Exhibit 4(c)16


 


	
   

  	
  Rules of the Westpac Banking Corporation Reward Plan

  
	
   

  	
   

  
	
   

  	
  as adopted at a meeting of the Board of Directors on
  11 October 2006 and approved by Shareholders of Westpac Banking Corporation
  by resolution at the 2006 Annual General Meeting.

  
	
   

  	
   

  
	
   

  	
  Allens Arthur Robinson

  The Chifley Tower

  2 Chifley Square

  Sydney NSW 2000

  Australia

  Tel 61 2 9230 4000

  Fax 61 2 9230 5333

  

  © Copyright Allens Arthur Robinson 2007

  



 

















 


Table of Contents


 


	
  1.

  	
  Purpose

  	
  1

  
	
  2.

  	
  Definitions
  and interpretations

  	
  1

  
	
  3.

  	
  Interpretation

  	
  6

  
	
  4.

  	
  Invitation
  to acquire Options

  	
  6

  
	
   

  	
  4.1

  	
  Issue

  	
  6

  
	
   

  	
  4.2

  	
  Form

  	
  6

  
	
   

  	
  4.3

  	
  Option price

  	
  7

  
	
  5.

  	
  Application
  for Options

  	
  7

  
	
   

  	
  5.1

  	
  Application procedure

  	
  7

  
	
   

  	
  5.2

  	
  Application in whole or in
  part

  	
  7

  
	
  6.

  	
  Grant of
  Options

  	
  8

  
	
   

  	
  6.1

  	
  Creation of Options

  	
  8

  
	
   

  	
  6.2

  	
  Non-acceptance of
  Application

  	
  8

  
	
  7.

  	
  Lapse of
  Options

  	
  8

  
	
   

  	
  7.1

  	
  Time of lapse

  	
  8

  
	
   

  	
  7.2

  	
  Breach, fraud or dishonesty

  	
  9

  
	
   

  	
  7.3

  	
  Rights following lapse

  	
  9

  
	
  8.

  	
  Exercise of
  Options

  	
  9

  
	
   

  	
  8.1

  	
  Vested Options

  	
  9

  
	
   

  	
  8.2

  	
  Exercise Period

  	
  9

  
	
   

  	
  8.3

  	
  Exercise of Options in part

  	
  11

  
	
   

  	
  8.4

  	
  Exercise procedure

  	
  11

  
	
  9.

  	
  Performance
  Hurdles and Vested Options

  	
  11

  
	
   

  	
  9.1

  	
  Performance criteria

  	
  11

  
	
   

  	
  9.2

  	
  Performance Hurdles

  	
  11

  
	
   

  	
  9.3

  	
  Determination of number of
  Vested Options

  	
  13

  
	
   

  	
  9.4

  	
  Rounding of fractions

  	
  14

  
	
  10.

  	
  Allocation
  of Shares

  	
  15

  
	
   

  	
  10.1

  	
  Allotment of Shares

  	
  15

  
	
   

  	
  10.2

  	
  Purchase of Shares

  	
  15

  
	
  11.

  	
  Change in
  Control

  	
  15

  
	
  12.

  	
  Capital
  Event

  	
  16

  
	
  13.

  	
  New issues

  	
  17

  
	
  14.

  	
  Options not
  transferable

  	
  17

  
	
  15.

  	
  Security
  Interest

  	
  17

  
	
  16.

  	
  Ranking and
  listing

  	
  17

  
	
  17.

  	
  Issue
  limitations

  	
  17

  



 

















 


	
  18.

  	
  No interest
  in Shares until exercise

  	
  18

  
	
  19.

  	
  Commencement
  and termination

  	
  18

  
	
   

  	
  19.1

  	
  Commencement

  	
  18

  
	
   

  	
  19.2

  	
  Termination and Suspension

  	
  18

  
	
  20.

  	
  Administration
  of the Plan

  	
  18

  
	
  21.

  	
  Amendment
  of the Plan

  	
  19

  
	
   

  	
  21.1

  	
  By the Board

  	
  19

  
	
   

  	
  21.2

  	
  Listing Rules

  	
  19

  
	
  22.

  	
  Law,
  Listing Rules and the Constitution

  	
  19

  
	
  23.

  	
  Rights of
  Participants

  	
  19

  
	
  24.

  	
  General

  	
  20

  
	
   

  	
  24.1

  	
  Advice

  	
  20

  
	
   

  	
  24.2

  	
  Costs and Expenses

  	
  20

  
	
   

  	
  24.3

  	
  Dispute

  	
  20

  
	
   

  	
  24.4

  	
  Notices

  	
  20

  
	
   

  	
  24.5

  	
  Error Correction

  	
  21

  
	
   

  	
  24.6

  	
  Governing Law

  	
  21

  



 

















 


WESTPAC BANKING CORPORATION (ABN 33 007 457 141)


 


WESTPAC REWARD PLAN


 


RULES


 


1.                                     Purpose


 


The Westpac Banking Corporation Reward Plan has been
established as an initiative for creating a stronger link between employee
performance and reward and increasing shareholder value by enabling
Participants to have a greater involvement with, and share in the future growth
and profitability of the Bank.


 


2.                                     Definitions
and interpretations


 


In this document the following terms have the
following meanings:


 


Application means an application on an Application Form by an Eligible Employee
to acquire Options under the Plan.


 


Application
Form means the application form in such
form as the Board may approve from time to time.


 


ASIC means the Australian Securities and Investments Commission.


 


ASIC Act means the Australian Securities and Investments Commission Act 2001
(Cth).


 


ASX means Australian Stock Exchange Limited (ABN 98 008 624 691).


 


Award means, in relation to a Participant, the number
of Options created in favour of that Participant pursuant to clause 6 having
the same Issue Date.


 


Bank means Westpac Banking Corporation (ABN 33 007 457 141) or any
company that becomes a holding company of Westpac Banking Corporation.


 


Board means the board of directors of the Bank from time to time.


 


Business
Day means any day other than a Saturday,
Sunday or other day on which commercial banking institutions in Sydney are
authorised or required by law to be closed.


 


Capital
Event means any of the following:


 


(a)                                  any event affecting the number or type of securities on issue in the
capital of the Bank, including a subdivision, consolidation, reduction,
redemption or further issue of securities whether by way of rights issue, bonus
issue or otherwise; and


 


(b)                                 any other event which the Board in its discretion reasonably
considers should be a Capital Event.


