**Exhibit4.1.2**

 

Share Sale Agreement

 

Lloyds TSB Bank plc

 

Lloyds Bank SubsidiariesLimited

 

Australia and New ZealandBanking Group Limited (ABN 11 005 357 522)

 

ANZ Banking Group (New Zealand)Limited

 

 

 

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**TABLE OF CONTENTS**

 
| 1      | **INTERPRETATION**                             |   |
|--------|------------------------------------------------|--------|
| 1.1    | Definitions                                    |   |
| 1.2    | Construction of References                     |   |
| 1.3    | General Interpretation                         |   |
| 1.4    | Deemed New Zealand  Companies                  |   |
| 1.5    | Currencies                                     |   |
|   |                                           |   |
| 2      | **SALE AND PURCHASE OF SHARES**                |   |
| 2.1    | Sale and Purchase                              |   |
| 2.2    | No Encumbrances                                |   |
| 2.3    | Rights and Privileges                          |   |
| 2.4    | Title                                          |   |
| 2.5    | Permitted Dividends                            |   |
| 2.6    | No Trustee or Nominee                          |   |
| 2.7    | Condition                                      |   |
| 2.8    | Date for Fulfilment                            |   |
| 2.9    | Reasonable Steps  to Satisfy Condition         |   |
| 2.10   | Waiver                                         |   |
| 2.11   | Non-Fulfilment                                 |   |
| 2.12   | Underwriting  Agreement Termination            |   |
| 2.13   | LTSB/NBNZ Fault                                |   |
| 2.14   | ANZ Bad Faith                                  |   |
| 2.15   | Break Fees                                     |   |
|   |                                           |   |
| 3      | **CALCULATION  AND PAYMENT OF PURCHASE PRICE** |   |
| 3.1    | Purchase Price                                 |   |
| 3.2    | Adjustment of Purchase  Price                  |   |
| 3.3    | Payment for Shares                             |   |
| 3.4    | Replacement  of LTSB Existing Standby Facility |   |
| 3.5    | Closing Accounts                               |   |
| 3.6    | Default Interest                               |   |
| 3.7    | Lowest Price                                   |   |
| 3.8    | Calculation of Interest                        |   |
| 3.9    | Payments                                       |   |
|   |                                           |   |
| 4      | **CLOSING**                                    |   |
| 4.1    | Venue and Time                                 |   |
| 4.2    | Delivery of Documents                          |   |
| 4.3    | Payment at Closing                             |   |
| 4.4    | Default in Closing                             |   |
| 4.5    | Company Documents and  Records                 |   |
|   |                                           |   |
| 5      | **CONDUCT OF BUSINESS**                        |   |
| 5.1    | Pre-Closing Conduct of  Business               |   |

 

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| 5.2    | Consultation                                                            |   |
|--------|-------------------------------------------------------------------------|--------|
| 5.3    | LTSB Existing Standby  Facility                                         |   |
| 5.4    | Pre-Closing Access to  Business                                         |   |
| 5.5    | Substitution of  Lloyds TSB Guarantees                                  |   |
| 5.6    | Counterparty Consents                                                   |   |
| 5.7    | Other Lloyds TSB  Group Relationships                                   |   |
| 5.8    | Black Horse Company Names                                               |   |
| 5.9    | Lloyds TSB Manuals                                                      |   |
| 5.10   | Consultation on  Employment Matters                                     |   |
| 5.11   | Post-Closing Redundancy                                                 |   |
| 5.12   | Employees                                                               |   |
|   |                                                                    |   |
| 6      | **REPRESENTATIONS AND  WARRANTIES**                                     |   |
| 6.1    | Vendor Warranties                                                       |   |
| 6.2    | Purchase  Price Adjustment for Breach of Warranty                       |   |
| 6.3    | Adjusted Price Sole Relief                                              |   |
| 6.4    | Monetary Limitations                                                    |   |
| 6.5    | Time Limit                                                              |   |
| 6.6    | General  Exceptions to Vendor Warranties                                |   |
| 6.7    | Exclusions from  Warranty Claims                                        |   |
| 6.8    | No Double Recoveries                                                    |   |
| 6.9    | Subrogation of Rights                                                   |   |
| 6.10   | Duty to Mitigate                                                        |   |
| 6.11   | Management of Claims                                                    |   |
| 6.12   | Purchaser Relies on  Own Judgement                                      |   |
| 6.13   | Purchaser Warranties                                                    |   |
| 6.14   | Tax  Consequences of Purchase Price Adjustment                          |   |
|   |                                                                    |   |
| 7      | **TAXATION**                                                            |   |
| 7.1    | Definitions                                                             |   |
| 7.2    | Purchase  Price adjustment for Indemnity Loss                           |   |
| 7.3    | Tax Warranties - General                                                |   |
| 7.4    | Tax Warranties –  Relevant Transactions                            |   |
| 7.5    | Indemnity                                                               |   |
| 7.6    | Claims                                                                  |   |
| 7.7    | Right to require  deferral of taxation                                  |   |
| 7.8    | Payment                                                                 |   |
| 7.9    | Effect  of Purchase Price adjustment/no windfall benefit from indemnity |   |
| 7.10   | Recoveries                                                              |   |
| 7.11   | Taxation Claims Procedures                                              |   |
| 7.12   | Existing Taxation Claims                                                |   |
| 7.13   | Procedure  for small taxation claim amounts                             |   |
| 7.14   | Expenses                                                                |   |
| 7.15   | Taxation Returns                                                        |   |
| 7.16   | Limitations on  Purchase Price adjustment                               |   |
| 7.17   | Purchaser Obligations                                                   |   |

 

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| 7.18   | Certain Confirmations                |   |
|--------|--------------------------------------|--------|
| 7.19   | Transaction Two                      |   |
| 7.20   | Transaction Three Swaps              |   |
| 7.21   | Transaction Four  Transactions       |   |
|   |                                 |   |
| **8**  | **NON-COMPETITION COVENANT**         |   |
| 8.1    | Definitions                          |   |
| 8.2    | No Competition                       |   |
| 8.3    | Exceptions to  Restricted Activities |   |
| 8.4    | Cessation of Restraint               |   |
| 8.5    | Restraint Reasonable                 |   |
| 8.6    | Modification                         |   |
| 8.7    | Assessment of Purchase  Price        |   |
|   |                                 |   |
| **9**  | **GUARANTEES**                       |   |
| 9.1    | Definitions                          |   |
| 9.2    | Guarantees                           |   |
| 9.3    | Non-Prejudice of Guarantee           |   |
| 9.4    | Guarantor a Principal  Obligor       |   |
| 9.5    | Exercise of Rights                   |   |
| 9.6    | Waiver of Subrogation  Rights        |   |
| 9.7    | No Competition                       |   |
| 9.8    | Reinstatement                        |   |
|   |                                 |   |
| **10** | **MISCELLANEOUS**                    |   |
| 10.1   | Vendor Liability Cap                 |   |
| 10.2   | Announcements                        |   |
| 10.3   | Confidentiality                      |   |
| 10.4   | No  Action                           |   |
| 10.5   | No Assignment                        |   |
| 10.6   | Notices                              |   |
| 10.7   | Designated Addresses                 |   |
| 10.8   | Giving of Notices and Consents       |   |
| 10.9   | No Cancellation                      |   |
| 10.10  | Waiver                               |   |
| 10.11  | Expenses                             |   |
| 10.12  | Contracts (Privity) Act              |   |
| 10.13  | Governing Law                        |   |
| 10.14  | Submission to Jurisdiction           |   |
| 10.15  | Process Agent                        |   |
| 10.16  | Severability                         |   |
| 10.17  | No  Merger                           |   |
| 10.18  | Further Assurances                   |   |
| 10.19  | Entire Agreement                     |   |
| 10.20  | Amendments                           |   |
| 10.21  | Execution and Delivery               |   |

