EXHIBIT
4.18


 


Deed of settlement and release
and Deed of indemnity (April 2004) – Mr Richard E McKinnon


 





















 


Dated: 2 April 2004


 


 


Terms of
Settlement


And


Release
Agreement


 


 


Richard
Ernest McKinnon


(“Mr
McKinnon”)


 


 


and


 


 


National
Australia Bank Limited


ABN
12004044937


(“National”)


 





















 


TERMS of
SETTLEMENT and RELEASE AGREEMENT


 


Date:                                                                                    2
April 2004


 


Parties:                                                                     NATIONAL
AUSTRALIA BANK LIMITED (ABN 12004044937) of 24th Floor, 500 Bourke
Street Melbourne 3000 (“the National”); and


 


Richard
Ernest McKinnon of 11 Merna Drive Templestowe (“Mr
McKinnon”)


 


Recitals:


 


A.                          Mr
McKinnon was employed by the National from 3 February 1986. Mr McKinnon
was appointed to the position of Chief Financial Officer (CFO) of the National
on 1 June 2000.


 


B.                            In
late May 2004, Mr McKinnon will vacate the role of CFO prior to leaving the
National on 31 August 2004 (“the termination date”).


 


C.                            Mr
McKinnon will remain with the National through until the termination date and,
during that time, will perform his duties to a reasonable standard, work with
his replacement as CFO in order to ensure a smooth transition, and will
continue to receive the total employment compensation package he is eligible to
receive at the date of this Agreement.


 


D.                           The
termination date may be varied by mutual agreement between the parties.


 


E.                             The
contract of employment between the National and Mr McKinnon will end on the
termination date.


 


F.                             The
National and Mr McKinnon agree that he will not, without the National’s written
consent, be employed by a direct competitor in the financial services industry
(namely Commonwealth Bank of Australia, Westpac, ANZ and St George Bank) for a
period of 12 months through until 31 August 2005.


 


G.                            The
National denies any liability to Mr McKinnon.


 


H.                          In
order to avoid the time and costs of any possible proceedings, the parties have
agreed to settle all matters between them on the terms contained in this
agreement (“this Agreement”).


 


Governing Law:


 


This Agreement is governed by the law of the
State of Victoria


 





















 


Operative Provisions:


 


1                                         Obligations
to be fulfilled by the National


 


1.1        The
National will pay to Mr McKinnon a gross lump sum severance payment of
$2,311,608 as follows:


 


1.1.1        $1,871,608
within 14 days of the termination date; and


 


1.1.2        $440,000
on or before 31 December 2004.


 


1.2        In
addition, the National will:


 


1.2.1        pay
the following to Mr McKinnon within 14 days of the termination date:


 


1.2.1.1     an
amount in lieu of accrued and untaken annual leave and long service leave as at
the termination date (calculated with reference to Mr McKinnon’s total
employment compensation package);


 


1.2.1.2     $146,000
being a deferred incentive payment due to Mr McKinnon;


 


1.2.2        pay
for outplacement services at the executive level for Mr McKinnon;


 


1.2.3        pay
for or reimburse Mr McKinnon for legal expenses (up to a maximum of $10,000)
incurred by Mr McKinnon in relation to this Agreement and associated matters;


 


1.2.4        provide
a certificate of service to Mr McKinnon within 14 days of the termination date;


 


1.2.5        pay
to Mr McKinnon the amount of $374,000 (being incentive pay under the EVA
Incentive Scheme for 2003/2004) by the earlier of:


 


1.2.5.1     the
date when the National makes any payments under that scheme to its Executive
General Managers; and


 


1.2.5.2     31
January 2005.


 


1.2.6        allow
Mr McKinnon to have any existing concessional lending with the National
continue for a 12 month period following the termination date.


 


1.3        The
amounts in paragraphs 1.1, 1.2.1 and 1.2.5 shall be subject to applicable
deductions of taxation as required by law.