 


Change
in Control occurs when a person’s voting
power is more than (or will become more than) 35% in relation to the Bank
(excluding any voting power held by virtue of acceptances under an off-market
bid unless or until the bid is or becomes unconditional).


 

















 


Class
Order means an instrument made by ASIC
that exempts each person in a class of persons from the Corporations Act, the
ASIC Act or any part of either or both, or that modifies the application of the
Corporations Act, the ASIC Act or any part of either or both in particular
circumstances.


 


Condition means, in respect of any Option, one or more conditions (if any)
determined by the Board in its absolute discretion to apply to that Option
including, without limitation, Performance Hurdles, First Exercise Date and
Last Exercise Date, as specified in an Invitation made to the relevant Eligible
Employee under clause 4.


 


Constitution means the Bank’s constitution as amended from time to time.


 


Corporations
Act means the Corporations Act 2001 (Cth).


 


Determination
Date means the Trading Day immediately
preceding the date of an Invitation.


 


Dual
Listed Company Structure means an
arrangement whereby, among other things, two corporations have a unified
management structure, but where each of the two corporations retains its
separate legal identity and existing stock exchange listing.


 


Eligible
Employee means an Employee who is a
member of senior management and whom the Board determines is to receive an
Invitation under the Plan. The Board may also determine at any time that such
an Employee who is located in a jurisdiction where it is, in the opinion of the
Board, not reasonably practicable to invite participation in the Plan, is not
an Eligible Employee and that, until the Board determines otherwise, such
Employee shall not receive an Invitation under the Plan.


 


Employee means any person who is in full-time or part-time employment of a
Group Company.


 


Exercisable
Option means an Unvested Option which
becomes a Vested Option pursuant to a determination made under
clause 9.3(b)(iv), such determination to be made on the basis that the
Test Date applicable to that Option:


 


(a)                                  will be the Monthly TSR Test Date immediately preceding the Last
Employment Date of the Participant holding that Option; or


 


(b)                                 if no Monthly TSR Test Date has occurred since the Issue Date of
that Option, will be taken to be the Last Employment Date of that Participant.


 


Exercise
Price means the amount payable per
Share, if any, on the exercise of a Vested Option or an Exercisable Option
calculated as follows:


 


(a)           the
Market Price; or


 


(b)           any
other amount (which may be nil) specified by the Board in the Invitation,


 


in each case making appropriate adjustment, if any, in
respect of Capital Events in accordance with clause 12.


 


First Exercise
Date means the earliest date that a
Participant may give Notice of Exercise under clause 8.2(a), such date to be
determined by the Board in its absolute discretion and, once determined,
specified in that Participant’s Invitation.


 


First
Test Date means the third anniversary
(or such other date as may be determined from time to time by the Board and
specified in an Invitation made under clause 4, of the commencement date
of that Performance Period.


 

















 


First
Test Date Notice means the written
notification provided to a Participant under clause 9.3(c) in respect of the
Board’s determination made as of the First Test Date.


 


Group
Company means the Bank and any of its
subsidiaries.


 


Invitation means an invitation to apply to acquire Options under the Plan,
subject always to compliance with any Law.


 


Issue
Date means the date on which an Option
is created under clause 6.1 by being inscribed on the Register.


 


Last
Employment Date means, with respect to a
particular Participant, the date on which:


 


(a)                                  that Participant ceases to be an Employee for whatever reason; or


 


(b)                                 that Participant’s employer (being a company other than the Bank)
ceases to be a Group Company.


 


Last
Exercise Date means the day ending at
5.00 pm Sydney time on the date 10 years after the Issue Date or such other
earlier date as is determined by the Board and specified in an Invitation to an
Eligible Employee.


 


Law means the applicable law of the jurisdiction in which an Eligible
Employee is located at the time of receipt of an Invitation.


 


Listing
Rules means the listing rules of the ASX
as amended from time to time.


 


Market
Price means the weighted average market
price per Share of all Shares traded on the ASX during the one week period up
to and including the Determination Date. The Board may exercise a discretion to
include or exclude particular transactions from this calculation (e.g. “specials”)
as it thinks fit. If no Shares are traded on the ASX during that one week
period, the price as determined by the Board.


 


Maximum
TSR Ranking means the TSR Ranking equal
to 75% or such other percentage as determined by the Board at the time of
determination of the Performance Hurdles applicable to the relevant Options.


 


Minimum
Parcel means the minimum number of
Shares determined by the Board from time to time, which need not be the same
number for all purposes of the Plan.


 


Minimum
TSR Ranking means the TSR Ranking equal
to 50% or such other percentage as determined by the Board at the time of
determination of the Performance Hurdles applicable to the relevant Options.


 


Monthly
TSR Test Date means, in respect of any
Option, the last Business Day of each calendar month during the Performance
Period applicable to that Option.


 


Notice
of Exercise means a duly completed
notice of exercise of a Vested Option or an Exercisable Option signed by the
Participant, in a form approved by the Board from time to time, and lodged in
accordance with clause 8.4.


 


Option means a right, which is subject to Performance Hurdles, to
subscribe for one Share under the Plan, or such number of Shares as determined
under clause 12, for monetary consideration exceeding $1.00 per Share.


 

















 


Participant means:


 


(a)                                  an Eligible Employee who returns a duly completed Application Form
in accordance with clause 5.1(a);


 


(b)                                 the legal personal representative of that Eligible Employee where
that legal personal representative’s name has been entered on the Register as
the holder of the Options; or


 


(c)                                  if, because of the Bankruptcy Act 1966 (Cth) or equivalent
legislation in any other jurisdiction, Options (or the rights under those
Options) held under the Plan that form part of the property of an Eligible
Employee, vest in the trustee of that Eligible Employee’s estate, that trustee,
whether or not the name of that trustee has been entered in the Register.


 


Peer
Group means those entities (being at
least 13 in number) as determined by the Board from time to time for the
purposes of constituting such a group.


 


Performance
Hurdles means performance criteria as
set out or referred to in the relevant Invitation, being the criteria set out
in clause 9.2 and clause 9.3 unless the Board determines alternative,
additional or modified performance criteria under clause 9.1.


