[Template Convertible Loan – Short Form]

September 2014

S H O R T F O R M C O N V E R T I B L E L O A N AG R E E M E N T

AGREEMENT DATED [insert]

PARTIES

1. [INSERT NAME OF CO-LENDER] and NZVIF INVESTMENTS LIMITED

(Lenders)

2. [INSERT COMPANY NAME] (Company)

BACKGROUND

The Lenders wish to make a convertible loan available to the Company. The terms and
conditions of that convertible loan are set out in this agreement.

THE PARTIES AGREE THAT:

1. DEFINITIONS

In this agreement, unless the context indicates otherwise:

Conversion means the conversion of an amount outstanding under the Loan into
Shares under clause 5;

Conversion Rate means the rate calculated on Conversion as follows:

n
  0.15  
1      y
  12  
x
z

where:

x is the number of Shares to be issued;

n is the number of months since any portion of the amount being converted
was drawn down (rounding up to the nearest month);

y is the amount being converted; and

z is $[insert "issue price" or describe how it is determined eg by

reference to next round price];

[Initial] Drawdown Date means the date from which the [first tranche of the] Loan
may be drawn down by the Company, being [insert date] or such other date as the
Lenders may agree with the Company;

Intellectual Property means copyright, all rights in relation to inventions (including

patents), registered and unregistered trade marks, registered and unregistered

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Short Form Convertible Loan Agreement Page 2

designs, circuit layouts, confidential information, software (whether in object code

or source code), and all other rights anywhere in the world resulting from intellectual
activity;

Investment Agreement means an agreement in a form agreed by the Lenders to

be entered into by the Lenders, the Company and the shareholders of the Company
on Conversion relating to the manner in which the shareholders will hold shares in
the Company and the Company will be operated;

Lenders' Proportions means:

(a) in respect of [insert name of co-lender], [50]%; and

(b) in respect of NZVIF, [50]%;

Loan means the amount of up to $[insert amount] to be made available to the

Company by the Lenders in the Lenders' Proportions;

Milestones means the milestones which must be achieved by the Company before
certain tranches of the Loan will be made available to the Company, as set out in
schedule 3;

NZVIF means NZVIF Investments Limited;

Shares means ordinary shares in the Company; and

Warranties means the warranties given by the Company to the Lenders, as set out
in schedule 1.

2. CONDITIONS

2.1 Conditions Precedent: This agreement is subject to the following conditions:

(a) Lenders' Board Approval: each Lender's board approving the terms and
conditions of this agreement;

(b) Documents: the Company giving each Lender a copy of:

(i) Security: a deed in a form agreed by the Lenders signed by the

Company and setting out the terms of the Lenders' security
interest in all of the personal property of the Company granted
under clause 4; and

(ii) Other Documents: any other documents or information in

relation to the Company or the Loan as the Lenders reasonably
request (which may include, without limitation, directors' and
shareholders' resolutions of the Company authorising entry into
this agreement by the Company and the issue of the Conversion
Shares).

2.2 Benefit of Conditions: The conditions in clause 2.1 are for the benefit of the
Lenders only. The Lenders may waive any of the conditions. Any waived conditions
will be deemed to be fulfilled.

2.3 Non-Fulfilment: If the conditions in clause 2.1 are not satisfied or waived on or
before the [Initial] Drawdown Date, either Lender may cancel this agreement by

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Short Form Convertible Loan Agreement Page 3

written notice to the Company signed on behalf of that Lender. If this agreement is
cancelled in that way, no party will have any obligation to any other party.

3. DRAWDOWN

[Drafting note: delete the second clause 3.1 if there is no tranching.]

