Confidential Materials omitted and
filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
SECOND AMENDMENT TO LOAN
ACCOUNT PROGRAM AGREEMENT
AND FIRST AMENDMENT TO LOAN SALE AGREEMENT
THIS SECOND AMENDMENT TO THE LOAN ACCOUNT
PROGRAM AGREEMENT AND FIRST AMENDMENT TO THE LOAN SALE
AGREEMENT (this “
Amendment ”) is entered into as of the 8th day of
October, 2008 by and between WEBBANK, a Utah-chartered industrial
bank having its principal location in Salt Lake City, Utah (“
Bank ”), and LENDINGCLUB CORPORATION, a Delaware
corporation, having its principal location in Sunnyvale, California
(“ Company ”).
A. Bank and Company have entered into that certain
Loan Account Program Agreement dated as of December 10, 2007
(as the same may from time to time be amended, modified,
supplemented or restated, the “ Program Agreement
”), together with the associated Loan Sale Agreement dated as
of the same date (as amended, modified, supplemented or restated,
the “ Loan Sale Agreement ”).
B. Through this Amendment, Bank and Company desire
to amend the Program Agreement and the Loan Sale Agreement to
incorporate a revised process for the payment of certain loan
origination fees paid by Borrowers participating in the
Program.
Now, Therefore, in consideration of the foregoing recitals and
other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
1. Definitions. Capitalized terms used but not defined in this
Amendment have the meanings given to them in the Program Agreement
or, if not defined in the Program Agreement, such terms have the
meanings given to them in the Loan Sale Agreement.
2.
Amendments to Program Agreement .
2.1 Section 7(a). Section 7 is hereby amended by deleting
subsection (a) in its entirety and replacing it with the
following:
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(a)
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Company will provide a Funding
Statement to Bank by e-mail or as otherwise mutually agreed by the
Parties by 12:00 p.m. Mountain Time on each Funding Date. Each
Funding Statement shall identify those Applicants whose
Applications satisfy the requirements of the Credit Policy and with
respect to whom Company requests that Bank establish Loan Accounts,
and provide the amount of Loan Proceeds and instructions for the
disbursement of all Loan Proceeds to be disbursed by Bank on such
Funding Date. The Funding Statement shall also set forth the amount
of Consumer Origination Fees due to Company on such Funding Date.
The Funding Statement shall be in the form of
Exhibit E .
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2.2
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Section 7(d).
Section 7 is
hereby amended by adding the following new subsection
(d):
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(d)
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Simultaneously with the
disbursement of the associated Loan Proceeds, Bank shall remit to
Company the Consumer Origination Fees in accordance with the
instructions set forth on each Funding Statement. Bank’s
obligation to remit Consumer Origination Fees to Company is subject
to the satisfaction of the conditions precedent set forth in
Section 7(c) above immediately prior to each remittance of Consumer
Origination Fees.
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2.3
Schedule 1, Definitions .
(a) Schedule 1 is hereby amended by deleting
sections (s), (t), and (w) in their entirety and replacing
them with the following:
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(s)
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“ Funding Account
” means an account owned by Bank and held at the Funding
Institution against which wire transfers or ACH transfers are
settled for the payment of Loan Proceeds to Borrowers and Consumer
Origination Fees to Company.
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(t)
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“ Funding Amount
” means the aggregate amount of (i) all Loan Proceeds to
be disbursed by Bank to Borrowers on each Funding Date, and
(ii) all Consumer Origination Fees to be paid by Bank to
Company on each Funding Date, as the same are listed on a Funding
Statement.
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(w)
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“ Funding Statement
” means the statement prepared by Company in the form of
Exhibit E on a Business Day that contains (i) a
list of all Applicants who meet the eligibility criteria set forth
in the Credit Policy, for whom Bank is requested to establish Loan
Accounts; (ii) the computation of the Loan Proceeds and all
information necessary for the transfer of Loan Proceeds from the
Funding Account to the accounts designated by the corresponding
Borrowers, including depository institution names, routing numbers
and account numbers; (iii) the computation of the Consumer
Origination Fees owed to Company; and (iv) such other
information as shall be reasonably requested by Bank and mutually
agreed to by the Parties.