 


Performance
Period means, in respect of any Option,
the period commencing and ending on dates as determined by the Board for the
purposes of determining the extent (if any) to which the Performance Hurdles
have been satisfied.


 


Plan means the Westpac Banking Corporation Reward Plan.


 


Register means the register created and maintained by or on behalf of the
Bank under and in accordance with section 170 of the Corporations Act.


 


Retirement means the voluntary cessation of employment of a Participant with a
Group Company solely by reason of that Participant having notified that Group
Company of his or her intention to permanently leave the workforce.


 


Rules means the rules of the Plan as set out in this document.


 


Satisfaction
Date means the date that is specified in
an Invitation to an Eligible Employee as the last possible date on which
Conditions must be and remain satisfied.


 


Second
Test Date means the fourth anniversary
(or such other date as may be determined from time to time by the Board and
specified in an Invitation made under clause 4), of the commencement date
of that Performance Period.


 


Second
Test Date Notice means the written
notification provided to a Participant under clause 9.3(c) in respect of the
Board’s determination made as of the Second Test Date.


 


Security
Interest means a mortgage, charge,
pledge, lien or other encumbrance of any nature.


 


Shares means fully paid ordinary shares in the capital of the Bank.


 


Tax includes any tax, levy, impost, deduction, charge, rate,
contribution, duty or withholding which is assessed (or deemed to be assessed),
levied, imposed or made by any government or any governmental,
semi-governmental or judicial entity or authority together with any interest,
penalty, fine, charge, fee or other amount assessed (or deemed to be assessed),
levied, imposed or made on or in respect of any or all of the foregoing.


 

















 


Tax Act means the Income Tax Assessment Act 1936 (Cth) or the Income Tax
Assessment Act 1997 (Cth) or both, as the context requires.


 


Test
Date means, in respect of each
Performance Period, each of:


 


(a)                                  the First Test Date;


 


(b)                                 the Second Test Date;


 


(c)                                  the Third Test Date; and


 


(d)                                 in any case where a determination of the Board is required under:


 


(i)                                    clause 8.2(d)(vi) or 8.2(e)(iv), the date (being either a Monthly
TSR Test Date or the Last Employment Date of the relevant Participant); or


 


(ii)                                 clause 11, the date (being either a Monthly TSR Test Date, a Test
Date or the Notice Date),


 


on or as at which such a determination is required to
be made.


 


Third
Test Date means the fifth anniversary
(or such other date as may be determined from time to time by the Board and
specified in an Invitation made under clause 4), of the commencement date
of that Performance Period.


 


Third
Test Date Notice means the written
notification provided to a Participant under clause 9.3(c) in respect of the
Board’s determination made as of the Third Test Date.


 


Total
and Permanent Disablement, in relation
to a Participant, means that that Participant has, in the opinion of the Board,
after considering such medical and other evidence as it sees fit, become
incapacitated to such an extent as to render the Participant unlikely ever to
engage in any occupation with the Bank or any other Group Company for which he
or she is reasonably qualified by education, training or experience.


 


Total
Exercise Price means the number of
Vested Options or Exercisable Options to be exercised in a particular case
multiplied by the Exercise Price.


 


Trading
Day means a day on which Shares are
traded on the ASX.


 


TSR means, in respect of an entity, the total shareholder return (including
dividends) of that entity being the amount calculated on a basis, rounded to
not less than 3 decimal places, to be determined from time to time by the
Board.


 


TSR
Ranking means the percentage ranking of
the Bank relative to each entity comprising the TSR Ranking Group. To obtain
the Bank’s percentage ranking at each applicable Test Date:


 


(a)                                  the TSR of each entity comprising the TSR Ranking Group and of the
Bank shall be ranked in descending order from highest to lowest;


 


(b)                                 the number of entities in the TSR Ranking Group with a lower TSR
than the Bank shall be calculated (the Numerator); and


 


(c)                                  the Numerator shall be divided by the number of entities then in the
TSR Ranking Group and the result of that equation, expressed as a percentage,
shall be the Bank’s TSR Ranking.


 


TSR
Ranking Group means, on any Test Date,
the 10 entities (or such other number as the Board may from time to time
determine) in the Peer Group, having the largest market capitalisation on that


 

















 


Test Date, that remain listed on the ASX and which
have published sufficient data to enable each entity’s respective TSR to be
determined for the purposes of this Plan.


 


Unvested
Option means an Option that is neither a
Vested Option nor an Option that has lapsed under clause 7.


 


Vested
Option has the meaning given in
clause 8.1, and the expression Vested Option shall be construed
accordingly.


 


3.                                     Interpretation


 


In this document unless the contrary intention
appears:


 


(a)                                  a gender includes all genders;


 


(b)                                 the singular includes the plural and vice versa;


 


(c)                                  a reference to any legislation or to a provision of any legislation
includes any modification or re-enactment of it, any legislative provision
substituted for it and all regulations and statutory instruments issued under
it;


 


(d)                                 headings are for convenience only and do not affect the
interpretation of these Rules;


 


(e)                                  reference to a clause or paragraph is a reference to a clause or
paragraph of these Rules, or the corresponding Rule or Rules of this Plan as
amended from time to time;


 


(f)                                    where any word or phrase is given a definite meaning in these Rules,
any part of speech or other grammatical form of that word or phrase has a
corresponding meaning;


 


(g)                                 where the time for doing any act, matter or thing under these Rules
falls on a day which is not a Business Day, it shall be done on the next
succeeding Business Day; and


 


(h)                                 terms which are defined in the Corporations Act bear the same
meaning when used in this document.


 


4.                                     Invitation
to acquire Options


 


4.1                              Issue


 


In its absolute discretion and subject to these Rules,
the Board may from time to time issue or cause to be issued Invitations on
behalf of the Bank to Eligible Employees in respect of that number or value of
Options as the Board in its discretion determines. In determining the number or
value of Options to be the subject of individual Invitations, the Board may
determine that those Invitations be made on a differential basis to Eligible
Employees, different classes of Eligible Employees or to Eligible Employees
within the same class, as the case may be.


