Borrower Agreement — Effective from July 2014 to August 2014

Effective from 31 July 2014 to 19 August 2014

This document sets out the terms on which a natural person (you or your) agrees to use the service provided by Harmoney Limited (Harmoney) to borrow money on a peer-to-peer basis from other persons through the Trustee (as defined below).

By accepting these terms, an agreement is formed between you, Harmoney, and the Trustee.

Introduction

1. This agreement sets out the terms on which you are able to access and use the Service. If there is any inconsistency between these terms and any other terms set out on the Website, these terms will prevail (except as expressly contemplated by these terms).

2. You acknowledge and agree that:

• (a) Harmoney provides the Service under a licence which Harmoney holds pursuant to the FMCA;
• (b) you may have only one Loan outstanding at any time, with a Loan Amount of not more than $35,000 (excluding the Origination Fee in relation to that Loan); and
• (c) you may not borrow more than $2 million using the Service in any 12 month period.

You should contact Harmoney if you are not clear as to any of the information set out in the Loan Disclosure.

3. In providing the Service, Harmoney will (and will procure that its Related Companies who provide any aspect of the Service will):

• (a) exercise the care, diligence, and skill that a prudent licensee for the Service would exercise in the same circumstances; and
• (b) if any aspect of the Service is contracted out, take all reasonable steps to:
  
  • (i) ensure that those functions are performed in the same manner, and are subject to the same duties and restrictions, as if Harmoney were performing them directly; and
  • (ii) monitor the performance of those functions.

Co-Borrowers

4. If your spouse or partner has registered as a Borrower (Primary Borrower) and has asked you to register as a co-borrower, or vice versa, then:

• (a) you will each have the same rights and obligations under this agreement;
• (b) you consent to Harmoney providing your personal information to the other of you; and
• (c) Harmoney will be entitled to accept instructions from either of you (without reference to the other) in respect of your rights and obligations under this agreement.

Registration as a Borrower

5. In order to access and use the Service, you must register as a Borrower by completing the Borrower Application. Harmoney reserves the right not to register any person as a Borrower if that person has not completed the registration process to Harmoney’s satisfaction or does not meet Harmoney’s eligibility criteria.

6. Harmoney’s eligibility criteria for registering as a Borrower are:

• (a) you must be a natural person (that is, not a company, partnership, incorporated society, trust, or other legal entity);
• (b) you must be a New Zealand resident, which Harmoney will verify through you having a New Zealand residential address and a bank account with a registered New Zealand bank;
• (c) you must be 18 years of age or older when you register; and
• (d) you must have an acceptable credit record, as determined by Harmoney at its discretion.

7. You acknowledge that Harmoney is required to implement its Fair Dealing Policy, which is set out on the Website, in respect of registering any person as a Borrower.

8. Harmoney may terminate your registration as a Borrower at any time at its absolute discretion by notice to you.

9. Harmoney may suspend your registration as a Borrower at any time by notice to you if Harmoney reasonably believes that you are not complying with the terms of this agreement or are otherwise not using the Service for its intended purpose.

10. You may terminate your registration as a Borrower at any time by notifying Harmoney through the Website or via 0800 HARMONEY or customer.services@harmoney.co.nz.

11. If your registration is terminated or suspended, this agreement will continue to apply in respect of any Loans and Loan Contracts to which you are a party when the termination or suspension takes effect.

12. Subject to clause 11, this agreement will apply to you for so long as you are registered as a Borrower.

Loan Process

13. If you want to take out a Loan using the Service, you must complete a Loan Application in which you nominate:

• (a) the proposed Loan Amount;
• (b) (if the Loan Application provides for this option) the lesser amount you agree to accept if the proposed Loan Amount is not reached by the end of the Listing Period;
• (c) the Repayment Period; and
• (d) whether the Loan will be a Secured Loan (and if so, the proposed Secured Assets).

The proposed Loan Amount and any lesser amount which you will accept must each be expressed as a multiple of $25. The amount you apply for will include an amount equivalent to the Origination Fee that you must pay Harmoney if you obtain the Loan.

14. As part of the Loan Application, you must provide Harmoney with details of your bank account with a registered bank in New Zealand, from which payments are to be made by you in respect of your Loan. By providing those details you agree to Harmoney establishing a direct debit authority against that bank account on the terms set out in the authority accompanying this agreement in relation to any amount payable by you to Harmoney or to the Trustee under this agreement or any Loan Contract.

15. If Harmoney approves your Loan Application for listing on the Website, it will assign a Credit Grade to your Loan Application which will state the maximum Loan Amount, the Repayment Period, and the Interest Rate applicable to that application. You may then select the Loan Amount and Repayment Period from the information provided by Harmoney. Following this selection, your Loan Application (together with those details, including the Loan Repayments) will comprise your Loan Listing for that Loan.