 

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| 10.22                                            | Counterparts |   |
|--------------------------------------------------|--------------|--------|
|                                             |         |   |
| **FIRST  SCHEDULE - SUBSIDIARIES**          |         |
|                                             |         |   |
| **SECOND  SCHEDULE - CLOSING ACCOUNTS**     |         |
|                                             |         |   |
| **THIRD  SCHEDULE - VENDOR WARRANTIES**     |         |
|                                             |         |   |
| **FOURTH  SCHEDULE - PURCHASER WARRANTIES** |         |
|                                             |         |   |
| **APPENDIX ONE –  PROPERTY INTERESTS**      |         |

 

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SHARE SALE AGREEMENT

 

*Date:*  24 October  2003

 

**PARTIES**

 

**Lloyds TSB Bank plc** at London, England

 

**Lloyds BankSubsidiaries Limited**at London,England

 

**Australia and NewZealand Banking Group Limited** (ABN 11005 357 522) at Melbourne, Australia

 

**ANZ Banking Group(New Zealand) Limited** at Wellington,New Zealand (Registered Number 35976)

 

**BACKGROUND**

 

A                                      At the request of the Guarantor, the Vendor has agreed to sell tothe Purchaser (a wholly owned subsidiary of the Guarantor) all of the shares inNBNZ Holdings for the consideration, and upon and subject to the terms andconditions, set out in this Agreement.

 

B                                        Lloyds TSB has agreed to guarantee the Vendor’s obligations underthis Agreement and the Guarantor has agreed to guarantee the Purchaser’sobligations under this Agreement.

 

**IT IS AGREED**between the Parties as follows:

 

1**                                          INTERPRETATION**

 

1.1**                                 Definitions**

In this Agreement, unlessinconsistent with the context, the following terms shall have the followingmeanings:

 

*AccountingPeriod*means the period commencing on1 January 2003 and ending on the day before the Closing Date.

 

*AccountingPolicies* means the accountingpolicies referred to in *paragraph 1*ofthe *Second Schedule *to theextent that that paragraph requires those policies to be applied in thepreparation of the Closing Accounts.

 

*AdjustmentDate*means the day falling 10Business Days after the Closing Accounts are designated as such in accordancewith the *Second Schedule*.

 

*Agreed NTA*means the sum of NZ$2,272,000,000 (two billion two hundred andseventy two million New Zealand dollars).

 

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*Agreement*includes the Recitals, each Schedule and the Appendix, all asmay be amended in writing between the Parties.

 

*ANZ Group*means the Guarantor and its subsidiaries.

 

*Balance Date*means 31 December 2002.

 

*Black BoxDocuments* means the documents inSection 17 the Data Room Index.

 

*Business Day*means:

 

(a)                                  in *clause 10.6*, a dayon which banks areopen for general over-the-counter banking business inLondon and Wellington; and

 

(b)                                 elsewhere in this Agreement, a day on which banks are open forover-the-counter banking business in Wellington.

 

*Closing*means the closing of the sale and purchase of the Shares on theClosing Date pursuant to this Agreement.

 

*ClosingAccounts*means the consolidatedfinancial statements of the NBNZ Group as at midnight on (that is, at the endof) the day before the Closing Date and for the Accounting Period to beprepared and audited pursuant to *clause 3.5* and the *Second Schedule *comprising:

 

(a)                                  consolidated statement of financial performance for the AccountingPeriod;

 

(b)                                 consolidated statement of financial position as at the date beforethe Closing Date;

 

(c)                                  consolidated statement of movements in equity for the AccountingPeriod*,*

 

and includes the notes to thosefinancial statements, when those financial statements are deemed to be  designated as the Closing Accounts in accordance with the *Second Schedule*.

 

*Closing Date*means:

 

(a)                                  1 December 2003; or

 

(b)                                 such other date as may be agreed in writing between Lloyds TSB andthe Purchaser as the Closing Date for the purposes of this Agreement,

 

and, as the context mayrequire, means the date on which Closing takes place.

 

*Companies Act* means the Companies Act 1993.

 

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*ConfidentialityDeed*means the Confidentiality Deeddated 13 June 2003 executed by the Guarantor in favour of Lloyds TSB.

 

*Data Room* means the premises in Sydney, Auckland and Wellington at which thewritten information referred to in the Data Room Index was made available byLloyds TSB to the Purchaser and/or the Guarantor for inspection.

 

*Data RoomIndex*means the index of writteninformation made available by Lloyds TSB to the Purchaser and/or the Guarantorfor inspection in the Data Room, a copy of which has been initialled (for thepurposes of identification) by or on behalf of Lloyds TSB and the Purchaser andis to be held by KPMG under the terms of an escrow letter.

 

*Default Rate*means the Interest Rate (calculated as at the first date on whichthe relevant default interest commences to accrue and calculated at intervalsof thirty (30) days thereafter) plus a margin of two percentage points.

 

*DisclosureInformation*means the followinginformation:

 

(a)                                  written information about the NBNZ Group provided to the Purchaserand/or the Guarantor or their respective advisers in the due diligence DataRoom established for the Guarantor and the Purchaser on behalf of Lloyds TSB;

 

(b)                                 information about the NBNZ Group contained in the written answersprovided by Lloyds TSB, the Vendor, a Group Company or their respectiveadvisers to the Guarantor and/or the Purchaser or their respective advisers inresponse to written questions submitted by or on behalf of the Guarantor and/orthe Purchaser; and

 

(c)                                  other written information (including the Disclosure Letter) aboutthe NBNZ Group provided to the Purchaser and/or the Guarantor or theirrespective advisers by Lloyds TSB or its advisers,

 

in each case for the purposesof the Guarantor’s and/or the Purchaser’s due diligence investigation of theNBNZ Group, copies of which written information are in an agreed collection offolders, each of which folders (for the purposes of identification) includes aconfirmation form signed by or on behalf of Lloyds TSB and the Purchaser andall of which folders are to be held by KPMG under the terms of an escrowletter, but for the avoidance of doubt excludes the National Bank’s individualcustomer loan and credit files reviewed by or on behalf of the Purchaser and/orthe Guarantor.

 

*DisclosureLetter*means the disclosure letterdated the Execution Date and provided to the Purchaser by or on behalf of theVendor before the execution of this Agreement and recording certain exceptionsto the Vendor Warranties and containing other information.

 

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*Distribution*has the meaning given to that term by section 2(1) of theCompanies Act.

 

*Employee* means a person who is an employee of the NBNZ Group as at Closing.

 

*ExecutionDate*means the date of thisAgreement.

 

*GovernmentalAuthority*means a minister of theCrown, department of state, government authority, regional council, territorialauthority or other statutory or regulatory authority, industry regulator orombudsman having jurisdiction or authority to perform or exercise functions orpowers.

 

*Group Company*:

 

(a)                                  means NBNZ Holdings and each other company (and includes CountrywideEndeavour Building Society) which is a member of the NBNZ Group; and

 

(b)                                 for the purposes of *Section 7*and *paragraphs 10.2*and *17*of the *Third Schedule *and in respect of anyperiod, includes any other taxpayer whose results are consolidated into thefinancial accounts of NBNZ Holdings for the year(s) to which the periodrelates.

 

*GST*means goods and services tax chargeable under the Goods and ServicesTax Act 1985.

 

*Guarantor*means, subject to *clause 9.1*,Australia and New Zealand Banking Group Limited, a company incorporated inAustralia (ABN 11 005 357 522).