 


4.2                              Form


 


An Invitation may take any form determined by the
Board from time to time and will:


 


(a)                                  specify or include the following information:


 


(i)                                    the date of the Invitation;


 


(ii)                                 the name of the Eligible Employee to whom the Invitation is made;


 

















 


(iii)                              the maximum number or value of Options in respect of which the
Eligible Employee is being invited to apply;


 


(iv)                             the First Exercise Date of the Options;


 


(v)                                the Last Exercise Date of the Options;


 


(vi)                             the Exercise Price;


 


(vii)                          the time period in which an Application shall be made; and


 


(viii)                       any other material terms and conditions required by any Law and any
relevant Class Order and any other terms and conditions applicable to the
Invitation including the requirement that the Eligible Employee must continue
and remain an Eligible Employee on the date that the Options are to be granted
in accordance with clause 6.1, and where Conditions (such as Performance
Hurdles to be satisfied) have been determined to apply by the Board, details of
those Conditions and any Satisfaction Date; and


 


(b)                                 be issued with an Application Form and such explanatory or other
material in respect of the Plan as the Board considers appropriate, or as is
required by Law and any relevant Class Order.


 


4.3                              Option
price


 


Options granted by the Bank under the Plan will be
granted free of charge to Participants, unless otherwise determined by the
Board.


 


5.                                     Application
for Options


 


5.1                              Application
procedure


 


(a)                                  An Eligible Employee who receives an Invitation may only make an
Application by returning the duly completed Application Form within the time
period and as otherwise specified in the Invitation.


 


(b)                                 If, on returning the duly completed Application Form in accordance
with paragraph (a) of this clause 5.1, the Eligible Employee’s employment
or appointment with a Group Company has not ceased, he or she:


 


(i)                                    becomes a Participant;


 


(ii)                                 irrevocably offers to acquire Options under the Plan in accordance
with the terms of the Invitation; and


 


(iii)                              agrees to be bound by the terms of the Invitation and by these Rules
or any modification of these Rules for the purposes of clause 9.1(b) as set out
in any relevant schedule to these Rules.


 


5.2                              Application
in whole or in part


 


An Eligible Employee who receives an Invitation may
make an Application in respect of all or part of the maximum number of Options
specified in the Invitation. If an Application is made for only part of the
Options, then the Eligible Employee may only do so in respect of that number of
Options


 

















 


which, if exercised, would result in the Eligible
Employee acquiring a number of Shares that is not less than the Minimum Parcel.
No further Application may be made in respect of that Invitation.


 


6.                                     Grant
of Options


 


6.1                              Creation
of Options


 


(a)                                  Options granted under the Plan shall be created, and a Participant’s
title to those Options will, subject to clause 24.5, conclusively be evidenced
for all purposes of the Plan by being inscribed on the Register. No certificate
or other evidence of title to an Option will be issued unless required under
any applicable law or the Board in its sole discretion determines otherwise.


 


(b)                                 Within 28 days after the end of the period for making an
Application, as specified in the Invitation, and except as provided in clause
6.2, the Board will, in respect of each Eligible Employee who has become a
Participant in accordance with clause 5.1(b):


 


(i)                                    inscribe or cause to be inscribed in the Register the name of that
Participant and the number of Options applied for by that Participant; and


 


(ii)                                 notify that Participant of the Issue Date and that the Options have
been so inscribed.


 


6.2                              Non-acceptance
of Application


 


(a)                                  In the event that the Board does not grant Options in favour of any
Participant under clause 6.1(a), the Board shall:


 


(i)                                    provide notification to that Participant that it does not wish to
accept that Participant’s Application;


 


(ii)                                 refund the moneys (if any) provided by that Participant as
consideration to apply for Options under the Plan; and


 


(iii)                              undertake any other action as it sees fit.


 


(b)                                 If paragraph (a) of this clause 6.2 applies to a Participant,
the Invitation to that Participant, and the Application by that Participant in
relation to that Invitation, shall be deemed never to have been made.


 


7.                                     Lapse
of Options


 


7.1                              Time of
lapse


 


An Option lapses, to the extent it has not been
exercised, on the earlier to occur of:


 


(a)                                  the date of lapse under clause 7.2 or clause 11;


 


(b)                                 the last day of any period specified in clauses 8.2(b) to 8.2(f)
(inclusive) in which a Participant may exercise an Option;


 


(c)                                  where Conditions have not been satisfied and remain unsatisfied on
the Satisfaction Date, the Satisfaction Date; and


 

















 


(d)                                 the Last Exercise Date.


 


7.2                              Breach,
fraud or dishonesty


 


If in the reasonable opinion of the Board a
Participant acts fraudulently or dishonestly or is in material breach of his or
her obligations to the Bank or any other Group Company then the Board may in
its absolute discretion determine that any Unvested Options of the Participant
have lapsed and the Board’s decision will be final and binding.


 


7.3                              Rights
following lapse


 


Upon the lapse of an Option, all rights of the
Participant in respect of that Option cease.


 


8.                                     Exercise
of Options


 


8.1                              Vested
Options


 


(a)                                  An Option granted to a Participant will become a Vested Option on
the relevant Test Date by reference to which a determination is made that the
Option has become a Vested Option only if all Conditions (including any
Performance Hurdles) applicable to that Option have been satisfied unless,
prior to  that Test Date, the Option has
lapsed under clause 7.


 


(b)                                 An Option granted to a Participant will also be treated for all
purposes under these Rules as a Vested Option if a determination is made under
clause 8.2(c), clause 8.2(f), clause 9.3(b)(iii) or clause 9.3(b)(iv) that the
Option is to become a Vested Option, from the date of the determination.


 


8.2                              Exercise
Period


 


(a)                                  Except as provided in clauses 8.2(b) to 8.2(f) (inclusive), an
Option that is a Vested Option may only be exercised during the period
commencing on the First Exercise Date and ending on the Last Exercise Date.
Except as provided in clauses 8.2(b) to 8.2(f) (inclusive) or clause 11, an
Unvested Option may not be exercised. Notwithstanding any provision in this
clause 8, no Option may be exercised after the Last Exercise Date.


 


(b)                                 Death or Total and
Permanent Disablement


 


If a Participant ceases to be an Employee as a result
of his or her death or Total and Permanent Disablement, that Participant may,
at any time prior to the first to occur of the Last Exercise Date and the first
anniversary of the Last Employment Date, exercise all Options (whether or not
they are Unvested Options).


