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.

Texas Residents: Prosper Marketplace, Inc. is licensed and examined under the laws of the State of Texas and by state law is subject to regulatory oversight by the Office of Consumer Credit Commissioner. Any consumer wishing to file a complaint against the Prosper Marketplace, Inc. should contact the Office of Consumer Credit Commissioner through one of the means indicated below: In Person or U.S. Mail: 2601 North Lamar Boulevard, Austin, Texas 78705-4207. Telephone No.: 800/538-1579. Fax No.: 512/936-7610. E-mail: consumer.complaints@occc.state.tx.us. Website: www.occc.state.tx.us.

Wisconsin Residents:  If this loan is made for commercial purposes, which are any purposes other than personal, family, or household purposes, this loan shall be governed by the terms of the Consumer Loan Act, Wis. Stat. chapters 421 to 427, including the provisions governing finance charges on loans of $25,000 or less.

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

Date:                                       

[Borrower]

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EX-10.1

Exhibit 10.1

form of BORROWER REGISTRATION AGREEMENT

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

1.  Registration as a Prosper Borrower. You are registering as a borrower in the Prosper credit marketplace, so that you may be eligible to post loan requests or “listings” for display on the Prosper website to people who may be interested in bidding against one another in a competitive auction format to purchase your loan after it is made and funded by Prosper. For the sake of simplicity, Prosper refers to the people who bid on listings as “Lenders” even though loans are made by Prosper and sold to the winning bidder or bidders. You agree to comply with the terms and provisions of this Agreement, the Terms of Use of the Prosper website, and the Prosper Policies, as those guidelines may be amended from time to time by Prosper in its sole discretion (collectively, the “Prosper Terms and Conditions”).

Prosper reserves the right to restrict access to the Prosper marketplace to individuals who meet minimum credit guidelines and other criteria, as determined by Prosper in its sole discretion.

2.  Authorization to Obtain Credit Report. You authorize Prosper to obtain a credit report from the Experian consumer credit reporting agency. Prosper uses the credit report (i) for authentication purposes, to make sure you are who you say you are, (ii) to determine how much non-mortgage debt you currently have, in order to determine your debt-to-income ratio, (iii) to obtain your Experian Scorex PLUS^sm credit score and assign you a Prosper Credit Grade based on that score, and (iv) to identify and display certain information and characteristics from your credit profile, including but not limited to the number, age, type and status of the credit lines currently being reported, public records (such as bankruptcies and judgments) and mortgage loans appearing on your credit report, and the number of your recent requests for credit. Information from your credit report will be displayed on the Prosper website with your listings. You authorize Prosper to verify information in your credit report, and you agree that Prosper may contact third parties to verify any such information. Prosper will obtain your credit report each time you post a listing, except that Prosper will not obtain a new credit report when you post listings within thirty (30) days following the posting of an earlier listing.

3.  Listings. You may request a loan from Prosper (“Loan”) by posting a listing on the Prosper website. You may request a Loan in the amount of $25,000 or less, subject to a minimum Loan amount; the minimum Loan amount is governed by the laws of the State where you reside, and normally ranges from $1,000 to $3,000. The minimum Loan amounts are posted in the States & Licenses section of the Prosper website, and are subject to change by Prosper at any time without notice. To post a listing, you must provide the amount of the Loan you are requesting, the maximum interest rate you are willing to pay, and the duration of your listing. At the time you post a listing you must also provide your annual income, occupation and employment status. The following information based on your credit file with Experian will be displayed with your listing:

(i)	Your Prosper credit grade;
(ii)	Your debt-to-income ratio, expressed as a percentage, reflecting the ratio between the amount of your monthly non-mortgage debt, as compared to the amount of monthly income that you indicated when completing your listing;
(iii)	Whether you own a home;
(iv)	The number of accounts on which you are currently late on a payment;
(v)	The total past-due amount you owe on all delinquent and charged-off accounts;
(vi)	The number of 90+ days past due delinquencies on your credit report in the last 7 years;

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(vii)	The number of negative public records (e.g., bankruptcies, liens, and judgments) on your credit report over the last 12 months, and over the last 10 years;
(viii)	The month and year your first recorded credit line (e.g., revolving, installment, or mortgage credit) was opened;
(ix)	The total number of credit lines appearing on your credit report, along with the number that are open and current;
(x)	The total balance on all of your open revolving credit lines;
(xi)	Your bankcard utilization ratio, expressed as a percentage, reflecting the ratio of the total balance used, to the aggregate credit limit on, all of your open bankcards; and
(xii)	The number of inquiries made by creditors to your credit report in the last six months.

Listings also display your self-reported occupation, employment status and range of income. If you are a member of a Prosper group when you post a listing, the listing will also identify your group; however, you do not have to be a member of a group to post a listing. You may also create a network of Prosper friends, and when you post a listing, you may also obtain endorsements of your listing from your group leader or your designated Prosper friends. Endorsements from your group leader or Prosper friends will be displayed with your listing. Group leaders and Prosper friends do not guarantee payments on your Loan, and an endorsement of your listing from a group leader or Prosper friend does not obligate the individual making the endorsement to guarantee or make any payments on your Loan. An endorsement of your listing from a group leader or Prosper friend is not required in order to post a listing.

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

Borrowers’ listings are displayed on the Prosper website. This means that people who visit the Prosper website will be able to view your listing, and see your Prosper credit grade, your debt-to income ratio and other information, provided, however, that certain information concerning your credit history will only be viewable by registered Prosper Lenders. Upon your submission of a listing, you authorize Prosper to display the listing on the Prosper website. To facilitate bids for your listing, Prosper may forward your listing by email to third parties, including but not limited to registered Prosper Lenders, and may display your listing in promotional, advertising and marketing materials, and you authorize Prosper to do so.

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

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Each listing you post on the Prosper website is both a request for a Loan and a commitment to borrow.

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

Commitment to Borrow. Each listing you post on the Prosper website is a commitment and promise to obtain a Loan from Prosper, for purchase by the person or persons whose bid or bids are matched with your listing. You have the right to withdraw your listing at any time prior to expiration of the listing. If your listing receives a Lender bid in, or Lender bids totaling, the amount of your requested Loan, you will receive a Loan from Prosper in the amount you requested, subject to Prosper’s right to verify information you provided in connection with your listing and your registration as a Prosper user and Prosper’s other rights as described in Section 4 below.

AT THE TIME YOU SUBMIT YOUR LISTING, YOU ARE COMMITTING TO OBTAIN A LOAN IN THE AMOUNT SPECIFIED IN YOUR LISTING, AT THE MAXIMUM INTEREST RATE SET FORTH IN YOUR LISTING, SHOULD YOUR LISTING BE MATCHED WITH A BID IN, OR BIDS TOTALING, THE AMOUNT OF YOUR REQUESTED LOAN. YOU HAVE THE RIGHT TO WITHDRAW YOUR LISTING AT ANY TIME PRIOR TO EXPIRATION OF YOUR LISTING; HOWEVER, YOU HAVE NO RIGHT TO RESCIND ANY LOAN.

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

Duration of Listings. When you post a listing, you specify how long your listing will be displayed on the Prosper website, subject to a maximum duration of ten (10) days. However, if your listing receives a Lender bid in, or Lender bids totaling, the full amount of your requested Loan prior to expiration of your listing, you may elect to end your listing early — you need not wait until your listing expires. You may also designate your listing for “automatic funding,” in which case your listing will end and no further bids on your listing will be accepted toward your listing as soon as your listing receives a bid or bids totaling the full amount of your requested Loan. Prosper reserves the right to make the automatic funding feature available only to certain credit grades. When you post a listing, it will be displayed on the Prosper website along with all other listings until you end the listing or the listing expires, or until the listing is withdrawn by you or by Prosper as provided in Section 4 below.

Additional Loans. Subject to eligibility requirements that Prosper may in its sole discretion establish and amend from time to time, you may have up to two Loans outstanding at any one time, provided that the aggregate outstanding principal balance of your Loans does not exceed the maximum Loan amount for your state of residence. To be eligible to post a listing for a second Loan, you must be current on your existing Loan, and you must not have been delinquent in making your last two monthly Loan payments. You may not post a listing for a second Loan within (6) months following the date of origination of your existing Loan. You may not obtain a Loan from the Prosper marketplace to pay off an existing Prosper Loan.

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

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

a. Prosper reserves the right to verify the accuracy of all information provided by borrowers, Lenders and group leaders in connection with listings, bids and Loans. Prosper also reserves the right to determine in its sole discretion whether a registered user is using, or has used, the Prosper website illegally or in violation of any order, writ, injunction or decree of any court or governmental instrumentality, for purposes of fraud or deception, or otherwise in a manner inconsistent with the Prosper Terms and Conditions or any 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 Loan. You agree to respond promptly to Prosper’s requests for information in connection with your listing, accounts, or your registration with Prosper.

b. In the event Prosper, prior to funding a Loan, 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 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 of a borrower’s requested Loan, Prosper may conduct a “pre-funding” review prior to funding the Loan. Loan funding occurs when Prosper disburses Loan proceeds into the borrower’s designated deposit account. Prosper may, at any time and in its sole discretion, delay funding of a Loan in order to enable Prosper to verify the accuracy of information provided by borrowers, Lenders and group leaders in connection with the listing or bids against the listing, and to determine whether there are any irregularities with respect to the listing or the bids against the listing. Prosper may cancel or proceed with funding the 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 Loan, Prosper will notify the borrower, group leader (if any), and all bidders for the listing of Prosper’s determination to cancel funding of the Loan.

5.  Matching of Bids and Listings.

a. Prosper’s auction platform will automatically match your listing with any bids that specify a minimum interest rate equal to or below the maximum interest rate you would accept.

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Bids are first matched with borrower listings with the highest offered interest rates above the bidder’s minimum interest rate, and thereafter the bids are matched to borrower listings with incrementally lower offered interest rates.

b. A match of your listing with one or more bids in the full amount of your requested Loan results in a Loan from Prosper to you, subject to Prosper’s right to verify information as provided in this Agreement. Each Loan will be evidenced by a Promissory Note in the form set forth on the attached Exhibit A. Notwithstanding anything to the contrary in the Terms of Use, you authorize Prosper to act as your authorized agent to sign a Promissory Note on your behalf in favor of Prosper in the principal amount of each Lender’s bid that is matched with your listing.

c. Prosper does not warrant or guaranty that your listings will be matched with any bids. Your listing must receive a bid in, or bids totaling, the entire amount of your requested Loan in order for a Loan to be made. You will not receive a Loan if, prior to withdrawal or expiration of your listing, only a portion (even a substantial portion) of your requested Loan amount is matched with a bid or bids.

d. To safeguard your privacy rights, on listings your name and address will be shielded from the view of bidders and prospective bidders, and your identity as the borrower on the Promissory Note will be shielded from the winning bidders who purchase your Loan. Only your Prosper user name will appear on listings and Promissory Notes, and only the user name of the bidders will appear with bids.

6.  Prosper’s Compensation.  If you receive a Loan, you must pay Prosper a fee to compensate Prosper for services rendered, and for reimbursement of our expenses, in connection with providing and maintaining the Prosper marketplace, including without limitation the authentication of borrowers, the administration of the auction platform, and the funding and sale of Loans.  The current fee amounts are posted in the Prosper Fees section of the Prosper website, and are subject to change by Prosper at any time without notice.The transaction fee is paid by the borrower out of, or contemporaneously with disbursement of, the Loan proceeds at the time a Loan is funded, so that the net amount of Loan proceeds you receive will be less that the full amount of your Loan. The amount and method of charging the transaction fee is subject to adjustment to the extent required by applicable state law. For example, if applicable state law limits the fee to a lesser amount, you will be charged the lesser amount.

7.  Listings Matched with Multiple Bids.  Your listing may be matched with more than one bid. If that happens, you agree to enter into separate Promissory Notes in the amount of each bid, with the aggregate principal amount of the Notes equal to your requested Loan amount. Each Promissory Note will be in the form of the Promissory Note attached as Exhibit A, and will have identical interest rates and, monthly payment due dates. Your monthly payment amount will be the aggregate monthly payment amount under the Promissory Notes, and the payments you make on your Loan are allocated pro rata to the respective Note owners based on the principal amount of each Lender’s Promissory Note with respect to the Loan. As used in this Agreement, the term “Loan” shall include your total indebtedness as evidenced by all Notes resulting from your listing being matched with multiple bids.

Authority to Act as Agent to Sign Promissory Notes. YOU AUTHORIZE PROSPER TO ACT AS YOUR AUTHORIZED AGENT TO SIGN A PROMISSORY NOTE, IN THE FORM SET FORTH ON THE ATTACHED EXHIBIT A, ON YOUR BEHALF IN FAVOR OF EACH LENDER WHOSE BID IS MATCHED WITH YOUR LISTING.

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8.  Making Your Loan Payments.  At the time you register as a borrower, you must provide your deposit account information to facilitate transfers of funds to and from the Prosper Funding Account and your deposit account. You agree to make your Loan payments by automated withdrawals from your designated account, or by the use of bank drafts drawn on your designated account. At the time you create your listing, you will be asked to choose the method of making your Loan payments, and your Loan payments will be made by the payment method you choose. Prosper will act as the servicer for all Loans you obtain through the Prosper marketplace, and all communications regarding your Loan must be made to Prosper. To the extent authorized or permitted by applicable law, you agree to pay all any fees incurred as a result of failed automated Loan payments due to insufficient funds in your account or for other reasons, returned check fees, penalties or similar servicing costs incurred by Prosper or the owner or owners of your Loan.

9. Authorization to Contact Your Group Leader. You acknowledge and agree that if you obtain a Loan through Prosper as a member of a group registered with Prosper, and your Loan payment becomes fifteen (15) days past due, Prosper may notify your group leader of the delinquent payment. You also acknowledge and agree that if you obtain a Loan through Prosper, in the event your loan payment becomes fifteen (15) days past due, Prosper may notify all of your designated Prosper friends who were winning bidders on your Loan listing of your delinquent payment. Groups on Prosper are rated according to the collective payment performance of the group’s members, so your failure to make Loan payments when due may have a negative effect on your group’s rating. If you borrow as a member of a group, you must remain a member of that group, and you may not change groups, as long as your Loan is outstanding.

10.  Collection & Reporting of Delinquent Loans. In the event you do not make your Loan payments on time, Prosper or any subsequent owner of the Loan will have all remedies authorized or permitted by the Promissory Note and applicable law. In addition, when a monthly payment becomes thirty (30) days past due, your Loan will be referred to a collection agency for collection. Prosper will report Loan payment delinquencies in excess of 30 days to one or more credit reporting agencies in accordance with applicable law. Subject to limitations of applicable law, you authorize and agree that Prosper or a collection agency may contact you at any or all of the telephone numbers you provide to Prosper at or after registration.

11.  No Guarantee. PROSPER DOES NOT WARRANT OR GUARANTEE (1) THAT YOUR LISTING WILL BE MATCHED WITH ANY BIDS, (2) THAT YOU WILL RECEIVE A LOAN AS A RESULT OF POSTING A LISTING, OR (3) THAT IF YOUR LISTING IS MATCHED YOU WILL RECEIVE A LOAN WITH AN INTEREST RATE LESS THAN THE MAXIMUM RATE SPECIFIED IN YOUR LISTING.

12.  Restrictions on Use. You are not authorized or permitted to use Prosper to obtain, or attempt to obtain, a Loan for someone other than yourself. You must be the owner of the deposit account you designate for electronic transfers of funds, with sole authority to direct that Loan payments be made from the account. Your designated account will be the account into which Loan proceeds will be deposited, and from which Loan payments will be made. Although you are registering as a borrower, you may also register and participate in the Prosper marketplace as a Lender or as a group leader. If you obtain a Loan and have your Loan written off as a result of your default, your registration will immediately expire, and you will not be eligible to post any further listings or re-register with Prosper as a borrower, Lender or group leader. Prosper may in its sole discretion, with or without cause and with or without notice, restrict your access to the Prosper website or marketplace.

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

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14.  Termination of Registration. Prosper may in its sole discretion, with or without cause, terminate this Agreement at any time by giving you notice as provided below.  In addition, upon Prosper’s determination that you committed fraud or made a material misrepresentation in connection with a listing, bid or Loan, performed any prohibited activity, or otherwise failed to abide by the terms of this Agreement or the Prosper Terms and Conditions, Prosper may, in its sole discretion, immediately and without notice, take one or more of the following actions: (i) suspend your right to post listings 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 listings you have placed on the Prosper website shall terminate, and will be removed from the Prosper website immediately. Any Loans you obtain prior to the effective date of termination resulting from listings you had placed on the Prosper website shall remain in full force and effect in accordance with their terms.

15.  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; provided, however, that Prosper does not have the right to change any term or provision of a Promissory Note evidencing a Loan to which you are a party except as authorized in the Promissory Note. Prosper will give you notice, which may be by email or in the form of a posting on the Prosper website, of material changes to this Agreement, or the Prosper Terms and Conditions. You authorize Prosper to correct obvious clerical errors appearing in information you provide to Prosper, without notice to you, although Prosper expressly undertakes no obligation to identify or correct such errors. This Agreement, along with the Prosper Terms and Conditions, represent the entire agreement between you and Prosper regarding your participation as a borrower in the Prosper credit marketplace, and supersede all prior or contemporaneous communications, promises and proposals, whether oral, written or electronic, between you and Prosper with respect to your involvement as a borrower with Prosper.