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2
(b) Schedule 1 is hereby amended by adding the
following new definition:
“
Consumer Origination Fee ” means the fee charged by
Company to Borrowers and deducted from the Loan Proceeds disbursed
by Bank to Borrowers, as disclosed to Borrowers in the Consumer
Finance Materials.
3. Revised Exhibits . Company and Bank hereby approve the revised
forms of Exhibits B, C, D and E to the Loan Program Agreement
attached hereto.
4.
Amendments to Loan Sale Agreement .
4.1 Section 2(d). Section 2 is hereby amended by deleting
subsection (d) in its entirety and replacing it with the
following:
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(d)
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Within five (5) days after the
end of each calendar month, Company shall pay Bank a monthly
service fee equal to the greater of (i) the product of
[ *
] multiplied by [*],
or (ii) $[*] in months [*] of the Initial Term; $[*] in months [*]
of the Initial Term; $[*] in months [*] of the Initial Term; and
$[*] in months [*] of the Initial Term.
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4.2 Schedule 1, Definitions.
Schedule 1 is hereby amended by
deleting section (z) in its entirety and replacing it with the
following:
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(z)
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“ Purchase Price
” means the principal amount of the Loan Proceeds disbursed
and the amount of Consumer Origination Fees paid to Company for
each Loan Account.
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5.
Limitation of Amendment .
5.1 The Amendment shall be limited precisely as
written and shall not be deemed to be a consent to any amendment,
waiver or modification of any other term or condition of the
Program Agreement or Loan Sale Agreement.
5.2 This Amendment shall be construed in connection
with and as part of the Program Agreement and Loan Sale Agreement
and all terms, conditions, representations, warranties, covenants
and agreements set forth in the Program Agreement and Loan Sale
Agreement are hereby ratified and confirmed and shall remain in
full force and effect.
5.3 In
the event of any conflict or inconsistency between this Amendment
and the terms of the Program Agreement or the Loan Sale Agreement,
the terms of this Amendment shall be controlling, but such
documents shall not otherwise be affected or the rights therein
impaired.
3
6. Counterparts. This Amendment may be executed in any number of
counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
7. Effectiveness . This Amendment shall be deemed effective upon
the due execution and delivery to Bank and Company of this
Amendment by each party hereto.
8. Governing Law . This Amendment and the rights and obligations
of the parties hereto shall be governed by and construed in
accordance with the laws of the State of Utah.
[Signature page follows.]
4
IN WITNESS
WHEREOF, the Parties have entered into this Amendment on the date
set forth above.
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WEBBANK
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/s/ Jason C.
Lloyd
Name: Jason C.
Lloyd
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Title: SVP, Strategic
Partnerships
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LENDINGCLUB
CORPORATION
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/s/ Renaud
Laplanche
Name: Renaud
Laplanche
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Title: CEO
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[Signature Page to Second Amendment
to Program Agreement and First Amendment to Loan Sale
Agreement]
WebBank
Person-to-Person Credit Policy
Page 2
Current Approval Date:
September 17, 2008
Last Revision Date: January 23, 2008
LendingClub Person-to-Person
Credit Policy
Person-To-Person Lending
Overview
Peer-to-peer
lending is a means by
which borrowers and lenders may transact business without the
traditional intermediaries. It can also be known as Social Lending
using the internet.
Internet is the enabling technology for peer-to-peer
lending has been the internet, where peer-to-peer lending appears
in two primary variations: an “online marketplace”
model and a “family and friend” model.
Theory of
Person-To-Person Lending
The theory is
that people will be more likely to repay their obligations if the
reputation of their group is at stake. Anyone (who qualifies with a
verifiable name, bank account and Social Security number) can start
a group or join an existing group that matches their interests or
philosophy.
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1.