 


(c)                                  Resignation


 


If a Participant ceases to be an Employee as a result
of his or her resignation, that Participant may, at any time prior to the first
to occur of the Last Exercise Date and the date that is 3 months after the Last
Employment Date, exercise only those Options (if any) that are Vested Options
at the Last Employment Date unless the Board in its absolute discretion
determines that such Participant is entitled to have some Unvested Options
treated as Vested Options, in which event those Unvested Options will become
Vested Options. All Unvested Options will lapse on the Last Employment Date.


 

















 


(d)                                 Retrenchment or cessation
of Participant’s employer as a Group Company


 


If:


 


(i)                                    a Participant ceases to be an Employee as a result of the
retrenchment of that Participant; or


 


(ii)                                 that Participant’s employer (being a company other than the Bank)
ceases to be a Group Company,


 


that Participant may:


 


(iii)                              at any time prior to the first to occur of the Last Exercise Date
and the first anniversary of the Last Employment Date; or


 


(iv)                             in the case of cessation as a result of retrenchment only, if the
Participant has provided notice of their election prior to the Last Employment
Date, to extend the period in which they may exercise Options beyond the first
anniversary of the Last Employment Date, at any time prior to the Last Exercise
Date,


 


exercise:


 


(v)                                only those Options (if any) that are Vested Options at the Last
Employment Date; plus


 


(vi)                             if the Last Employment Date is before the Third Test Date, that
number of Unvested Options (if any) that have become Vested Options pursuant to
a determination made under clause 9.3(b)(iii),


 


with all other Unvested Options lapsing on that
Participant’s Last Employment Date.


 


(e)                                  Retirement


 


If a Participant ceases to be an Employee as a result
of the Retirement of that Participant, that Participant may:


 


(i)                                    at any time prior to the first to occur of the Last Exercise Date
and the first anniversary of the Last Employment Date; or


 


(ii)                                 if the Participant has provided notice of their election prior to
the Last Employment Date, to extend the period in which they may exercise
Options beyond the first anniversary of the Last Employment Date, at any time
prior to the Last Exercise Date,


 


exercise:


 


(iii)                              only those Options (if any) that are Vested Options at the Last
Employment Date; plus


 


(iv)                             only that number of Unvested Options (if any) that become
Exercisable Options, pursuant to a determination made under
clause 9.3(b)(iv),


 


with all other Unvested Options lapsing on that
Participant’s Last Employment Date.


 

















 


(f)                                    Other circumstances


 


If a Participant ceases to be an Employee for any
reason other than those set out in clauses 8.2(b) to 8.2(e), all of the
Participant’s Options (whether they are Vested Options that have not been
exercised or Unvested Options) shall lapse on the Last Employment Date unless
the Board in its absolute discretion determines that such Participant is
entitled to have some Unvested Options treated as Vested Options, in which
event those Unvested Options will become Vested Options and the Participant
may, at any time prior to the first to occur of the Last Exercise Date and the
date that is 3 months after the Last Employment Date, exercise those Vested
Options.


 


8.3                              Exercise
of Options in part


 


If a Participant elects to exercise part of his or her
Options comprised in an Award, the Notice of Exercise must be in respect of:


 


(a)                                  that number of Shares which is not less than the Minimum Parcel;


 


(b)                                 multiples of a Minimum Parcel; 
and


 


(c)                                  that number of Shares which will not leave any unexercised Options
comprised in that Award to that Participant totalling less than a Minimum
Parcel.


 


8.4                              Exercise
procedure


 


A Participant may exercise any of his or her Options
by lodging a Notice of Exercise and a cheque payable to the Bank for the Total
Exercise Price (if any) applicable to those Options, or by such other means of
payment as may be approved by the Board, at the head office of the Bank for the
time being or other place nominated by the Board for this purpose.


 


9.                                     Performance
Hurdles and Vested Options


 


9.1                              Performance
criteria


 


(a)                                  The performance criteria applicable to any Options shall be as
specified in clause 9.2 and clause 9.3 unless the Board determines otherwise.


 


(b)                                 If the Board determines that alternative, additional or modified
performance criteria are to apply to any Option in lieu of the performance
criteria specified in clause 9.2 and clause 9.3, the Board shall as part of
that determination approve a schedule, to be attached to and form part of these
Rules, which contains replacement clauses setting out those alternative,
additional or modified performance criteria (including any modification, if
necessary, to cross referencing within these Rules) applicable to that Option.


 


9.2                              Performance
Hurdles


 


(a)                                  Subject to clause 9.1, the Performance Hurdles applicable to any
Performance Period relating to any Option comprised in an Award shall be
determined by reference to the TSR Ranking Group in accordance with sub-clauses
(b), (c) and (d) below.


 


(b)                                 Where, as at the First Test Date, the TSR Ranking of the Bank is:


 

















 


(i)                                    less than the Minimum TSR Ranking, the number of Options that shall
become Vested Options as at the First Test Date shall be zero;


 


(ii)                                 equal to the Minimum TSR Ranking, the number of Options that shall
become Vested Options as at the First Test Date is the number equal to 50% of
the total number of Options comprised in that Award;


 


(iii)                              equal to or greater than the Maximum TSR Ranking, the number of
Options that shall become Vested Options as at the First Test Date is the
number equal to 100% of the total number of Options comprised in that Award;
and


 


(iv)                             greater than the Minimum TSR Ranking and less than the Maximum TSR
Ranking, the number of Options that shall become Vested Options as at the First
Test Date increases on a straight line basis from 50% to 100% of the total
number of Options comprised in that Award.


 


(c)                                  Where, as at the Second Test Date, the TSR Ranking of the Bank is:


 


(i)                                    less than the Minimum TSR Ranking or equal to or less than the TSR
Ranking of the Bank on the First Test Date, the number of Options that shall
become Vested Options as at the Second Test Date shall be zero;


 


(ii)                                 equal to or greater than the Maximum TSR Ranking, the number of
Options that shall become Vested Options as at the Second Test Date is the
number equal to 100% of the total number of Unvested Options comprised in that
Award; and


 


(iii)                              greater than the TSR Ranking of the Bank on the First Test Date and
less than the Maximum TSR Ranking, an additional number of Options shall become
Vested Options as at the Second Test Date so that the total percentage by
number of Options in an Award which have become Vested Options as a result of
the operation of clause 9.2 increases on a straight line basis from the
percentage of Options that became Vested Options on the First Test Date to 100%
of the total number of Options comprised in that Award.