16.  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 must not (i) infringe on any third party’s copyright, patent, trademark, trade secret or other proprietary rights or right of publicity or privacy; (ii) violate any applicable law, statute, ordinance or regulation; (iii) be defamatory or libelous; (iv) be lewd, hateful, violent, pornographic or obscene; (v) violate any laws regarding unfair competition, anti-discrimination or false advertising; (vi) promote violence or contain hate speech; or (vii) contain viruses, trojan horses, worms, time bombs, cancelbots or other similar harmful or deleterious programming routines. You may not include or display any personally identifying information, including, without limitation, name, address, phone number, email address, Social Security number or driver’s license number, or bank account or credit card numbers of any Prosper member, on your Prosper member web page, or elsewhere on the Prosper website.

17.  Notices.  All notices and other communications hereunder shall be given by email to your registered email address, and shall be deemed to have been duly given and effective upon transmission. If your registered email address changes, you must notify by sending an email to support@prosper.com or calling (800) 208-0103. You also agree to update your registered residence address, mailing address and telephone number on the Prosper website if your address or telephone number changes.

18.  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

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IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

19.  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.

20.  Miscellaneous. You may not assign, transfer, sublicense or otherwise delegate your rights under this Agreement to another person without Prosper’s prior written consent. Any such assignment, transfer, sublicense or delegation in violation of this Section shall be null and void. This Agreement shall be governed by the laws of the State of California. 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.

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EXHIBIT A

PROMISSORY NOTE

Borrower Address:                                                                                               .

1.  Promise to Pay.  In return for a loan I have received, I promise to pay to the order of Prosper Marketplace, Inc. (“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 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.

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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 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.

I understand that if I have elected to have my payments made by automatic withdrawals from my account:

                    a. The interest rate set forth in this Note, and the Annual Percentage Rate and related disclosures set forth in my Truth-in-Lending Disclosure Statement include the one percent (1.00%) reduction in my interest rate (the “Preferred Rate”) that I received as an incentive to make my payments by preauthorized automatic withdrawals.

                    b. I will no longer be eligible for the Preferred Rate, and I must make my monthly payments using bank drafts drawn by you on my behalf on my account each month, if (i) I withdraw my authorization to make payments by automatic withdrawals, (ii) I cancel or close my account without establishing a new account at least three (3) days before the next monthly payment due date, or (iii) on two occasions during the term of this Note, my entire monthly payment cannot be made by automatic withdrawal  from my account on the due date because of insufficient funds in the account, or for any other reason (other than an error by you).

                    c. If I become ineligible for the Preferred Rate, you have the right to add one percent (1.00%) to the interest rate on this Note. If you exercise this right, the increased interest rate will become effective on the due date of the next monthly payment due under this Note, and will continue for the remainder of the term of the Note. The increase in the interest rate on my Note will result in a higher monthly payment amount, equal to the amount that would be sufficient to repay in full the unpaid principal I owe as of the effective date of the increased interest rate, on the maturity date at the increased interest rate in substantially equal monthly payments. I must pay the higher monthly payment amount beginning on the first monthly payment due date after the increased interest rate becomes effective.

                    d. I understand that if the interest rate on my Note is increased as set forth in this Paragraph, the Preferred Rate will not be reinstated for any reason, even if I continue making my payments by automatic withdrawals.

8.  Default and Remedies. If I fail to make any payment when due in the manner required by Paragraph 7, or if receivership or insolvency proceedings or any assignment for the benefit of creditors is instituted by or against me; I die, I fail to keep any promise or meet any other obligations in this Note, or I make a material misrepresentation in connection with my loan, 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 not do so until one or more payments under this Note is at least 120 days past due, and you will give me at least 30 days prior notice of acceleration; provided, however,

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that if my default is the result of a material misrepresentation you do not need to wait until one or more payments is past due, and you do not need to give me any 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 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.   Except as provided below, this Note is governed by the laws of the State of my residence, as reflected in your registration records, at the time this loan is made. I will promptly notify you of any changes in my State of residence. For borrowers who are residents of Alaska and Minnesota, this Note is entered into in California and is governed by the laws of California, where Prosper Marketplace, Inc. is located.

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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.

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.

Texas Residents: Prosper Marketplace, Inc. is licensed and examined under the laws of the State of Texas and by state law is subject to regulatory oversight by the Office of Consumer Credit Commissioner. Any consumer wishing to file a complaint against the Prosper Marketplace, Inc. should contact the Office of Consumer Credit Commissioner through one of the means indicated below: In Person or U.S. Mail: 2601 North Lamar Boulevard, Austin, Texas 78705-4207. Telephone No.: 800/538-1579. Fax No.: 512/936-7610. E-mail: consumer.complaints@occc.state.tx.us. Website: www.occc.state.tx.us.

Wisconsin Residents:  If this loan is made for commercial purposes, which are any purposes other than personal, family, or household purposes, this loan shall be governed by the terms of the Consumer Loan Act, Wis. Stat. chapters 421 to 427, including the provisions governing finance charges on loans of $25,000 or less.

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

Date:                                           

[Borrower]

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EX-10.2

Exhibit 10.2

FORM OF LENDER* REGISTRATION AGREEMENT

(Loan Commitment, Sale and Servicing Agreement)

* Note: Your role as a Prosper “Lender” is that of a loan purchaser, and your rights and obligations as a purchaser or prospective purchaser of Prosper loans 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, making loan purchase commitments and purchasing promissory notes representing loans made by Prosper to borrowers. All loans originated through Prosper are made to borrowers by Prosper Marketplace, Inc. from its own funds, and then sold and assigned by Prosper to the winning bidder or bidders on the listing without recourse to Prosper. Prosper is the originating lender for licensing and regulatory reasons and is licensed in all states where licensing is required given Prosper’s current lending criteria, which may change from time to time in its discretion.  Prosper uses the term “Lender” instead of “loan purchaser” for the sake of brevity and simplicity.

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

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 the Prosper website and purchase promissory notes evidencing loans made by Prosper following the matching of your bids with listings (collectively “Notes”). 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 (the “Prosper Policies”), as may be amended from time to time by Prosper in its sole discretion (collectively, the “Prosper Terms and Conditions”).

2.  Posting of Bids. Upon registration, you may post bids on borrower listings on the Prosper website. “Listings” are Prosper borrowers’ loan requests that are displayed on the Prosper website along with desired loan amount, offered interest rate, borrower credit grade, non-housing debt-to-income ratio, and other credit information from the borrower’s credit report, and group affiliation (if any). Listings also display the borrower’s self-reported annual income, occupation and employment status. Borrowers are identified by a Prosper user name but are not allowed to disclose their identity or contact information to Lenders.

A bid by a Lender is the Lender’s commitment to purchase a Note in the principal amount of the Lender’s bid, representing a loan to be made by Prosper to the Borrower, should the listing receive an amount of bids totaling the amount of the Borrower’s requested loan. Lenders “bid” the amount they are willing to commit to the purchase of a loan to the Borrower 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), and the funds must remain on deposit for as long as the bid is a “winning” bid on the listing. Lender bids become “winning” bids if such bids are in the group of bids that total the amount of the requested loan and have the lowest interest rate among all bids placed against the listing. Once a bid is made by a Lender, it is irrevocable.

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 “standing order” by indicating the aggregate amount of funds to be bid on listings that meet specified borrower criteria, the maximum amount that may be bid on one borrower listing, the minimum interest rate you are willing to receive, and the specific borrower criteria such as his or her credit grade, credit characteristics, group affiliation or debt-to-income ratio. You may have

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more than one standing order in place at one time, and you may bid selectively while one or more standing orders are in place.

Availability of Funds. At the time you place a bid you must have funds on deposit with Prosper (“Funds”) 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.

Your Loan Purchase Commitment. Whether you bid selectively or by placing a standing order, each bid you post on the Prosper website is a commitment and promise to purchase each Note that results from all or a portion of your bid being matched with the listing you select or with the listing or listings meeting the criteria specified in your standing order. 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 THE NOTE THAT RESULTS FROM ALL OR A PORTION OF YOUR BID BEING MATCHED WITH THAT LISTING. AT THE TIME YOU SUBMIT A STANDING ORDER, YOU ARE COMMITTING TO PURCHASE EACH NOTE THAT RESULTS FROM BIDS BEING PLACED ON YOUR BEHALF ON BORROWER LISTINGS MEETING THE CRITERIA SPECIFIED IN YOUR STANDING ORDER.

Limits on Bids.Lenders may bid the entire amount of the loan being requested, or may bid a lesser amount, subject to a minimum bid amount of $50. If you make a standing order, you can achieve risk diversification by designing your standing order to bid your available Funds in increments as low as $50 and designating in your standing order 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 Prosper 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. When you bid on a listing, you must bid an amount equal to or less than the current auction interest rate for the listing in order for all or portion of your bid to be matched with the

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listing. If you bid by making a standing order, Prosper’s auction platform will automatically match your bids with any borrower listings that offer an interest rate higher than your minimum acceptable interest rate, and otherwise meet your designated criteria. Borrower 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 borrower 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 standing orderare placed.

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 of the borrower’s requested loan. Your bid remains outstanding on a listing until you are outbid, or until the listing is withdrawn by the borrower or removed by Prosper in accordance with Section 9 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 of the borrower’s requested loan, the bids that are winning bids at the time the listing expires are matched with the listing, and Prosper will make a loan in the requested loan amount to the borrower who posted the listing, subject to Prosper’s right to verify information as described in Section 9 below. Each loan to the borrower is made from Prosper’s own funds, and will be evidenced by a Note or Notes, in the form set forth on the attached Exhibit A, naming Prosper as the payee, in the amount of each winning bid on the listing. On the day following the date loan proceeds are disbursed to the borrower, a Note in the amount of each winning bidder’s bid will be sold and assigned to the winning bidder in accordance with Section 5 below, and Funds of each winning bidder in the amount of the bid will be transferred from the bidder’s Prosper Funding Account to Prosper. By making a bid, you agree that if you are the winning bidder or are among the winning bidders on a listing that results in a loan, you will purchase a Note in the amount of your winning bid.

d. Prosper does not warrant or guaranty that your bids will be matched with any listings. In the event some, but not all, of the Funds you bid are matched with a listing, you are committed to purchasing the Note that results from the portion of your Funds being matched with 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. To safeguard your privacy rights and those of your borrowers, on all Notes evidencing Prosper 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 and Notes for you to see, and only your Prosper user name will appear with your bids.

4.  Multiple Lenders.  A borrower’s listing may be matched with more than one bid, and therefore you may be one of several Lenders who purchase a Note resulting from multiple bids being matched with a listing. In these instances, your Note is separate and distinct from the Notes of the other Lenders, and is enforceable in accordance with its terms.

5.  Sale and Servicing of Notes.

Purchase and Sale of Notes. Prosper agrees to sell and you agree to purchase, from time to time, without recourse, all Notes resulting from the matching of your bids with listings on the Prosper marketplace. Prosper agrees that after making loans to borrowers evidenced by such Notes, Prosper will sell, transfer, assign, set over and convey to you, and you will purchase, all of

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Prosper’s right, title and interest in and to the Notes; provided, however, that Prosper will retain the Servicing Rights (as defined below) with respect to the loans. Although Prosper will retain the Servicing Rights to all loans, you will hold title to, and ownership of, the Notes until the Notes are paid in full or sold as provided in Section 6.f below. You may not sell, transfer, assign, set over and convey your right, title and interest in and to the Notes except through the Prosper website and only in accordance with the Prosper Terms and Conditions, or as otherwise provided for in this Agreement. Prosper undertakes to establish and maintain a platform as part of its website pursuant to which outstanding Notes may be offered for sale to other registered Lenders on the platform, but Prosper assumes no obligation to assure the availability of any such platform. During the time you own the Notes you are entitled to all payments of principal, interest and late fees received from borrowers on the Notes, subject to servicing compensation and collection expenses as provided in this Agreement.

Servicing Rights. The Servicing Rights retained by Prosper include: (a) any and all rights to service the Notes; (b) any payments to or monies received by Prosper for servicing the Notes; (c) any returned check fees, fees incurred as a result of failed automated loan payments or returned checks or bank draftsdue to insufficient funds in a borrower’s account or for other reasons (“NSF fees”), penalties or similar servicing costs incurred with respect to the Notes; (d) all agreements or documents creating, defining or evidencing any such servicing rights and all rights of Prosper under those agreements or documents; (e) all accounts and other rights to payment related to the Notes; and (f) any and all documents, files, records, servicing files, servicing documents, servicing records, data tapes, computer records, or other information pertaining to the Notes or pertaining to the past, present or prospective servicing of the Notes (collectively, “Servicing Rights”). Prosper acknowledges that you are relying upon Prosper’s servicing facilities, personnel, records, processes, procedures and infrastructure to administer the sale and servicing of the Notes, and consequently, except as described in this Agreement, Prosper shall not assign the servicing rights to any third party nor resign from the obligations and duties hereby imposed on it except upon the merger, conversion, consolidation, or sale or other disposition of all or substantially all of Prosper’s business or assets. Prosper may, however, utilize subcontractors or other third parties to perform some or all of the servicing duties and functions, provided that servicing is performed in accordance with the servicing standard set forth in the following paragraph. If for any reason Prosper is unable to service your Notes, Prosper will assign and transfer the Servicing Rights to an unaffiliated third party loan servicer with at least three (3) years’ experience servicing receivables similar to the Notes. If Prosper fails or becomes insolvent and is unable to assign the Servicing Rights to a suitable third party loan servicer, Prosper will assign and transfer the Servicing Rights to P2P Servicing LLC, an entity to be managed by employees of Prosper experienced in the Platform’s operations to provide back-up loan servicing for the remaining term of the Notes.

Servicing Standard.  Prosper, as independent contractor servicer, shall service and administer the Notes in accordance with their terms and provisions, applicable law and the terms and provisions of this Agreement. In servicing the Notes, Prosper shall use the same care, skill, prudence and diligence with which prudent lending institutions service similar assets, and Prosper shall seek to maximize the timely recovery of principal and interest on the Notes. Prosper shall have full power and authority to do or cause to be done any and all things that it may reasonably deem necessary or desirable in connection with such servicing and administration of the Notes on your behalf, and you agree to cooperate with Prosper in the performance of its servicing and other obligations under this Agreement. However, Prosper shall not permit any modification with respect to any Note that would change the interest rate, defer or forgive the payment of principal or interest, reduce or increase the outstanding principal balance, or change the final maturity date on the Note.

Servicing Compensation.  As compensation for servicing the Notes, Prosper shall be entitled to retain from monthly payments on the Notes a servicing fee (the “Servicing Fee”). The current Servicing Fee amounts are posted in the Prosper Fees section of the Prosper website, and are subject to change by Prosper at any time without notice. The Servicing Fee on each of your Notes will be the amount of the Servicing Fee in effect at the time the loan evidenced by your Note is made, and will remain unchanged for the term of the Notes. With respect to each Note you purchase from Prosper, the Servicing Fee is payable only upon Prosper’s receipt of the full monthly payment from the borrower on such loan no later than thirty (30) days after the due date of the payment. Prosper shall retain as additional servicing compensation, NSF fees and similar fees, except for late charges, which will be paid to you. Prosper shall also retain as additional servicing compensation additional amounts payable by borrowers in respect of the discount foregone by borrowers as a result of

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the borrower’s withdrawal of authorization or other termination of authority for loan payments to be made by automatic withdrawals, as provided in Paragraph 7 of the Note.

Servicing Account.  Borrowers agree to make loan payments by automated withdrawals directly from the borrower’s designated account, or by bank drafts drawn on the account, into a collection account maintained by Prosper for your benefit (the “Servicing Account”). Loan payments made in another manner will be deposited into the Servicing Account upon receipt. No interest will accrue on funds in the Servicing Account. You agree to provide Prosper with account information and authorization to enable Prosper to make automated transfers of funds directly from the Servicing Account into your designated account. All immediately available collections of principal, interest and late fees, less fees incurred as a result of failed automated loan payments, group leaders’ Finder’s Payment Rewards (as discussed below) and our Servicing Fee deducted from each loan payment, will be delivered via automated transfer from the Servicing Account into your designated account at the end of each business day. Prosper will maintain electronic records of loan disbursements and borrowers’ payments.

Reporting.  Prosper will administer your Lender account and provide you with monthly statements in electronic format reflecting payments received on your Notes, itemizing any fees or charges incurred, and our Servicing Fees. Prosper will report loan payments and delinquencies to the credit reporting agencies without displaying your identity as the owner of the Note.

Servicing Indemnification. Prosper will indemnify and hold you harmless from any claims, losses, damages or penalties that you may sustain in any way related to Prosper’s failure to perform its duties and service the Notes in compliance with the terms of this Agreement and applicable law. Notwithstanding the foregoing, neither Prosper nor any of Prosper’s officers, employees or agents shall be liable to you for any reasonable action taken or for refraining from the taking of any reasonable action in good faith pursuant to this Agreement, or for reasonable errors in judgment made in good faith. If a claim is made by a third party with respect to Prosper’s servicing obligations under this Agreement, Prosper will assume the defense of any such claim and pay all expenses in connection with any such claim.