 





















 


1.4        Mr
McKinnon is entitled to retain all shares in the capital of the National (Shares), and all options to
subscribe for, and other rights (including, without limitation, performance
rights) to acquire, Shares or securities (Options) owned or held by Mr McKinnon, including without
limitation any Shares or Options issued or granted to Mr McKinnon, or to which
Mr McKinnon is entitled, pursuant to any National executive or employee share
or option plan (ESOPs).  Despite anything to the contrary in the terms
of any ESOP or the terms of issue of any Options of Mr McKinnon, such Options
will not lapse or be forfeited or cease to be exercisable on, or as a result
of, Mr McKinnon ceasing to be an employee or executive of the National.  The terms of any Option will continue to
apply to Mr McKinnon as if he had not ceased to be an executive or employee of
the National and/or any subsidiary of the National.  To assist with funding of Mr McKinnon’s 2003
Options (including the performance rights) the National will, if required by Mr
McKinnon, arrange lending facilities for Mr McKinnon at the lowest available
commercial interest rate.


 


1.5        The
National will, if it has not already done so by the date of execution of this
Agreement, provide to Mr McKinnon a deed of indemnity in the form of Appendix 1
and, in any event, by executing this Agreement it indemnifies Mr McKinnon
against claims described in that appendix and Annexure A to that appendix.


 


2              No
admission of liability


 


2.1        The
parties agree that this Agreement must not be interpreted as an admission by
the National of liability to Mr McKinnon for any matter, other than as
expressly provided in this Agreement.


 


3              Obligations
to be fulfilled by Mr McKinnon


 


3.1        Mr
McKinnon undertakes not to lodge any applications or make any claim against the
National or any of its officers, directors or employees pursuant to any law of
the Commonwealth or a State relating to unfair termination or other related
claims as referred to in clause 3 of this Agreement.


 


4              Release


 


4.1        Subject
to paragraph 4.2, Mr McKinnon hereby RELEASES AND FOREVER
DISCHARGES the National, which expressions shall include all past
and present officers, employees and directors from all actions, suits,
proceedings, causes of action, claims and demands whatsoever and howsoever
arising which Mr McKinnon now has or may have had save for any rights arising
from personal injury or, but for this Agreement, he could or might have against
the National arising out of the employment of Mr McKinnon by the National or the
termination of that employment. Not withstanding the generality of the
foregoing, upon execution of this Agreement Mr McKinnon shall take all steps
necessary to withdraw and forever stay any proceedings commenced or pending
against the National in any Court, Commission or Tribunal.


 





















 


4.2        Paragraph
4.1 does not apply to the salary and other remuneration which Mr McKinnon is
entitled to receive from the National until the termination date.


 


4.3        The National hereby RELEASES AND
FOREVER DISCHARGES Mr McKinnon from all actions, suits, proceedings,
causes of action, claims and demands whatsoever which the National has or which
but for this Agreement, the National could or might have had against Mr
McKinnon arising out of the employment of Mr McKinnon by the National or the
termination of that employment save for the right to issue proceedings should
it be discovered at a later date that Mr McKinnon had deliberately defrauded
the National.


 


5              Confidentiality


 


5.1        Subject to this Agreement, a party to this Agreement must
not disclose to any person whatsoever the terms of this Agreement including,
without limiting the generality of this obligation, the amounts payable
hereunder by the National or the discussions between the parties leading to the
making of this Agreement.


 


5.2        A party may disclose information within this clause as
follows:


 


5.2.1        in
the case of Mr McKinnon to his  family;


 


5.2.2        to
the legal and financial advisers of that party;


 


5.2.3        with
the prior written consent of the other party;


 


5.2.4        as
required by law;


 


5.2.5        as
required by any regulatory body including a stock exchange;


 


5.2.6        for
the purpose of enforcing this Agreement in legal proceedings;


 


5.2.7        for
the purpose of effecting any rollover of the payments provided in clause 1.1 of
this Agreement to an approved superannuation fund.