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Lending Club Credit Policy Committee
(CPC)
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i.
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Review Credit Performance
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ii.
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Establish and Revise Risk Grade
Categories
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iii.
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Establish and Revise Interest Rate
Categories
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iv.
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Review & Update Credit
Policies
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v.
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Recommend changes in policies to
WebBank Loan Committee and Board
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i.
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Any
deviations from this WebBank approved policy must be approved by
the chief credit officer or the senior underwriter at WebBank where
the amount under consideration exceeds $25,000.
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ii.
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The
president of the WebBank can appoint secondary personal to approve
exceptions in the absence of the chief credit officer and/or the
senior underwriter.
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2.
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Loan Application Information
Requirement
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Customer’s general information will be
collected including: name, address, social security number, birth
date, email address, phone numbers, income, employment, and
affiliation relationships (optional).
WebBank
Person-to-Person Credit Policy
Page 3
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b.
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Loan Request Information
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Borrower will
provide the loan amount, length of loan term, and
purpose.
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c.
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Bank Account Information
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Borrower will
provide at the minimum one valid bank account with corresponding
ABA routing number. Lending Club will authenticate account
ownership.
Current
acceptable payment method includes electronic fund transfer
(EFT) via ACH. All ACH fund transfers will require a four
(4) business day clearing period to avoid NSF (Non-Sufficient
Funds) risk.
In certain
instances, wire transfers will be supported.
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e.
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Information
Verification/Authentication
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i.
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Lending Club, at its sole
discretion, reserves the right to require verification for any
information submitted at any time. Failure to comply will be
grounds of declining the listing of a loan request. Or, for a loan
which has already funded, Lending Club may, at its sole discretion,
assess a False Information Penalty and/or call the loan immediately
due and payable, depending on the severity of the
situation.
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ii.
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Level of verification and
authentication requirements is determined by CPC or its
delegates.
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f.
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Non-Credit Based Application
Information
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i.
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Bank Account Verification
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1.
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A
valid bank account with ACH transfer capability will be required
for authenticating borrowers.
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2.
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Lending Club and/or its vendors will
verify bank accounts through CPC approved methods.
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ii.
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Affinity Network
Verification
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1.
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Borrower’s membership in
Affinity Groups may be verified per methods determined by Lending
Club.
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All Borrowers
and Guarantors will be required to digitally sign an electronic
authorization for Lending Club to obtain a current (within the
acceptable time period as determined by the CPC and approved by
WebBank) copy of their respective credit reports both for the
processing of the loan request as well as for monitoring or
collection efforts associated with the loan.
Lending Club
will rely upon its approved credit bureau partner(s) to supply the
credit scoring and credit report data for Borrowers and
Guarantors.
WebBank
Person-to-Person Credit Policy
Page 4
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1.
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CPC
has elected to use the FICO credit score model (as modeled by Fair
Isaac Company) from its credit bureau partner(s) (TransUnion,
Experian, or Equifax) as the primary credit score model used to
categorize loans into Base Risk Grades from lowest risk to highest
risk that Lending Club is willing to accept.
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2.
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In
addition to the Base Risk Grades, Lending Club will establish
additional sub-grades within each Base Risk Grade using numbers 1
being the lowest risk (best sub-grade) up to the highest risk
(worst sub-grade) as determined by CPC.
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3.
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Any
credit score below the minimum acceptable score will be denied from
being able to list the loan with Lending Club.
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d.
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Data Collection &
Validation
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i.
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Lending Club will collect customer
performance data to be used for validation of credit policies as
well as future model development.
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ii.
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Lending Club will also collect
periodic updates of credit scores for monitoring of active loan
portfolio quality and trends.
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i.
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Lending Club defines the Base Risk
Grade using segmentations of default rate of the associated credit
score from the lowest default rate (risk grade of A) up to the
highest default rate (risk grade of D) as listed in the Base Risk
Grade Categorization Table in Credit Policy IV.b.
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ii.
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Lending Club will not list a loan
request where the Base Risk Grade is below the minimum threshold
determined by CPC.