3.1 Drawdown in One Lump Sum: The Loan may be drawn down by the Company
in one lump sum from the Drawdown Date by written notice to the Lenders.
[or]

3.1 Drawdown on Achievement of Milestones: The Loan may be drawn down by

the Company in [insert number of tranches] tranches in the amounts set out in
schedule 2 in respect of each tranche by written notice to the Lenders, where:

(a) Initial Drawdown Date: the first tranche of $[insert amount] may be
drawn down from the Initial Drawdown Date; and

(b) Subsequent Tranches: each subsequent tranche may be drawn down

upon the achievement of the Milestones applicable to that tranche,
provided that the Lenders' obligation to make such subsequent tranches
available for drawing down:

(i) Lenders' Satisfaction: will be conditional on the Company

providing to the Lenders such evidence as the Lenders may
require that the relevant Milestones have been achieved, and the
Lenders confirming (in their absolute discretion) that the relevant
Milestones have been achieved to their satisfaction; and

(ii) Due Dates: will cease in respect of any subsequent tranche if

the Milestones applicable to that tranche have not been satisfied
by the due date specified in schedule 2 (unless the Lenders
agree otherwise).

3.2 Lenders' Proportions: Each Lender will contribute its Lender's Proportion of each
amount drawn down.

3.3 Use of Loan: The Company must use all amounts drawn down only for purposes
that have been approved by the Lenders.

4. SECURITY

With effect from the [Initial] Drawdown Date until all amounts outstanding under this
agreement have been repaid, the Company grants to the Lenders:

4.1 Security Interest: a first-ranking security interest in all of its present and after
acquired personal property (as defined in the Personal Property Securities Act
1999); and

4.2 Fixed Charge: a first-ranking fixed charge over all of its non-personal property,

as security for the due payment of all amounts outstanding under this agreement and for the
due performance and observance of its obligations under this agreement.

5. WARRANTIES

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Short Form Convertible Loan Agreement Page 4

5.1 Warranties: In consideration of the Lenders entering into this agreement the
Company warrants and represents to the Lenders for the benefit of the Lenders that
each of the Warranties is true and accurate and not intentionally misleading.
[Drafting note: may be appropriate for individuals to join in giving Warranties,
in which case they will need to be parties to this agreement.]

5.2 Time Warranties Given: The Warranties referred to in clause 5.1 will be deemed
to be given on the date that [each portion of] the Loan is drawn down.

5.3 Exclusions from Warranty Claims: No facts or circumstances will give rise to a
Warranty Claim to the extent that those facts or circumstances:

(a) Disclosed in Schedule: are fairly disclosed in schedule 1; or

(b) Actions with Consent: arise because of an action taken by the Company
with the Lenders' written consent.

5.4 Indemnity: The Company indemnifies the Lenders against any loss or expenses
suffered or incurred by the Lenders resulting from a breach of clause 5.1.

5.5 General Authority Warranty: In addition to the Warranties, each party warrants
and represents to each of the other parties that:

(a) Authority: it has the legal right, authority and full power to enter into this
agreement and to perform its obligations under it and has taken all
necessary corporate and other action to authorise its execution, delivery
and performance; and

(b) Binding Obligation: this agreement constitutes valid and binding

obligations of that party enforceable against that party in accordance with
its terms.

6. CONVERSION

6.1 Election to Convert: The Lenders may by notice in writing to the Company convert
all amounts outstanding under the Loan, or any part of the Loan outstanding at a
relevant time, to Shares in the Company. Upon receipt of such notice, the Company
will:

(a) Convert Debt to Equity: convert all or any amounts outstanding under
the Loan (as applicable) into new fully paid Shares at the Conversion Rate
by applying such amounts to subscribe for Shares; and

(b) Issue Shares: issue and allot to each Lender the Lender's Proportion of
such Shares.

6.2 Investment Agreement: Upon Conversion of all or any amounts outstanding under
the Loan the parties will enter into and execute an Investment Agreement to be
prepared by the Lenders at the Company’s expense.

6.3 Issue of Shares: Shares issued on Conversion will be credited as fully paid and
rank pari passu with all other shares of the Company then on issue.

6.4 Fractional Entitlements: The number of Shares to be issued to each Lender will
be rounded up to the nearest whole number in the event of a fractional entitlement.

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Short Form Convertible Loan Agreement Page 5

6.5 Anti-Dilution: If the Company issues Shares prior to Conversion at a price less
than $[insert agreed issue price] per Share, then the number of Shares issued on
Conversion will be multiplied by X, where:

A
X
B

where:

A is $[insert agreed issue price]; and

B is the lowest price at which Shares have been issued prior to

Conversion.