16. Your Loan Listing will be listed by Harmoney on its Website, for consideration by Investors, during the Listing Period. You may withdraw your Loan Listing at any time before the Loan Contract has been concluded (as set out in clause 18), by cancelling your Loan Listing on the Website.

17. If your Loan is Fully Funded before the Listing Period expires, Harmoney will:

• (a) notify you of that fact; and
• (b) on the Trustee's behalf, provide you with a Loan Disclosure setting out the key terms of the proposed Loan (as required by thCCCFA). For the purposes of section 35 of the CCCFA, you:
  • (i) nominate the email address specified in the Loan Application (or such other email address as you may notify to Harmoney) as the information system to which the Loan Disclosure may be sent; and
  • (ii) agree that the Loan Disclosure may be provided to you by sending you an electronic communication that allows the Loan Disclosure to be accessed from a website or by means of the Internet.

You should contact Harmoney if you are not clear as to any of the information set out in the Loan Disclosure.

Loan Contract

18. Immediately after Harmoney has provided the Loan Disclosure to you, a Loan Contract will come into existence under which the Trustee (who will be the lender of the Loan) will agree to advance the Loan Amount to you. The Loan Contract will be on the terms set out in Schedule 1 to this agreement. For the purposes of this agreement, the Loan Disclosure will be treated as provided to you on the day on which it is emailed to you or otherwise sent to you by electronic communication (within the meaning of section 35 of the CCCFA).

Settlement

19. Your Loan will be Settled before or on the next Business Day after Harmoney has provided you with the Loan Disclosure for it.

20. At Settlement, Harmoney will:

• (a) collect the funds that make up the Loan Amount from the Participating Investors, and deposit the Loan Amount in the Advance Account; and
• (b) acting at the direction of the Trustee, as authorised by you:
  
  • (i) deduct the Origination Fee from the Loan Amount, and transfer it to Harmoney's own account (in satisfaction of your obligation to pay that Origination Fee to Harmoney); and
  • (ii) transfer the balance of the Loan Amount to your Nominated Account.

Fees payable by You

21. You must pay Harmoney an Origination Fee for each Loan made to you using the Service. The Origination Fee will be calculated at Harmoney's prevailing rate (as notified on the Website when the relevant Loan Settles) and deducted on Settlement.

22. You must pay Harmoney such other fees as Harmoney may from time to time charge in providing the Service (being the Borrower Fees), at the prevailing rate, as specified on the Website from time to time. You must make the payment to the Collections Account or as otherwise notified by Harmoney. Harmoney may change the types of Borrower Fees it charges and the amounts of the various types of Borrower Fees (or the rates at which they are calculated) at any time, and such changes will come into effect from a date specified on the Website. However, any new type of Borrower Fee or change in the amount or rate of a Borrower Fee will not apply in respect of a Loan Contract made before that change came into effect.

Secured Loans

23. You may offer an approved asset as security for a Loan. The types of assets that are approved by Harmoney for use as security will be listed on the Website. This asset must be owned by you, be in your name only, and have no other security interests over it. Harmoney reserves the right to determine whether the asset offered is adequate or suitable to be offered as security for the proposed Loan.

Repayments

24. You must pay the Loan Repayments and all other amounts required to be paid by you under a Loan Contract to the Collections Account on the due date.

Collection Services

25. The Trustee has appointed Harmoney to provide (itself or through a third party) collection and enforcement services (collectively, Collection Services) in respect of your Loans. The Collection Services include:

• (a) monitoring all payment obligations under each Loan Contract;
• (b) taking appropriate steps to contact you for payment arrears;
• (c) taking appropriate recovery action where there is a payment default; and
• (d) enforcing the security (if any) for the Loan.

26. Harmoney will be entitled to process additional direct debit payments to cover any collection fees payable by you.

Warranties

27. You warrant to Harmoney that:

• (a) all information you provide to Harmoney is true, accurate, and complete, and there is no information which has not been provided which would impact on Harmoney’s decision to register you as a Borrower or to make a Loan Listing available; and
• (b) you will provide Harmoney with updated information in respect of any Loan Listing if any of your circumstances have changed from the time you submitted your Borrower Application.

Liability

28. You acknowledge and agree, in respect of Harmoney, each Related Company of Harmoney, and the Trustee, and their respective employees, directors, officers, agents, and contractors (together, relevant persons) and to the fullest extent permitted by law, that:

• (a) none of the relevant persons will be liable in respect of:
  
  • (i) any failure to provide the Service or otherwise to comply with this agreement, if the failure or non-compliance is caused by events beyond its reasonable control; or
  • (ii) to achieve any funding in respect of any Loan Listing;
• (b) the liability of any relevant person (if any) in relation to any Loan will be limited to the amount of the Origination Fee actually received by Harmoney for that Loan.

