EXHIBIT
4.20


 


Deed of settlement and release
– Mr Ian F Scholes


 





















 


This deed of settlement and release


 


is made on 2nd  August 2004 between the following parties:


 


1.            Ian
Scholes

C/- Nathan Kuperholz, Level 2, 280 Queen Street,
Melbourne, Victoria, 3000

(Scholes)


 


2.            National
Australia Bank Limited

ABN 12 004 044 937

of 500 Bourke Street, Melbourne, Victoria, 3000

(the  National)


 


Recitals


 


A.           Scholes
was employed as Executive General Manager, Corporate & Institutional
Banking of the National pursuant to terms and conditions of appointment and
employment contained in a letter and attachments dated 8 March 2002.


 


B.            The employment contract
provides for various entitlements and imposes obligations on the parties
depending upon the reasons for termination of employment.


 


C.            Scholes’ employment as
Executive General Manager, Corporate & Institutional Banking of the
National was terminated on 12 March 2004.


 


D.            On about 12 March 2004,
a PricewaterhouseCoopers report was released entitled “Investigation into
foreign exchange losses at the National Australia Bank” (the PwC
Report). On about 23 March 2004 a report was released by the
Australian Prudential Regulation Authority entitled “APRA Report into Irregular
Currency Options Trading at the National Australia Bank” (the APRA
Report).


 


E.            The parties have agreed to
settle the terms of Scholes’ termination, and any claims arising from any
publication by the National of or concerning the PwC Report or the APRA Report,
in accordance with this deed.


 


This deed witnesses


 


that in consideration of, among other things,
the mutual promises contained in this deed, the parties agree:


 


1             Payment


 


1.1          The National must pay to Scholes within 14 days of the date
of execution of this deed by Scholes the sum of $2,242,700.00 (Settlement
Sum), less appropriate
taxation deductions as required by law for payment of all contractual and
statutory amounts in respect of the termination of Scholes’ employment with the
National which are identified in Attachment 1.


 


The Settlement Sum is in respect of the
following components as set out in Attachment 1:


 





















 


(a)           TRP for the period 13 March 2004 to 25 March 2005;


 


(b)           Target incentive payment for the period 13 March 2004 to 25 March 2005;
and


 


(c)           Deferred incentive payment.


 


1.2          Accrued
entitlements


 


The National has already paid the net amount
of $492.96 to Scholes on 15 March 2004. This payment is in satisfaction of
TRP to 12 March 2004 and includes all of Scholes’ accrued annual leave and
annual leave loading entitlements.


 


1.3          Retention
of shares, share options and performance rights


 


The National acknowledges that Scholes will
retain the following shares, share options and performance rights on the same
terms and conditions on which they were granted:


 


(a)           71 “EVA” shares;


 


(b)           Share options granted on 25 March 2002 (250,000 @ $36.14);


 


(c)           Share options granted on 20 March 2003 (125,000 @ $30.46); and


 


(d)           Performance rights granted on 20 March 2003 (31,250).


 


1.4          Reasonable
legal expenses


 


The National will reimburse Scholes’
reasonable legal expenses (of Nathan Kuperholz, his associate firm Kliger
Partners and Mark Dreyfus QC) in the sum of $22,721.93, incurred since the
termination of his employment and which relate to legal advice solely in
relation to the termination of his employment and the negotiation and
conclusion of the settlement as reflected in this deed. Reimbursement of such
reasonable legal expenses will be made within 14 days of the date of execution
of this deed by Scholes.


 


2             Scholes’ acknowledgments, release and
undertaking to the National


 


2.1          Acknowledgments


 


Scholes acknowledges that:


 


(a)           The National pays the Settlement Sum under clause 1.1, the accrued
entitlements under clause 1.2 and allows retention of the shares, share options
and performance rights under clause 1.3 in full settlement of any claims
against the National:


 


(i)            arising from Scholes’ employment with the National, or its
termination; or


 


(ii)           in respect of any publication of or concerning the PwC Report or the
APRA Report,


 





















 


that Scholes has now or may have had in the
future if the parties had not executed this deed; and


 


(b)           this deed must not be interpreted as an admission by the National of
liability to Scholes for any matter.