 


(d)                                 Where, as at the Third Test Date, the TSR Ranking of the Bank is:


 


(i)                                    less than the Minimum TSR Ranking or equal to or less than the TSR
Ranking of the Bank on the First Test Date or Second Test Date (whichever is
the greater), the number of Options that shall become Vested Options as at the
Third Test Date shall be zero;


 


(ii)                                 equal to or greater than the Maximum TSR Ranking, the number of
Options that shall become Vested Options as at the Third Test Date is the
number equal to 100% of the total number of Unvested Options comprised in that
Award; and


 


(iii)                              greater than the TSR Ranking of the Bank on the First Test Date or
the Second Test Date (whichever is the greater) and less than the Maximum TSR
Ranking, an additional number of Options shall become Vested Options as at the
Third Test Date so that the total percentage by number of Options in an Award
which have become Vested Options as a result of the operation of clause 9.2
increases on a straight line basis from the percentage of Options that became
Vested Options on


 

















 


the First Test Date or the Second Test Date (whichever
is the higher) to 100% of the total number of Options comprised in that Award.


 


9.3                              Determination
of number of Vested Options


 


(a)                                  As soon as practicable after each Test Date applicable to any
Performance Period, the Board shall determine:


 


(i)                                    the TSR Ranking Group; and


 


(ii)                                 the TSR Ranking of the Bank and of each entity comprising the TSR
Ranking Group,


 


as at that Test Date.


 


(b)                                 As soon as practicable after each Test Date, the Board shall
determine in respect of each Participant as at that Test Date:


 


(i)                                    whether, and to what extent, the Performance Hurdles and all other
Conditions (if any) applicable to that Performance Period up to that Test Date
have been satisfied;


 


(ii)                                 the number of Unvested Options that will become Vested Options (if
any);


 


(iii)                              in the case of a determination made for the purposes of clause
8.2(d)(vi), the number of Unvested Options (if any) that have become Vested
Options, calculated in accordance with the following formula:


 





 


where:


 


A is the number of Unvested Options that will become Vested Options.
If the Bank’s TSR Ranking as at the Test Date is less than 50%, A shall be taken to be nil;


 


V is the number of Options comprised in an Award  that have become Vested Options prior to the
Last Employment Date other than those that become Vested Options as a result of
the operation of this clause 9.3(b)(iii);


 


W is the number of Options comprised in an Award;


 


X is the Bank’s TSR Ranking determined on or as at:


 


(i)                                    the most recent of a Monthly TSR Test Date and a Test Date to have
occurred immediately preceding the Last Employment Date of the relevant
Participant; or


 


(ii)                                 if no Monthly TSR Test Date or Test Date has occurred since the
Issue Date of that Participant’s Options, the Last Employment Date of that
Participant,


 

















 


PROVIDED THAT if the Bank’s TSR Ranking so determined
is greater than 75%, X shall for the
purposes of this calculation be taken to be 75% (in each case X will be expressed as a whole number);


 


Y is the number of days from and excluding the date (Start Date) on which
the relevant Performance Period commenced up to and including the Last Employment
Date but only if that Participant’s Last Employment Date occurs before the
First Test Date; and


 


Z is the number of days from and excluding the Start Date up to and
including the First Test Date but only if that Participant’s Last Employment
Date occurs before the First Test Date.


 


(iv)                             in the case of a determination made for the purposes of clause
8.2(e)(iv), the number of Unvested Options (if any) that have become
Exercisable Options;


 


(v)                                whether any Capital Event has occurred during the Performance Period
up to that Test Date;


 


(vi)                             the Exercise Price (if any);


 


(vii)                          in the case of the First Test Date and the Second Test Date of an
applicable Performance Period, the number of Options that will continue to be
Unvested Options; and


 


(viii)                       in the case of the Third Test Date, the number of Unvested Options
that will automatically lapse on that day.


 


(c)                                  Following each determination made by the Board under clause 9.3(b),
the Board shall provide a written notification to each Participant:


 


(i)                                    as to whether or not the Performance Hurdles and other Conditions
(if applicable) have been met;


 


(ii)                                 the number of Vested Options (if any) that the Participant will be
entitled to exercise;


 


(iii)                              in the case of determinations made under clause 9.3(b)(iii) and
(iv), the number of Unvested Options (if any) that have become Vested Options
or, as the case may be, Exercisable Options;


 


(iv)                             whether a Capital Event has occurred; and


 


(v)                                the Exercise Price.


 


9.4                              Rounding
of fractions


 


If any determination made under clause 9.2 or clause
9.3, results in there being a fraction of a Vested Option, the aggregate number
of Vested Options shall be rounded, as follows:


 


(a)                                  upwards to the nearest whole number, if the fraction is a value of
0.5 or more; and


 


(b)                                 downwards to the nearest whole number, if the fraction is a value
less than 0.5.


 

















 


10.                              Allocation
of Shares


 


10.1                       Allotment of
Shares


 


Subject to clause 10.2, the Bank must within 28
days after receipt of a Notice of Exercise and the Total Exercise Price (if
any) in respect of Options, allot and issue to the Participant that number of
Shares nominated by the Participant in the Notice of Exercise under these
Rules.


 


10.2                       Purchase of
Shares


 


(a)                                  The Bank may, at the Board’s discretion, determine to apply the
Total Exercise Price together with, to the extent permitted by Law, moneys
provided by the Bank, in purchasing Shares instead of making an allotment and
issue of Shares for the purpose of the Notice of Exercise. The relevant Shares
will be purchased in the name of the Participant within 28 days after receipt
of the Notice of Exercise and Total Exercise Price (if any).


 


(b)                                 If the Board so determines, the Board shall at the time of that
determination appoint an entity that is unrelated to any Group Company (Entity) for the sole
purpose of purchasing the relevant number of Shares and, for that purpose, the
Bank shall pay or cause to be paid to that Entity an amount equal to the costs
and expenses of the acquisition of those Shares.


 


(c)                                  The Entity so appointed shall acquire the number of Shares as
directed by the Board and immediately allocate and cause those Shares to
immediately be registered in the name of the relevant Participant, as directed
by the Board.


 


(d)                                 In acquiring those Shares, but not otherwise, the Entity acts as
trustee for the relevant Participant until such time as those Shares have been
acquired, allocated and registered in the name of that Participant. All other
fiduciary obligations and duties of that Entity to that Participant that might
otherwise be implied or imposed by law or equity are expressly excluded to the
extent permitted by law, including without limitation any such obligation or
duty arising under any statute.