Nothing in this clause 28 or this agreement (except for clause 29) limits any rights you may have under the Consumer Guarantees Act 1993.
This clause 28 is for the benefit of, and is enforceable by, each relevant person, in terms of the Contracts (Privity) Act 1986

29. If you are in trade, and you acquire the Service in trade, all parties agree that:

• (a) the provisions of the Consumer Guarantees Act 1993; and
• (b) sections 9, 12A, and 13 of the Fair Trading Act 1986, will not apply to this agreement.

30. You acknowledge that you do not rely on Harmoney’s skill or judgment as to the suitability or otherwise of the Service for your specific needs, in terms of providing a service through which you can seek to have loans funded.

31. You acknowledge that the Website may not be available at all times and that neither Harmoney nor the Trustee will be liable to you for any loss of profit or opportunity (however described) arising from any inability to access the Website at any time.

Replacement of Trustee and Harmoney

32. Harmoney can in its discretion replace the Trustee with another entity it appoints to hold Loans as trustee for Participating Investors (and otherwise to act as trustee for Investors). Any such change will not affect your rights and obligations under this agreement. The replacement Trustee will have the same rights and obligations under this agreement as the Trustee it replaces, without further action being necessary.

33. If a Harmoney Servicer Default occurs, a back-up servicer will be appointed to carry out the role of Harmoney under this agreement. Any such appointment will not affect your rights and obligations under this agreement. The appointed back-up servicer from time to time will have the same rights as Harmoney did, without further action being necessary.

Communications and Disputes

34. Harmoney may provide you with communications in relation to the provision of the Service, including notices and disclosures, by mail or in an electronic form, including by email.

35. You must provide notices to Harmoney by mail (posted to its registered address) or by email to the email address below.

36. If you have any questions about the Service or the terms of this agreement, please contact Harmoney as follows:

• Phone: 0800 HARMONEY
• Email: customer.services@harmoney.co.nz

37. Each of Harmoney and the Trustee is a member of the Financial Services Complaints Limited dispute resolution scheme. You may refer any dispute relating to the provision of the Service to that dispute resolution service, details of which are available at http://www.fscl.org.nz/.

38. The entries made in the accounts maintained by Harmoney (as principal or as the Trustee's agent, as the case may be) are, in the absence of manifest error, conclusive evidence of the matters to which they relate.

Amendments to Agreement

39. Harmoney may modify this agreement, and the way in which it provides the Service, at any time by notice on the Website. You should check the notices section of the Website regularly. Any such modifications will apply from the date stated on the Website (Amendment Date).

40. If Schedule 1 is modified under clause 39, and:

• (a) a Loan Listing for a Loan to you is placed on the Website before the Amendment Date; but
• (b) the Loan Contract resulting from that Loan Listing is made on or after the Amendment Date, that Loan Contract will be made on the terms of Schedule 1 as in force on the day when your Loan Listing was placed on the Website (ie not on the modified terms).

Assignment

41. You may not transfer or assign any of your rights or obligations under this agreement without Harmoney's prior written consent (which consent may be withheld at Harmoney’s absolute discretion).

Tax Matters

42. You will not be required to withhold or account to Inland Revenue for any RWT in relation to interest payments you make under the Loan. This is because the Trustee holds an RWT Exemption Certificate.

43. In certain circumstances where a Participating Investor is not resident in New Zealand for income tax purposes, you may be required to:

• (a) withhold and account to Inland Revenue for NRWT; or
• (b) pay AIL to Inland Revenue, in relation to interest payments you make under the Loan.
• However, Harmoney (acting for the Trustee) will meet all NRWT or AIL obligations on your behalf from the Loan Repayments you make, immediately upon payment of the relevant interest into the Collections Account. For this purpose, you:
  
  • (i) authorise the Trustee to act on your behalf and to do all things necessary (including, where required, completing Inland Revenue registration forms and providing all necessary information about you to Inland Revenue) to meet any NRWT or AIL obligations on your interest payments;
  • (ii) authorise the Trustee to delegate its authority under clause 43(i) to Harmoney as its agent; and
  • (iii) agree to provide the Trustee (through Harmoney) with all necessary information (including your IRD number and any other relevant personal or tax-related information) for it to act effectively for the purposes described above.
  You are not required to make any additional payment as a top-up for the NRWT or AIL deduction.

Governing law

44. This agreement is governed by New Zealand law. The parties submit to the non-exclusive jurisdiction of the New Zealand courts in respect of all matters arising under or in connection with this agreement.