 

*InsolvencyEvent* means, in relation to any GroupCompany:

 

(a)                                  the appointment of a receiver or manager of the whole or anymaterial part of that Group Company’s assets, or of a liquidator, statutorymanager or similar official unless the appointment is discharged within 21 daysof it being made;

 

(b)                                 an application or order made, proceedings commenced, a resolutionpassed or proposed in a notice of meeting or other steps taken for:

 

(i)                                     the liquidation or removal of that Group Company from the registerof companies, unless:

 

(aa)                            the application, order, proceedings, or resolution is withdrawn,reversed, struck out or dismissed within 21 days of it being made; or

 

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(bb)                          the application, order, proceedings, or resolution is frivolous orvexatious and is contested in good faith by that Group Company; or

 

(ii)                                  the entry by the Group Company into an arrangement with orassignment for the benefit of its creditors or a class of them;

 

(c)                                  the Group Company being declared to be at risk for the purposes ofthe Corporations (Investment and Management) Act 1989;

 

(d)                                 the Group Company:

 

(i)                                     being (or being taken to be under applicable legislation) unable topay its debts as they fall due; or

 

(ii)                                  stopping or suspending payment of all or a class of its debt otherthan as the result of a failure to pay a debt or claim the subject of a goodfaith dispute;

 

(e)                                  the Group Company (other than a company named in *Part 2* of the *First Schedule*) ceasing to carry on business;

 

(f)                                    the Group Company amalgamating with any company, or otherwisechanging the form in which it exists as a company otherwise than for thepurposes of a solvent reconstruction, merger or consolidation; or

 

(g)                                 circumstances which will, or with the passing of time or giving ofnotice will, result in the liquidation or removal of the Group Company from theregister of companies; or

 

(h)                                 any analogous event affecting the Group Company in any jurisdictionother than New Zealand.

 

*Interest Rate*means:

 

(a)                                  in respect of any payment to be made in New Zealand dollars, thefollowing:

 

(i)                                     the “FRA” rate for 30 day bank accepted bills of exchange (expressedas a percentage) as quoted on the Reuters page BKBM (or any successor page) at10.45am on the first Business Day of the period in respect of which such rateis to be calculated; or

 

(ii)                                  if such rate does not appear on that Reuters Page on that BusinessDay, the average of the mean bid and offered rates of the National Bank forbank bills of exchange having a tenor of 30 days at or about 10.45am on thatBusiness Day;

 

5

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(b)                                 in respect of any payment to be made in any currency other than NewZealand dollars, the following:

 

(i)                                     the rate per annum which is the offered rate rounded up to the nearestfour decimal places calculated and published by the information vendor for thetime being designated by the British Bankers’ Association (presently appearingon the relevant page of the Reuters Screen Service): or

 

(ii)                                  if no such rate is published or available for the applicablecurrency or Interest Period on such screen service, the rate offered to LloydsTSB by prime banks in the London Interbank market, as determined by Lloyds TSB,

 

in either such case, at orabout 11.00 a.m. (or such later time as may be agreed between Lloyds TSB andthe Purchaser in respect of the period in respect of which such rate is to becalculated) on the first Business Day of the period in respect of which suchrate is to be calculated for deposits in the amount and currency of the drawingfor the term of the period in respect of which such rate is to be calculated.

 

*InterimPeriod* means the period commencing onthe Execution Date and ending at Closing.

 

*June Accounts*means the audited consolidatedfinancial statements of the NBNZ Group as at 30 June 2003 comprising:

 

(i)                                     consolidated statement of financial performance for the6 months ended 30 June 2003;

 

(ii)                                  consolidated statement of financial position as at30 June 2003;

 

(iii)                               consolidated statement of movements in equity for the 6 monthsended 30 June 2003;

 

(iv)                              consolidated statement of cash flows for the 6 months ended30 June 2003,

 

and includes the notes to thosefinancial statements.

 

*Latest AnnualAccounts* means:

 

(a)                                  in relation to the NBNZ Group, the audited consolidated financialstatements of the NBNZ Group as at the Balance Date comprising:

 

(i)                                     consolidated statement of financial performance for the year endedon the Balance Date;

 

6

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(ii)                                  consolidated statement of financial position as at the Balance Date;

 

(iii)                               consolidated statement of movements in equity for the year ended onthe Balance Date; and

 

(iv)                              consolidated statement of cash flows for the year ended on theBalance Date,

 

and includes the notes to thosefinancial statements; and

 

(b)                                 in relation to a Managed Fund, the audited financial statements forthat Managed Fund as at the end of its most recently completed financial yearprepared under the Financial Reporting Act 1993*.*

 

*Lloyds TSB*means Lloyds TSB Bank plc a company incorporated in England.

 

*Lloyds TSBGroup* means Lloyds TSB Group plc (acompany incorporated in Scotland) and its subsidiaries and unless inconsistentwith the context, means each such company individually.

 

*Lloyds TSBTrade Marks* means the Trade Markslisted in the First Schedule of the Trade Mark Licence.

 

*Loan*means:

 

(a)                                  an asset of a Group Company which, if it was or had been an asset ofthat Group Company as at 30 June 2003, would have fallen within thecategory of “Loans and Advances” in the statement of financial position formingpart of the June Accounts; and

 

(b)                                 each legally binding commitment or obligation of a Group Company tomake available any loan, advance, guarantee, letter of credit or otherfinancial accommodation which, when fulfilled, would result in the creation ofan asset in the nature of the asset referred to in (a) above.

 

*Loan Notes*means the floating rate unsecured New Zealand dollar loan notesreferred to in Document number 14.1.3.4 in the Data Room Index.

 

7

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*LTSB ExistingStandby Facility* means the standbycredit facility in a principal amount of up to £4 billion provided by LloydsTSB to the National Bank and existing as at the Execution Date.

 

*LTSB New Revolving Loan Facility* means the new revolving loanfacility in a principal amount of up to £2 billion to be made available fromClosing by Lloyds TSB to the National Bank substantially on the terms set outin a facility letter the form of which has been initialled on behalf of LloydsTSB and the Guarantor for the purposes of identification.

 

*Managed Funds*means:

 

(a)                                  the Thoroughbred Unit Trusts (formerly known as the National BankUnit Trusts) being unit trusts existing under the Unit Trusts Act 1960 and establishedunder a Trust Deed dated 22 September 1988 between the National Bank (asManager) and the Public Trust (as Trustee);

 

(b)                                 the Thoroughbred Cash Fund being a group investment fund existingunder the Public Trust Act 2001 and governed by a Trust Deed dated19 July 2001 between the National Bank (as Manager) and the PublicTrust (as Trustee);

 

(c)                                  the Thoroughbred Superannuation Plan (formerly known as the NationalBank Superannuation Plan) being a registered superannuation scheme under theSuperannuation Schemes Act 1989 and established under a Trust Deed dated23 April 1992 between the National Bank and the Public Trust (asTrustee);

 

(d)                                 the Thoroughbred Superannuation Scheme being a registeredsuperannuation scheme under the Superannuation Schemes Act 1989 and establishedunder a Trust Deed dated 31 July 1997 between the National Bank andthe Public Trust (as Trustee);

 

(e)                                  the National Bank Superannuation Bond being a registeredsuperannuation scheme under the Superannuation Schemes Act 1989 and establishedunder a Trust Deed dated 19 November 1993 between the National Bankand the Public Trust (as Trustee); and

 

(f)                                    the Staff Superannuation Fund.

 

*MaterialAdverse Effect* in relation to aperson means a material adverse effect on that person’s financial condition oroperations or on the consolidated financial condition or operations of it andits subsidiaries taken as a whole.