 


5.3        Without
limiting any express or implied obligation of confidentiality upon him under
any statute (including the Corporations Law) or under his contract of
employment with the National, Mr McKinnon undertakes that he will not divulge
to any person or use any trade secrets or confidential information concerning
the business, financial arrangements or position of the National or any other
confidential information belonging to the National except with prior written
authority of the National.


 





















 


5.4        So that there can be no
misunderstanding confidential information means: any trade secrets, process,
formulae or other confidential information relating to the business affairs,
accounts, works, marketing plans, sales plans, prospects, research, management,
financing, products, inventions, designs, processes and any data bases, data
surveys, customer lists, specifications, drawings, records, reports, software
or other documents, material, meetings, minutes of meetings,
disputes, and all matters relating to any litigation, threatened litigation,
investigations, inquiries, judicial or quasi judicial proceedings or other information whether
in writing or otherwise concerning the National or any clients or suppliers to
which Mr McKinnon gained access, whether before, during or after his
employment. Where there is any doubt about whether information is confidential
it should be deemed to be confidential information.


 


5.5        Neither party shall disparage the other nor speak of the other
in the terms which are likely to be injurious to the commercial or personal
standing of the other.


 


6              Public
Comment


 


6.1        Mr McKinnon and the National must not make any
statement, or induce anyone else to make any statement (whether written or
oral) about Mr McKinnon’s employment, the cessation of that employment or any
related matter which:


 


6.1.2        in
respect of Mr McKinnon is likely to harm his reputation; or


 


6.1.3        in
respect of the National, is likely to harm the reputation of the National, its
directors, officers or employees


 


unless and to the extent that the statement
is required to be made by law or by a stock exchange.


 


6.2        The National and Mr McKinnon will agree on the
form of any public statement which may be made about any of the events described
in the Recitals to this Agreement, and will not make any public statement about
any matter described in the Recitals without the agreement of the other.


 


7              No
Representation


 


7.1        After
the termination date Mr McKinnon agrees not to represent himself as an officer
or employee of the National or as being in any way connected with or interested
in the business of the National.


 


8              Competency


 


8.1        Mr
McKinnon acknowledges that:


 


8.1.1        he
was given the opportunity to seek independent legal and other advice of their
choice before executing this Agreement;


 


8.1.2        in
light of any advice provide, he considered his position;


 





















 


8.1.3        if
advised by his legal representative, he has been advised as to the terms of
this Agreement


 


8.1.4        the
effect of this Agreement is fully understood; and


 


8.1.5        the
terms of this Agreement are fair and reasonable.


 


9              Entire
Agreement


 


9.1        Mr
McKinnon acknowledges and agrees that this Agreement:


 


9.1.1        Constitutes
the entire agreement of the parties concerning the resolution of all matters
relating to the employment and termination of Mr McKinnon’s employment


 


9.1.2        Supersedes
all prior agreements, understandings and negotiations in respect of same.


 


10           No
Representations and Warranties


 


10.1      Mr McKinnon acknowledges that in entering this Agreement he
has not relied on any representations or warranties except as expressly
provided by the written terms of this Agreement.


 


11           Transition
Arrangements and future assistance


 


11.1      To
ensure a smooth transition, Mr McKinnon agrees to co-operate fully with any
requests made by the National for the provision of information and other
assistance concerning the business, affairs or customers of the National.


 


11.2      Mr
McKinnon agrees that he will, if requested by the National or any subsidiary of
the National, provide such assistance (including by giving statements and
evidence) as the National or the subsidiary may reasonably require in respect
of any court proceedings or any investigation or enquiry by any relevant
regulator in relation to the National or the subsidiary.


 


11.3      The
National agrees to pay Mr McKinnon such remuneration as may be agreed between
the parties, and reimburse Mr McKinnon for all reasonable expenses incurred by
Mr McKinnon, in providing the assistance in paragraph 11.2.