6.  Collection of Delinquent Loans.  As part of the registration process, you will be asked, among other things, to select from among two or more unaffiliated collection agencies and designate which collection agency Prosper is to use in the event a borrower fails to make payments when due under a Note. In the event a monthly payment on a Note is not received on or before the due date for the payment, you agree that in servicing such Note Prosper will take the following steps:

a. During the first ten days after the due date, Prosper will do the following:

(1)Contact and remind the borrower of his or her obligation to make the payment; and

(2)Prosper will make a second attempt to complete an automated withdrawal from the borrower’s account to make the delinquent payment; if payments are to be made by bank draft, the draft will be redeposited.

b. When a payment becomes fifteen (15) days past due, Prosper will notify the borrower’s group leader of the delinquent payment. Prosper will continue to contact and remind the borrower of his or her obligation to make the payment.

c. When a payment becomes thirty (30) days past due, Prosper will assign the loan account to the collection agency you selected at the time of registration. If there are multiple Lenders on a

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loan to a borrower, and one or more of the other Lenders selects a collection agency different from the one you selected, you agree that Prosper will use the selected collection agency common to the Lender or Lenders who have the greatest ownership interest in the loan. In the event of a tie among the Lenders as to their choice of a collection agency, the agency will be selected at random by Prosper. The borrower’s identity, contact information and other personally identifiable information will be provided to the collection agency to which the delinquent Note is assigned for collection, but you will not be provided with any such borrower information.

d. Upon receipt of the account, the collection agency will attempt to collect the delinquent amount and have the borrower bring the account current as soon as possible. The collection agency is not authorized to forgive any amount owing, permit any modification with respect to any Note that would change the interest rate, defer or forgive the payment of principal or interest, reduce or increase the outstanding principal balance, or change the final maturity date on any Note.

e. The collection agency will receive a percentage of any amounts collected by the agency, and the collection agency’s percentage share will be deducted from the delinquent payments collected by the agency. At any time a Note is more than thirty (30) days past due, the group leader’s compensation in the form of Finder’s Payment Rewards (if any) relating to the loan evidenced by the Note is suspended, and the portion of the loan payment that would otherwise accrue to the group leader is reallocated and paid to you.  The collection agency will deposit the net amounts collected into the Servicing Account for the benefit of you and the other Lenders as applicable.

f. Except in the case of borrower bankruptcy, Notes that become over 120 days past due are charged off and offered for sale to an unaffiliated debt buyer authorized and willing to purchase consumer loans. You authorize Prosper to offer for sale and sell your Notes that become over 120 days past due to a debt buyer in accordance with this Section. Because debt purchasers buy many past-due Notes at once, Notes that are in default might not be offered for sale at the point at which they are exactly 120 days past due, but may remain unsold for some period after they are 120 days past due. Collection efforts will continue until the Note is actually sold to a debt purchaser. Proceeds, if any, from the sale of your Notes, less expenses of sale, will be paid to you. No portion of the proceeds of a defaulted Note sale will be paid to any group leader. PROSPER DOES NOT GUARANTEE THAT A NOTE WILL BE SOLD AT A DEBT SALE, OR THAT YOU WILL RECEIVE ANY PROCEEDS FROM A DEBT SALE OF YOUR NOTE.

g. Late fees and NSF fees will be charged after any required grace period, to the extent such fees are authorized or permitted by the promissory note and applicable law. In the event your Note is sold at a debt sale, any accrued but unpaid NSF fees on the loan that would otherwise be retained by Prosper will be waived so that as much of the debt sale proceeds as possible can be recovered by you.

h. If Prosper receives notice that a borrower has filed for protection under the federal bankruptcy laws, or has become the subject of an involuntary bankruptcy petition, no further automated debit transfers or bank drafts for payment of monthly loan payments will be initiated, and any collection activity on the account will cease.  If requested by the bankruptcy court, Prosper will file a proof of claim with the bankruptcy court in the amount of the total outstanding balance owed on the borrower’s loan as of the date the bankruptcy petition is filed. Prosper will forward any amounts received on a loan in bankruptcy to the Lenders who own the Notes on a pro rata basis. Notes of Borrowers that are in bankruptcy will not be offered for sale to a debt buyer and will be charged off.

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You agree that the foregoing collection process shall be the exclusive method of servicing and collecting delinquent Notes.

7.  Representations and Warranties as to Notes Sold.  Prosper makes the following representations and warranties to you that, 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 complied in all material respects with applicable federal, state and local laws, including usury, truth-in-lending, equal credit opportunity, fair credit reporting, licensing or other similar laws, in originating the loan evidenced by the Note.

b. The proceeds of the loan evidenced by the Note sold have been fully disbursed to the borrower or the borrower’s designated payee by Prosper from its own funds prior to your purchase of the Note.

c. Prosper has made commercially reasonable efforts to authenticate and verify the identity of the borrower on the loan evidenced by the Note. Based on such authentication and verification, to the best of Prosper’s knowledge: (i) the borrower had full legal capacity to execute and deliver the Note, and (ii) each Note sold to you by Prosper is the legal, valid and binding obligation of the borrower, and is enforceable in accordance with its terms.

d. In the event of a material default under a Note you purchase from Prosper under this Agreement that is the result of verifiable identity theft of the named borrower’s identity, Prosper will repurchase the Note for the remaining unpaid principal balance. The determination of whether verifiable identity theft has occurred shall be in Prosper’s sole discretion. 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 it’s sole discretion elect to repurchase a Note at an earlier time.

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 defect in the Note, if the defect  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 delinquency or nonpayment of the loan), damages, expenses, legal fees, costs and judgments resulting from any claim, demand or defense that arising as a result of the defect in the Note. The decision whether a defective Note 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 outstanding principal balance of the Note as of the date of repurchase, plus any accrued but unpaid interest on the principal balance as of the date of repurchase at interest rate set forth in the Promissory Note; provided, however, that (i) in the event Prosper repurchases a Note within three (3) days of disbursement of loan proceeds to the borrower, no interest will be deemed to have accrued, and therefore no interest will be paid to you, and (ii) in the event Prosper repurchases a Note due to identity theft as provided in Section 7.d above, no interest will be paid to you. 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 Prosper in its capacity as servicer of the Note on your behalf shall execute any endorsements or assignments necessary to effectuate the transfer and assignment of the Note to Prosper. Upon repurchase of a Note, Prosper may exercise any remedies authorized or

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permitted under the Note and applicable law. Prosper’s obligation to cure or repurchase a Note or indemnify you for a defective Note 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.  Prosper’s Right to Verify Information and Cancel Funding.

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

b. In the event Prosper, prior to funding a loan to a borrower, 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 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. If, after a loan is funded, Prosper makes such a determination of irregularity with regard to the listing that resulted in the loan, a bid for the listing, or a loan resulting from the listing, Prosper may, in its discretion, exercise its remedies of indemnification or cure or repurchase of the Note evidencing the loan as provided under Section 8 above.

d. When a listing ends or expires with a bid or bids totaling the amount of a borrower’s requested loan, Prosper may conduct a “pre-funding” review prior to funding of the loan. Loan funding occurs when Prosper disburses loan proceeds into the borrower’s designated deposit account. Prosper may, at any time and in its sole discretion, delay funding of a loan in order to enable Prosper to verify the accuracy of information provided by borrowers, Lenders and group leaders in connection with the listing or bids against the listing, and to determine whether there are any irregularities with respect to the listing or the bids against the listing. Prosper may cancel or proceed with funding the 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 loan, Prosper will notify the borrower, group leader (if any), and all bidders for the listing of Prosper’s determination to cancel funding of the loan.

e. In most instances, Prosper does 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 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

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verification by Prosper. Prosper does not verify any statements by borrowers as to how loan proceeds are to be used and does not confirm after 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; if the report reflects an active mortgage loan, the borrower is presumed to be a homeowner. In connection with Prosper’s identity and anti-fraud verification of borrowers, Prosper verifies the borrower’s deposit account to determine that the borrower is the holder of record of the account.

10.  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 LOANS. PROSPER DOES NOT GUARANTEE ANY LOANS OBTAINED THROUGH THE PROSPER WEBSITE AND DOES NOT ACT AS A GUARANTOR OF ANY LOAN PAYMENT OR PAYMENTS BY ANY PROSPER BORROWER.

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

11.  Restrictions on Use. Except as provided in Section 12 below, you are not authorized or permitted to use Prosper to bid or purchase Notes for someone other than yourself. You must be the owner of the deposit account you designate for electronic transfers of funds, with sole 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. You may bid on listings of any registered Prosper borrowers. 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 Prosper web site or marketplace.

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

13.  Acknowledgement of Group Leader Compensation; Endorsements from Prosper Friends.

Group Leader Compensation. Many borrowers who participate in the Prosper marketplace do so by joining a group headed by a group leader. Group leaders invite prospective borrowers to the Prosper marketplace and display their groups on the Prosper website. Group leaders do not guarantee payments on any Note, and an endorsement of a listing from a

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borrower’s group leader does not obligate the group leader to guarantee or make any payments on any Note. With respect to certain loans resulting from listings that were posted prior to September 13, 2007, group leaders may receive compensation in the form of a Finder’s Payment Reward equal to a percentage of the interest portion of the monthly loan payments made on loans originated through the Prosper marketplace. With respect to loans for which Finder’s Payment Rewards are payable to group leaders, the following provisions apply.

a. You acknowledge that the group leader on certain loans that resulted from listings that were posted prior to September 13, 2007 may receive a percentage of the interest portion of each monthly loan payment made by each borrower on your Notes, provided that no loan payment is more than thirty (30) days past due. The portion of each loan payment the group leader will receive depends on the credit grade of the borrower, and is established at the time of creation of the listing that resulted in the loan to the borrower, and remains unchanged for the life of the loan.

b. The group leader will not receive any Finder’s Payment Reward at a time when any payment on a Note is more than thirty (30) days past due. With respect to loan payments received by Prosper on a Note that is more than thirty (30) days past due, Prosper will pay you, rather than the group leader, the entire amount of principal and interest received on such Note. If a Note that is more than thirty (30) days past due later becomes current in its payments, the group leader will resume receiving the portion of the monthly payment that represents the Finder’s Payment Reward for as long as the Note remains current.

c. The Finder’s Payment Reward is added onto the interest rate you agreed to accept in your winning bid. For example, if the Finder’s Payment Reward on a loan evidenced by one of your Notes is 2.00%, and your winning bid on the listing that resulted in the loan was 8.00%, the interest rate on the Note evidencing the loan will be 10.00% (8.00% plus 2.00%). The borrower will pay 10.00% interest; you will be entitled to receive 8.00% of the 10.00% (less the cost of the Servicing Fee and other authorized servicing compensation), and the group leader would receive 2.00% of the 10.00% interest, provided that the Note is not more than 30 days past due.

d. You have no right under this Agreement or the Prosper Terms and Conditions to bring any legal action against any Prosper group leader, or against any other person, to collect any Finder’s Payment Reward. You are not a third party beneficiary of, and you have no rights as a third party beneficiary under, any agreement between Prosper and any borrower, group leader or other Prosper Lender.

                Endorsements from Prosper Friends. Prosper allows borrowers to create a network of Prosper friends, and obtain endorsements of listings from one or more of the borrower’s designated Prosper friends. Endorsements from the borrowers’ Prosper friends are displayed with borrower’s listings. Prosper friends do not guarantee payments on any Note, and an endorsement of a listing from a borrower’s Prosper friend does not obligate the individual making the endorsement to guarantee or make any payments on any Note.

14.  Prohibited Activities. You agree that you will not do the following, in connection with any listings, bids, 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 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 a borrower’s listing;

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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, any amount from any borrower on any of your Notes, or engage in any activities that require a license as a loan servicer, debt collector, or credit counselor, including but not limited to collection calls or correspondence, and receipt of payments, with regard to any of your Notes;

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

f. Contact borrowers on any of your Notes without the borrower’s consent;

g. Contact any collection agency or law firm to which 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 the Prosper 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 or any individual that provided an endorsement of a listing relating to any of your Notes, or take any action that directly or indirectly suggests that any borrower’s Prosper friend is obligated in any way on a Note; or

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

15.  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) 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 resulting from bids you have placed on the Prosper website shall remain in full force and effect in accordance with their terms, subject to repurchase, indemnification or cure as provided in Section 8 above.

16.  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

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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 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.

17.  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; provided, however, that Prosper does not have the right to change any term or provision of a Note you purchase from Prosper under this Agreement except as authorized in the Promissory Note. Prosper will give you notice, which may be by email or in the form of a posting on the Prosper website, of material changes to this Agreement, or the Prosper Terms and Conditions. You authorize Prosper to correct obvious clerical errors appearing in information you provide to Prosper, without notice to you, although Prosper expressly undertakes no obligation to identify or correct such errors. This Agreement, along with the Prosper Terms and Conditions, represent the entire agreement between you and Prosper regarding your participation as a Lender in the Prosper credit marketplace, 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 with Prosper.

18.  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 must not (i) infringe on 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.

19.  Notices.  All notices and other communications hereunder shall be given by email to your registered email address, and shall be deemed to have been duly given and effective upon transmission. If your registered email address changes, you must notify Prosper by sending an email to support@prosper.com or calling (800) 208-0103. You also agree to update your registered residence address on the Prosper website if you change your residence.

20.  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.

21.  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.

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22.  Miscellaneous. You may not assign, transfer, sublicense or otherwise delegate your rights under this Agreement to another person without Prosper’s prior written consent. Any such assignment, transfer, sublicense or delegation in violation of this Section shall be null and void. This Agreement shall be governed by the laws of the State of California. 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.

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EXHIBIT A

PROMISSORY NOTE

Borrower Address:                                                                                                                

1.  Promise to Pay.  In return for a loan I have received, I promise to pay to the order of Prosper Marketplace, Inc. (“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

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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 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.

I understand that if I have elected to have my payments made by automatic withdrawals from my account:

                    a. The interest rate set forth in this Note, and the Annual Percentage Rate and related disclosures set forth in my Truth-in-Lending Disclosure Statement include the one percent (1.00%) reduction in my interest rate (the “Preferred Rate”) that I received as an incentive to make my payments by preauthorized automatic withdrawals.

                    b. I will no longer be eligible for the Preferred Rate, and I must make my monthly payments using bank drafts drawn by you on my behalf on my account each month, if (i) I withdraw my authorization to make payments by automatic withdrawals, (ii) I cancel or close my account without establishing a new account at least three (3) days before the next monthly payment due date, or (iii) on two occasions during the term of this Note, my entire monthly payment cannot be made by automatic withdrawal  from my account on the due date because of insufficient funds in the account, or for any other reason (other than an error by you).

                    c. If I become ineligible for the Preferred Rate, you have the right to add one percent (1.00%) to the interest rate on this Note. If you exercise this right, the increased interest rate will become effective on the due date of the next monthly payment due under this Note, and will continue for the remainder of the term of the Note. The increase in the interest rate on my Note will result in a higher monthly payment amount, equal to the amount that would be sufficient to repay in full the unpaid principal I owe as of the effective date of the increased interest rate, on the maturity date at the increased interest rate in substantially equal monthly payments. I must pay the higher monthly payment amount beginning on the first monthly payment due date after the increased interest rate becomes effective.

                    d. I understand that if the interest rate on my Note is increased as set forth in this Paragraph, the Preferred Rate will not be reinstated for any reason, even if I continue making my payments by automatic withdrawals.

8.  Default and Remedies. If I fail to make any payment when due in the manner required by Paragraph 7, or if receivership or insolvency proceedings or any assignment for the benefit of creditors is instituted by or against me; I die, I fail to keep any promise or meet any other obligations in this Note, or I make a material misrepresentation in connection with my loan, 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 not do so until one or more payments under this Note is at least 120 days

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past due, and you will give me at least 30 days prior notice of acceleration; provided, however, that if my default is the result of a material misrepresentation you do not need to wait until one or more payments is past due, and you do not need to give me any 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 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.   Except as provided below, this Note is governed by the laws of the State of my residence, as reflected in your registration records, at the time this loan is made. I will promptly notify you of any changes in my State of residence. For borrowers who are residents of Alaska and Minnesota, this Note is entered into in California and is governed by the laws of California, where Prosper Marketplace, Inc. is located.

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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.

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.

Texas Residents: Prosper Marketplace, Inc. is licensed and examined under the laws of the State of Texas and by state law is subject to regulatory oversight by the Office of Consumer Credit Commissioner. Any consumer wishing to file a complaint against the Prosper Marketplace, Inc. should contact the Office of Consumer Credit Commissioner through one of the means indicated below: In Person or U.S. Mail: 2601 North Lamar Boulevard, Austin, Texas 78705-4207. Telephone No.: 800/538-1579. Fax No.: 512/936-7610. E-mail: consumer.complaints@occc.state.tx.us. Website: www.occc.state.tx.us.

Wisconsin Residents:  If this loan is made for commercial purposes, which are any purposes other than personal, family, or household purposes, this loan shall be governed by the terms of the Consumer Loan Act, Wis. Stat. chapters 421 to 427, including the provisions governing finance charges on loans of $25,000 or less.

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

Date:                                          

                                                                                                [Borrower]

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EX-10.3

Exhibit 10.3

FORM OF GROUP LEADER REGISTRATION AGREEMENT

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

1.  Registration as a Prosper Group Leader. You are registering as a group leader on the Prosper website, so that you may be the head of a group of prospective Prosper borrowers. You agree to comply with the terms and provisions of this Agreement, the Terms of Use of the Prosper website, and the Prosper Policies, as those guidelines may be amended from time to time by Prosper in its sole discretion (collectively, the “Prosper Terms and Conditions”).

2.  Group Leader’s Services.  You agree to do the following:

a.Set up a group home page on the Prosper website, describing your group;

b.Become familiar with how Prosper works, and invite your group members to the Prosper marketplace;

c.Act as the liaison between your group and Prosper;

d.Consider requests from individuals to join your group, and allow individuals who meet your group’s eligibility criteria to join your group; and

e.Do your best to monitor, protect and promote the integrity and reputation of your group.