 


2.2          Release


 


Scholes releases absolutely and discharges
the National from any claim, action, suit, cause of action, demand, liability,
damages and costs (whether at common law, in equity or, to the extent
permitted, under any statute):


 


(a)           arising in any way concerning or in the course of Scholes’
employment or directorships with the National or their termination (but
excluding any claim for personal injury arising under the Accident Compensation
Act 1985 (Vic) or any third party claim, action, suit, cause of action, demand,
liability, damages and costs against Scholes for which he would, in the normal
and usual course, have been indemnified by the National);


 


(b)           for reimbursement of reasonable work related expenses which remain
outstanding as at the date of this deed (including any reasonable amounts owing
on the company credit card as of 12 March 2004); or


 


(c)           in respect of any publication of or concerning the PwC Report or the
APRA Report,


 


that Scholes has now or may have had in the
future if the parties had not executed this deed.


 


2.3          Resignation
from appointments


 


Scholes agrees to take immediate steps to
terminate his directorships or appointments to any body (including, but not
limited to, any related corporation of the National) which Scholes holds as a
result of, or arising from, his employment with the National.


 


3             Release of Scholes


 


(a)           Subject to clause 3(b), the National releases and discharges Scholes
from any claim, action, suit, cause of action, demand, liability, damages and
costs (whether at common law, in equity or, to the extent permitted, under any
statute) the National has or may have against Scholes in respect of Scholes’
employment with the National.


 


(b)           The National does not release or discharge Scholes in any manner
whatsoever in respect of any claim, action, suit, cause of action, demand,
liability, damages and costs (whether at common law, in equity or, to the
extent permitted, under any statute) arising from any criminal or fraudulent
conduct committed by Scholes in the course of his employment with the National.


 





















 


4             Confidentiality


 


(a)           Neither party may disclose any information in respect of the terms
of this deed, other than:


 


(1)           for the purpose of enforcing this deed;


 


(2)           with the express authority of the other party; or


 


(3)           as required by any:


 


(A)          applicable law;


 


(B)          order of a court of competent jurisdiction;


 


(C)          rule of a recognised stock exchange; or


 


(D)          government department or agency.


 


(b)           Notwithstanding clause 4(a), the National may disclose information
in respect of the terms of this deed in the course of its compliance with
regulatory disclosure obligations and communication with shareholders.


 


5             Future co-operation


 


(a)           To ensure a smooth transition, Scholes 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.


 


(b)           Scholes 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.


 


(c)           Subject to satisfactory substantiation, the National agrees to
reimburse Scholes for all reasonable time spent and/or reasonable expenses
incurred by him in providing assistance in accordance with clause 5(b).


 


6             Plea in bar


 


(a)           The National may plead this deed in bar to any claim or proceeding
by Scholes in respect of the subject matter of the release in clause 2.


 


(b)           Scholes may plead this deed in bar to any claim or proceeding by the
National in respect of the subject matter of the release in clause 3.


 


7             Costs and expenses


 


The National must pay all reasonable costs
and expenses in respect of the negotiation, preparation, execution, delivery,
stamping and registration of this deed.


 





















 


8             Scholes’ warranties


 


Scholes warrants that:


 


(a)           Scholes has entered into this deed voluntarily and without any
duress from the National;


 


(b)           except as set out in this deed, the National has not made any
promises, representations or inducements to Scholes to enter into this deed;


 


(c)           Scholes has had full opportunity to consult Scholes’ legal advisers
concerning the nature, effect and extent of the matters addressed by this deed;
and


 


(d)           Scholes is aware that the National is relying on this warranty in
executing this deed.


 


9             Governing law and jurisdiction


 


(a)           This deed is governed by the law of Victoria.


 


(b)           Each of the parties irrevocably submits to the non-exclusive
jurisdiction of the courts of Victoria.


