Oops. I just read the form 8K that Prosper filed with the SEC on this event. It turns out that our friend Nigel only invested $1 Million. That's not enough to keep them running long term. This is what is often called a "bridge loan".
Is this for show, or to get Nigel on the board, or just to keep them running for a short time 'till they get more money, or what?
http://www.sec.gov/Archives/edgar/data/1416265/000141626509000239/p8k11092009.htmItem 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”).