Defined Terms

45. In this agreement:

Advance Account means the bank account operated by Harmoney on behalf of the Trustee into which funds are transferred by Harmoney from the Investor Account when an Order is accepted, and from which Harmoney (as agent for the Trustee) transfers funds to the relevant Borrower’s Nominated Account at Settlement;

AIL means approved issuer levy payable under part 6B of the Stamp and Cheque Duties Act 1971;

Borrower means a natural person who has registered as a Borrower with Harmoney;

Borrower Application means the application to become a Borrower, set out on the Website;

Borrower Fees means the fees (in addition to the Origination Fee) which are charged by Harmoney to Borrowers in relation to the Service, as set out on the Website;

Business Day means a day other than a Saturday, Sunday or statutory public holiday in New Zealand;

CCCFA means the Credit Contracts and Consumer Finance Act 2003;

Collections Account means the bank account held by Harmoney into which:

• (a) Loan Repayments and other amounts payable by Borrowers to the Trustee for the benefit of Investors are paid; and
• (b) (to the extent that Harmoney has not notified Borrowers otherwise) amounts payable by Borrowers to Harmoney are paid
  and from which any tax deductions or withholdings on interest comprised in Loan Repayments (including any NRWT and AIL) are deducted and paid over to Inland Revenue, the Investor Fees and (to the extent paid into that account) Borrower Fees are paid to Harmoney, and the balance is repaid to the Investor Account for the benefit of the relevant Investors;

Collection Services means the services described in clause 25;

Credit Checks means the credit checks carried out by Harmoney on a Borrower, either itself or through a Related Company or a third party credit reporting agency;

Credit Grade means Harmoney’s proprietary credit grade attributed to a Borrower, which Harmoney generates based on information provided by a Borrower and otherwise obtains in respect of that Borrower (including through Credit Checks), details of which are set out on the Website;

Disclosure Statement means Harmoney’s disclosure statement which is set out on the Website, as updated by Harmoney from time to time;

FMCA means the Financial Markets Conduct Act 2013;

Fully Funded in relation to a Loan Listing or a Loan means that Harmoney has received sufficient Orders from Investors to fund the full amount of:

• (a) the proposed Loan Amount; or
• (b) any lesser amount you agreed to accept, as specified in the relevant Loan Listing;

Harmoney Servicer Default means the liquidation of Harmoney or Harmoney ceasing to hold a licence for the Service under the FMCA for a period of 5 Business Days;

Interest Rate means the annual interest rate (expressed as a percentage rate per annum) which is set by Harmoney in respect of a Loan Listing

Investor means, as the context requires;

• (a) a person who has registered as an Investor with Harmoney
• (b) in relation to a Loan, a Participating Investor

Investor Account means a trust account held by Harmoney for the benefit of an Investor;

Investor Agreement means the agreement entered into by an Investor with Harmoney and the Trustee in relation to the provision of the Service by Harmoney to that Investor;

Investor Fees means the fees which are charged by Harmoney to Investors in relation to the Service, as set out on the Website;

Listing Period means the period from the date a Loan Listing is first listed on the Website to the earlier of 14 days from that date and the date on which the Loan which is the subject of that Loan Listing is fully funded;

Loan means the Loan Amount lent by the Trustee to a Borrower, using the Service, and where applicable includes the amount of all compounded and capitalised interest;

Loan Amount means, as the context requires:

1. (a) the amount that a Borrower wishes to borrow, inclusive of the amount of the Origination Fee payable on the loan, as set out in the relevant Loan Listing; or
   (b) the total amount of the Loan at Settlement, as set out in the Loan Disclosure; which must in each case be a multiple of $25;

Loan Application means the application for a Loan, which is set out on the Website;

Loan Contract in relation to a Loan means the contract under which that Loan is made, as described in clause 19;

Loan Disclosure means, in respect of any Loan which is settled, the initial disclosure required under the CCCFA which is provided to the Borrower in respect of that Loan;

Loan Listing means a listing on the Website which is placed by a Borrower and accepted by Harmoney which sets out the details of a Loan which the Borrower wishes to have funded;

Loan Repayments means, as the context requires:

1. (a) the monthly payments of principal and interest which will be payable by the Borrower in respect of the Loan Amount specified in a Loan Listing; or
   (b) the monthly payments of principal and interest which are payable by the Borrower on a Loan which has Settled;

Nominated Account means the New Zealand bank account which is nominated by a Borrower from time to time as the account into which Loan advances are to be paid by Harmoney for that Borrower at Settlement;

NRWT means non-resident withholding tax imposed under the NRWT rules in the Income Tax Act 2007;

Order means the amount of an Order, which must be in a multiple of $25;

Origination Fee means the fee payable by the Borrower in respect of any Loan which is Settled, as set out on the Website;

Participating Investor in relation to a Loan means an Investor who participated in providing funds to the Trustee to make that Loan; and in relation to an entire Loan funded by a Wholesale Investor (within the meaning of the Investor Agreement) includes that Wholesale Investor and each transferee of any share in that Wholesale Investor's beneficial interest in that Loan; and "Participate" has a corresponding meaning;