 


10           Severability


 


(a)           Any clause in this deed which is prohibited in any jurisdiction is,
in that jurisdiction, ineffective only to the extent of that prohibition.


 


(b)           Any clause in this deed which is void, illegal or unenforceable in
any jurisdiction does not affect the validity, legality or enforceability of
that provision in any other jurisdiction or of the remaining provisions in that
or any other jurisdiction.


 


11           Entire agreement


 


This deed, including Attachment 1 hereto,
embodies the entire agreement between the parties in respect of the subject
matter of the deed and there is no other understanding, agreement,
representation or warranty, whether expressed or implied, in any way extending,
modifying or qualifying any of the provisions of this deed.


 


12           Time of the essence


 


Time is of the essence of this deed.


 





















 


13           Counterparts


 


(a)           This deed may be executed in any number of counterparts.


 


(b)           All counterparts, taken together, constitute one deed.


 


(c)           A party may execute this deed by signing any counterpart.


 


14           Letter from John Stewart


 


Within seven days of settlement, the National
will provide to Scholes the original of the letter from John Stewart on behalf
of the National to Mr Scholes in the terms of Attachment 2.


 


Executed as a deed:


 


 


	
  By Peter McKinnon as the validly authorised

  	
   

  
	
  attorney of
  the National Australia Bank Limited

  	
   

  
	
  under power
  of attorney dated 29 February 1991

  	
   

  
	
  (as amended)
  in the presence of:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attorney

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Witness

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name of
  witness (please print)

  
	
   

  	
   

  
	
  Signed
  sealed and delivered by 

  	
  [Original
  signed]

  	
   

  
	
  Ian
  Scholes

  	
   

  
	
  in the
  presence of:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Original signed]

  	
   

  
	
   

  	
  Witness

  
	
   

  	
   

  
	
   

  	
  NATHAN
  KUPERHOLZ

  	
   

  
	
   

  	
  C/- 280
  Queen Street, Melbourne 3000

  	
   

  
	
   

  	
  A natural
  person who is a current

  	
   

  
	
   

  	
  Practitioners
  within the meaning of

  	
   

  
	
   

  	
  The Legal
  Practice Act 1996

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name (please
  print)

  



 





















 


Attachment 1 – Components of
Settlement Sum


 


	
  Description

  	
   

  	
  Amount(1)

  	
   

  
	
  1

  	
   

  	
  TRP from 13 March 2004 to 25 March 2005
  (i.e. 55 weeks to expiry of contract period)

  @ $597,811.09 per annum x 150%.

  	
   

  	
  $

  	
  948,450.00

  	
   

  
	
  2

  	
   

  	
  Target incentive payment from 13 March 2004
  to 25 March 2005 @ $650,000 per annum x 150%

  (ie. 55 weeks TEC x 150%).

  	
   

  	
  $

  	
  1,031,250.00

  	
   

  
	
  3

  	
   

  	
  Deferred incentive payment

  	
   

  	
  $

  	
  263,000.00

  	
   

  



 










(1)  Amounts expressed are gross, unless stated otherwise and
are subject to deduction of tax as required by law.


 





















 


Attachment 2 – Letter from Mr
Stewart on behalf of the National to Mr Scholes


 


 


[To be
placed on National Australia Bank letterhead]


 


 


[insert date]


 


 


Mr Ian Scholes


24 The Avenue


Hampton 
Vic  3188


 


Dear Ian


 


I am pleased that the National and you have
been able to amicably resolve the terms of settlement applying to your
departure from the National Australia Bank. The terms of the settlement we have
reached are consistent with the advice the National has received regarding your
entitlements under your contract of employment.


 


I am disappointed that we did not have the
opportunity to work together on rebuilding the National, and share your regret
that the events which occurred leading up to your departure occurred ‘on your
watch’.


 


I would also like to acknowledge your
contribution over recent years as one of the senior managers of the National
and wish you the best in the future.


 


Yours sincerely


 


 


John Stewart

Managing Director