THE PROSPER MARKETPLACE IS INTENDED TO FOSTER IDEALS OF COMMUNITY SERVICE, CONNECTION AND RESPONSIBILITY.  YOU AGREE THAT YOU WILL NOT DISCRIMINATE AGAINST ANY INDIVIDUAL REQUESTING TO JOIN YOUR GROUP OR ANY GROUP MEMBER 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.  Compensation.  Group leaders are not entitled to receive, and do not receive, any compensation for serving as a group leader, except that with respect to loans resulting from listings posted prior to September 13, 2007. For loans that resulted from listings posted prior to September 13, 2007, group leaders may receive a finder’s fee in accordance with the provisions of the remainder of this Section 3.

For each loan resulting from a listing posted by a member of your group prior to September 13, 2007, Prosper will pay you an amount equal to a percentage of the interest portion of each monthly loan payment made by each borrower in your group (the “Finder’s Payment Reward”), provided that no loan payment on the loan is more than thirty (30) days past due. The portion of each loan payment you will receive was established at the time the loan was made and will remain unchanged for the duration of the loan. You are only entitled to receive Finder’s Payment Rewards on loans that resulted from your group member’s listings for which you specified that such Finder’s Payment Rewards are applicable.

The Finder’s Payment Reward will be paid to you monthly, within thirty (30) days after Prosper’s receipt of the applicable monthly payment. Finder’s Payment Rewards will be paid to you by automated deposit into an FDIC-insured non-interest bearing account at Wells Fargo Bank, N. A. (the “Prosper Funding Account”) separate from Prosper’s own funds. You will not earn interest on funds in the Prosper Funding Account. 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 designated deposit account. You will not receive any Finder’s

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Payment Rewards at a time when any payment on the loan is more than thirty (30) days past due. If a loan that is more than thirty (30) days past due later becomes current in its payments, you will resume receiving the monthly Finder’s Payment Reward for as long as the loan remains current. You will also not receive any Finder’s Payment Rewards during the time the interest rate on a loan is reduced in accordance with the Federal Servicemembers Civil Relief Act, which places limits on interest rates on credit obligations during the time members of the military are on active duty under certain circumstances.

The amount, if any, you receive as a monthly Finder’s Payment Reward is based on the number and amount of timely loan payments made by your group’s borrowers on each of their Prosper loans. Finder’s Payment Rewards are paid to you by Prosper, and not from any Prosper borrower or lender. No Prosper borrower or lender is obligated to pay you any Finder’s Payment Rewards, and you have no right under this Agreement or the Prosper Terms and Conditions to bring any legal action against any Prosper borrower or lender, or against any other person, to collect any Finder’s Payment Reward. You are not a third party beneficiary of, and you have no rights as a third party beneficiary under, any promissory note, registration agreement or other agreement between Prosper and any borrower, or any registration agreement or other agreement between Prosper and any registered Prosper lender.

FINDER’S PAYMENT REWARDS ARE WHOLLY CONTINGENT UPON EACH OF YOUR GROUP’S BORROWERS MAKING TIMELY MONTHLY PAYMENTS ON THEIR PROSPER LOANS, AND YOU UNDERSTAND AND AGREE THAT PROSPER DOES NOT WARRANT OR GUARANTEE THAT YOU WILL RECEIVE ANY MINIMUM AMOUNT OF FINDER’S PAYMENT REWARDS, OR ANY FINDER’S PAYMENT REWARDS AT ALL, ON ANY PROSPER LOANS.

4.  No Loan Guarantees.  Group leaders do not guarantee payments on any loan, and you are not required or obligated in any way to guarantee any loan obtained through the Prosper website by any member of your group, or by any other person. Prosper does not guarantee any loans and does not act as a guarantor of any loan payment or payments by any Prosper borrower. Prosper allows borrowers to create a network of Prosper friends, and obtain endorsements of listings from one or more of the borrower’s designated Prosper friends. Endorsements from the borrowers’ Prosper friends are displayed with borrower’s listings. Prosper friends do not guarantee payments on any loan, and an endorsement of a listing from a borrower’s Prosper friend does not obligate the individual making the endorsement to guarantee or make any payments on any loan.

5.  Prohibited Activities.  Group leadership in the Prosper marketplace does not confer upon you authority to perform any of the activities described below. You agree that you will not do the following in connection with any listings, bids, loans or other transactions involving or potentially involving Prosper:

a.	Represent yourself to any group member or other 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 connection with your role as a Prosper group leader, or propose or agree to accept any fee, bonus, additional interest, kickback or thing of value of any kind, in connection with your role as a Prosper group leader;
c.	Give, or offer or agree to give, to any Prosper lender or other person any fee, bonus, additional interest, kickback or thing of value of any kind in exchange for such person’s bid, or offer or agreement to bid, on any listing, including without limitation a listing posted or proposed to be posted by a member of your group;
d.	Represent yourself as or engage in any services as a financial advisor, tax advisor, or financial or credit analyst unless you are licensed, certified, registered or otherwise authorized to provide such services under applicable law;

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e.	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, or underwriting of loans, in connection with any Prosper loan;
f.	Take any action on your own to collect, or attempt to collect, any amount from any borrower on any Prosper loans to members of your group, or engage in any activities that require a license as a debt collector, loan servicer, or credit counselor, including but not limited to collection calls or correspondence, and receipt of payments with regard to any Prosper loans to members of your group;
g.	Contact a borrower or take any action to collect, or attempt to collect, any amount from any of the borrower’s Prosper friends or any individual that provided an endorsement of a listing relating to any Prosper loans, or take any action that directly or indirectly suggests that any borrower’s Prosper friend is obligated in any way on any loan.
h.	Contact any collection agency or law firm to which a loan of one of your group’s members has been referred for collection;
i.	Include or display any personally identifying information, including, without limitation, name, address, phone number, email address, Social Security number or driver’s license number, or bank account or credit card numbers of any Prosper member on your Prosper member web page, or elsewhere on the Prosper website;
j.	Harass any borrowers or other Prosper members, or solicit or seek to persuade any member of a Prosper group to leave their group or to join a different group;
k.	Discriminate against or exclude any individual requesting to join your group or any group member 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; or
l.	Engage in any activities that violate applicable federal, state or local laws, including without limitation, the 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.

6.  Marketing.  Prosper may, from time to time, make marketing materials available to you for distribution or display to group members. You may not revise, alter or otherwise modify any such marketing materials without Prosper’s express written consent.

7.  Reporting by Prosper.  Prosper will administer your account and provide you with online monthly statements reflecting Finder’s Payment Rewards that accrue to your account. With respect to all outstanding Prosper loans to members of your group, Prosper will notify you of any loan payment that becomes fifteen (15) days past due.

8.  Restrictions on Use.  You are not authorized or permitted to serve as a group leader on Prosper, or otherwise use Prosper for someone other than yourself. In order to register as a group leader, you must be registered in the Prosper marketplace as a borrower or a lender, and you must have designated a deposit account for electronic transfers of funds. You must be the owner of the deposit account you designate, with sole authority to direct that funds be transferred

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to or from the account. If you participate on Prosper as a lender, you may bid on listings of any registered Prosper borrowers, including members of your group. Prosper may in its sole discretion, with or without cause and with or without notice, restrict your access to the Prosper website or marketplace.

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

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

b. In the event Prosper, prior to funding a 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 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 of a borrower’s requested loan, Prosper may conduct a “pre-funding” review prior to funding of the loan. Loan funding occurs when Prosper funds a loan and disburses loan proceeds into the borrower’s designated deposit account. Prosper may, at any time and in its sole discretion, delay funding of a loan in order to enable Prosper to verify the accuracy of information provided by borrowers, lenders and group leaders in connection with the listing or bids against the listing, and to determine whether there are any irregularities with respect to the listing or the bids against the listing. Prosper may cancel or proceed with funding the 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 loan, Prosper will notify the borrower, group leader (if any), and all bidders for the listing of Prosper’s determination to cancel funding of the loan.

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

11.  Confidentiality. To safeguard the privacy of your group members, you agree not to provide the name, email address, telephone number, identity or other personally identifiable informationof any borrower or group member to any lender or other person, or disclose or display such information publicly or on any forum or medium viewable by third parties.

12.  Termination of Registration; Suspension.  Prosper may in its sole discretion, with or without cause, terminate this Agreement by giving you notice as provided below. In addition, upon Prosper’s reasonable determination that you committed fraud or made a material misrepresentation in connection with a listing, bid, loan or group member, performed any

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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) suspend your right to add new members to your group; (ii) remove your group from the Prosper marketplace; or (iii) terminate this Agreement and your registration with Prosper. Upon termination of this Agreement and your registration with Prosper, you are no longer entitled to receive any Finder’s Payment Rewards that have accrued or would otherwise accrue on outstanding group member loans, and Prosper may, in its sole discretion, either remove your group web page or replace you as group leader.

13.  Indemnification. In addition to your indemnification obligations set forth in Prosper’s Terms of Use, 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 without limitation, obligations to comply with any applicable laws; (ii) arising out of or relating to the development, operation, maintenance, management and contents of your Prosper group web page, your group, or your website or 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 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.

Prosper agrees to indemnify, defend and protect you and hold you harmless against all claims, liabilities, actions, costs, damages, losses, demands and expenses of every kind, known or unknown, contingent or otherwise, asserted by Prosper borrowers, lenders or other third parties against you relating directly to your activities as a Prosper group leader, except to the extent any such claims are based on, or result from, (i) your failure to comply with any provision of this Agreement, or (ii) your acts or omissions outside of your role as a Prosper group leader. Prosper’s obligation to indemnify you shall survive termination of this Agreement, unless termination is due to your failure to comply with the terms of this Agreement, in which case Prosper’s obligation to indemnify you shall terminate immediately.

14.  Prosper’s Right to Modify Terms.  Prosper has the right to change any term or provision of this Agreement or the Prosper Terms and Conditions. Prosper will give you notice, which may be by email or in the form of a posting on the Prosper website, of material changes to this Agreement or the Prosper Terms and Conditions. You authorize Prosper to correct obvious clerical errors appearing in information you provide to Prosper, without notice to you, although Prosper expressly undertakes no obligation to identify or correct such errors. This Agreement, along with the Prosper Terms and Conditions, represent the entire agreement between you and Prosper regarding your participation as a group leader in the Prosper credit marketplace, and supersedes all prior or contemporaneous communications, promises and proposals, whether oral, written or electronic, between you and Prosper with respect to your involvement as a group leader with Prosper.

15.  Group Home Page Display and Content.  You authorize Prosper to display on the Prosper website information you provide to Prosper regarding your group, including, without limitation, photos, content, logos or links to websites. Any material you display on your group home page site must conform to the Prosper Terms and Conditions, as amended from time to time, and must not (i) infringe on 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

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routines. Prosper groups are not exclusive, and there may be several groups of the same type posted on the Prosper website; by becoming a Prosper group leader and posting a group home page on the Prosper website you do not acquire any exclusive or proprietary rights to your group type or any rights in addition to those you may have under existing law.

16.  Independent Contractors. The parties to this Agreement are independent contractors, and this Agreement does not create, and nothing contained in this Agreement will be deemed to establish, an employment, agency, franchise, joint venture or partnership relationship between the parties. Neither party shall have, nor make any representation that it has, the power or authority to enter into any agreement for or on behalf of the other party, or incur any obligation or liability of, or to otherwise bind the other without the other party’s prior written consent.

17.  Notices.  All notices and other communications hereunder shall be given by email to your registered email address, and shall be deemed to have been duly given and effective upon transmission. If your registered email address changes, you must notify by sending an email to support@prosper.com or calling (800) 208-0103. You also agree to update your registered residence address on the Prosper website if you change your residence.

18.  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.

19.  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.

20.  Miscellaneous.  You may not assign, transfer, sublicense or otherwise delegate your rights under this Agreement to another person without Prosper’s prior written consent. Any such assignment, transfer, sublicense or delegation in violation of this Section shall be null and void. This Agreement shall be governed by the laws of the State of California. 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.

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EX-10.4

Exhibit 10.4

COLLECTION SERVICES AGREEMENT

This Collection Agreement (the “Agreement”) is entered into as of the 13^th day of September, 2005 between P2P Credit, Inc., a Delaware corporation with its principal place of business at 153 Kearny Street, Mezzanine, San Francisco, California 94108 (“Company”), and Penncro Associates, Inc., with its principal place of business at 95 James Way, Suite 113, Southampton, PA 18966 (hereinafter referred to as “Collector”) (each of Company and Client, individually, the “Party”, and collectively, the “Parties).

WHEREAS, Collector is a nationwide debt collection agency engaged in the business of taking assignments of, purchasing and collecting debts owed to creditors by consumers residing in the United States;

WHEREAS, Company is an online lender engaged in the business of originating direct consumer loans to U.S. residents and selling the loans to third parties on a servicing retained basis;

WHEREAS, Company, as duly appointed servicer of the loans pursuant to consumer loan purchase and servicing agreements between Company and third party purchasers of the loans, desires to engage Collector to perform collection services in connection with delinquent loans (“Accounts”) on the terms provided in this Agreement;

NOW THEREFORE, in consideration of the foregoing, other good and valuable consideration, and the mutual terms and covenants contained herein, the Parties hereto agree as follows:

1.NATURE AND SCOPE OF COLLECTION ACTIVITIES

Company is engaging Collector to use its reasonable best efforts to collect Accounts that have become more than 30 days contractually past due, and bring those Accounts current. The Parties understand and agree that this Agreement is intended to cover the time period commencing when an Account becomes 30 days contractually past due and ending on the earlier of (i) when the delinquency is fully cured, or (ii) when Company in its discretion exercises its right to recall the Account, or (iii) when the Account has payments which are 120 days contractually past due or (iv) when 90 days after assignment no currently delinquent payments have been collected on the Account. If, after any delinquent payments becoming 120 days contractually past due, or no delinquent payments have been collected by Collector 90 days after assignment of the Account, or if the Company in its discretion exercises its right to recall the Account, Collector shall cease all collection activity on the subject Account, and Company may in its sole discretion sell the Account to a third party debt collector. Company hereby engages Collector and Collector agrees to render to provide collection services on the terms provided herein.

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2.DUTIES AND OBLIGATIONS OF COLLECTOR

2.1Collector shall: (i) act prudently in accordance with customary and usual third party deficiency collection procedures for other institutional collection companies which collect receivables similar to the Accounts; and (ii) use and exercise that degree of skill and attention that is customary with other third party deficiency collection companies in the industry that collect receivables in connection with direct loans and sales contracts and that is customary for receivables for which it provides collection services. Subject to the forgoing standards and except as provided in this Agreement, Collector shall have the full power and authority acting alone to do any and all things in connection with collecting Accounts that it may deem reasonably necessary or desirable to recover delinquent amounts.

2.2All collection services performed by Collector or its agents, subcontractors or representatives shall be performed in full compliance with all applicable federal, state and local laws, including without limitation federal and state laws governing business practices and debt collection practices. Collector may not use any threats, intimidation, harassment, or otherwise violate any applicable law or regulation in performing the services under this Agreement. Collector shall be duly licensed and bonded in all states that require licensure and/or bonding for collection agencies.

2.3Collector shall immediately notify Company of Collector’s receipt of any service of process or any inquiries by federal, state, or local governmental authorities relating to any Account. In the event a lawsuit, administrative proceeding or customer complaint is initiated with respect to any Account during or after Collector takes assignment of the Account, Collector shall promptly upon request provide Company with all documentation and information within Collector’s possession or control affecting the subject Account. Collector shall also cooperate with Company in the defense or response to any lawsuit, administrative proceeding or customer complaint affecting an Account, and shall provide declarations or documentation reasonable required by Company to assist in Company’s defense or response, or in Company’s prosecution of any lawsuit or proceeding. Collector shall, at the request and direction of the Company, make all files and records available to Company and to any federal or state regulator with regulatory authority over Company.

2.4Collector shall not have the right to commence or participate in legal proceedings to collect any Accounts.

2.5Collector shall not release an Account obligor from payment of any unpaid amount under any Account or waive the right to collect any unpaid amounts owing on an Account from an obligor. Collector may accept partial Account payments as in settlement of the amount actually paid and no more.

2.6Collector shall not contact or communicate with any third party investor, owner or purported owner of an Account. All communications of any kind with the owner of an Account

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shall be by and through Company. If Collector is contacted by a third party investor, owner or purported owner of an Account, Collector shall immediately notify Company of such contact.

2.7Upon receipt of assignment of an Account for collection, Collector shall use reasonable best efforts to collect delinquent amounts on such Account. Accounts recalled by the Company, and Accounts on which no currently delinquent payments have been received by the Collector 90 days after assignment of the Acount, or after any payments become 120 days contractually past due, the Account shall be transferred back to Company by Collector at no charge to Company. When transferring an Account back to Company, Collector shall transfer to Company all files, records and documentation relating to the Account. Collector acknowledges and agrees that its receipt of Accounts pursuant to this Agreement is for purposes of collection only, and Collector shall not obtain or acquire any ownership interest in any Accounts assigned to Collector for collection hereunder.

2.8Delinquent amounts to be collected on Accounts assigned to Collector may include past-due principal and interest, late charges, ACH fees and other authorized fees as specified by Company at the time of assignment.