PPSR means the Personal Property Securities Act 1999;

Related Company has the meaning given to that term in section 2(3) of the Companies Act 1993;

Repayment Period means the repayment period (in months) in respect of a Loan, which may be 36 months or 60 months;

RWT means resident withholding tax imposed under the RWT rules in the Income Tax Act 2007;

RWT Exemption Certificate has the meaning given in section YA 1 of the Income Tax Act 2007;

Secured Loan means a Loan in respect of which the Borrower has provided Security in respect of its repayment obligations;

Service means the peer-to-peer lending service which is provided by Harmoney through the Website;

Settlement in relation to a Loan means:

• (a) Harmoney arranging for the collection of funds from all Investors who have had their Order on the relevant Loan Listing accepted, and (as directed by the Trustee) deducting the applicable Origination Fee for Harmoney's own account and transferring the balance of the Loan Amount to the Borrower's Nominated Account (all via the Advance Account); and
• (b) the time at which the above transfer occurs, and Settle and Settled have corresponding meanings;

Trustee means the entity which makes and holds Loans as bare trustee for Investors; and

Website means the website at www.harmoney.co.nz, or such other website operated by Harmoney from time to time to provide the Service.

Interpretation

46. In this agreement:

• (a) headings are inserted for ease of reference only, and do not affect the interpretation of this agreement;
• (b) references to you or your means the Borrower(s) and includes, unless the context states otherwise, the Primary Borrower and co-Borrower;
• (c) references to the singular include the plural and vice versa;
• (d) references to a person include an individual, company, corporation, partnership, firm, joint venture, association, trust, unincorporated body of persons, governmental or other regulatory body, authority or entity, in each case whether or not having a separate legal identity;
• (e) reference to any party includes its permitted assignee or transferee; and any reference to the Trustee or to Harmoney includes any entity appointed to replace it under clause 32 or 33 (as applicable);
• (f) reference to the "liability" of a person include references to its liability under any cause of action, whether in contract, tort, or equity or under any enactment;
• (g) references to any document (however described) are references to that document as modified, novated, supplemented, varied or replaced from time to time and in any form, whether on paper or in an electronic form; and
• (h) a reference to any legislation is a reference to that legislation as amended or replaced from time to time, and includes any regulations or legislative instrument made under it.

SCHEDULE 1

FORM OF LOAN CONTRACT

1. Parties: The parties to this Loan Contract are:

• (a) you, as borrower;
• (b) your spouse or partner as co-borrower, if clause 3 applies;
• (c) the Trustee, as lender; and
• (d) Harmoney, as agent for the Trustee.

The Trustee enters into this Loan Contract as bare trustee for the benefit of the Participating Investors, and not in any other capacity. The Trustee holds all rights and powers vested in it under or in connection with this Loan Contract as trustee for the Participating Investors in accordance with their respective interests, on and subject to the terms of the Trustee's appointment (as set out in the relevant Investor Agreements).

2. Effective date: This Loan Contract comes into existence and enters into force immediately after the Loan Disclosure has been provided to you (or to your spouse or partner, if clause 3(b)(v) applies). For the purposes of this clause 2, the Loan Disclosure will be treated as provided to you on the day on which it is emailed to you or otherwise sent to you by electronic communication (within the meaning of section 35 of the CCCFA).

3. Co-Borrowers

(a) This clause applies if:

• (i) your spouse or partner has registered as a Borrower (Primary Borrower) and has asked you to register as a co-Borrower; or
• (ii) you have registered as a Borrower (Primary Borrower) and have asked your spouse or partner to register as a co-Borrower.

(b) If this clause applies:

• (i) you and your spouse or partner are party to the same Loan Contract, being this Loan Contract (regardless of the fact that you entered into this Loan Contract by separate processes);
• (ii) you and your spouse or partner are jointly and severally liable under this Loan Contract;
• (iii) you consent to Harmoney providing your personal information to the other of you;
• (iv) Harmoney can accept instructions from either of you (without reference to the other) in respect of your rights and obligations under this Loan Contract;
• (v) if providing a disclosure statement to either of you is sufficient under section 35(2) of the CCCFA, the Loan Disclosure will be deemed to have been provided to both of you for all purposes if it has been provided to either of you; and
• (vi) at Settlement, the Loan Amount will be paid to the Primary Borrower's Nominated Account.

4. Loan: The Trustee agrees to advance the Loan Amount specified in the Loan Disclosure to you for the term so specified, on and subject to the terms of this Loan Contract.

5. Settlement: Settlement of the Loan will occur before or on the first Business Day after the day on which the Loan Disclosure was provided to you.

