Item 1.01. Entry into a Material Definitive Agreement.
On November 10, 2009, Prosper Marketplace, Inc. ("Prosper") and QED Fund I,
L.P., a Delaware limited partnership ("QED"), entered into a Note and Warrant
Purchase Agreement (the "Purchase Agreement"), pursuant to which, Prosper sold
to QED a Convertible Promissory Note (the "Note"), dated as of November 10,
2009. The Note is in the principal amount of $1,000,000. Interest on the Note
accrues at a per annum rate of 15.0%. All principal and accrued interest under
the Note are due in a single payment on November 10, 2011 (the "Maturity
Date"). On the Maturity Date and for 90 days after, QED may elect to convert all
principal and accrued interest under the Note into shares of Prosper's preferred
stock. If QED elects to convert the Note, and Prosper has consummated a
preferred stock financing for an aggregate purchase price of $5,000,000 or more
between November 10, 2009 and the date of QED's election, the Note will convert
into shares of the preferred stock sold pursuant to such financing at the per
share purchase price for such financing. If QED elects to convert the Note but
Prosper has not consummated any such preferred stock financing, the Note will
convert into shares of Prosper's Series C Preferred Stock at the per share
purchase price at which such shares were sold for Prosper's Series C financing,
which was consummated in June 2007. Prosper's obligations under the Note are
unsecured. Within 30 days of the closing of the transactions contemplated by the
Purchase Agreement, QED may elect to purchase an additional convertible
promissory note from Prosper in the principal amount of $1,000,000, which note
shall be convertible into shares of Prosper's preferred stock on the same terms
as the Note.
In connection with the Purchase Agreement, Prosper also issued to QED a fully
vested warrant to purchase 164,178 shares of Prosper's Common Stock at an
exercise price of $0.56 per share (the "Warrant").
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 is hereby incorporated by reference. No
underwriting discounts or commissions were paid in connection with the Note and
the Warrant. The Note and the Warrant were sold in reliance on the exemption
from the registration requirements of the Securities Act, as set forth in
Section 4(2) under the Securities Act relative to sales by an issuer not
involving any public offering.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
The information set forth in Item 1.01 is hereby incorporated by
reference. Under the Purchase Agreement, Prosper and QED agreed that Nigel
Morris, who is the managing partner of QED Partners LLC, QED's general partner,
will serve on Prosper's Board of Directors for 2 years beginning on November 10,
2009.