2.9Collector shall, prior to the commencement of any collection activities on an Account, run a bankruptcy check on all obligors of Accounts transferred to Collector. Collector shall notify the Company immediately upon receipt of any notification with respect to Bankruptcy of an Account obligor, and shall forward any documentation received by it with respect to the Bankruptcy.

2.10Collector will notify Company immediately, in writing, of any claims or litigation filed or threatened against Collector or Company. Collector will also maintain complete and accurate records with respect to any complaints received in connection with an Account. Collector shall promptly notify the Company in writing of any imposed fines, penalties, suits or alleged violations of any law or regulation in the performance of this Agreement.

2.11Collector shall maintain anti-fraud, privacy and employee background check programs, to be monitored by Company.

2.12Collector will allow Company to audit Collector records with respect to security, privacy, anti-fraud, commission calculation, or any other reasonable subject, upon written notice from Company.

2.13Collector will allow display of information regarding netback percentages and other relevant collections metrics by Company on its Internet website. Collector will also prepare a summary of Collector’s qualifications to be displayed by Company on its Internet website.

2.14Collector may accept payments from borrowers in multiple formats, including cash, check, wire, ACH, debit card and credit card. Collector shall transfer payments received by Account obligors to Company’s designated account immediately upon receipt and clearance

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from borrower, on a daily basis, and in ACH or wire format. Collector shall bear the cost of electronic transmission of funds.

2.15Collector shall return to Company any Accounts positively identified as resulting from ID Theft. Appropriate dispute resolution mechanism between Collector and Company to be used in the event that characterization of the account as from ID Theft is disputed.

2.16Collection shall meet technology requirements of Company as set forth in Appendix B.

3.RESPONSIBILITIES OF COMPANY

3.1Company may reasonably direct Collector to modify or supplement Collector’s duties or methods of performing those duties provided that Collector shall be compensated by the requesting party at a reasonable fee for any reasonable increase in expense experienced by Collector due to such additional requests.

3.2Company agrees to provide Collector with notification of all direct payments received by Company on Accounts under collection by the Collector. Company shall reimburse amounts due on Account payments received directly by the Company on a monthly basis.

3.3Upon assignment of Accounts to Collector, Company agrees that it will cease written and telephonic communications with the Account debtors, other than to inform them of additional fees, charges and payments due.

3.4Upon assignment of Accounts to Collector, Company will provide Collector with an itemization of the specific delinquent amounts due on each Account.

4.MONTHLY REPORTING

On or before the tenth (10^th) day of each calendar month, Collector shall report to Company on a monthly basis in a format acceptable to Company, the gross and net amounts collected by the Collector during the immediately preceding calendar month. This report shall be in addition to electronic data transmissions required under the Technology Requirements in Appendix B.

5.COMPENSATION

5.1In consideration for the collection services performed by Collector hereunder, Collector shall receive the fees as outlined in Appendix A (“Fees”). Company acknowledges and agree that all amounts payable to Collector pursuant to this Agreement shall be payable solely from amounts collected and that in no event shall the Company be liable for any costs or expenses of Collector, except as provided in Section 10 (Indemnification). By way of clarification and not limitation, there shall be no additional fees associated with technology, licensing, implementation, account maintenance, transmission fees, bankruptcy checks and authentication fees, or other costs associated with the collection efforts.

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5.2Collector will be entitled to withhold Fees from Account monies remitted directly to Collector prior to transfer to Company so long as proper accounting for this withholding is provided to Company. Collector shall reflect amounts collected as well as Fees as part of the Account reporting, and additionally shall provide monthly statements reflecting both amounts collected and Fees, as well as report these items as part of the  electronic transmissions.

6.REPRESENTATIONS AND WARRANTIES OF COLLECTOR

6.1Collector is duly organized, validly existing and in good standing under the laws of its state of incorporation and is duly qualified to do business, and is in good standing in every jurisdiction in which the nature of its business requires it to be so qualified. Collector has full corporate power and authority to enter into this Agreement and to carry out the provisions of this Agreement. Collector will comply with the laws of each state to the extent necessary to perform its obligations under this Agreement.

6.2This Agreement and all other instruments or documents to be delivered hereunder or pursuant hereto, and the transactions contemplated hereby, have been duly authorized by all necessary corporate proceedings of Collector.

6.3The execution and delivery of this Agreement by Collector hereunder and the compliance by Collector with all provisions of this Agreement do not conflict with or violate any applicable law, regulation or order and do not conflict with or result in a breach of or default under any of the terms or provisions of any contract or agreement to which Collector is subject or by which it or its property is bound, nor does such execution, delivery or compliance violate the by-laws or articles of incorporation or formation of Collector.

6.4This Agreement constitutes a legal, valid and binding obligation of the Collector enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, or other similar laws affecting the enforcement of creditors’ rights generally and by equitable limitations on the availability of specific remedies, regardless of whether such enforceability is considered in a proceeding in equity or at law.

6.5There are no proceedings or investigations pending or, to the Collector’s knowledge, threatened against the Collector, before any court, regulatory body, administrative agency or other tribunal or governmental instrumentality having jurisdiction over the Collector or its properties (i) asserting the invalidity of this Agreement, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement, (iii) seeking any determination or ruling that might materially and adversely affect the performance by the Collector of its obligations under, or the validity or enforceability of, this Agreement or (iv) that could have a material adverse effect on the Loans.

6.6The Collector is not required to obtain the consent of any other party or any consent, license, approval or authorization, or registration or declaration with, any governmental authority, bureau or agency in connection with the execution, delivery, performance, validity or enforceability of this Agreement which has not already been obtained. The Collector has in

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place the errors and omissions and/or blanket crime policies required to be maintained pursuant to Section 8.

6.7The representations and warranties contained in this Section shall survive the execution of this Agreement.

7.TERM AND TERMINATION

7.1Term. This Agreement shall become effective on the date hereof and shall continue for a period of one (1) year, unless earlier terminated as set forth. Upon the expiration of the initial term, the Agreement will renew on a yearly basis unless either Party provides written notice of their intent not to renew at least sixty (60) days in advance of the end of the initial term or any renewal term.

7.2Termination. Either Party shall have the right to terminate this Agreement at any time without cause upon ninety (90) days prior written notice. Each Party shall have the right to terminate this Agreement immediately on notice upon the occurrence of an event of default as described in Section 9 of this Agreement.

7.3Post-Termination Rights. In the event of termination or expiration of this Agreement, the Parties’ respective obligations under this Agreement shall continue in full force and effect through the effective date of termination or expiration, except (i) to the extent such obligations are expressly designated to survive termination, and (ii) that Collector shall continue its collection efforts with respect to the Accounts assigned prior to and existing on the date of termination for a period of ninety (90) days, and at no additional cost will provide information to Company or Company’s designee to facilitate the recall or ultimate sale of Accounts if necessary. Collector will provide Company a final accounting with respect to all Accounts remaining with the Collector at the end of the 90 day period.

8.ERRORS AND OMISSIONS AND BLANKET CRIME INSURANCE

8.1Collector shall maintain, at its own expense, (i) an errors and omissions insurance policy or comparable self-insurance plan and (ii) a blanket crime policy, in each case in accordance with industry standards for receivables similar to the Loans and with broad coverage with established insurance companies, covering all officers, employees or other persons acting on behalf of Collector in any capacity with regard to the Loans to handle funds, money, documents and papers relating to the Loans. The Collector shall provide Company with evidence of such coverage upon request. Any such insurance shall protect and insure Collector against losses, including forgery, theft, embezzlement, fraud, errors and omissions and negligent acts of such persons and shall be maintained in a form and amount that would meet the requirements of prudent institutional collection companies servicing consumer receivables.

8.2No provision of this Section requiring such insurance shall diminish or relieve Collector from its duties and obligations as set forth in this Agreement. Collector shall cause each of its sub-contractors engaged as permitted under this Agreement, if any, to maintain a policy of

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insurance covering errors and omissions which would meet the above stated requirements. Upon Company’s request, the Collector shall cause any sub-contractor to deliver to such person a certificate evidencing coverage under such errors and omissions and/or crime protection policies. Notwithstanding the foregoing, the Collector will give prompt written notice to Company if the insurance coverage maintained by the Collector pursuant to this Section is modified or amended in any way that would be adverse to Company.

9.EVENTS OF DEFAULT

If any one of the following events (“Events of Default”) shall occur and be continuing:

Any failure by Collector to deliver to Company any proceeds or payment required to be so delivered under the terms of this Agreement that shall continue unremedied for a period of two (2) Business Days after the earlier of knowledge by the Collector of such failure and receipt of written notice to Collector;

Failure on the part of Collector to observe or to perform in any material respect any other covenants or agreements set forth in this Agreement, which failure shall continue unremedied for a period of thirty (30) days after the date on which written notice of such failure shall have been received by Collector;

If there is breach of any representation or warranty and such breach shall not be cured in all material respects within thirty (30) consecutive days after the earlier of (i) receipt of written notice from Company or (ii) upon discovery by Collector;

A voluntary or involuntary petition for bankruptcy concerning Collector is filed under Title 11 of the United States Code, the Collector makes a general assignment for the benefit of creditors or commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Collector, or a custodian is appointed for, or takes charge of, all or any substantial part of the property of the Collector;

Any representation, warranty, certification or statement made by the Collector in this Agreement or in any certificate or report delivered by it pursuant to this Agreement shall prove to have been incorrect in any material respect when made or deemed made and such error shall not be cured in all material respects within thirty (30) consecutive days after the earlier of (i) receipt of written notice from Company or (ii) upon discovery by the Collector; or

Any merger or consolidation of the Collector (including, without limitation, any conveyance, transfer or lease of substantially all of its assets to another person) that has not been consented to by Company.

then, and in each and every case and so long as such event of default shall not have been remedied, Company may terminate all of the rights and obligations of Collector under this Agreement. In addition to the indemnification rights and the right to terminate this Agreement

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as provided herein, the Collector agrees that upon the happening of any of the foregoing events of default, Company may avail itself of any other relief to which it may be legally or equitably entitled.

10.INDEMNIFICATION

10.1Collector agrees to indemnify and hold Company and its respective officers, directors employees and agents (each an “Indemnified Party”), harmless from and against any and all claims, damages, losses, liabilities, penalties, fines, forfeitures, legal fees and related costs, judgments and any other costs, fees and expenses, including reasonable legal fees and expenses (collectively, “Losses”) that such Indemnified Party may sustain in any way related to the negligence or misconduct of Collector (or any person hired by the Collector) in its performance under the terms of this Agreement, or arising from any breach of the representations and warranties of Collector, provided, however, that Collector shall not be required to indemnify any Indemnified Party against any Losses that the Collector Indemnitees may sustain in any way related to errors in such accounting and servicing records and other documentation provided to the Collector by Company or third party retained by Company. Collector shall immediately notify Company if a claim is made by a third party with respect to this Agreement or any of the Loans.

10.2Collector may accept and reasonably rely on all accounting and servicing records and other documentation provided to Collector by or at the direction of Company. Company acknowledges and agrees that Collector, its respective officers, directors, employees and agents (each a “Collector Indemnitee”), shall be held harmless and indemnified from and against any and all claims, losses, liabilities, penalties, fines, forfeitures, legal fees and related costs, judgments, and any other costs, fees and expenses that Collector may sustain in any way related to the negligence or misconduct of the Company with respect to the origination of the Loans, provided, however, that Company shall not be required to indemnify Collector Indemniteees against any Losses that the Collector Indemnitees may sustain in any way related to errors in such accounting and servicing records and other documentation provided to the Collector by Collector or any third party retained by the Collector.

10.3This right to indemnification shall survive the termination of this Agreement.

11.CONFIDENTIALITY

11.1Confidential Information. Each Party and their respective affiliates, directors, officers, employees, authorized representatives, agents and advisors (including without limitation, attorneys, accountants, consultants, bankers and financial advisors) shall keep confidential all information concerning the other Party’s proprietary business procedures, products, services, operations, marketing materials, fees, policies or plans and all Nonpublic Personal Information of the other Party that is received or obtained during the negotiation or performance of the Agreement, whether such information is oral or written, and whether or not labeled as confidential by such Party (collectively “Confidential Information”). “Nonpublic Personal Information” shall include all personally identifiable financial information and any list,

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description or other grouping of consumers, and publicly available information pertaining to them, that is derived using any personally identifiable financial information that is not publicly available, and shall further include all “nonpublic personal information” as defined by federal regulations implementing the Gramm-Leach-Bliley Act, as amended from time to time. “Personally identifiable financial information” means any information a consumer provides to a Party in order to obtain a financial product or service, any information a Party otherwise obtains about a consumer in connection with providing a financial product or service to that consumer, and any information about a consumer resulting from any transaction involving a financial product or service between a Party and a consumer. Personally identifiable information may include, without limitation, a consumer’s first and last name, physical address, zip code, email address, phone number, social security number, birth date, and any other information that itself identifies or when tied to the above information, may identify a consumer.

11.2Use of Confidential Information. The Parties shall use Confidential Information only as necessary to perform the Agreement, provided however, that the Parties may use Confidential Information that is Nonpublic Personal Information in a manner consistent with the direction of the consumer to which it relates. For as long as Confidential Information is in possession of a Party, such Party shall take reasonable steps, at least substantially equivalent to the steps it takes to protect its own proprietary information, to prevent the use, duplications or disclosure of Confidential Information, provided, however, that a Party may disclose Confidential Information (i) to its employees or agents who are directly involved in negotiating or performing the Agreement and who are apprised of their obligations under this Addendum and directed by the receiving Party to treat such information confidentially, or (ii) as required by law or by a supervising regulatory agency of a receiving Party. Neither Party shall disclose, share, rent, sell or transfer to any third party any Confidential Information except as necessary to perform the Agreement; provided, however, that if either Party discloses, shares, rents, sells or transfers Nonpublic Personal Information to any third party, the disclosing Party shall (i) prohibit each third party recipient of Nonpublic Personal Information from disclosing, sharing, renting, selling or transferring such Nonpublic Personal Information to any other third party except as necessary to perform the Agreement, and (ii) require each third party recipient of Nonpublic Personal Information to comply with the requirements of this Addendum. The Parties’ rights and obligations under this Addendum shall survive termination of the Agreement indefinitely.

11.3Privacy Policies. Each Party’s Privacy Notices and Privacy Policies are consistent with the Federal Trade Commission’s procedures, rules and regulations, as applicable and as amended from time to time, and comply with acceptable trade practices and the instructions of the consumer whose Nonpublic Personal Information is involved. Neither Party’s Privacy Notices and Privacy Policies conflict with such Party’s obligations under the Agreement.

11.4Return of Information. Upon the termination or expiration of the Agreement, or at any time upon the request of the disclosing Party, the other Party shall promptly return all Confidential Information received in connection with the transaction, and shall promptly destroy such materials containing such information (and any copies, extracts, and summaries thereof) and shall further provide the other Party with written confirmation of such return or

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destruction upon request; provided, however, that this Section shall not apply to Nonpublic Personal Information received by a Party in accordance with the terms of the Agreement, for the sole purpose of performing the Agreement.

11.5Indemnity; Remedies. In the event a Party discovers that Confidential Information has been used in an unauthorized manner or disclosed in violation of this Addendum, the Party discovering the unauthorized use or disclosure shall immediately notify the other Party of such event, and the disclosing Party shall indemnify and hold the other Party harmless from all claims, damage, liability, costs and expenses (including court costs and reasonable attorneys’ fees) arising or resulting from the unauthorized use or disclosure. In addition, the non-disclosing Party shall be entitled to all other remedies available at law or equity, including injunctive relief.

12.MISCELLANEOUS

12.1Subcontractors. Neither Party may subcontract any of its obligations hereunder to any third party without the prior express written consent of the other.

12.2No Agency Relationship. The relationship between Company and Collector shall not be construed as a joint venture, partnership or principal-agent relationship, and under no circumstances shall any of the employees of one Party be deemed to be employees of the other Party for any purpose. This Agreement shall not be construed as authority for either Party to act for the other in any agency or any other capacity, except as expressly set forth in this Agreement.

12.3Waivers; Cumulative Remedies. No failure or delay on the part of Company to insist upon the strict performance of any term or condition under this Agreement or to exercise any right or remedy available under this Agreement at law or in equity, shall imply or otherwise constitute a waiver of such right or remedy, and no single or partial exercise of any right or remedy by any Party will preclude exercise of any other right or remedy. All rights and remedies provided in this Agreement are cumulative and not alternative; and are in addition to all other available remedies at law or in equity.

12.4Further Assurances. Each Party agrees, if reasonably requested by the other Party, to execute and deliver such additional documents or instruments and take such further actions as may be reasonably necessary to effect the transactions contemplated by this Agreement.

12.5Notices. All notices and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed given (i) three business days after being deposited in the U.S. mail, first class, postage prepaid, (ii) upon transmission, if sent by facsimile transmission, or (iii) upon delivery, if served personally or sent by any generally recognized overnight delivery service, to the following addresses:

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To the Collector:	Penncro Associates, Inc.
	95 James Way, Suite 113
	Southampton, PA 18966.
	Attn: Steve Beranek, SVP – Business Development
To Company:	P2P Credit, Inc.
	153 Kearny Street, Mezzanine
	San Francisco, CA 94108
	Attn: JP Whelan, VP Finance
	Fax no. (415) 362-7233

The timing and content of any advertisements, announcements, press releases or other promotional activity relating to this Agreement, and the use of each other’s name or trademarks shall be subject to the prior approval of both Parties.