 


(e)                                  The Entity is not an agent or trustee for the Bank or, except as
provided by paragraph (d) of this clause 10.2, any Participant.


 


11.                              Change
in Control


 


(a)                                  Where there is publicly announced any proposal (whether by takeover
bid, scheme of arrangement or otherwise but excluding a proposal for a Dual
Listed Company Structure) in relation to the Bank which the Board reasonably
believes may lead to a Change in Control, the Board shall, notwithstanding any
other provisions of these Rules or the Options held by each Participant,
promptly notify (the date of such notice being the Notice Date) each
Participant in writing that he or she may, within a period specified in the
notice (which period must be not less than 14 days from the Notice Date) (the Change in Control Notice Period),
exercise:


 


(i)                                    in the case of Options comprised in an Award where the Notice Date
is on or after the Satisfaction Date, only those Options (if any) that are
Vested Options held by the Participant at the Notice Date; and


 

















 


(ii)                                 in the case of Options comprised in an Award where the Notice Date
is prior to the Satisfaction Date, only that number of Options (if any)
calculated in accordance with the following formula:


 





 


where:


 


A is the number of Unvested Options that will become Vested Options.
If the Bank’s TSR Ranking as at the Test Date is less than 50%, A shall be taken to be nil;


 


V is the number of Options comprised in an Award that have become
Vested Options prior to the Notice Date;


 


W is the number of Options comprised in an Award;


 


X is the Bank’s TSR Ranking determined on or as at:


 


(i)                                    the most recent of a Monthly TSR Test Date and a Test Date to have
occurred immediately preceding the Notice Date; or


 


(ii)                                 if no Monthly TSR Test Date or Test Date has occurred since the
Issue Date of that Participant’s Options, the Notice Date,


 


PROVIDED THAT if the Bank’s TSR Ranking so determined
is greater than 75%, X shall for
the purposes of this calculation be taken to be 75% (in each case X will be expressed as a whole number);


 


Y is the number of days from and excluding the date (Start Date) on which
the Performance Period commenced up to and including the Notice Date but only
if the Notice Date occurs before the First Test Date; and


 


Z is the number of days from and excluding the Start Date up to and
including the First Test Date but only if the Notice Date occurs before the
First Test Date.


 


(b)                                 All Options held by the Participant which:


 


(i)                                    are not the subject of notice under paragraphs (a)(i) or (a)(ii); or


 


(ii)                                 are the subject of a notice under paragraphs (a)(i) or (a)(ii) and
have not been exercised by the Participant by the end of the Change of Control
Notice Period,


 


shall lapse.


 


12.                              Capital
Event


 


(a)                                  If a Capital Event occurs before the lodgement of a Notice of
Exercise, the Board shall determine in respect of each Option:


 


(i)                                    the number of underlying Shares; and


 


(ii)                                 the Exercise Price,


 

















 


by taking into account the Capital Event in a manner
which is fair and equitable to the Participants and which is consistent with
the relevant provisions of the Listing Rules. Options shall be reconstructed in
a manner which will not result in any additional benefits being conferred on
Participants which are not conferred on persons holding Shares or vice versa.


 


(b)                                 The Board may inform each Participant of these decisions or shall
otherwise inform each Participant on request.


 


13.                              New
issues


 


An Option does not confer on a Participant the right
to participate in new issues of Shares by the Bank, including by way of bonus
issue, rights issue or otherwise.


 


14.                              Options
not transferable


 


Options may not be transferred, assigned or novated
without the approval of the Board, except that a legal personal representative
of a Participant who has died or whose estate is liable to be dealt with under
laws relating to mental health or bankruptcy will be entitled to be registered
as the holder of those Options after the production to the Board of such
documents or other evidence as the Board may reasonably require to establish
that entitlement.


 


15.                              Security
Interest


 


Participants shall not grant any Security Interest in
or over or otherwise dispose of or deal with any Options or any interest
therein, and any such Security Interest or disposal or dealing will not be
recognised in any manner by the Bank.


 


16.                              Ranking
and listing


 


(a)                                  Shares allotted as a consequence of the exercise of Options will,
from the date of allotment, rank equally with all other issued Shares.


 


(b)                                 The Bank will apply for official quotation of those Shares on each
stock exchange on which Shares are quoted in accordance with the Listing Rules.


 


(c)                                  The Options will not be listed for quotation on any stock exchange.


 


17.                              Issue
limitations


 


(a)                                  The total number of unissued Shares, the subject of Options, which
may be offered at any time to Eligible Employees under the Plan shall not
exceed the maximum permitted under any Class Order providing relief from the
prospectus regime of the Corporations Act to ensure compliance with such Class
Order.


 


(b)                                 Options may not be granted under the Plan to an Eligible Employee to
the extent that if all of the Options granted would be immediately exercisable
from the Issue Date and are exercised on the Issue Date, the Eligible Employee
would, on the Issue Date:


 

















 


(i)                                    hold a legal or beneficial interest in more than five percent (5%)
of the Shares; or


 


(ii)                                 be in a position to cast, or control the casting of, more than five
percent (5%) of the maximum number of votes that might be cast at a general
meeting of the Bank.


 


18.                              No
interest in Shares until exercise


 


A Participant has no interest in any Share unless and
until the related Option is exercised and Shares are either allotted and issued
to, or purchased in the name of, that Participant as a result of that exercise.


 


19.                              Commencement
and termination


 


19.1                       Commencement


 


The Plan takes effect from the date of resolution by
the Board adopting the Plan or as such later date as may be specified by the
Board in that resolution.


 


19.2                       Termination and
Suspension


 


The Board may terminate or suspend the operation of
the Plan at any time by resolution of the Board. For the avoidance of doubt,
any termination of the Plan pursuant to this clause will not affect any Options
that are outstanding.


 


20.                              Administration
of the Plan


 


(a)                                  The Plan shall be administered by the Board which shall have power
to delegate to any one or more persons (including, but not restricted to, a
committee of the Board) for such period and on such conditions as the Board may
determine the exercise of its powers or discretions arising under the Plan.