7. REPAYMENT [AND PREPAYMENT]

7.1 Repayment of Loan: All or any part of the Loan will be repayable by the Company
to the Lenders upon demand by the Lenders at any time. Immediately upon receipt
of a written demand, the Company will repay to the Lenders the amount of the Loan
demanded together with all interest accrued on the amount of the Loan to be repaid.

7.2 Prepayment: At any time after the Initial Drawdown Date, the Company may give
written notice to the Lenders that it wishes to prepay all or any part of the Loan (in
multiples of $10,000). Upon receipt of such notice, the Lenders may either:

(a) Accept Prepayment: accept prepayment of the Loan as requested by the

Company in such notice (provided that no sum prepaid may be redrawn);
or

(b) Demand Conversion: give written notice to the Company that the
Lenders wish to convert the relevant portion of the Loan, in which case the
process set out in clause 6.1 will apply.

7.3 Interest: The Company will pay to the Lenders interest at the rate of [15]% per
annum on the principal amount of the Loan outstanding from time to time, such
interest to be calculated and compounded on a daily basis from the date of
drawdown to the date of repayment. Interest will be payable on the date of
repayment of the Loan (or the applicable part of the Loan being repaid [or prepaid]).
If part only of the Loan is repaid [or prepaid], the oldest part of the Loan will be
deemed to be repaid first.

7.4 Default: If any sum is not paid to the Lenders when due, the Company must, upon
demand by the Lenders, pay to the Lenders interest on the overdue sum from the
due date for payment until the date of payment of that sum to the Lenders (both
before and after judgment). Interest under this clause will accrue on a daily basis
and be calculated by reference to successive periods of such duration as the
Lenders may select at the rate of [insert percentage]% per annum.

8. MAJOR ACTIVITES

The Company undertakes to the Lenders that it will not, unless approved in writing by the
Lenders:

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Short Form Convertible Loan Agreement Page 6

8.1 Issue Securities: issue or create (by classification or otherwise) any new shares
or options having rights, preferences or privileges senior to or on parity with the
Shares;

8.2 Change Capital Structure: increase or reduce the share capital of the Company,
or in any way change the capital structure of the Company;

8.3 Change in Ownership: approve any change in the ownership or control of the
Company’s shares;

8.4 Dispose of Assets: sell or dispose by any method a material proportion of the
Company’s assets;

8.5 Dividends: pay, redeem or declare any dividend on any shares; or

8.6 Borrowings and Security: enter into any borrowings, guarantees, indemnities or
other contingent commitments or the granting of any security over the assets of the
Company.

9. OTHER RIGHTS OF THE LENDERS

9.1 Observation: The Lenders may nominate any person to attend all meetings and
proceedings of the board as an observer, and to receive all papers provided to the
board, provided that such person signs a confidentiality agreement in a form
reasonably acceptable to the board if requested by the board.

9.2 Information and Reports: The Company will provide to the Lenders such
information and reports as the Lenders may reasonably request from time to time.

10. NOTICES

10.1 Method of Delivery: Any written notice required under this agreement must be
signed by a duly authorised senior representative of the party giving that notice and
will be deemed validly given if:

(a) delivered by hand to the intended recipient's address as set out in

schedule 2; or

(b) sent by facsimile to the intended recipient's facsimile number as set out in
schedule 2 and if the sender's facsimile machine confirms transmission to
the intended recipient.

10.2 Time of Delivery: Any notice transmitted by facsimile or delivered after 5.00 pm
on a Business Day, or at any time on a non Business Day, will be deemed received
at 9.00 am on the next Business Day (being, in each case, the time of day at the
intended place of receipt of that notice).

11. GENERAL

11.1 Assignment: No party will assign or otherwise transfer any of its rights or
obligations under this agreement to any other person without the other parties' prior
written consent. Consent must not be unreasonably withheld or delayed.

11.2 Entire Agreement: This agreement records the entire understanding and
agreement of the parties relating to the matters dealt with in this agreement. This

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agreement supersedes all previous understandings or agreements (whether

written, oral or both) between the parties relating to these matters.

11.3 Further Assurances: Each party will do all things and execute all documents
reasonably required to give effect to the provisions and intent of this agreement.