12.6Assignment. Neither Party may transfer or assign all or a portion of its rights, obligations and duties under this Agreement to unless the other Party has consented to such transfer or assignment.

12.7Limitation of Liability. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY UNDER THIS AGREEMENT FOR ANY DAMAGES OR CLAIMS FOR LOST PROFITS OR CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.

12.8Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

12.9Entire Agreement. This Agreement, including any exhibits or other documents attached hereto or referenced herein, each of which is hereby incorporated into this Agreement and made an integral part hereof, constitutes the entire agreement between the Parties relating to the subject matter hereof and there are no representations, warranties or commitments except as set forth herein. This Agreement supersedes all prior understandings, negotiations and discussions, written or oral, of the Parties relating to the transactions contemplated by this Agreement.

12.10Modification. This Agreement may not be changed orally but only by an agreement in writing, signed by the Party against whom enforcement of any waiver, change, modification, or discharge is sought.

12.11Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California.

12.12Provisions Severable. If any provision of this Agreement shall be or become wholly or partially invalid, illegal or unenforceable, such provision shall be enforced to the extent that its

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legal and valid and the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired.

12.13Counterparts. This Agreement may be executed in two or more counterparts, each of which together shall be deemed an original, but all of which shall constitute one and the same instrument.

12.14Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors and assigns.

 [SIGNATURE PAGE TO FOLLOW]

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the date first written above.

COLLECTOR:

Penncro Associates, Inc.

By:	/s/ REGINA CROWLEY
Name:	Regina Crowley
Its:	President

COMPANY:

P2P CREDIT, INC.

By:	/s/ CHRIS LARSEN
Name:	Chris Larsen
Its:	CEO

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APPENDIX A

Fees

Any amounts due which are collected during the first 30 days a Collector has an Account shall entitle the Collector to 15% of all these amounts (the “Collection Fee”), whether past due or due for the current period.

The applicable Collection Fee shall be multiplied by 70% for each 30 days that the Collector has a particular Account. For instance, a collection made during the second 30 day period during which the Collector has account shall be subject to a 10.50% commission. If made during the third 30 day period, it shall be subject to a 7.35 % commission.

Regardless of which during which 30 day period collected, the Collection Fee shall have 5% added to it for any collections which bring an Account current. For instance, a collection made during the first 30 day period which brings an Account totally current shall be subject to a 20% commission.

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Appendix B

Technology Requirements

•Technology requirements may be modified by the mutual written consent of the Parties.

•Data transmissions to and from P2P Credit will occur via a secure FTP server on a daily batch basis using a P2P Credit approved format.

•“Diff” files on P2P Credit account information to be transmitted from Collector to P2P Credit daily. Complete P2P account information to be transmitted on a weekly basis.

•Borrower account information to be maintained will include, among other items, number and mode of contact attempts, successful contacts and content of interaction, and repayment information.

•Collector to maintain appropriate firewalls, anti-virus and encryption standards for the protection of P2P account information.

•Collection agents computer systems to operate under lockdown, with no printing and downloading capabilities available at agent terminals. Appropriate security measures to be followed with respect to information security.

•Collector to host all P2P account database information domestically, and all account records to remain onshore.

•Collector to keep current and provide to P2P Credit with written documentation of the Disaster Recovery, Security and Security Audit programs to be implemented on P2P Credit accounts.

•P2P Credit to have ability to conduct an onsite audit of Collector facilities and practices on a reasonable, periodic basis.

•Collector to maintain records of all collection attempts, all collection e-mails sent to or received from borrower, and recordings of all phone conversations.

•Collector to notify P2P Credit immediately if a security breach is detected and suspected.

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ADDENDUM NUMBER ONE

TO

COLLECTION SERVICE AGREEMENT

This Addendum Number One (“Addendum”) supplements and amends the Collection Services Agreement dated as of September 13, 2005 (the “Agreement”) by and between P2P Credit, Inc., now known as Prosper Marketplace, Inc. (“Prosper”), and Penncro Associates, Inc. (“Penncro”). Capitalized terms not defined in this Addendum shall have the definitions set forth in the Agreement.

WHEREAS, under the Agreement, Penncro performs collection services in connection with delinquent Accounts that have become more than thirty (30) days past due and have been referred to Penncro for collection;

WHEREAS, Prosper desires to have Penncro make telephone calls on behalf of Prosper to customers whose Accounts are delinquent but less than thirty (30) days past due;

NOW, THEREFORE, in consideration of the mutual promises contained in the Agreement and this Addendum, the parties hereby acknowledge and agree as follows:

1.ADDITIONAL COLLECTION SERVICES

1.1Commencing upon execution of this Addendum, in addition to the collection services provided by Penncro as set forth in the Agreement, Penncro shall make telephone calls (“Payment Follow-up Calls”) on Saturdays and Sundays, to designated Prosper customers whose Accounts are delinquent but less than thirty (30) days past due, to request that monthly payments on the customers’ Accounts be made.

1.2All Payment Follow-up Calls will be made in Prosper’s name. When making the calls Penncro shall not tell or suggest to customers that their Accounts have been referred to Penncro for collection.

1.3In connection with the Payment Follow-up Calls, Penncro shall follow the guidelines and reporting requirements set forth on the attached Exhibit A.

2.PROSPER’S RIGHTS AND OBLIGATIONS

2.1Prosper shall provide Penncro with a list of Accounts and customers to be contacted during the upcoming weekend.

2.2Prosper may, in its sole discretion, request that Penncro make Payment Follow-up Calls on days other than Saturdays and Sundays, and Penncro shall make calls on the additional days as well.

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2.3Prosper is not obligated to forward any minimum number of Accounts, or request that Penncro make any minimum number of Payment Follow-up Calls, pursuant to this Addendum.

3.COMPENSATION

Prosper shall pay Penncro compensation for making the Payment Follow-up Calls, as described on the attached Exhibit b.

4.TERMINATION OF ADDENDUM

Either party shall have the right to terminate this Addendum for convenience, with or without cause, upon thirty (30) days prior written notice to the other party.

5.MISCELLANEOUS

Except for the changes set forth in this Addendum, the Agreement shall remain unchanged in all respects, and shall remain in full force and effect in accordance with its terms.

PROSPER MARKETPLACE, INC.				PENNCRO ASSOCIATES, INC.
By:	/s/ JOHN B. WITCHEL				By:		/s/ REGINA CROWLEY
John B. Witchel					Regina Crowley
Title:		CTO & Secretary	Title:			President

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EXHIBIT A

PAYMENT FOLLOW-UP CALL GUIDELINES AND REPORTING

1.Accounts are 1-30 days past due.

2.Accounts that have a payment in process will be excluded.

3.Borrowers should be asked to make a manual payment on the Prosper website (www.prosper.com) by going to the “Your Account – Borrower” tab.

a.Borrowers can schedule a payment in advance on our website if funds are not currently available – e.g. they can post-date payments

b.If borrowers no longer have a checking account, Penncro can take a payment or we will take checks/money orders, but these are not the preferred methods of payment

i.	Prosper Marketplace
	111 Sutter Street, 22nd floor
	San Francisco, CA 94104

4.When leaving message, tell Borrowers to look for Prosper emails and leave Prosper’s Customer Service number (1-800-208-0103). Hours are M-F, 6AM-6PM PST.

5.If borrowers ask, their account is not considered to be at the “collection agency” and will not be reported as delinquent to the bureau until they are > 30 days past due

6.Any account questions, take name and number and Prosper will have someone from Prosper call them back

7.Penncro will email Excel file to Nancy Satoda, Prosper’s Director of Credit Risk, at nancy@prosper.com on the morning of the next business day after calls are made, with the following details:

a.User ID

b.Loan ID

c.Call attempt detail

i.	Date/time attempts
ii.	Call result
iii.	Decoder for call result notations

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EXHIBIT B

COMPENSATION

Compensation for the services performed will be $0.20/account for each Payment Follow-up Call attempt made.

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EX-10.5

Exhibit 10.5

COLLECTION SERVICES AGREEMENT

This Collection Agreement (the “Agreement”) is entered into as of the 11^th day of January, 2007 between Prosper Marketplace, Inc., a Delaware corporation with its principal place of business at 111 Sutter Street, 22nd Floor, San Francisco, California 94104 (“Company”), and Account Solutions Group, LLC, with its principal place of business at  205 Bryant Woods South, Amherst, New York 14228 (hereinafter referred to as “Collector”) (each of Company and Client, individually, the “Party”, and collectively, the “Parties).

WHEREAS, Collector is a nationwide debt collection agency engaged in the business of collecting on debts owed to creditors by consumers residing in the United States;

WHEREAS, Company is an online lender engaged in the business of originating direct consumer loans to U.S. residents and selling the loans to third parties on a servicing retained basis;

WHEREAS, Company, as duly appointed servicer of the loans pursuant to consumer loan purchase and servicing agreements between Company and third party purchasers of the loans, desires to engage Collector to perform collection services in connection with delinquent loans (“Accounts”) on the terms provided in this Agreement;

NOW THEREFORE, in consideration of the foregoing, other good and valuable consideration, and the mutual terms and covenants contained herein, the Parties hereto agree as follows:

1.NATURE AND SCOPE OF COLLECTION ACTIVITIES

Pursuant to the terms of this Agreement, the Company may, from time to time and in its sole discretion, assign Accounts to Collector for collection of past-due amounts. Upon receipt of an Account for collection, Collector shall use its reasonable best efforts to collect past-due amounts on the Accounts, and bring the Accounts current. All Accounts assigned for Collection under this Agreement shall be at least 30 days contractually past due. Company has the right, at any time and in its sole discretion, with or without cause, to recall an Account from Collector. Collector’s obligation to collect past-due amounts on Accounts shall terminate on the earlier of (i) when the delinquency is fully cured, or (ii) when Company in its discretion exercises its right to recall the Account. Although Company has the right to recall an assigned Account from Collector at any time, it is Company’s desire to allow Collector to retain an Account for at least 90 days, in order to afford Collector the opportunity to collect the past-due amounts on the Account. Upon recall of an Account by Company, Collector shall cease all collection activity on the subject Account, and Company may in its sole discretion sell the Account to a third party debt buyer in accordance with the terms of Company’s loan purchase, sale and servicing agreements with the owners of the Accounts. Company hereby engages Collector and Collector agrees to render to provide collection services on the terms provided herein.

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2.DUTIES AND OBLIGATIONS OF COLLECTOR

2.1Collector shall: (i) act prudently in accordance with customary and usual third party deficiency collection procedures for other institutional collection companies which collect receivables similar to the Accounts; and (ii) use and exercise that degree of skill and attention that is customary with other third party deficiency collection companies in the industry that collect receivables in connection with direct loans and sales contracts and that is customary for receivables for which it provides collection services. Subject to the forgoing standards and except as provided in this Agreement, Collector shall have the full power and authority acting alone to do any and all things in connection with collecting Accounts that it may deem reasonably necessary or desirable to recover delinquent amounts.

2.2All collection services performed by Collector or its agents, subcontractors or representatives shall be performed in full compliance with all applicable federal, state and local laws, including without limitation federal and state laws governing business practices and debt collection practices. Collector may not use any threats, intimidation, harassment, or otherwise violate any applicable law or regulation in performing the services under this Agreement. Collector shall be duly licensed and bonded in all states that require licensure and/or bonding for collection agencies.

2.3Collector shall immediately notify Company of Collector’s receipt of any service of process or any inquiries by federal, state, or local governmental authorities relating to any Account. In the event a lawsuit, administrative proceeding or customer complaint is initiated with respect to any Account during or after Collector takes assignment of the Account, Collector shall promptly upon request provide Company with all documentation and information within Collector’s possession or control affecting the subject Account. Collector shall also cooperate with Company in the defense or response to any lawsuit, administrative proceeding or customer complaint affecting an Account, and shall provide declarations or documentation reasonable required by Company to assist in Company’s defense or response, or in Company’s prosecution of any lawsuit or proceeding. Collector shall, at the request and direction of the Company, make all files and records available to Company and to any federal or state regulator with regulatory authority over Company.

2.4Collector shall not have the right to commence or participate in legal proceedings to collect any Accounts.

2.5Collector shall not offer or accept settlement of an Account for less than the full balance owing on the Account.

2.6Collector shall not contact or communicate with any third party investor, owner or purported owner of an Account. All communications of any kind with the owner of an Account shall be by and through Company. If Collector is contacted by a third party investor, owner or purported owner of an Account, Collector shall immediately notify Company of such contact.

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2.7Upon receipt of assignment of an Account for collection, Collector shall use reasonable best efforts to collect delinquent amounts on such Account. Accounts recalled by the Company shall be transferred back to Company or to Company’s designee by Collector at no charge to Company. When transferring an Account back to Company or Company’s designee, Collector shall transfer to Company an electronic confirmation that Collector has cancelled collection efforts relating to the Account, and Collector shall delete from its records all files, documentation and information relating to the Account, except that Collector may retain and maintain only such Account information as is necessary to comply with legal recordkeeping requirements applicable to Collector. Collector acknowledges and agrees that its receipt of Accounts pursuant to this Agreement is for purposes of collection only, and Collector shall not obtain or acquire any ownership interest in any Accounts assigned to Collector for collection hereunder. Collector further acknowledges and agrees that the decision to assign an Account to Collector is in Company’s sole discretion, and Company is not obligated to assign any minimum number of Accounts, or any Accounts at all, to Collector under this Agreement.

2.8Delinquent amounts to be collected on Accounts assigned to Collector may include past-due principal and interest, late charges, ACH fees and other authorized fees as specified by Company at the time of assignment.

2.9Collector shall, prior to the commencement of any collection activities on an Account, run a bankruptcy check on all obligors of Accounts transferred to Collector. Collector shall notify the Company immediately upon receipt of any notification with respect to Bankruptcy of an Account obligor, and shall forward any documentation received by it with respect to the Bankruptcy.

2.10Collector will notify Company immediately, in writing, of any claims or litigation filed or threatened against Collector or Company. Collector will also maintain complete and accurate records with respect to any complaints received in connection with an Account. Collector shall promptly notify the Company in writing of any imposed fines, penalties, suits or alleged violations of any law or regulation in the performance of this Agreement.

2.11Collector shall maintain anti-fraud, privacy, security and employee background check programs, and allow Company to audit Collector records with respect to such programs or Collector’s commission calculations, or any other reasonable subject, upon written notice from Company.

2.12Collector understands and agrees that a brief description of Collector and of Collector’s compensation payable pursuant to this Agreement shall be displayed publicly on Company’s web site at www.prosper.com, along with collection performance metrics and statistics. The form of disclosure appears at http://www.prosper.com/public/help/topics/lender-collection_agencies.aspx. Collector shall provide Company with a description of Collector, including Collector’s qualifications and experience in collecting receivables similar to the Accounts, for Company to display on Company’s web site. Company may display the description provided by Collector, or Company may in its discretion edit or revise the

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description of Collector; provided, however, any revisions to the description shall be subject to Collector’s prior approval.

2.13Collector shall accept payments from borrowers in multiple formats, including cash, check, wire and consumer-generated ACH. Collector shall transfer payments received by Account obligors to Company’s designated account immediately upon receipt and clearance from borrower, on a daily basis, in ACH or wire format. Collector shall bear the cost of electronic transmission of funds.

2.14Collector shall return to Company any Accounts positively identified as resulting from ID Theft.

2.15Collection shall meet technology requirements of Company as set forth in Appendix B.

3.RESPONSIBILITIES OF COMPANY

3.1Company may reasonably  request Collector to modify or supplement Collector’s duties or methods of performing those duties provided that Collector shall be compensated by the requesting party at a reasonable fee for any reasonable increase in expense experienced by Collector due to such additional requests. Any such modification or supplement must be agreed to by the parties in writing as an Amendment or Addendum to this Agreement signed by authorized representatives of both parties as provided in Article 12.10 herein.

3.2Company agrees to provide Collector with weekly notification of all direct payments received by Company on Accounts under collection by the Collector. Company shall, on a monthly basis, reimburse amounts due on Account payments received directly by the Company during such time when an Account has been transferred to Collector for collection.

3.3Upon assignment of Accounts to Collector, Company agrees that it will cease written and telephonic communications with the Account debtors, other than to inform them of additional fees, charges and payments due.

3.4Upon assignment of Accounts to Collector, Company will provide Collector with an itemization of the specific delinquent amounts due on each Account.

3.5In performing this Agreement, including Company’s assignment of Accounts to Collector, Company and its agents, subcontractors and/or representatives shall fully comply with all applicable federal, state and local laws, including without limitation the Fair Credit Reporting Act, the Gramm-Leach-Bliley Act, and federal and state laws governing business practices and debt collection practices.

4.MONTHLY REPORTING

On or before the tenth (10^th) day of each calendar month, Collector shall report to Company on a monthly basis in a format acceptable to Company, the gross and net amounts collected by the

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Collector during the immediately preceding calendar month. This report shall be in addition to electronic data transmissions required under the Technology Requirements in Appendix B.

5.COMPENSATION

5.1In consideration for the collection services performed by Collector hereunder, Collector shall receive the fees as outlined in Appendix A (“Fees”). Company acknowledges and agree that all amounts payable to Collector pursuant to this Agreement shall be payable solely from amounts collected and that in no event shall the Company be liable for any costs or expenses of Collector, except as provided in Section 10 (Indemnification). By way of clarification and not limitation, there shall be no additional fees associated with technology, licensing, implementation, account maintenance, transmission fees, bankruptcy checks and authentication fees, or other costs associated with the collection efforts.