 


12           National
Property


 


12.1      Mr
McKinnon agrees:


 


12.1.1         on
or before the termination date to deliver to the National all property
belonging to the National which is in his possession, custody or control
including without limitation all books, documents (including emails), papers,
materials and any other item; and 


 





















 


12.1.2         not
to make or retain a copy of any document which is the property of the National,
including any computer-based copies.


 


13           Severance


 


13.1      If
the whole or any part of this Agreement is void, unenforceable or illegal in a
jurisdiction it is severed for that jurisdiction. The remainder of this
Agreement has full force and effect and the validity or enforceability of that
provision in any other jurisdiction is not effected. This clause has no effect
if the severance alters the basic nature of this Agreement or is contrary to
public policy.


 


14           Variation
and Waiver


 


15.1      A
provision of this Agreement or a right created under it may not be waived or
varied except in writing, signed by each of the parties or their authorised
representatives


 


15           Inconsistent
Agreements


 


17.1      If
a provision of this Agreement is inconsistent with a provision of any other
agreement between the parties to this Agreement the provisions of this
Agreement prevail.


 


16           Counterparts


 


17.1      This
Agreement may be executed in counterparts. 
All executed counterparts constitute one document.


 


EXECUTED as
an agreement


 





















 


Execution
Page


 


	
  Signed
  for and on behalf of

  	
   

  	
  }

  
	
  National
  Australia Bank Ltd

  	
   

  	
  }

  
	
  this 2 April 2004

  	
   

  	
  }

  
	
  in the presence of:

  	
   

  	
  }

  
	
   

  	
   

  	
   

  
	
  [Original
  signed]

  	
   

  	
   

  	
  [Original
  signed]

  	
   

  
	
  Signature of Witness

  	
   

  	
  Signature of authorised representative

  
	
   

  	
   

  	
   

  
	
  DONALD I W LAWSON

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name of witness

  	
   

  	
  Office held

  
	
   

  	
   

  	
   

  
	
  24/500 BOURKE ST MELBOURNE

  	
   

  	
  Executive General Manager

  
	
  Address of witness

  	
   

  	
  Ross Pinney

  
	
   

  	
   

  	
  (By executing this Agreement the signatory
  warrants that he is duly authorised to execute this Agreement on behalf of
  National Australia Bank Limited)

  
	
  DEPUTY CHIEF GENERAL COUNSEL

  	
   

  	
   

  	
   

  
	
  Occupation of witness

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signed
  by the said

  	
   

  	
  }

  
	
  Richard
  Ernest McKinnon

  	
   

  	
  }

  
	
  this 2 April 2004

  	
   

  	
  }

  
	
  in the presence of:

  	
   

  	
  }

  
	
   

  	
   

  	
   

  
	
  DONALD I W LAWSON

  	
   

  	
   

  	
  [Original
  signed]

  	
   

  
	
  Signature of Witness

  	
   

  	
  Signature of Richard Ernest McKinnon

  
	
   

  	
   

  	
   

  
	
  [Original
  signed]

  	
   

  	
   

  	
   

  
	
  Name of witness

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  24/500 BOURKE ST MELBOURNE

  	
   

  	
   

  	
   

  
	
  Address of witness

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DEPUTY CHIEF GENERAL COUNSEL

  	
   

  	
   

  	
   

  
	
  Occupation of witness

  	
   

  	
   

  
						



 





















 


Appendix 1


 


DEED OF
INDEMNITY


 


	
  THIS Deed is made the day of

  	
   

  	
  [March] 2004

  	
   

  	
   

  



 


MADE BY                                   NATIONAL
AUSTRALIA BANK LIMITED (ABN 12 004 044 937) (“Bank”) in favour of [                         ],
HIS EXECUTORS, ADMINISTRATORS AND ESTATE (“Officer”)


 


RECITALS


 


A                                                                                       Officer
has been employed by the Bank as [          ]
and has been a director of related bodies corporate of the Bank pursuant to
such employment.