 


(b)                                 The Board may at any time and from time to time:


 


(i)                                    give directions to any person or persons appointed under paragraph
(a) of this clause 20 as to the manner of the exercise by the Board of any
of its discretions under these Rules or the Plan; and


 


(ii)                                 amend any of those directions,


 


and where the Board has given such a direction, the
person or persons (as the case may be) must exercise the relevant discretion in
accordance with that direction.


 


(c)                                  The Board shall have power to:


 


(i)                                    determine appropriate procedures for administration of the Plan
consistent with the provisions of these Rules; and


 


(ii)                                 resolve conclusively all questions of fact or interpretation and all
calculations arising in connection with the Plan.


 


(d)                                 The Board may at any time appoint or engage specialist service
providers for the operation and administration of the Plan.


 

















 


(e)                                  The Board shall ensure a complete register of Participants is
maintained to facilitate efficient management and administration, and to comply
with regulatory reporting requirements.


 


21.                              Amendment
of the Plan


 


21.1                       By the Board


 


Subject to clause 21.2, the Board may at any time
and from time to time by resolution:


 


(a)                                  amend all or any of these Rules or all or any of the rights or
obligations of the Participants or any of them; and


 


(b)                                 formulate (and subsequently amend) special terms and conditions, in
addition to those set out in these Rules, to apply to Eligible Employees
employed in, resident in, or who are citizens of, countries other than
Australia. Each of such sets of special terms and conditions shall be restricted
in its application to those Eligible Employees employed in, resident in, or who
are citizens of the foreign country or countries specified by the Board, and
may be revoked, added to or varied in accordance with paragraph (a) of this
clause 21.1.


 


21.2                       Listing Rules


 


The exercise of any powers under these Rules by the
Board is subject to any restrictions or procedural requirements relating to the
amendment of the rules of an employee incentive scheme or of issued options
imposed by any Law or by the Listing Rules and applicable to the Plan or the
Options, as the case may be, unless those restrictions, conditions or
requirements are relaxed or waived by the ASX or any of its delegates either
generally or in a particular case or class of cases and either expressly or by
implication.


 


22.                              Law,
Listing Rules and the Constitution


 


The Rules and all offers and issues of Options and
Shares under the Plan are subject to any Law, the Listing Rules and the Bank’s
Constitution, each as in force from time to time.


 


23.                              Rights
of Participants


 


Nothing in these Rules:


 


(a)                                  confers on any Eligible Employee or Participant the right to
continue as an Employee of any Group Company;


 


(b)                                 confers on any Employee the right to become or remain an Eligible
Employee or to participate under the Plan;


 


(c)                                  affects any rights which a Group Company may have to terminate the
employment of an Eligible Employee or Participant;


 


(d)                                 may be used to increase damages in any action brought against any
Group Company in respect of any such termination and a Participant shall waive
any and all rights to


 

















 


compensation or damages in consequence of any such
termination insofar as those rights arise or may arise from that Participant
ceasing to have rights under or entitled to exercise any Option under the Plan
as a result of such termination; and


 


(e)                                  confers any responsibility or liability on any Group Company or its
directors, officers, employees, representatives or agents in respect of any
taxation liabilities of the Eligible Employees or Participants.


 


24.                              General


 


24.1                       Advice


 


Eligible Employees should obtain their own independent
advice on the financial, taxation and other consequences to them of or relating
to participation in the Plan including in relation to exercising Options and
disposing of any or all Shares acquired as a result of exercising Options.


 


24.2                       Costs and
Expenses


 


With the exception of Taxes (excluding any Taxes
payable on brokerage) which are payable by a Participant, a Participant will
not be liable for any costs associated with the implementation and
administration of the Plan unless the Board in its discretion determines
otherwise. If the Board so determines, the Board must inform the Participant
prior to allocating any such expense to a Participant.


 


Subject to the preceding paragraph, the Bank will pay
all expenses, costs and charges in relation to the establishment,
implementation and administration of the Plan, including all costs incurred in
or associated with the allotment and issue or purchase of Shares (except for
Taxes which are payable by Participants) for the purposes of the Plan.


 


24.3                       Dispute


 


Any disputes or differences of any nature arising
under the Plan shall be referred to the Board and its decision shall be final
and binding in all respects.


 


24.4                       Notices


 


Any notice, instruction or direction given under or
pursuant to these Rules:


 


(a)                                  is validly given if it is handed to the addressee, faxed to the
addressee at the fax number last notified by that person or posted ordinary
prepaid post (first class air-mail if to an overseas address) to the last known
address of the addressee;


 


(b)                                 must be signed by the sending or a person duly authorised by the
sender;


 


(c)                                  except as provided in paragraph (d), will be taken to have been
given:


 


(i)                                    in the case of personal delivery, when personally received;


 


(ii)                                 in the case of post to a domestic address, three Business Days after
posting;


 


(iii)                              in the case of post to an overseas address, seven Business Days
after posting; or


 

















 


(iv)                             in the case of a fax, on production of a transmission report by the
machine from which the fax was sent that indicates that the fax was transmitted
in its entirety to the fax number of the addressee,


 


unless it is personally received or faxed after 5.00
pm on the day, in which case it shall be deemed to be received or faxed on the
next succeeding Business Day;


 


(d)                                 in the case of a notice of election under clause 8.2(d) or clause
8.2(e), an Application Form or a Notice of Exercise, that election, application
or notice will not be taken to have been received by or on behalf of the Bank
until it is actually received by the Bank at the address nominated from time to
time by the Board.


 


24.5                       Error
Correction


 


(a)                                  In the event that any error or mistake has been made in relation to
the number of  Options the subject of:


 


(i)                                    an Invitation under clause 4.2;


 


(ii)                                 an inscription in the Register pursuant to clause 6.1; or


 


(iii)                              any notification made under clause 9.3(c),


 


that Invitation, inscription or notification, as the
case may be, shall be null and void and of no effect to the extent of any such
error or mistake and the Board may in its absolute discretion, correct such
error or mistake, without the need to obtain consent from the relevant Eligible
Employee or relevant Participant, by notice to the Eligible Employee or that
Participant and, where appropriate, may issue an amended Invitation or
notification or correct the Register.


 


(b)                                 The Board will notify the relevant Participant within a reasonable
period after discovering and correcting the error or mistake.


 


24.6                       Governing Law


 


This Plan and the rights of Participants under its
Rules are governed by the laws in force in New South Wales.