5.2Collector will be entitled to withhold Fees from Account monies remitted directly to Collector prior to transfer to Company so long as proper accounting for this withholding is provided to Company. Collector shall reflect amounts collected as well as Fees as part of the Account reporting, and additionally shall provide monthly statements reflecting both amounts collected and Fees, as well as report these items as part of the electronic transmissions.

5.3Collector shall not be entitled to collect any fees (including without limitation service fees, insufficient funds (NSF) fees, convenience fees, wire transfer fees, collection fees or  attorney’s fees) or other amounts, except for the Fees described on Appendix A.

6.REPRESENTATIONS AND WARRANTIES OF COLLECTOR

6.1Collector is duly organized, validly existing and in good standing under the laws of its state of incorporation and is duly qualified to do business, and is in good standing in every jurisdiction in which the nature of its business requires it to be so qualified. Collector has full corporate power and authority to enter into this Agreement and to carry out the provisions of this Agreement. Collector will comply with the laws of each state to the extent necessary to perform its obligations under this Agreement.

6.2This Agreement and all other instruments or documents to be delivered hereunder or pursuant hereto, and the transactions contemplated hereby, have been duly authorized by all necessary corporate proceedings of Collector.

6.3The execution and delivery of this Agreement by Collector hereunder and the compliance by Collector with all provisions of this Agreement do not conflict with or violate any applicable law, regulation or order and do not conflict with or result in a breach of or default under any of the terms or provisions of any contract or agreement to which Collector is subject or by which it or its property is bound, nor does such execution, delivery or compliance violate the by-laws or articles of incorporation or formation of Collector.

6.4This Agreement constitutes a legal, valid and binding obligation of the Collector enforceable in accordance with its terms, except as enforceability may be limited by

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bankruptcy, insolvency, reorganization, or other similar laws affecting the enforcement of creditors’ rights generally and by equitable limitations on the availability of specific remedies, regardless of whether such enforceability is considered in a proceeding in equity or at law.

6.5There are no proceedings or investigations pending or, to the Collector’s knowledge, threatened against the Collector, before any court, regulatory body, administrative agency or other tribunal or governmental instrumentality having jurisdiction over the Collector or its properties (i) asserting the invalidity of this Agreement, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement, (iii) seeking any determination or ruling that might materially and adversely affect the performance by the Collector of its obligations under, or the validity or enforceability of, this Agreement or (iv) that could have a material adverse effect on the Loans.

6.6The Collector is not required to obtain the consent of any other party or any consent, license, approval or authorization, or registration or declaration with, any governmental authority, bureau or agency in connection with the execution, delivery, performance, validity or enforceability of this Agreement which has not already been obtained. The Collector has in place the errors and omissions and/or blanket crime policies required to be maintained pursuant to Section 8.

6.7The representations and warranties contained in this Section shall survive the execution of this Agreement.

7.TERM AND TERMINATION

7.1Term. This Agreement shall become effective on the date hereof and shall continue for a period of one (1) year, unless earlier terminated as set forth.

7.2Termination. Either Party shall have the right to terminate this Agreement at any time without cause upon ninety (90) days prior written notice. Each Party shall have the right to terminate this Agreement immediately on written notice upon the occurrence of an event of default as described in Section 9 of this Agreement.

7.3Post-Termination Rights. In the event of termination or expiration of this Agreement, the Parties’ respective obligations under this Agreement shall continue in full force and effect through the effective date of termination or expiration, except (i) to the extent that such obligations are expressly designated to survive termination, and (ii) that Collector shall continue its collection efforts with respect to the Accounts assigned prior to and existing on the date of termination for a period of ninety (90) days, and at no additional cost will provide information to Company or Company’s designee to facilitate the recall or ultimate sale of Accounts if necessary. Collector will provide Company a final accounting with respect to all Accounts remaining with the Collector at the end of the 90 day period.

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8.ERRORS AND OMISSIONS AND BLANKET CRIME INSURANCE

8.1Collector shall maintain, at its own expense, (i) an errors and omissions insurance policy or comparable self-insurance plan and (ii) a blanket crime policy, in each case in accordance with industry standards for receivables similar to the Loans and with broad coverage with established insurance companies, covering all officers, employees or other persons acting on behalf of Collector in any capacity with regard to the Loans to handle funds, money, documents and papers relating to the Loans. The Collector shall provide Company with evidence of such coverage upon request. Any such insurance shall protect and insure Collector against losses, including forgery, theft, embezzlement, fraud, errors and omissions and negligent acts of such persons and shall be maintained in a form and amount that would meet the requirements of prudent institutional collection companies servicing consumer receivables.

8.2No provision of this Section requiring such insurance shall diminish or relieve Collector from its duties and obligations as set forth in this Agreement. Collector shall cause each of its sub-contractors engaged as permitted under this Agreement, if any, to maintain a policy of insurance covering errors and omissions which would meet the above stated requirements. Upon Company’s request, the Collector shall cause any sub-contractor to deliver to such person a certificate evidencing coverage under such errors and omissions and/or crime protection policies. Notwithstanding the foregoing, the Collector will give prompt written notice to Company if the insurance coverage maintained by the Collector pursuant to this Section is modified or amended in any way that would be adverse to Company.

9.EVENTS OF DEFAULT

If any one of the following events (“Events of Default”) shall occur and be continuing:

(a)  Any failure by either Party to deliver to the other Party any proceeds or payment required to be so delivered under the terms of this Agreement that shall continue unremedied for a period the of  five (5) Business Days after the earlier of (i) knowledge by  defaulting Party of such failure; or (ii) receipt of written notice by the defaulting Party of such failure from the aggrieved Party

(b)  Failure on the part of either Party to observe or to perform in any material respect any other covenants or agreements set forth in this Agreement, which failure shall continue unremedied for a period of thirty (30) days after the date on which written notice of such failure shall have been received by  the defaulting Party from the aggrieved Party;

(c)  A breach of any representation or warranty made in this Agreement that is not cured in all material respects within thirty (30) consecutive days after the earlier of (i) receipt of written notice of such breach from the aggrieved Party ; or (ii) upon discovery  by the Party in breach;

(d)  A voluntary or involuntary petition for bankruptcy concerning Collector is filed under Title 11 of the United States Code, the Collector makes a general assignment for the benefit of creditors or commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any

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jurisdiction whether now or hereafter in effect relating to the Collector, or a custodian is appointed for, or takes charge of, all or any substantial part of the property of the Collector; or

(e)  Any representation, warranty, certification or statement made by the either Party in this Agreement or in any certificate or report delivered by it pursuant to this Agreement shall prove to have been incorrect in any material respect when made or deemed made and such error shall not be cured in all material respects within thirty (30) consecutive days after the earlier of (i) receipt of written notice of such error from the aggrieved Party or (ii) upon discovery by the Party which made the representation, warranty, certification or statement;

then, and in each and every case and so long as such event of default shall not have been remedied,  either Party may terminate all of the rights and obligations of the other Party under this Agreement. In addition to the indemnification rights and the right to terminate this Agreement as provided herein, the Parties agree that upon the happening of any of the foregoing events of default, either Party may avail itself of any other relief to which it may be legally or equitably entitled.

10.INDEMNIFICATION

10.1Collector agrees to indemnify and hold Company and its respective officers, directors employees and agents (each an “Indemnified Party”), harmless from and against any and all claims, damages, losses, liabilities, penalties, fines, forfeitures, legal fees and related costs, judgments and any other costs, fees and expenses, including reasonable legal fees and expenses (collectively, “Losses”) that such Indemnified Party may sustain in any way related to the negligence or misconduct of Collector (or any person hired by the Collector) in its performance under the terms of this Agreement, or arising from any breach of the representations and warranties of Collector, provided, however, that Collector shall not be required to indemnify  Company against any Losses that the Company may sustain in any way related to errors in such accounting and servicing records and other documentation provided to the Collector by Company or third party retained by Company. Collector shall immediately notify Company if a claim is made by a third party with respect to this Agreement or any of the Loans.

10.2Collector may accept and reasonably rely on all accounting and servicing records and other documentation provided to Collector by or at the direction of Company. Company acknowledges and agrees that Collector, its respective officers, directors, employees and agents (each a “Collector Indemnitee”), shall be held harmless and indemnified from and against any and all claims, losses, liabilities, penalties, fines, forfeitures, legal fees and related costs, judgments, and any other costs, fees and expenses that Collector may sustain in any way related to the negligence or misconduct of Company (or any person hired by the Company) in its performance under the terms of this Agreement, or arising from any breach of the representations and warranties of Company, or relating to Company’s unauthorized use of or reference to Collector on Company’s website, or in any way related to the negligence or misconduct of the Company with respect to the origination of the Loans.

10.3This right to indemnification shall survive the termination of this Agreement.

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11.CONFIDENTIALITY

11.1Confidential Information. Each Party and their respective affiliates, directors, officers, employees, authorized representatives, agents and advisors (including without limitation, attorneys, accountants, consultants, bankers and financial advisors) shall keep confidential all information concerning the other Party’s proprietary business procedures, products, services, operations, marketing materials, fees, policies or plans and all Nonpublic Personal Information of the other Party that is received or obtained during the negotiation or performance of the Agreement, whether such information is oral or written, and whether or not labeled as confidential by such Party (collectively “Confidential Information”). “Nonpublic Personal Information” shall include all personally identifiable financial information and any list, description or other grouping of consumers, and publicly available information pertaining to them, that is derived using any personally identifiable financial information that is not publicly available, and shall further include all “nonpublic personal information” as defined by federal regulations implementing the Gramm-Leach-Bliley Act, as amended from time to time. “Personally identifiable financial information” means any information a consumer provides to a Party in order to obtain a financial product or service, any information a Party otherwise obtains about a consumer in connection with providing a financial product or service to that consumer, and any information about a consumer resulting from any transaction involving a financial product or service between a Party and a consumer. Personally identifiable information may include, without limitation, a consumer’s first and last name, physical address, zip code, email address, phone number, social security number, birth date, and any other information that itself identifies or when tied to the above information, may identify a consumer.

11.2Use of Confidential Information. The Parties shall use Confidential Information only as necessary to perform the Agreement, provided however, that the Parties may use Confidential Information that is Nonpublic Personal Information in a manner consistent with the direction of the consumer to which it relates. For as long as Confidential Information is in possession of a Party, such Party shall take reasonable steps, at least substantially equivalent to the steps it takes to protect its own proprietary information, to prevent the use, duplications or disclosure of Confidential Information, provided, however, that a Party may disclose Confidential Information (i) to its employees or agents who are directly involved in negotiating or performing the Agreement and who are apprised of their obligations under this Addendum and directed by the receiving Party to treat such information confidentially, or (ii) as required by law or by a supervising regulatory agency of a receiving Party. Neither Party shall disclose, share, rent, sell or transfer to any third party any Confidential Information except as necessary to perform the Agreement; provided, however, that if either Party discloses, shares, rents, sells or transfers Nonpublic Personal Information to any third party, the disclosing Party shall (i) prohibit each third party recipient of Nonpublic Personal Information from disclosing, sharing, renting, selling or transferring such Nonpublic Personal Information to any other third party except as necessary to perform the Agreement, and (ii) require each third party recipient of Nonpublic Personal Information to comply with the requirements of this Section. The Parties’ rights and obligations under this Section shall survive termination of the Agreement indefinitely.

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11.3Privacy Policies. Each Party’s Privacy Notices and Privacy Policies are consistent with the Federal Trade Commission’s procedures, rules and regulations, as applicable and as amended from time to time, and comply with acceptable trade practices and the instructions of the consumer whose Nonpublic Personal Information is involved. Neither Party’s Privacy Notices and Privacy Policies conflict with such Party’s obligations under the Agreement.

11.4Return of Information. Upon the termination or expiration of the Agreement, or at any time upon the request of the disclosing Party, the other Party shall promptly return all Confidential Information received in connection with the transaction, and shall promptly destroy such materials containing such information (and any copies, extracts, and summaries thereof) and shall further provide the other Party with written confirmation of such return or destruction upon request; provided, however, that this Section shall not apply to: (i) Nonpublic Personal Information received by a Party in accordance with the terms of the Agreement, for the sole purpose of performing the Agreement, or (ii) system notes of Collector relating to Accounts, provided, however, that Company shall have the right to access such notes upon reasonable request by Company to Collector.

11.5Indemnity; Remedies. In the event a Party discovers that Confidential Information has been used in an unauthorized manner or disclosed in violation of this Section, the Party discovering the unauthorized use or disclosure shall immediately notify the other Party of such event, and the disclosing Party shall indemnify and hold the other Party harmless from all claims, damage, liability, costs and expenses (including court costs and reasonable attorneys’ fees) arising or resulting from the unauthorized use or disclosure. In addition, the non-disclosing Party shall be entitled to all other remedies available at law or equity, including injunctive relief.

12.MISCELLANEOUS

12.1Subcontractors. Neither Party may subcontract its obligations hereunder to a third party without the prior express written consent of the other, except that such written consent is not required for those subcontractors that may be necessary to perform certain delegable obligations of this Agreement (“Necessary Subcontractors”), including but not limited to the subcontractor Collector uses to generate and issue collection letters to consumers  and the subcontractor that provides Collector its software for collections. The Parties shall remain responsible for obligations, services and functions performed by such Necessary Subcontractors (and their subcontractors) to the same extent as if such obligations, services and functions were performed by the Parties. Collector shall, upon Company’s request, provide Company with the identity of all subcontractors directly related to collection efforts on Accounts. Compensation payable under this Agreement shall not be increased if Necessary Subcontractors or other subcontractors are used in connection with collection of an Account.

12.2No Agency Relationship. The relationship between Company and Collector shall not be construed as a joint venture, partnership or principal-agent relationship, and under no circumstances shall any of the employees of one Party be deemed to be employees of the other Party for any purpose. This Agreement shall not be construed as authority for either Party to act for the other in any agency or any other capacity, except as expressly set forth in this Agreement.

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12.3Waivers; Cumulative Remedies. No failure or delay on the part of Company to insist upon the strict performance of any term or condition under this Agreement or to exercise any right or remedy available under this Agreement at law or in equity, shall imply or otherwise constitute a waiver of such right or remedy, and no single or partial exercise of any right or remedy by any Party will preclude exercise of any other right or remedy. All rights and remedies provided in this Agreement are cumulative and not alternative; and are in addition to all other available remedies at law or in equity.

12.4Further Assurances. Each Party agrees, if reasonably requested by the other Party, to execute and deliver such additional documents or instruments and take such further actions as may be reasonably necessary to effect the transactions contemplated by this Agreement.

12.5Notices. All notices and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed given (i) three business days after being deposited in the U.S. mail, first class, postage prepaid, (ii) upon transmission, if sent by facsimile transmission, or (iii) upon delivery, if served personally or sent by any generally recognized overnight delivery service, to the following addresses:

To the Collector:	Account Solutions Group, LLC
	205 Bryant Woods South
	Amherst, NY 14228
	Attn:  Dennis Cardarella
	Fax no. (716) 564-4440
To Company:	Prosper Marketplace, Inc.
	111 Sutter Street, 22nd Floor
	San Francisco, CA 94104
	Attn: Nancy Satoda, Director of Credit Risk
	Fax no. (415) 362-7233
	With a copy to Edward A. Giedgowd, General Counsel, at the same fax number.

The timing and content of any advertisements, announcements, press releases or other promotional activity relating to this Agreement, and the use of each other’s name or trademarks shall be subject to the prior approval of both Parties.

12.6Assignment. Neither Party may transfer or assign all or a portion of its rights, obligations and duties under this Agreement to unless the other Party has consented to such transfer or assignment.

12.7Limitation of Liability. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY UNDER THIS AGREEMENT FOR ANY DAMAGES OR CLAIMS FOR LOST PROFITS OR CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.

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12.8Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

12.9Entire Agreement. This Agreement, including any exhibits or other documents attached hereto or referenced herein, each of which is hereby incorporated into this Agreement and made an integral part hereof, constitutes the entire agreement between the Parties relating to the subject matter hereof and there are no representations, warranties or commitments except as set forth herein. This Agreement supersedes all prior understandings, negotiations and discussions, written or oral, of the Parties relating to the transactions contemplated by this Agreement.

12.10Modification. No change to this Agreement shall be valid unless in writing and signed by authorized representatives of both parties.

12.11Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

12.12Provisions Severable. If any provision of this Agreement shall be or become wholly or partially invalid, illegal or unenforceable, such provision shall be enforced to the extent that its legal and valid and the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired.

12.13Counterparts. This Agreement may be executed in two or more counterparts, each of which together shall be deemed an original, but all of which shall constitute one and the same instrument.

12.14Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors and assigns.

 [SIGNATURE PAGE TO FOLLOW]

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the date first written above.

COLLECTOR:

ACCOUNT SOLUTIONS GROUP, LLC

By:	/s/ LANCE DELLAMEA
Name:	Lance DellaMea
Its:	Senior Vice President

COMPANY:

PROSPER MARKETPLACE, INC.

By:	/s/ CHRISTIAN A. LARSEN
Name:	Christian A. Larsen
Its:	CEO & President

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APPENDIX A

Fees:

Collector shall receive a percentage (the “Collection Fee Percentage”) of any amounts due (whether past due or due for the current period) that are collected and received by Collector on an Account. The Collection Fee Percentage shall be 15% with respect to amounts received during the first thirty (30) days following the date an Account is assigned to Collector; on the 31^st day after the date an Account is assigned to Collector, the Collection Fee Percentage shall be reduced by 70%, and on the 61^st day after the date an Account is assigned to Collector, the then-applicable Collection Fee Percentage shall again be reduced by 70%, as set forth in the following table. The Collection Fee Percentage corresponding to the time period in which collections are received by Collector shall apply to such collections.