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b.
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Base Risk Grade Categorization
Table
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Below
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Sample
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Sample
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Sample
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Sample
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Minimum
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Band 1
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Band 2
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Band 3
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Band 4
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FICO Score (new customer)*
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< 640
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640~659
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660~679
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679~713
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714+
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c.
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Risk Sub-Grades
(Sub-Grade)
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i.
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Within each Base Risk Grade, a
number of Sub-Grades will be created by CPC to further define the
risk profile of individual loans with in the Base Risk Grade.
Additional Risk Sub-Grades of E1 to G5 are created to accommodate
Lending Club’s risk grade modifier system and are not based
on default rates as the Sub-Grades from A1 to D5. Please refer to
the Sub-Grade Table in Credit Policy IV.d for details.
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WebBank
Person-to-Person Credit Policy
Page 5
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d.
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Risk Sub-Grade Categorization
Table
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Base Risk
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FICO
Score
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Grade
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Sub-Grade
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1
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2
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A
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3
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4
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5
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1
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2
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B
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3
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4
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5
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1
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2
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C
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3
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4
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5
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1
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2
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D
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3
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4
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5
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1
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2
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E
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3
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4
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5
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1
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2
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F
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3
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4
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5
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1
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2
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G
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3
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4
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5
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*
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note that
Sub-Grades E~G are only available as a result of adding risk grade
modifiers. No borrowers below the minimum credit score limit will
be accepted except under special Facebook.com credit rules
described below in IV.e.
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WebBank
Person-to-Person Credit Policy
Page 6
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i.
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Facebook.com — A special rule
set was developed for Facebook.com, where the users tend to have a
shorter credit history. Notwithstanding anything to the contrary in
the credit policy, borrowers referred through Facebook will be
accepted if they have:
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1.
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FICO score between 610 and 639
(corresponding to Sub-Grades E1 to G3 in IV.d);
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2.
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no
current delinquencies;
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3.
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less than 3 delinquencies within the
past 24 months; and,
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4.
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have the oldest credit account age
between a minimum of 12 months and a maximum of
60 months.
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i.
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Certain information from the credit
profile or loan application warrants manual overrides to the normal
Risk Grading process and triggers immediate exclusion from listing
of the loan.
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a.
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Bankruptcy is listed on the credit
report for ten years. We believe responsible financial management
is a pre-requisite for listing the loan. Therefore Lending Club
will not accept loan requests with a bankruptcy record within the
past seven (7) years in the credit data file.
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2.
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Derogatory Public Record
(unpaid)
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a.
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A
government tax lien will supersede all unsecured creditor claims.
An unpaid lien typically indicates that additional liens are
forthcoming and greatly increases a Borrower’s risk profile
for the loan request. Lending Club will not list a Borrower’s
loan request whose credit file has existing liens.
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a.
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Lending Club will exclude from
listing the loan requests from Borrowers who has current
delinquency(ies).
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4.
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Collection or Write-Off Account
(Other than medical)
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a.
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Lending Club will exclude from
listing the loan requests from Borrowers who have a current or
recent collection or write-off account within the past
12 months.
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5.
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Credit Report Fraud Alert
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a.
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We
will not allow the listing of loan requests from Borrowers whose
credit file has an active fraud alert or an extended fraud
alert.
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6.
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Insufficient Credit
Experience
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a.
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Lending Club will deny listing of
loan requests from borrowers who have a length of credit history
below 12 months. Credit history is established by individual
or co-borrower accounts but not authorized-signer
accounts.
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7.
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Waiting Period for Multiple
Listings
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a.
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Lending Club will require a waiting
period where we can establish a minimum of six months of
satisfactory payment history from a first loan prior to allowing
another loan listing by the same borrower.
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8.
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Insufficient Total
Accounts
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a.
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Lending Club will exclude listings
where the total number of accounts, both active and inactive, is
less than 4.
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WebBank
Person-to-Person Credit Policy
Page 7
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9.