 

*MaterialContract*means any contract oragreement, whether written or oral, and including any amendments thereto (eacha *contract)*to which a GroupCompany is a party and under which a Group Company has unperformed obligationsor has

 

8

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yet to receive the full benefitas at the Execution Date and which involves, relates to or affects the businessand/or assets of one or more of the Group Companies, and which:

 

(a)                                  involves, or the Vendor believes may reasonably be expected toinvolve, the payment or receipt by a Group Company of in excess of NZ$250,000(two hundred and fifty thousand New Zealand dollars) (before GST) in cash orother consideration of equivalent nature per annum; or

 

(b)                                 if terminated, would have a Material Adverse Effect on any GroupCompany; and

 

(c)                                  is not:

 

(i)                                     a Loan contract; or

 

(ii)                                  a guarantee or security for a Loan or an indemnity in respect of aLoan; or

 

(iii)                               an employment contract or another contract for the provision ofpersonal services to a Group Company.

 

*month*means calendar month.

 

*National Bank*means The National Bank of NewZealand Limited a company incorporated in New Zealand (Registered Number WN276922).

 

*National BankGroup* means the National Bank and itssubsidiaries (and includes Countrywide Endeavour Building Society) and, unlessinconsistent with the context, means each such company or other entityindividually.

 

*NBNZ Group* means NBNZ Holdings and its subsidiaries, including members of theNational Bank Group and, unless inconsistent with the context, means each suchcompany or other entity individually.

 

*NBNZ GroupTrade Marks*means those trade marksof which a Group Company is registered as the proprietor.

 

*NBNZ Holdings* means NBNZ Holdings Limited a company incorporated in New Zealand(Registered Number WN 421963).

 

*Net TangibleAssets*means the amount by whichTotal Tangible Assets as disclosed in the Closing Accounts exceed TotalLiabilities as disclosed in the Closing Accounts.

 

*NZ GAAP*means New Zealand generally accepted accounting practice within theterms of section 3 of the Financial Reporting Act 1993.

 

9

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a *Party*means the Vendor, the Purchaser, Lloyds TSB or theGuarantor, as the case may be, and *theParties*means them collectively.

 

*PermittedDividends*means the imputed dividendand the supplementary dividend referred to in *clause2.5*.

 

*PermittedEncumbrance*means:

 

(a)                                  encumbrances securing taxes, assessments, governmental charges orlevies, or the claims of contractors, carriers, landlords, warehousemen,workmen, repairmen, customers, employees and similar persons, which are not yetdue and payable or are being contested in good faith, so long as such contestdoes not involve any substantial danger of the sale, forfeiture or loss ofproperties or assets which are material to the NBNZ Group details of which havebeen included in the Disclosure Information;

 

(b)                                 encumbrances and imperfections of land title in respect of PropertyInterests which are not reasonably likely to, individually or in the aggregate,have a material adverse effect on or materially interfere with the use, occupancyor operation of the relevant premises as currently used, occupied or operated;

 

(c)                                  reservations of ownership by suppliers in the ordinary course ofbusiness;

 

(d)                                 with respect to leased premises forming part of the PropertyInterests, all underlying mortgages, deeds of trust, leases, grants of term orother estates in or interests affecting the landlord’s or fee simple owner’sinterest in the applicable portion of such property which are superior to theinterests of the relevant Group Company as tenant under the applicable lease;

 

(e)                                  with respect to owned premises and leased premises forming part ofthe Property Interests, all applicable building and zoning ordinances;

 

(f)                                    security interests arising in the ordinary course of business anddisclosed on the Personal Property Securities Register, including securityinterests relating to the Relevant Transactions.

 

*PropertyInterests* means the NBNZ Group’sfreehold and leasehold interests in land (including its leases or tenancies ofbuildings) described in the schedule attached to this Agreement as *Appendix One*.

 

*PurchasePrice*means the purchase price forthe Shares being the price referred to in *clause3.1* as the same may be adjusted pursuant to *clause 3.2.*

 

*Purchaser*means ANZ Banking Group (New Zealand) Limited a company incorporatedin New Zealand (Registered Number 35976).

 

10

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*PurchaserWarranties*means the representations and warranties of thePurchaser and the Guarantor created by *clause6.13* andset out in the *Fourth**Schedule.*

 

*RelatedCompany* has the meaning given to thatterm in section 2(3) of the Companies Act.

 

*RelevantTransactions*means the seventransactions specified in Part 1 of Document number 17.4.1 in the DataRoom Index.

 

*Shares*means 357,781,904 fully paid ordinary shares in the capital of NBNZHoldings.

 

*StaffSuperannuation Fund*means theNational Bank Staff Superannuation Fund being a registered superannuationscheme under the Superannuation Schemes Act 1989 and established under a Deeddated 1 April 1900 between the National Bank and the Public Trust (asTrustee) and governed by Rules deemed (under a Trust Deed dated31 March 1979 between the National Bank and the Trustees) to havecome into force on 1 June 1978 (Registered Number AS 2294).

 

*StructuredFinance Transactions*means thetransactions specified in parts 1 and 2 of Document number 17.4.1 in the DataRoom Index.

 

*subsidiary*has the meaning given to it in section 5(1) of the CompaniesAct.

 

*SuperannuationFunding Shortfall* means the excess ofthe accrued liabilities of the Staff Superannuation Fund over the market valueof the assets of the Staff Superannuation Fund, as determined by the actuary tothe Staff Superannuation Fund pursuant to the provisions of Professional StandardNumber 2 (Actuarial Reporting for Superannuation Schemes) promulgated by theNew Zealand Society of Actuaries.

 

*Tax Savings*, in respect of a loss, liability, cost or expense shall:

 

(a)                                  include, where the amount of a loss, liability, cost or expenseincurred is wholly or partly deductible for income tax purposes, the amount ofthe deduction (or where the deduction is properly allocable for tax purposes tomore than one or another income year an amount representing the net presentvalue of the deduction as agreed by the Vendor and Purchaser, or failingagreement as determined by an independent expert appointed, mutatis mutandis,in accordance with *paragraph 3.1*ofthe *Second Schedule*) to which therelevant person is entitled multiplied by the relevant taxation rate;

 

(b)                                 in the case of a deduction referred to in (a) above (and after thatdeduction has been present valued if required), be treated and deemed incurredand allocable in the same income year as the relevant loss, liability, cost orexpense is incurred; and

 

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(c)                                  include the amount of any input tax credit available as aconsequence of that loss, liability, cost or expense.

 

*TotalLiabilities*means the aggregate ofall liabilities of the NBNZ Group on a consolidated basis ascertained inaccordance with the Accounting Policies.

 

*TotalTangible Assets*means the aggregateof the book values of the tangible assets of the NBNZ Group on a consolidatedbasis ascertained in accordance with the Accounting Policies.

 

*Trade MarkLicence*means the trade mark licencebetween Lloyds TSB and the National Bank, in the form agreed between Lloyds TSBand the Purchaser on or before the Execution Date and initialled on behalf ofthose Parties for the purposes of identification.

 

*TransactionFour Transactions*means the threetransactions identified as the Transaction Four Transactions in Document number17.4.1 in the Data Room Index and includes a reference to each such TransactionFour Transactions individually.

 

*TransactionOne*means the funding and arrangementtransaction identified as Transaction One in Document number 17.4.1 in the DataRoom Index.

 

*TransactionThree Swaps*means the two fundingswap transactions identified as Transaction Three Swaps in Document number17.4.1 in the Data Room Index.

 

*TransactionTwo* means the financing transaction identified as Transaction Two andDocument number 17.4.1 in the Data Room Index.

 

*TransactionTwo - Entity One and**Entity Two*mean the entities respectivelydescribed as such in Document number 17.4.1 in the Data Room Index.