6. Interest: Interest will accrue on the outstanding amount of the Loan at the interest rate specified in that Loan Disclosure, on the basis of a 365-day year. It is payable by you monthly in arrears (and will compound if not paid when due).

7. Repayment: You must pay all Loan Repayments specified in the Loan Disclosure, comprising all payments of principal and interest, to Harmoney (as agent for the Trustee) on the repayment dates specified in the Loan Disclosure.

8. Early repayment option: You can prepay the Loan or any portion of it early. If you choose to prepay the entire outstanding amount together with all interest and Borrower Fees accrued to the date of prepayment, Harmoney will, on request, provide you with written confirmation of the prepayment amount for this purpose.

9. Payment provisions: You must make every payment due by you under this Loan Contract:

• (a) as and when due;
• (b) in cleared funds and in full, without any set-off, deduction, or withholding, except as may be required by law (but, in accordance with clauses 42 to 43 of the Borrower Agreement, you will not make any tax withholdings or deductions from interest that is included in your Loan Repayments); and
• (c) by direct credit to the Collections Account (as notified to you by Harmoney).

10. Security

• (a) This clause applies if your Loan Listing offered to provide any assets as security for the Loan, and Harmoney approved that asset as security.
• (b) If this clause applies, you grant the Trustee a security interest in those assets (being the Secured Assets) as security for the due payment and performance of all your debts and obligations under this Loan Contract.
• (c) Harmoney has registered or will register a financing statement over the Secured Assets, in the name of the Trustee as secured party.
• (d) You must:
• (i) maintain the Secured Assets in a suitable condition (fair wear and tear excepted);
• (ii) ensure that the Secured Assets are appropriately insured at all times;
• (iii) not sell or otherwise dispose of, or lose possession or control of, any Secured Asset without Harmoney's prior written consent (which consent Harmoney may withhold unless you provide a replacement asset which Harmoney in its discretion considers to be adequate or suitable security).

• (e) Sections 114(1)(a), 133, and 134 of the PPSA will not apply to this Security.
• (f) You will have none of the rights under sections 116, 120(2), 121, 125, and 129 and 131 of the PPSA.
• (g) If the Trustee has rights in addition to, or existing separately from, those in Part 9 of the PPSA, those rights will continue to apply and, in particular, will not be limited by section 109 of the PPSA.

11. Collection and enforcement

• (a) Harmoney is authorised to carry out the Collection Services. Accordingly, Harmoney will:
• (i) monitor all payment obligations under this Loan Contract;
• (ii) take appropriate steps to contact you for payment arrears;
• (iii) take appropriate recovery action if there is a payment default; and
• (iv) enforce the Security (if applicable).
• (b) You must promptly and fully comply with all requests and directions Harmoney gives you when it exercises these powers.

12. Default
(a) If you do not pay any money due under this Loan Contract on the due date, you must:

• (i) (subject to any grace period specified on the Website) pay a late payment fee at the prevailing rate specified on the Website. The late payment fee must be paid at the same time as the next payment due under the Loan; and
• (ii) continue to pay interest on the overdue amount at the interest rate applying to the Loan. The interest will accrue from the due date until the overdue amount has been paid in full, and is payable on demand (or compounded monthly in arrears if not paid).

(b) Further, if you:

• (i) do not pay any money due under this Loan Contract on the due date;
• (ii) commit an act of bankruptcy (within the meaning of the Insolvency Act 2006); or
• (iii) provided Harmoney with incorrect or fraudulent information in registering as a Borrower or applying for the Loan,
• Harmoney (as agent for the Trustee) may by notice to you declare all money outstanding under the Loan Contract (including all interests and fees) immediately due and payable. In that case, you must immediately pay that outstanding money.

(c) If any direct debit instruction or other payment instruction you give in order to pay an amount due under the Loan is dishonoured, you will be charged a dishonour fee at the prevailing rate specified on the Website. The dishonour fee must be paid at the same time as the next payment due under the Loan.
(d) You must on demand pay Harmoney for all costs and expenses (including all legal expenses) it incurs in enforcing or attempting to enforce this Loan Contract or the Security. 13. Trustee's liability

• (a) The Trustee enters into this Loan Contract as trustee for the Participating Investors, and not in its personal capacity. The Trustee's liability to you under and in connection with this Loan Contract is limited to the assets from time to time under its control as trustee for the Participating Investors (subject to clause 13(b)). However, the Trustee will not have the benefit of this limitation if the loss for which the Trustee is liable is the direct result of the Trustee's wilful default or dishonesty.
• (b) Clause 28 of the Borrower Agreement (construed as if references in that clause to "this agreement" were references to "this Loan Contract") applies to this Loan Contract in relation to the Trustee and its employees, directors, officers, agents, and contractors.