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Insufficient Open
Accounts
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a.
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Lending Club will exclude from
listing loan requests where the number of open and active accounts
is less than 3.
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10.
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Excessive Recent Credit
Inquiries
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a.
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Lending Club will not allow
borrowers with more than 10 credit inquiries in the past six (6)
months to list their loan request.
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11.
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Excessive Credit
Utilization
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a.
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Lending Club will keep borrowers
with credit utilization of 100% or more from listing their loan
requests.
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ii.
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Lending Club may also manually
review and decline some of the loan listing requests through CPC
and/or its delegates.
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i.
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The
primary income source is based solely on the monthly gross income
of the Borrower and does not include that of the spouse or other
individuals in the household.
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ii.
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In
addition to salary income, only recurring incomes of other types
will be considered acceptable income sources.
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iii.
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Complying with federal regulation,
alimony or child support payments to Borrower are not required to
be disclosed unless it is desired to have such payments counted
toward income.
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i.
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Lending Club reserves the right to
require income verification for every Borrower. Verification may
include but is not limited to the following:
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1.
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Pay
stub for the most recent two (2) pay periods covering the past
28 days. If self-employed, the most recent two (2) years
signed 1040 tax return with all relevant schedules and associated
forms (i.e. W-2 and 1099 Forms). Borrower may supplement this
requirement with business tax returns if it can be proven that the
borrower has full control of the company and is the
owner.
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2.
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Signed 4506-T form authorizing
Lending Club and its agent to obtain past two (2) years of
1040 or 1065 tax returns, W-2 forms, and/or 1099 forms.
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3.
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Certified financial statements
audited by state-licensed CPA.
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ii.
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Borrower’s monthly pre-loan
and post-loan debt payment obligations will be calculated based on
information available in the credit report and Lending Club
system.
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iii.
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Pre-Loan Debt Payment
Calculation
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1.
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Pre-Loan Debt payment obligation is
calculated by aggregating borrower’s monthly revolving and
installment payments only (includes monthly payment for any Lending
Club loan issued prior to this request), without any mortgages. The
resulting number will be the Total Monthly Pre-Loan Debt Payment
amount.
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WebBank
Person-to-Person Credit Policy
Page 8
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iv.
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Post-Loan Debt Payment
Calculations
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1.
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Non-Mortgage Post-Loan Debt Payment
is calculated by adding Total Monthly Pre-Loan Debt Payment to the
monthly payment amount of the Lending Club loan listing that
borrower is requesting. This is the Post-Loan Non-Mortgage Debt
Payment.
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2.
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Total Post-Loan Debt Payment is
calculated by the monthly payments from all mortgages to the
Post-Loan Non-Mortgage Debt Payment. This is the Total Post-Loan
Debt Payment.
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d.
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DTI
(Debt to Income) Ratio Calculation
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i.
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Pre-Loan DTI (DTI-1) is calculated
based on representing the Total Monthly Pre-Loan Debt Payment
obligations as a percentage of gross monthly income as determined
in Credit Policy V.a & V.c.
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ii.
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Post-Loan Non-Mortgage DTI (DTI-3)
is calculated based on representing the Post-Loan Non-Mortgage Debt
Payment obligations as a percentage of gross monthly income as
determined in Credit Policy V.a & V.c.
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iii.
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Post-Loan DTI (DTI-4) is calculated
based on representing the Total Post-Loan Debt Payment obligations
as a percentage of gross monthly income as determined in Credit
Policy V.a & V.c.
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i.
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Lending Club will decline to list
any loan request with a Pre-Loan DTI above the maximum Pre-Loan DTI
limit as determined and adjusted by CPC from time to
time.
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ii.
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Lending Club will decline to list
any loan request with a Post-Loan Non-Mortgage DTI above the
maximum Post-Loan Non-Mortgage DTI limit as determined and adjusted
by CPC from time to time.
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iii.
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Lending Club will decline to list
any loan request with a Post-Loan DTI above the maximum Post-Loan
DTI limit as determined and changed by CPC from time to
time.