11.4 Governing Law and Jurisdiction: This agreement is governed by the laws of New
Zealand. The parties submit to the non exclusive jurisdiction of the New Zealand
courts in respect of all matters relating to this agreement.

SIGNATURES

SIGNED on behalf of [INSERT NAME OF

CO-LENDER] as Lender by:

Signature of director

Name of director

SIGNED on behalf of NZVIF

INVESTMENTS LIMITED as Lender by:

Signature of director/authorised signatory Signature of director/authorised signatory

Name of director/authorised signatory Name of director/authorised signatory

SIGNED on behalf of [INSERT NAME OF

COMPANY] by:

Signature of director

Name of director

9523135_4.DOC
Short Form Convertible Loan Agreement – Schedule 1: Warranties

SCHEDULE 1

WARRANTIES

[Drafting note: Company should disclose any exceptions here.]

[Drafting note: consider whether other Warranties are appropriate in the

circumstances, eg assets unencumbered, no litigation, no material obligations.]

Disclosure of Information

 All facts and information known to the Company which could reasonably be expected
to be material to a person in a similar position to the Lenders in terms of a decision
to enter into this agreement have been disclosed by the Company to the Lenders.

 All information which has been given by the Company, the directors of the Company
or by the Company’s solicitors or accountants to the Lenders or their directors,
officers, solicitors or accountants was at the time it was so given, and is now, true
and accurate in all respects.

Intellectual Property

 There is no Intellectual Property which the Company needs for its current or proposed
business which the Company either does not own outright or is not available on the
open market.

 The business of the Company as now carried on does not infringe any Intellectual
Property rights of any other person.

 No Intellectual Property created or developed by the Company is being used by any

other person.

 The Company is not a party to any licences, sub-licences and other agreements
pursuant to which any other person is authorised to use, sell, distribute or license any
Intellectual Property created or developed by the Company.

 The Company is not, nor has it been at any time, in breach of any agreement to which
it is a party relating to the use of Intellectual Property owned by a third party.

 No claims with respect to the Company's Intellectual Property are pending or

threatened by any third party.

 No current or prior officers, employees or consultants of the Company claim any

ownership interest in any Intellectual Property as a result of having been involved in
the development of such Intellectual Property while employed by or consulting to the
Company.

 The Company has taken all steps necessary or desirable to fully protect its
Intellectual Property in New Zealand.

 The Company is not liable for taxation as a consequence of the transfer of Intellectual
Property to the Company.

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Short Form Convertible Loan Agreement – Schedule 1: Warranties

Capital Structure

 The shares disclosed to the Lenders constitute all of the issued shares and all rights
to be issued shares of the Company. All of the shares are fully paid and are owned
by the persons disclosed by the Company to the Lenders.

 There are no share options allocated for shares in the Company and no person has
the right to call for an allotment, conversion, issue, sale or transfer of any shares in
the Company by reason of any agreement, conversion, right, option or otherwise.

Eligibility

 The majority of assets (by value) and employees (by number) of the Company are
located in New Zealand and the Company is not engaged in any business which
principally involves one or more of property development, retailing, mining,
hospitality, or acting as a financial intermediary.

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Short Form Convertible Loan Agreement – Schedule 2: Address for Notices

SCHEDULE 2

ADDRESSES FOR NOTICES

[Insert name of Co-Lender]

Address:

Phone:
Fax:
Attention:

NZVIF

Address: Unit 1B, Ascot Office Park

93-95 Ascot Avenue
Greenlane
Auckland 1051

Phone: +64 9 951 0170

Fax: +64 9 951 0171
Attention: Chris Twiss (Investment Director)

Company

Address:

Phone:
Fax:
Attention:

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Short Form Convertible Loan Agreement – Schedule 3: Milestones

SCHEDULE 3

MILESTONES

[Drafting note: delete where Loan is not tranched.]

Tranche and Applicable Milestones Due Date Amount of Loan

Initial Drawdown Date N/A $[insert]

Second Tranche [insert] $[insert]

 [insert]
 [insert]
 [insert]

Third Tranche [insert] $[insert]

 [insert]
 [insert]
 [insert]

[etc]

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