14. Harmoney's liability: Harmoney enters into this Loan Contract as agent for the Trustee, and not in Harmoney's personal capacity. Accordingly, Harmoney has no personal liability to you under this Loan Contract.

15. Changes to Terms: This Loan Contract can only be modified by written agreement between all the parties.

16. Notices

• (a) You must provide all notices to the Trustee and Harmoney (as agent for the Trustee) in writing addressed to Harmoney (including by email sent to customer.services@harmoney.co.nz).
• (b) The Trustee and Harmoney may provide you with communications in relation to this Loan Contract and the Loan, including notices and disclosures, by electronic means (including by email). Subject to clause 2, every electronic communication to you (including any email) will be deemed received by you when transmitted by the Trustee or Harmoney (as the case may be).
• (c) In respect of any disclosure statements to be provided to you under the CCCFA:

(i) You nominate the email address specified in the Loan Application (or such other email address as you may notify to Harmoney)
as the information system to which any CCCFA disclosure statements or other communications may be sent.
(ii) Any such disclosure statement may be provided to you by sending you an electronic communication that allows the disclosure statement to be accessed from a website or by means of the Internet.
17. Investors

• (a) Your legal relationship under the Loan Contract is held by the Trustee for the benefit of the Participating Investors.
• (b) The Trustee is the trustee solely for the Participating Investors.
• (c) You are not entitled to any information about the Participating Investors.
• (d) You will not be advised if there is any change in the Participating Investors (for example, because a Participating Investor sells it beneficial interest in the Loan as permitted). Any such change will not affect any of your rights and obligations under this Loan Contract.

18. Replacement of Trustee or Harmoney

• (a) Harmoney can in its discretion replace the Trustee. Any such change will not affect your rights and obligations under this Loan Contract. The replacement Trustee will have the same rights and obligations as the Trustee it replaces, without further action being necessary.
• (b) If a Harmoney Servicer Default occurs, a back-up servicer will be appointed to carry out the role of Harmoney under this Loan Contract. Any such appointment will not affect your rights and obligations under this agreement. The appointed back-up servicer from time to time will have the same authority as Harmoney did, without further action being necessary.

19. Assignment: You may not transfer or assign any of your rights or obligations under this Loan Contract to any person without Harmoney's prior written consent (which consent may be withheld at Harmoney’s absolute discretion).

20. Governing Law: This Loan Contract is governed by New Zealand law. The parties submit to the non-exclusive jurisdiction of the New Zealand courts in respect of all matters relating to this Loan Contract and the Loan.

21. Disputes

• (a) The Trustee is a member of the Financial Services Complaints Limited dispute resolution scheme. You may refer any dispute relating to this Loan Contract to that dispute resolution service, details of which are available at http://www.fscl.org.nz/.
• (b) The entries made in the accounts maintained by Harmoney (as the Trustee's agent) are, in the absence of manifest error, conclusive evidence of the matters to which they relate.

22. Interpretation

• (a) In this Loan Contract, any term with capitalised initials has the same meaning as in the Borrower Agreement which the parties entered into, except that:
• Loan means the Loan (as defined in the Borrower Agreement) made or to be made under this Loan Contract;
• Loan Application, Loan Disclosure, and Loan Listing respectively means the Loan Application, Loan Disclosure, and Loan Listing (each as defined in the Borrower Agreement) relating to the Loan;
• PPSA means the Personal Property Securities Act 1999;
• Security means the security interest granted by the Borrower to the Trustee, as described in clause 10;
• Secured Asset means an asset the subject of a Security; and
• Settlement means Settlement (as defined in the Borrower Agreement) under this Loan Contract.
• (b) In this Loan Contract, all references must be interpreted as provided in clause 46 of the Borrower Agreement (construed as if references in that clause 46 to "this agreement" were references to "this Loan Contract").
• (c) Headings are inserted for ease of reference only, and do not affect the interpretation of this Loan Contract.

ATTACHMENT – DIRECT DEBIT TERMS

In these terms, references to "Initiator" are references to Harmoney (or its successors or assigns) and references to the "Customer" are references to the Borrower.

CONDITIONS OF INSTRUCTION TO ACCEPT DIRECT DEBITS

1. The Initiator:

1.1. Will provide notice either:

1.1.1. in writing; or

1.1.2. by electronic mail where the Customer has provided prior written consent to the Initiator.

1.2. Has agreed to give advance Notice of the net amount of each Direct Debit and the due date of the debiting at least 10 calendar days (but not more than 2 calendar months) before the date when the Direct Debit will be initiated.

1.2.1. The advance notice will include the following message:

"Unless advice to the contrary is received from you by (date*), the amount of $........... will be directly debited to your Bank account on (initiating date*)."

*This date will be at least two (2) days prior to the initiating date to allow for amendment of Direct Debits.