 

*UnderwritingAgreement* means the UnderwritingAgreement dated on or about 24 October 2003 between the Guarantor (asissuer) and Morgan Stanley Dean Witter Australia Securities Limited andCitigroup Global Markets Australia Pty Limited (as underwriters) a copy ofwhich has been initialled on behalf of the Parties for the purposes ofidentification.

 

*Vendor*means Lloyds Bank Subsidiaries Limited a company incorporated inEngland.

 

*VendorWarranties*means the representationsand warranties of the Vendor and Lloyds TSB created by *clause**6.1*and set out in the *Third Schedule*.

 

*VendorWarranty Claim*means a claim under *clause 6.2* (but which is not precluded by anotherprovision in *Section 6)*by the Purchaser forcompensation by the Vendor for a Warranty Loss.

 

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*Warranty Loss*means a loss, cost, expense ormonetary liability of (in each case) a type or nature which is reasonablyforeseeable (other than loss of profits but including reasonable legal andother costs) suffered or incurred by the Purchaser (calculated, subject to *clause 6.4(a)*, after taking intoaccount all relevant Tax Savings in relation to the relevant loss, cost,expense or monetary liability of the Purchaser and/or the relevant GroupCompany/ies) to the extent that the same arises as a result of a VendorWarranty being untrue, and:

 

(a)                                  for the purposes of this definition such a reasonably foreseeableloss, cost, expense or monetary liability of a Group Company shall be deemed tobe a reasonably foreseeable loss, cost, expense or monetary liability of thePurchaser of exactly the same amount, except in relation to partly owned GroupCompanies where the amount of the deemed loss, cost, exposure or monetaryliability shall be the same proportion of the relevant loss, cost, expense ormonetary liability as the proportion of the ordinary voting securities in thatpartly owned subsidiary owned by another Group Company; and

 

(b)                                 for the avoidance of doubt, for the purposes of this definition andotherwise, the Vendor shall not be liable in respect of any amount payable bythe Guarantor to, or any other liability of the Guarantor to, any equityinvestor or other investor in the Guarantor.

 

*Wind-upCompanies*means the following GroupCompanies and, unless inconsistent with the context, means each such companyindividually:

 

(a)                                  CountrywideSuperannuation Services Limited;

 

(b)                                 Lloyds NZAPty Limited;

 

(c)                                  NorthpacHoldings Limited;

 

(d)                                 PuketeIndustrial Holdings Limited;

 

(e)                                  ReceivablesWarehouse Limited;

 

(f)                                    RonaldoEnterprises Limited;

 

(g)                                 SouthPacific Merchant Finance (Australia) Pty Limited;

 

(h)                                 SouthpacCorporation (Australia) Pty Limited; and

 

(i)                                     SouthpacInvestment Management (Australia) Pty Limited.

 

1.2                                 **Constructionof References**

In this Agreement,unless the context requires otherwise, any reference to:

 

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*consent*includes an approval, authorisation, consent, exemption, filing,licence, order, exemption, permit, permission, recording, notification,lodgement, declaration or registration from, by or with a GovernmentalAuthority, and references to obtaining consents are to be construedaccordingly.

 

*encumbrance*means a debenture, mortgage, charge (whether fixed or floating),pledge, lien or other security interest whether legal or equitable andreferences to *encumber*are to beconstrued accordingly.

 

*person*includes an individual, body corporate, an association of persons(whether corporate or not), a trust and a state or agency of a state (in eachcase, whether or not having separate legal personality and whether incorporatedor existing in NewZealand or elsewhere).

 

*relief*includes relief, loss allowance, credit of tax, deduction, orset-off in computing income for the purposes of taxation, or computing anyliability for taxation, or any grant conferred on any person, or any right torepayment of taxation (whether or not including interest) available to thatperson whether in New Zealand or elsewhere.

 

*so far as theVendor is aware*is a reference to theactual knowledge (and not the constructive knowledge) of:

 

(a)                                  employees of Lloyds TSB after reasonable enquiry on their behalf hasbeen made of the Chief Executive and Chief Financial Officer of the NationalBank and (for the purposes of the *ThirdSchedule *only) also of the Head of Technology of the NationalBank; and

 

(b)                                 (for the purposes of *Section 7*only) also of Greg Grant and Michael Lynch being employees of the NationalBank.

 

*taxation*or *tax*includes:

 

(a)                                  all forms of taxation (whether direct or indirect), duties, imposts,withholding obligations, levies and rates of New Zealand or elsewhere and, inparticular (but without limitation), income tax, fringe benefit tax, chequeduty, credit card transaction duty, goods and services tax, gift duty, accidentcompensation levies, dividend withholding payments, customs or excise duties,resident withholding taxes, non-resident withholding taxes, specifiedsuperannuation contribution withholding taxes and approved issuer levies; and

 

(b)                                 all costs, charges, interest, penalties, additional tax, fines andexpenses, incidental and relating to or arising in connection with any suchtaxes, duties, dues, imposts,withholding obligations, levies or rates or to thenegotiation of any settlement of any dispute as to the liability of any personfor any of them, or any actual or threatened taxation claim or

 

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proceedings of whatsoevernature and wheresoever undertaken in connection with any of them.

 

*taxationauthority*means the Inland RevenueDepartment and any other governmental or other authority whatsoever competentto impose or collect any form of taxation whether in New Zealand or elsewhere.

 

*taxation claim*includes any notice, demand,assessment, determination, letter or other document issued, or action taken, byor on behalf of any Governmental Authority (whether state, provincial orlocal), statutory or regulatory authority or body or other person, whether inNew Zealand or elsewhere, and in particular (but without limitation) the InlandRevenue Department in New Zealand (or any overseas body with similar functionsor powers), whereby a Group Company may be, or be sought to be, placed underany liability to, or any increased liability to, taxation or may be deprived,or sought to be deprived, of any relief.

 

1.3                                 **GeneralInterpretation**

In this Agreement:

 

(a)                                  a reference to a Group Company includes a reference to its successorcompany;

 

(b)                                 unless otherwise stated, a reference to a Section or a clauseor a Schedule or an Appendix is to a Section or clause in, or aSchedule or Appendix to, this Agreement and a reference in aSchedule to a paragraph is a reference to a paragraph in that Schedule;

 

(c)                                  words in the singular include the plural and vice versa;

 

(d)                                 unless otherwise stated, a reference to a statute or regulation shall mean a statuteor regulation of New Zealand and shall include any amendment thereto and any statute orregulation in substitution therefore and any regulation or statutory instrumentissued under it;

 

(e)                                  Section, clause and paragraph headings are inserted for convenienceonly and shall be ignored in interpreting this Agreement;

 

(f)                                    expressions referring to writing shall be construed as includingreferences to words printed, type-written, telexed, communicated by electronicmail or on computer disk, lithographed or otherwise traced, copied orreproduced;

 

(g)                                 unless otherwise stated, references to time are references to NewZealand time; and

 

(h)                                 unless the context otherwise requires, references to, andexpressions used in connection with, financial calculations, valuations,accounting or financial

 

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reporting functions or in theirdescription bear the respective meanings ascribed to like expressions orexpressions to similar intent in accordance with NZ GAAP.

 

1.4                                 **DeemedNew Zealand Companies**

All references in thisAgreement to a subsidiary or Related Company of a Party shall (if thatParty is not a company incorporated under the Companies Act) be construed as ifthat Party is such a company.

 

1.5                                 **Currencies**

All references in thisAgreement to:

 

(a)                                  *Pounds Sterling*, *GBP* and £ arereferences to the lawful currency of England;

 

(b)                                 *Australian dollars* and *A$* are referencesto the lawful currency of Australia; and

 

(c)                                  *New Zealand dollars* and *NZ$* arereferences to the lawful currency of New Zealand,

 

AND references to *dollars*,*NZ$*and *$*are alsoreferences to New Zealand dollars.