Time Period When Collections are Received	Collection Fee Percentage
Within 30 days following receipt of an Account	15.00	%
31 to 60 days following receipt of an Account	10.50	%
61 days or more following receipt of an Account	7.35	%

Regardless of which time period amounts are collected, the Collection Fee Percentages shown above shall be increased by 5% for any collections which bring an Account current.

For example, if an Account with a past-due amount of $120 is assigned to Collector on November 10, 2006, and Collector receives $100 on December 3, 2006, Collector’s Fee would be $15 ($100 x 15%). However, if Collector receives $120 on December 3, 2006 (thereby bringing the Account current), Collector’s Fee would be $24 ($120 x 20%).

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Appendix B

Technology Requirements

•Technology requirements may be modified by the mutual written consent of the Parties.

•Data transmissions to and from Company will occur via a secure FTP server on a daily batch basis using a Company approved format.

•“Diff” files on Company Account information to be transmitted from Collector to Company daily. Complete Account information to be transmitted on a weekly basis.

•Borrower Account information to be maintained will include, among other items, number and mode of contact attempts, successful contacts and content of interaction, and repayment information.

•Collector to maintain appropriate firewalls, anti-virus and encryption standards for the protection of Account information.

•Collection agents computer systems to operate under lockdown, with no printing and downloading capabilities available at agent terminals. Appropriate security measures to be followed with respect to information security.

•Collector to host all Account database information domestically, and all Account records to remain onshore.

•Collector to keep current and provide to Company with written documentation of the Disaster Recovery, Security and Security Audit programs to be implemented on Company Accounts.

•Company to have ability to conduct an onsite audit of Collector facilities and practices on a reasonable, periodic basis.

•Collector to maintain records of all collection attempts, all collection e-mails sent to or received from borrower, and  system notes of all phone conversations.

•Collector to notify Company immediately if a security breach is detected or suspected.

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EX-10.6

Exhibit 10.6

TERMS OF USE

PLEASE CAREFULLY REVIEW THESE TERMS AND CONDITIONS OF USE BEFORE USING THIS SITE.  ANY USE OF THIS WEBSITE CREATES A BINDING AGREEMENT TO COMPLY WITH THESE TERMS AND CONDITIONS.  IF YOU DO NOT AGREE TO THESE TERMS, YOU SHOULD EXIT THIS SITE IMMEDIATELY.

USER AGREEMENT

The following are terms of a legal agreement (the “Agreement”) between you and Prosper Marketplace, Inc. (“Prosper”) that sets forth the terms and conditions for your use of this web site (the “Site”).  The Site is owned and operated by Prosper.  This Site is being provided to you expressly subject to this Agreement.  By accessing, browsing and/or using the Site, you acknowledge that you have read, understood, and agree to be bound by the terms of this Agreement and to comply with all applicable laws and regulations.  The terms and conditions of this Agreement form an essential basis of the bargain between you and Prosper.

Prosper reserves the right to amend this Agreement at any time and will notify you of any such changes by posting the revised Agreement on the Site. You should check this Agreement periodically for changes.  All changes shall be effective upon posting.  Your continued use of the Site after any change to this Agreement constitutes your agreement to be bound by any such changes. Prosper may terminate, suspend, change, or restrict access to all or any part of this Site without notice or liability.

LIMITATIONS OF USE

The copyright in all material on this Site, including without limitation the text, data, articles, design, source code, software, photos, images and other information (collectively the “Content”), is held by Prosper or by the original creator of the material and is protected by U.S. and International copyright laws and treaties.  You agree that the Content may not be copied, reproduced, distributed, republished, displayed, posted or transmitted in any form or by any means, including, but not limited to, electronic, mechanical, photocopying, recording, or otherwise, without the express prior written consent of Prosper.  You acknowledge that the Content is and shall remain the property of Prosper. You may not modify, participate in the sale or transfer of, or create derivative works based on any Content, in whole or in part.  The use of the Content on any other Site, including by linking or framing, or in any networked computer environment for any purpose, is prohibited without Prosper’s prior written approval.  You also may not, without Prosper’s express written permission, “mirror” any material contained on this Site on any other server.  Any unauthorized use of any Content on this Site may violate copyright laws, trademark laws, the laws of privacy and publicity, and communications statutes and regulations.

You agree to use the Content and Site only for lawful purposes.  You are prohibited from any use of the Content or Site that would constitute a violation of any applicable law, regulation, rule or ordinance of any nationality, state, or locality or of any international

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law or treaty, or that could give rise to any civil or criminal liability.  Any unauthorized use of the Site, including but not limited to unauthorized entry into Prosper’s systems, misuse of passwords, or misuse of any information posted on the Site is strictly prohibited.  Prosper makes no claims concerning whether the Content may be downloaded or is appropriate for use outside of the United States.  If you access this Site from outside of the United States, you are solely responsible for ensuring compliance with the laws of your specific jurisdiction.  Your eligibility for particular products or services is subject to final determination by Prosper.

Members of the Prosper community must be U.S. Residents that are 18 years of age or older. Children under the age of 18 are not eligible to participate in the offerings on this website.

CONTENT AND USE RESTRICTIONS

You agree not to post, upload, publish, display, transmit, share, store or otherwise make or attempt to make publicly available on the Site or on any other website, or in any email, blog, forum, medium or other communication of any kind, any private or personally identifiable information of any Prosper member or other third party, including, without limitation, names, addresses, phone numbers, email addresses, Social Security numbers, driver’s license numbers, or bank account or credit card numbers, whether or not such private or personally identifiable information is displayed on or ascertainable from the Site, or obtained or obtainable from sources unrelated to the Site (such as from a “Google® search” or other online research).

You agree to not to use the Site or any Content to upload, post, email, transmit or otherwise make available any unsolicited or unauthorized advertising, promotional materials, “junk mail,” “spam,” “chain letters,” “pyramid schemes,” or any other form of commercial or non-commercial solicitation or bulk communications of any kind to any Prosper member or other third party. In order to protect Prosper members from such advertising or solicitation, Prosper reserves the right to restrict the number of emails which a member may send to other members in any 24-hour period to a number which Prosper deems appropriate in our sole discretion. Directly contacting more than ten (10) Prosper members with a materially identical message within a 24-hour period is presumed to be spam and a violation of this Agreement.

PATENT INFORMATION

Technologies and processes embodied in and used by this Site are covered by one or more Prosper U.S. patents and by other patents pending.

TRADEMARKS

Prosper (including the Prosper logo), Prosper.com, and all related logos (collectively the “Prosper trademarks”) are trademarks or service marks of Prosper.  Other company, product, and service names and logos used and displayed on this Site may be trademarks or service marks owned by Prosper or others.  Nothing on this Site should be construed as granting, by implication, estoppel, or otherwise, any license or right to use any of the Prosper trademarks displayed on this Site, without our prior written permission in each

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instance.  You may not use, copy, display, distribute, modify or reproduce any of the trademarks found on the Site unless in accordance with written authorization by us.  Prosper prohibits use of any of the Prosper trademarks as part of a link to or from any site unless establishment of such a link is approved in writing by us in advance.  Any questions concerning any Prosper Trademarks, or whether any mark or logo is a Prosper Trademark, should be referred to Prosper.

LINKS TO THIRD-PARTY SITES

This site may contain links to web sites controlled, owned, and operated by third parties (the “third-party sites”).  Prosper cannot control and has no responsibility for the accuracy or availability of information provided on the third-party sites.  You acknowledge that use of any third-party sites is governed by the terms of use for those websites, and not by this Agreement.  Links to third-party sites do not constitute an endorsement or recommendation by Prosper of such sites or the content, products, advertising or other materials presented on such sites, but are only for your convenience and you access them at your own risk.  Such third-party sites may have a privacy policy different from that of Prosper and the third-party site may provide less security than this Site.  Prosper is not responsible for the content of any third-party web sites, nor does Prosper make any warranties or representations, express or implied, regarding the content (or the accuracy of such content) on any third-party web sites, and Prosper shall have no liability of any nature whatsoever for any failure of products or services offered or advertised at such sites or otherwise.

DISCLAIMER OF WARRANTIESNONE OF PROSPER, ANY OF ITS AFFILIATES, PROVIDERS OR THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, INDEPENDENT CONTRACTORS OR LICENSORS (COLLECTIVELY THE “PROSPER PARTIES”) GUARANTEES THE ACCURACY, ADEQUACY, TIMELINESS, RELIABILITY, COMPLETENESS, OR USEFULNESS OF ANY OF THE CONTENT AND PROSPER DISCLAIMS LIABILITY FOR ERRORS OR OMISSIONS IN THE CONTENT.

THIS SITE AND ALL OF THE CONTENT IS PROVIDED “AS IS” AND “AS AVAILABLE,” WITHOUT ANY WARRANTY, EITHER EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OR TITLE. ADDITIONALLY, THERE ARE NO WARRANTIES AS TO THE RESULTS OF YOUR USE OF THE CONTENT. PROSPER PARTIES DO NOT WARRANT THAT THE SITE IS FREE OF VIRUSES OR OTHER HARMFUL COMPONENTS.  THIS DOES NOT AFFECT THOSE WARRANTIES WHICH ARE INCAPABLE OF EXCLUSION, RESTRICTION OR MODIFICATION UNDER THE LAWS APPLICABLE TO THIS AGREEMENT.

PROSPER MAY DISCONTINUE OR MAKE CHANGES IN THE CONTENT AND SITE AT ANY TIME WITHOUT PRIOR NOTICE TO YOU AND WITHOUT ANY LIABILITY TO YOU.  ANY DATED INFORMATION IS PUBLISHED AS OF ITS DATE ONLY, AND PROSPER PARTIES DO NOT UNDERTAKE ANY

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OBLIGATION OR RESPONSIBILITY TO UPDATE OR AMEND ANY SUCH INFORMATION.  PROSPER RESERVES THE RIGHT TO TERMINATE ANY OR ALL SITE OFFERINGS OR TRANSMISSIONS WITHOUT PRIOR NOTICE TO YOU.  THIS SITE COULD CONTAIN TECHNICAL INACCURACIES OR TYPOGRAPHICAL ERRORS.  USE OF THIS SITE IS AT YOUR OWN RISK.

LIMITATION OF LIABILITY

UNDER NO CIRCUMSTANCES WILL PROSPER PARTIES BE LIABLE FOR ANY DAMAGES INCLUDING GENERAL, SPECIAL, DIRECT, INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR ANY OTHER DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST PROFITS OR BUSINESS INTERRUPTION) OF ANY KIND WHETHER IN AN ACTION IN CONTRACT OR NEGLIGENCE ARISING OR RELATING IN ANY WAY TO THE USE OR INABILITY TO USE BY ANY PARTY OF THE CONTENT, THE SITE OR ANY THIRD-PARTY SITE TO WHICH THIS SITE IS LINKED, OR IN CONNECTION WITH ANY FAILURE OF PERFORMANCE, ERROR, OMISSION, INTERRUPTION, DEFECT, DELAY IN OPERATION OR TRANSMISSION, COMPUTER VIRUS OR LINE OR SYSTEM FAILURE, EVEN IF PROSPER PARTIES, OR REPRESENTATIVES THEREOF, ARE ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, LOSSES OR EXPENSES. PROSPER IS NOT LIABLE FOR ANY DEFAMATORY, OFFENSIVE OR ILLEGAL CONDUCT OF ANY USER. YOUR SOLE REMEDY FOR DISSATISFACTION WITH THIS SITE IS TO STOP USING THE SITE. IF YOUR USE OF MATERIALS FROM THIS SITE RESULTS IN THE NEED FOR SERVICING, REPAIR OR CORRECTION OF EQUIPMENT OR DATA, YOU ASSUME ANY COSTS THEREOF. IF THE FOREGOING LIMITATION IS FOUND TO BE INVALID, YOU AGREE THAT PROSPER PARTIES’ TOTAL LIABILITY FOR ALL DAMAGES, LOSSES, OR CAUSES OF ACTION OF ANY KIND OR NATURE SHALL BE LIMITED TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW.

INDEMNIFICATION

You agree to indemnify and hold harmless Prosper Parties from and against any and all claims, losses, expenses, demands or liabilities, including attorneys’ fees and costs, incurred by the Prosper Parties in connection with any claim by a third party (including any intellectual property claim) arising out of (i) materials and content you submit to, post to or transmit through the Site, or (ii) your use of the Site in violation of this Agreement or in violation of any applicable law. You further agree that you will cooperate fully in the defense of any such claims. Prosper Parties reserve the right, at their own expense, to assume the exclusive defense and control of any matter otherwise subject to indemnification by you, and you shall not in any event settle any such claim or matter without the written consent of Prosper. You further agree to indemnify and hold harmless Prosper Parties from any claim arising from a third party’s use of information or materials of any kind that you post to the Site.

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MONITORING OF THE SITE

Prosper has no obligation to monitor the Site; however, you acknowledge and agree that Prosper has the right to monitor the Site electronically from time to time and to disclose any information as necessary or appropriate to satisfy any law, regulation or other governmental request, to operate the Site, or to protect itself or other users of the Site.

SUBMISSIONS TO THE SITE

All remarks, discussions, ideas, concepts, know-how, techniques, graphics or other submissions communicated to Prosper through this Site (collectively, “Submissions”) will be deemed and remain the property of Prosper, and Prosper is entitled to use any Submission for any purpose, without restriction or compensation to the individual who has provided the Submission.  Prosper shall not be subject to any obligations of confidentiality regarding Submissions except as expressly agreed by Prosper or as otherwise required by applicable law.  Nothing herein contained shall be construed as limiting Prosper’s responsibilities and obligations under its Privacy Policy.

USE OF PERSONALLY IDENTIFIABLE INFORMATION

Prosper’s practices and policies with respect to the collection and use of personally identifiable information are governed by Prosper’s Privacy Policy.

AVAILABILITY

This Site is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to applicable law or regulation.  By offering this site and Content no distribution or solicitation is made by Prosper to any person to use the Site or Content in jurisdictions where the provision of the site and/or content is prohibited by law.

TERMINATION

This Agreement is effective until terminated by Prosper.  Prosper may terminate this Agreement  at any time without notice, or suspend or terminate your access and use of the Site at any time, with or without cause, in Prosper’s absolute discretion and without notice.  The following provisions of this Agreement shall survive termination of your use or access to the Site: the sections concerning Indemnification, Disclaimer of Warranties, Limitation of Liability, Waiver, Applicable Law and Dispute Resolution, and General Provisions, and any other provision that by its terms survives termination of your use or access to the Site.

WAIVER

Failure by Prosper to enforce any of its rights under this Agreement shall not be construed as a waiver of those rights or any other rights in any way whatsoever.

APPLICABLE LAW AND DISPUTE RESOLUTION

This Agreement and all other aspects of your use of the Site shall be governed by and construed in accordance with the laws of the United States and, to the extent applicable, to the laws of the State of California, without regard to its conflict of laws rules.  You agree that you will notify Prosper in writing of any claim or dispute concerning or

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relating to the Site and the information or services provided through it, and give Prosper a reasonable period of time to address it BEFORE bringing any legal action, either individually, as a class member or representative, or as a private attorney general, against Prosper.

OTHER AGREEMENTS

This Agreement shall be subject to any other agreements you have entered into with Prosper.

ADDITIONAL TERMS

Certain sections or pages on the Site may contain separate terms and conditions of use, which are in addition to the terms and conditions of this Agreement.  In the event of a conflict, the additional terms and conditions will govern for those sections or pages.

SEVERABILITY

If any provision of this Agreement is found to be invalid or unenforceable, the remaining provisions shall be enforced to the fullest extent possible, and the remaining provisions of the Agreement shall remain in full force and effect.

GENERAL PROVISIONS

This Agreement supersedes any previous Terms of Use Agreement to which you and Prosper may have been bound.  This Agreement will be binding on, inure to the benefit of, and be enforceable against the parties and their respective successors and assigns. Neither the course of conduct between parties nor trade practice shall act to modify any provision of the Agreement. All rights not expressly granted herein are hereby reserved.  Headings are for reference purposes only and in no way define, limit, construe or describe the scope or extent of such section.

COPYRIGHT COMPLAINTSIf you believe, in good faith, that any materials on the Site infringe your copyrights, notifications of claimed copyright infringement should be sent to Prosper’s designated agent.  Notification should include:

•an electronic or physical signature of the person authorized to act on behalf of the owner of the copyright interest;

•a description of the copyrighted work that you claim has been infringed;

•a description of where the material you claim is infringing is located on the Site;

•a statement by you that you have a good faith belief that the disputed use is not authorized by the copyright owner, its agent or the law; and

•a statement by you, made under penalty of perjury, that the above information in your notice is accurate and that you are the copyright owner or duly authorized to act on the copyright owner’s behalf.

Prosper’s agent for notification of claimed copyright infringement is: Edward A. Giedgowd, telephone: (415) 593-5400, fax: (415) 362-7233, email: copyright@prosper.com.

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CONTACTING US

If you have questions regarding the Agreement or the practices of Prosper, please contact us by e-mail at compliance@prosper.com or by regular mail at Prosper Marketplace, Inc., 111 Sutter Street, 22nd Floor, San Francisco, California 94104, Attention: General Counsel.

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