1.3. Alternatively, the Initiator undertakes to give notice to the Acceptor of the commencement date, frequency and amount at least 10 calendar days before the first Direct Debit is drawn (but no more than 2 calendar months).

1.3.1. Where the Direct Debit System is used for the collection of payments which are regular as to frequency, but variable as to amounts, the Initiator undertakes to provide the Acceptor with a schedule detailing each payment amount and each payment date.

1.3.2. In the event of any subsequent change to the frequency or amount of the Direct Debits, the Initiator has agreed to give advance notice of at least 30 days before the changes comes into effect. This notice must be provided either:

(a) in writing; or

(b) by electronic mail where the Customer has provided prior written consent to the Initiator.

1.4. May initiate a Direct Debit on my/our account when authorisation is received from me/us in accordance with the terms and conditions agreed between me/us and the Initiator of each amount to be debited from my/our account.

1.4.1. notice will be sent of the net amount of each Direct Debit and the due date of debiting after receiving authorisation from me/us under clause 1.4 but no later than the date the Direct Debit will be initiated. This notice must be provided either:

(a) in writing; or

(b) by any other means which provides a verifiable record of the initiated transaction and where the Customer has provided prior written consent to the Initiator.

1.4.2. Where the notice is in writing it must include the following message:

"The amount $....... was directly debited to your Bank account on (initiating date)."

1.4.3. Where the notice is provided by other means:

(a) the Initiator should hold prior written consent of those means of providing notice; and

(b) the notice should provide a verifiable record of the initiated transaction and include the amount and initiating date of that transaction.

1.5. May, upon the relationship which gave rise to this Instruction being terminated, give notice to the Bank that no further Direct Debits are to be initiated under the Instruction. Upon receipt of such notice the Bank may terminate this Instruction as to future payments by notice in writing to me/us.

2. The Customer may:

2.1. At any time, terminate this Instruction as to future payments by giving written (or by the means previously agreed in writing) notice of termination to the Bank and to the Initiator.

2.2. Stop payment of any Direct Debit to be initiated under this Instruction by the Initiator by giving written notice to the Bank prior to the Direct Debit being paid by the Bank.

2.3. Where no advance notice is provided under clause 1.4 a variation to the amount agreed between the Initiator and the Customer from time to time to be Direct Debited had been made without notice being given in terms of clause 1.4 above, request the Bank to reverse or alter any such Direct Debit initiated by the Initiator by debiting the amount of the reversal or alteration of Direct Debit back to the Initiator through the Initiator’s Bank PROVIDED such request is made not more than 120 days from the date when the Direct Debit was debited to my/our account.

2.4. Request the Bank to reverse any Direct Debits initiated by the Initiator under the Instructions by debiting the amount of the Direct Debits back to the Initiator through the Initiator’s Bank where the Initiator cannot produce a copy of the Instructions and/or Confirmation to me/us that I/we are reasonably satisfied demonstrate that I/we have authorised my/our bank to accept Direct Debits from the Initiator against my/our account PROVIDED the request is made not more than 9 months from the date when the first Direct Debit was debited to my/our account by the Initiator under the Instructions.

3. The Customer acknowledges that:

3.1. This Instruction will remain in full force and effect in respect of all Direct Debits passed to my/our account in good faith notwithstanding my/our death, bankruptcy or other revocation of this Instruction until actual notice of such event is received by the Bank.

3.2. In any event this Instruction is subject to any arrangement now or hereafter existing between me/us and the Bank in relation to my/our account.

3.3. Any dispute as to the correctness or validity of an amount debited to my/our account shall not be the concern of the Bank except in so far as the Direct Debit has not been paid in accordance with this Instruction. Any other disputes lie between me/us and the Initiator.

3.4. Where the Bank has used reasonable care and skill in acting in accordance with this Instruction, the Bank accepts no responsibility or liability in respect of:

3.4.1. the accuracy of information about Direct Debits on Bank statements; and

3.4.2. any variations between notices given by the Initiator and the amounts of Direct Debits.

3.5. The Bank is not responsible for, or under any liability in respect of the Initiator’s failure to give notice in accordance with clauses 1.1 to 1.4, nor for the non-receipt or late receipt of notice by me/us for any reason whatsoever. In any such situation the dispute lies between me/us and the Initiator.

3.6. Where notice given by the Initiator in terms of clause 1.4 to the debtor responsible for the payment shall be effective. Any communication necessary because the debtor responsible for payment is a person other than me/us is a matter between me/us and the debtor concerned.

4. The Bank may:

4.1. In its absolute discretion conclusively determine the order of priority of payment by it of any monies pursuant to this or any other Instruction, cheque or draft properly signed by me/us and given to or drawn on the Bank.

4.2. At any time terminate this Instruction as to future payments by notice in writing to me/us.

4.3. Charge its current fees for this service in force from time to time.