 

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2                                          **SALEAND PURCHASE OF SHARES**

 

2.1                                 **Sale andPurchase**

The Vendor agrees to sell andtransfer to the Purchaser, and the Purchaser agrees to purchase and take atransfer of, the Shares on the terms and conditions set out in this Agreement.

 

2.2                                 **NoEncumbrances**

The Shares shall be bought andsold free and clear of all encumbrances whatsoever.

 

2.3                                 **Rights****and Privileges**

The Shares shall be bought andsold with all rights, options, privileges and entitlements which attach theretoas at or following the Execution Date and with the right to all dividends(other than the Permitted Dividends) and other Distributions declared, made orpaid thereon after the Execution Date.

 

2.4                                 **Title**

Following payment at Closing of:

 

(a)                                  the purchase price for the Shares in accordance with *clauses 3.3(a)*and *4.3(a)*; and

 

(b)                                 the amount required to be paid atClosing pursuant to *clause 3.4(b)*and*clause 4.3(b),*

 

beneficial title to the Shares shall be deemed to have passed to the Purchaser at 0001 hourson the Closing Date.

 

2.5                                 **PermittedDividends**

No later than the day beforethe Closing Date the Vendor will procure that NBNZ Holdings pays (in NewZealand dollars) a dividend (which may carry imputation credits) ofNZ$575,000,000 (five hundred and seventy five million New Zealand dollars)payable out of the retained earnings of NBNZ Holdings, together with asupplementary dividend (as defined in Section OB 1 of the Income Tax Act1994) calculated in New Zealand dollars by reference to the imputation creditsattached to the first mentioned dividend and also payable in New Zealanddollars.

 

2.6                                 **No Trusteeor Nominee**

For the avoidance of doubt, itis hereby acknowledged that notwithstanding any other provision of thisAgreement:

 

(a)                                  the Vendor does not hold the Shares as trustee or nominee for thePurchaser at any time prior to the completionof Closing and the receipt by the Vendor and Lloyds TSB respectively of theamounts payable under *clauses 4.3(a)*and *4.3(b)* respectively;

 

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(b)                                 the Purchaser has no rights to vote or participate in decisionmaking or to otherwise exercise shareholder decision-making rights with respectto the Shares or NBNZ Holdings at any time prior to the completion of Closing and the receipt by the Vendor and Lloyds TSBrespectively of the amounts payable under *clauses 4.3(a)*and *4.3(b)* respectively; and

 

(c)                                  the Purchaser’s remedy for any breach of a covenant given by theVendor and Lloyds TSB concerning the NBNZ Group, with respect to a period up tothe time specified in *clause 2.4*,is solely a contractual remedy enforceable against the Vendor and Lloyds TSB.

 

2.7                                 **Condition**

The Closing of the sale andpurchase of the Shares is conditional on the Guarantor raising, by way of thefully underwritten (under the Underwriting Agreement) 2 for 11 renounceablerights issue (at A$13 per share), the Offer Amount (as defined in theUnderwriting Agreement) to assist the Purchaser to finance the purchase of theShares.

 

2.8                                 **Date forFulfilment**

If, as at midnight (AustralianEastern Time) on 28 November 2003 (or on such other date as may be agreedin writing by Lloyds TSB and the Purchaser for the fulfilment of thatcondition):

 

(a)                                  the Guarantor has not raised, in the manner referred to in *clause 2.7*, the Offer Amount; and

 

(b)                                 either:

 

(i)                                     each of the conditions set out in *clause 2.1*and *clause 2.2* ofthe Underwriting Agreement has not been fulfilled or waived in accordance withthe relevant clause; or

 

(ii)                                  either or both of the underwriters under the Underwriting Agreementhas or have, in accordance with the Underwriting Agreement, terminated theirunderwriting commitments thereunder,

 

then the condition set out in *clause 2.7* shall be treated as not havingbeen fulfilled.

 

2.9                                 **Reasonable Steps to Satisfy Condition**

The Guarantor and the Purchaserwarrant to Lloyds TSB and the Vendor that the Underwriting Agreement has been,or on the Execution Date will be, executed by all parties thereto.  Each of the Guarantor and the Purchasershall use all reasonable endeavours to procure the fulfilment of the conditionset out in clause 2.7.

 

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2.10                           **Waiver**

The condition set out in clause2.7 has been inserted for the benefit of the Purchaser and may only be waivedby the Purchaser.

 

2.11                           **Non-Fulfilment**

If, as at midnight (AustralianEastern Time) on 28 November 2003 (or on such other date as may be agreedin writing by Lloyds TSB and the Purchaser for the fulfilment of thecondition), the condition set out in *clause2.7*is treated as not having been fulfilled under *clause 2.8*then:

 

(a)                                  the Parties will consult promptly and in good faith for 10 BusinessDays immediately after 28 November 2003 or such other date (or forsuch longer or shorter period as may be agreed in writing between them) todetermine whether the sale of the Shares to the Purchaser pursuant to thisAgreement can proceed notwithstanding the non-fulfilment of the condition setout in *clause 2.7*, and (if so)the amendments (if any) to this Agreement required to enable that sale toproceed;

 

(b)                                 if, at the end of the period for consultation under *clause 2.11(a)*, the Parties have notagreed in writing the basis on which the sale of the Shares will proceed, theneither Lloyds TSB or the Purchaser may give the other of them not less than 5Business Days’ written notice terminating this Agreement; and

 

(c)                                  upon the expiry of such notice period then, subject to *clauses 2.12* to *2.14* this Agreement will terminateimmediately and, upon termination, no Party will have any claim on anotherunder or otherwise in connection with this Agreement but the terms of theConfidentiality Deed will continue to apply.

 

2.12                           **Underwriting Agreement Termination**

If the non-fulfilment of thecondition set out in *clause 2.7*is caused by an event or circumstance described in *clause 2.8(b)*then:

 

(a)                                  the Vendor may not sue the Purchaser for specific performance;

 

(b)                                 the Vendor may not sue the Purchaser for damages, subject to *clause 2.12(c)* and *clause 2.14(c)*; and

 

(c)                                  subject to *clause 2.13*,the Purchaser shall, within 5 Business Days after28 November 2003 (or after such other date as may be agreed inwriting by Lloyds TSB and the Purchaser for fulfilment of the condition in *clause 2.7*), pay to the Vendor thesum of NZ$100,000,000 (one hundred million New Zealand dollars) as a contractbreak fee.

 

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2.13                           **LTSB/NBNZ Fault**

*Clause2.12(c)* shall not apply where:

 

(a)                                  the relevant event described in clause 10.1(a) or (b) (as the casemay be) of the Underwriting Agreement which resulted in the termination of theUnderwriting Agreement was caused by adverse circumstances in the NBNZ Group;or

 

(b)                                 the relevant event described in clause 10.1(b) of the UnderwritingAgreement is that described in clause 10.1(b)(iv) and:

 

(i)                                     the termination of this Agreement is a valid termination by thePurchaser following the failure by the Vendor or Lloyds TSB to observe orperform its obligations under this Agreement; or

 

(ii)                                  this Agreement is found to be void; or

 

(c)                                  the relevant event described in clause 10.1(b) of the UnderwritingAgreement is a material adverse change in the financial position, results orprospects of NBNZ Holdings from that reflected in the Prospectus (as that termis defined in the Underwriting Agreement) and that material adverse change iscaused by adverse circumstances within the NBNZ Group which were existing priorto the Execution Date and which were known to Lloyds TSB, NBNZ Holdings or theNational Bank but were not disclosed in writing to the Guarantor or thePurchaser prior to the execution of this Agreement.