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1.
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DTI-1 — Maximum acceptable
DTI-1 is 30%
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2.
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DTI-3 — Maximum acceptable
DTI-3 is 48%
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a.
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Pre-Loan Debt-To-Income Ratio
(DTI-1)
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Borrower’s capacity to repay is a primary
factor in establishing loan default risk. DTI measures the ability
of Borrower’s income to cover debt service. Sub-Grade is
adjusted up or down in accordance with the DTI ratio using a grade
adjustment system as depicted in the Modifier Table in Credit
Policy VI.c.
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b.
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Guidance Limit
Utilization
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i.
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Guidance Limit is assigned by
Lending Club after considering Borrower’s risk profile and
loan application as depicted in Guidance Limit Table in Credit
Policy VI.b.ii. Based on the Guidance Limit derived from either an
external decisioning analytics vendor or internal credit models,
Sub-Grade is adjusted up or down by the Loan Amount to Guidance
Limit Ratio as depicted in the Modifier Table in Credit Policy
VI.c.
|
WebBank
Person-to-Person Credit Policy
Page 9
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Base
Risk
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Grade
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Guidance Limit
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15,000
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12,500
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10,000
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7,000
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4,000
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3,000
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2,000
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*
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Guidance limit
for Risk Grades E~G are not currently used.
|
WebBank
Person-to-Person Credit Policy
Page 10
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i.
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Various channels where Lending Club
sources the leads for its loan listing requests may perform
differently over time. Risk grade modifiers are used to
appropriately reflect such differences in credit risk.
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ii.
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Credit.com — Based on
experiences of higher default and delinquency rate with loans from
this channel, Lending Club will add an additional -5 Sub-Grade to
loan listings coming from credit.com channel.
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i.
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The
number of open accounts is an indication of credit experience as
well as credit usage behavior. Low numbers indicates lack of
sufficient credit experience, while a higher number indicates
excessive credit accounts which may lead to
over-leverage.
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ii.
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This is the number of currently
active accounts on the borrower’s credit report. This
includes all revolving accounts that can be drawn down, along with
all installment and mortgage accounts that carries a balance and
are not yet paid off.
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e.
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Recent Credit Inquiries
(6 months)
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i.
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Number of credit inquiries acts as
an indication of borrower’s need for additional credit as
well as potential fraud. Excessive number of credit inquiries is
positively correlated to delinquencies and defaults.
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ii.
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This is the total number of credit
inquiries within the past six (6) months as indicated by
Lending Club’s credit bureau partners.
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f.
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Credit Utilization (%)
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i.
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Credit utilization helps to identify
credit availability from borrowers’ existing credit report.
High utilization may indicate potential cash flow uncertainty while
a low utilization may be a result of lack of credit
experience/usage.
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ii.
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Credit Utilization is calculated
based on total balances owed on revolving accounts divided by the
credit limit and/or highest usage on the account.
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g.
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Credit History Length
(months)
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i.
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Length of credit history is an
important identifier of credit risk as the shorter the history, the
greater the uncertainty about the behavior of the borrower over
time.
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ii.
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Credit history length is calculated
based on the earliest credit account from the borrower’s
credit report until the date of the credit report.
|
WebBank
Person-to-Person Credit Policy
Page 11
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h.
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Modifier Table (Changes in
Sub-Grade)
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Base
Risk
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DTI
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Grade
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0%
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7%
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13%
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18%
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20%
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23%
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25%
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28%
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30%
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0
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0
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-1
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-2
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-4
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-8
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-12
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-16
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Decline
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Base
Risk
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Utilization (Loan Amount to Guidance
Limit Ratio)
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Grade
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0%
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25%
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50%
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75%
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100%
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125%
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150%
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175%
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200%
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0
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-1
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-2
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-3
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-4
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-5
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-6
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-8
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-10
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225%
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250%
|
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275%
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300%
|
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325%
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350%
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-12
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-14
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-16
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-20
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-26
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-32
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