 


B                                                                                       The
Bank and Officer have agreed that the Officer’s employment with the Bank will
terminate effective from [          ]
[March] 2004.


 


C                                                                                       Article 21
of the Bank’s Constitution (a copy of which is annexed hereto as Annexure A)
provides, inter alia, that in circumstances referred to therein, a person who
has been an officer of the Bank (which includes a director of related bodies
corporate) is entitled to be indemnified out of the property of the Bank
against certain liabilities referred to in the Article.


 


OPERATIVE
PROVISIONS


 


1                                                                                          The
Bank agrees that the Officer may enforce the provisions of Article 21 of
the Bank’s Constitution as such provisions exist at the date hereof in respect
of any liability incurred by, or claim against, the Officer in relation to the
Officer’s employment or directorship of any related body corporate of the Bank
as if the provisions of Article 21 of the Bank’s Constitution were a
contract under seal between the Officer and the Bank.


 


2                                                                                          In the event that any term or effect of this
Deed shall be or become illegal, this Deed shall be read down and construed
so far as may be necessary to avoid such illegality thereto but subject thereto
shall be given full effect.


 


3                                                                                          In
the event a claim is made against the Officer he shall have access to such Bank
records as are relevant and reasonably necessary to properly defend
himself.  The Bank agrees that it will
make available such other resources as may be agreed to enable the Officer to
conduct his defence.


 





















 


Executed and delivered as a Deed Poll in Melbourne the day and year
first above written.


 


 


	
  THE COMMON SEAL of NATIONAL

  	
  )

  	
   

  
	
  AUSTRALIA BANK LIMITED
  was

  	
  )

  	
   

  
	
  hereunto affixed in accordance with its

  	
  )

  	
   

  
	
  Constitution

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature of Authorised Person

  	
   

  	
  Signature of Authorised Person

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Office Held

  	
   

  	
  Office Held

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name of Authorised Person

  	
   

  	
  Name of Authorised Person

  



 





















 


ANNEXURE A


 


Indemnity and Insurance


 


Indemnity


 


21.1                           Every person who is or has been an officer is
entitled to be indemnified out of the property of the Company to the relevant
extent against:


 


(a)                                  every
liability incurred by the person in the capacity as an officer (except a
liability for legal costs); and


 


(b)                                 all
legal costs incurred in defending or resisting (or otherwise in connection
with) proceedings, whether civil, criminal or of an administrative or
investigatory nature, in which the officer becomes involved in that capacity


 


unless:


 


(c)                                  the
Company is forbidden by statute to indemnify the person against the liability
or legal costs: or


 


(d)                                 an
indemnity by the Company of the person against the liability or legal costs
would, if given, be made void by statute.


 


Insurance


 


21.2                           The
Company may pay or agree to pay, whether directly or through an interposed
entity, a premium for a contract insuring a person who is or has been an
officer against liability incurred by the person in the capacity as an officer,
including a liability for legal costs, unless:


 


(a)                                  the
Company is forbidden by statute to pay or agree to pay the premium; or


 


(b)                                 the
contract would, if the Company paid the premium, be made void by statute.


 


Contract


 


21.3                           The
Company may enter into a contract with an officer or former officer to give:


 


(a)                                  effect
to the rights of the officer or former officer conferred by this Article 21;
and


 





















 


(b)                                 an
officer or former officer access to papers, including those documents provided
from or on behalf of the Company or a related body corporate of the Company to
the officer during their appointment and those documents which were referred to
in such documents or were made available to the officer for the purposes of
carrying out their duties as an officer.


 


No Limit


 


21.4                           This
Article 21 does not limit any right the officer otherwise has.


 


Interpretation


 


21.5                           In
this Article 21:


 


(a)                                  “officer”
means a director, secretary or executive officer of the Company or of a related
body corporate of the Company; and


 


(b)                                 “to
the relevant extent” means to the extent and for the amount that the officer is
not otherwise entitled to be indemnified and is not actually indemnified.”