 

2.14                           **ANZ Bad Faith**

If the condition set out in *clause 2.7* is not fulfilled because of badfaith on the part of the Purchaser or the Guarantor then:

 

(a)                                  the Vendor may not sue the Purchaser for specific performance; and

 

(b)                                 (without limiting paragraph (a)) the Purchaser shall, within 5Business Days after 28 November 2003 (or after such other date as may beagreed in writing by Lloyds TSB and the Purchaser for fulfilment of thecondition in clause 2.7), pay to the Vendor the sum of NZ$100,000,000 (onehundred million New Zealand dollars) as a contract break fee; and

 

(c)                                  the Vendor may sue the Purchaser for damages, and the quantum ofdamages shall be the loss of value of the NBNZ Group (less the amount of thecontract break fee).

 

2.15                           **Break Fees**

The Purchaser and the Guarantoracknowledge that each of the contract break fees referred to in *clauses 2.12(c)* and *2.14(b)*is not a penalty and does notnecessarily represent the loss that the Vendor will suffer if the Purchaserdoes not

 

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complete Closing due to thenon-fulfilment of the condition referred to in *clause 2.7*.

 

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3                                          **CALCULATION AND PAYMENT OF PURCHASE****PRICE**

 

3.1                                 **Purchase Price**

Subject to any adjustment madepursuant to *clause 3.2*ofthis Agreement, the aggregate purchase price for the Shares shall be the sum of£2,043,776,250 (two billion forty three million seven hundred and seventy sixthousand and two hundred and fifty Pounds Sterling).

 

3.2                                 **Adjustmentof Purchase Price**

The purchase price stated in *clause 3.1*shall beadjusted as follows:

 

(a)                                  if the amount of Net Tangible Assets is less than the Agreed NTAthen the purchase price for the Shares shall be reduced dollar for dollar by the amount by which the amount of the Net Tangible Assets is less thanthe Agreed NTA; and

 

(b)                                 if the amount of Net Tangible Assets is more than the Agreed NTAthen the purchaseprice for the Shares shall be increased dollar for dollar by the amount bywhich the amount of the Net Tangible Assets is more than theAgreed NTA.

 

Any adjustment pursuant to this*clause 3.2*shall be made on theAdjustment Date inaccordance with *clause 3.3(b).*

 

3.3                                 **Payment for****Shares**

The Purchase Price shall bepaid as follows:

 

(a)                                  at Closing the Purchaser shall pay to the Vendor (in PoundsSterling) the sum stated in *clause 3.1*;and

 

(b)                                 on the Adjustment Date either ofthe following payments shall be made, as the case mayrequire:

 

(i)                                     if Net Tangible Assets exceeds theAgreed NTA then thePurchaser shall pay to the Vendor (in New Zealand dollars) the amount of such excesstogether with interest on that excess calculated at the Interest Rate for the period from (and including) the ClosingDate to (but excluding) the Adjustment Date; or

 

(ii)                                  if Net Tangible Assets is lessthan the Agreed NTA thenthe Vendor shall payto the Purchaser (inNew Zealand dollars) theamount of such shortfall together with interest on thatshortfall calculated at the Interest Rate for the period from (and including) the Closing Date to (butexcluding) the Adjustment Date.

 

3.4                                 **Replacement of LTSB Existing Standby Facility**

It is agreed that:

 

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(a)                                  Lloyds TSB will provide the LTSBNew Revolving Loan Facility to the National Bank and will procure that theNational Bank accepts the LTSB New Revolving Loan Facility; and

 

(b)                                 at Closing (subject to the LTSBNew Revolving Loan Facility being available to the National Bank in accordancewith its terms) Lloyds TSB and the Purchaser shall arrange for the NationalBank to make a drawing or drawings under that new facility to repay theoutstanding principal amount under the LTSB Existing Standby Facility and topay all interest, fees, charges and other amounts outstanding, accrued orpayable by the National Bank to Lloyds TSB under or in respect of the LTSBExisting Standby Facility, in each case in the currency required by andotherwise in accordance with the LTSB Existing Standby Facility; and

 

(c)                                  Lloyds TSB and the Purchasershall arrange for the LTSB Existing Standby Facility to be cancelled witheffect on and from Closing.

 

3.5                                 **Closing****Accounts**

The Closing Accounts will beprepared, audited and designated in accordance with the *Second Schedule*.

 

3.6                                 **DefaultInterest**

If a Party shall fail to pay onthe due date any sum which that Party is obliged to pay pursuant to thisAgreement, then that Party shall pay interest on the amount in respect of whichdefault has been made at the Default Rate for the period from and including thedate on which the default was made until the relevant amount in respect ofwhich default has been made and all interest on that amount has been paid infull.

 

3.7                                 **Lowest Price**

For the purposes of:

 

(a)                                  the accrual rules in the Income Tax Act 1994, the Parties agree:

 

(i)                                     that the Final Purchase Price is the lowest price (determined undersection OB7 of the Income Tax Act 1994, to the extent the considerationpayable is denominated in a foreign currency) they would have agreed for theShares, on the Execution Date, if payment would have been required in full atthe time the first right in the contracted property (being the Shares) wastransferred;

 

(ii)                                  that the Final Purchase Price is the value of the Shares;

 

(iii)                               that no part of the Final Purchase Price is or representscapitalised or compounded interest; and

 

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(b)                                 in *clause 3.7(a)*,**“Final Purchase Price” means the PurchasePrice as adjusted pursuant to this Agreement.

 

3.8                                 **Calculationof Interest**

Any interest payable pursuant to thisAgreement shall be calculated on a daily basis and shallbe capitalised every 30 days.

 

3.9                                 **Payments**

All payments pursuant to this Agreement shallbe:

 

(a)                                  made in cleared immediatelyavailable funds before 1600 hours on the due date for payment, unless anothertime for payment is specified in this Agreement; and

 

(b)                                 madein New Zealand dollars unless (i) another payment currency is specified in thisAgreement, or (ii) the Parties agree in writing that the relevant payment willbe made in another currency.

 

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4                                          **CLOSING**

 

4.1                                 **Venue and Time**

Closing shall take place on the Closing Date:

 

(a)                                  at the offices of Chapman Tripp,Level 6, Optimation House, 1-13 Grey Street, Wellington or at such other timeor place as Lloyds TSB and the Purchaser may agree in writing; and

 

(b)                                 no later than 1600 (GMT) in orderto facilitate the payment on the Closing Date of Pounds Sterling pursuant to *clause3.3(a)**.*

 

4.2                                 **Deliveryof Documents**

At Closing, the Vendor shall deliver to the Purchaser:

 

(a)                                  a transfer of the Shares to the Purchaser dulyexecuted by the Vendor in registrable form;

 

(b)                                 the share certificate(s) for the Shares or a certificate from NBNZ Holdings that no share certificate for any of the Shares has been issued;

 

(c)                                  evidence of the passing by theDirectors of NBNZ Holdings of resolutions approving the transfer of the Sharesto the Purchaser and directing that the name of the Purchaser be entered in the share register of NBNZ Holdings on delivery to NBNZHoldings of the transfer referred to in *clause 4.2(a)*;

 

(d)                                 the following resignations (eachwith effect from the completion of Closing):

 

(i)                                     resignations of the Directors ofNBNZ Holdings and each other company listed in *Part1* or *Part 2*of the *First Schedule *(other than thoseDirectors who the Purchaser has notified the Vendor in writing at least 5Business Days prior to the Closing Date are not requiredto resign)from the office ofDirector of NBNZ Holdings or the relevant Group Company (as the case may be);and

 

(ii)                                  resignations of the NBNZ Group’snominated Directors on the Boards of the companies listed in *Part 3*and *Part 4* of the *FirstSchedule *(other than those Directors who the Purchaser hasnotified the Vendor in writing at least 5 Business Days prior to the ClosingDate are not required to resign) from the office of Director of the relevantcompany,

 

which resignations shall include an acknowledgement that the relevant officer has nooutstanding claim againstNBNZ Holdings or any other Group Company for loss of the relevant office and no money is owing by NBNZ

 

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Holdings or any other Group Company to thatofficer (other than, where applicable, deposits made on commercial arms length terms by that officer withthe National Bank);

 

(e)                                  a direction to the bank/s of eachGroup Company to cancel all authorities of signatories who are appointees of the NBNZGroup (other than those signatories who the Purchaser has notified the Vendorin writing at least 5 Business Days prior to the Closing Date are not requiredto resign) to operatethe relevant bank accounts;

 

(f)                                    duly executed transfers, in favour of NBNZ Holdings or the NationalBank, of all shares (if any) in a wholly-owned subsidiaryof which a person other than a Group Company is the registered holder (asnominee) together with the share certificates (if any) for any such shares or (where relevant) acertificate from the relevant Group Company that no share certificate for therelevant shares has been issued.  Withrespect to shares held by an individual in this regard, the Vendor need onlyuse its reasonable endeavours to deliver a transfer or certificate under this *clause 4.2(f)* concerning thoseshares;

 

(g)                                 the share registers of NBNZHoldings and each other wholly owned Group Company incorporated in New Zealand;

 

(h)                                 a shareholders resolution of NBNZ Holdings amending the Constitution of NBNZ Holdings as required by the Purchaser by notice in writingto the Vendor at least 10 Business Days prior to the Closing Date; and

 

(i)                                     a copy of the Trade Mark Licenceduly executed by Lloyds TSB and the National Bank with evidence reasonably acceptableto the Purchaser that the licence was granted and in force prior to Closing.

 

4.3                                 **Payment at****Closing**

At Closing the documents delivered pursuantto *clause 4.2*shall be heldin escrow at the Closing venue for the Vendor and the Purchaser for their respectiverights and interests until:

 

(a)                                  the Vendor has received the sums payable by the Purchaserat Closing pursuant to *clause 3.3(a)*;and

 

(b)                                 Lloyds TSB has received the sumpayable by the National Bank at Closing pursuant to *clause 3.4(b)*,

 

AND the Purchaser and the Guarantor willmake, or procure that there is made, each such payment at Closing.  Such payments shall be made to such bankaccounts of the Vendor and Lloyds TSB respectively as Lloyds TSB shall notifythe Purchaser in writing not less than 5 Business Days before the Closing Date.

 

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4.4                                 **Default inClosing**

If, after the condition in *clause 2.7*is fulfilled, Closing is noteffected on the Closing Date (and both of the Vendor and the Purchaser do notagree in writing that Closing does not need to be effected on that date) then:

 

(a)                                  either such Party may at any timethereafter serve on the other of them notice in writing (a *Closing Notice*) to effect Closing withinfive Business Days in accordance with *clause 4.2*and *clause 4.3* but thenotice shall be effective only if the Party serving it is at the time ofservice either in all respects ready, able and willing to proceed to effectClosing in accordance with the notice (and that Party states in the notice thatit is so ready, willing and able) or is not so ready, able and willing toeffect Closing only by reason of the default or omission of the other Party;

 

(b)                                 upon service of a Closing Notice,the Party on which the notice is served shall effect, or procure that there iseffected, Closing within five Business Days after the date of service of thenotice (excluding the day of service) and in respect of that period time shallbe of the essence;

 

(c)                                  if the Party on which the ClosingNotice is served does not comply with the terms of a Closing Notice, then theParty which has served the Closing Notice without prejudice to any of its otherrights or remedies available hereunder or at law or in equity, may:

 

(i)                                     sue the defaulting Party forspecific performance; or

 

(ii)                                  cancel this Agreement and sue thedefaulting Party for damages; and

 

(d)                                 where the Vendor is entitled tocancel this Agreement the entry by the Vendor into an unconditional contractfor the resale of all or some of the Shares by the Vendor shall take effect asa cancellation of this Agreement by the Vendor if this Agreement has notpreviously been cancelled and such resale shall be deemed to have occurredafter cancellation.

 

4.5                                 **CompanyDocuments and Records**

The Vendor shall procure that on the ClosingDate there willbe in the possessionor control of the NBNZ Group:

 

(a)                                  to the extent that a Group Companyhas any of the following:

 

(i)                                     the minute book, board papers,governance documents, statutory registers, current Certificate of Incorporation,Constitution and (if any) common seal of each Group Company;

 

(ii)                                  each Group Company’s documents oftitle, leases and contracts relating to its Property Interests;

 

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(iii)                               all current books of record andaccount and tax records ofeach Group Company and allcomputerised records of eachGroup Company;

 

(iv)                              each Group Company’s copies of allinsurance policies relating to the assets of that Group Company and thebusiness conducted by that Group Company; and

 

(v)                                 each Group Company’s policies andmanuals, and contracts, files, documents and other records concerning thatGroup Company or the business carried on by it;

 

(b)                                 the share certificate(s) for theshares owned by a Group Company in each Group Company named in *Part 1*, *Part2*and *Part 3*of the *First Schedule *or a certificate fromthe relevant Group Company that no certificate for the relevant shares exists;

 

(c)                                  shareholder resolutions or other relevant notices appointing thosepersons who the Purchaser has notified the Vendor in writing at least 10Business Days prior to the Closing Date are:

 

(i)                                     to****be directors of eachcompany listed in *Part 1* and *Part 2* of the *First Schedule*; and

 

(ii)                                  to replace the NBNZ Group’s nominated Directors on the Boards ofthe companies listed in *Part 3*and*Part 4* of the *First Schedule*,

 

in each case taking effect asat completion of Closing.

 

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5                                          **CONDUCT OFBUSINESS**

 

5.1                                 **Pre-ClosingConduct of Business**

During the Interim Period,unless the prior written consent of the Purchaser is obtained in eachparticular case (which consent (i) shall be given on behalf of thePurchaser by a person who will be nominated by the Purchaser withintwo Business Days after the Execution Date and who will be available togive consents under this *clause 5.1*whichmay be needed to facilitate the ongoing conduct of the business of the NBNZGroup, and (ii) shall not be unreasonably withheld or delayed), the Vendorshall ensure that the NBNZ Group:

 

(a)                                  conducts its business insubstantially the same manner as that in which it was conducted in the twoyears before the Execution Date;

 

(b)                                 does not incur or make anycommitment to incur capital expenditure in excess of NZ$500,000 for an individualitem or NZ$4,000,000 in the aggregate other than in performance of acontractual obligation existing as at the Execution Date and disclosed to theGuarantor before the Execution Date;

 

(c)                                  does not acquire or dispose ofassets other than (i) in the ordinary course of business, (ii) assets having avalue of less than NZ$500,000 individually or NZ$2,000,000 in the aggregate,and (iii) the DEPOSITPOINT trade mark registration 299365, and the domain names“lloydsbank.com.au” and “lloydstsb.co.nz”, proposed to be transferred to LloydsTSB;

 

(d)                                 does not give any guarantee orindemnity, or otherwise incur any actual or contingent liability, to secureliabilities or obligations of:

 

(i)                                     any member of the Lloyds TSBGroup; or

 

(ii)                                  any other person, except in theordinary course of business or where the maximum liability of the relevantGroup Company does not exceed NZ$2,000,000;

 

(e)                                  does not:

 

(i)                                     change materially the terms andconditions of employment of any Employee; or

 

(ii)                                  pay any bonuses (other than leavingbonuses), make any payments to Employees or introduce any additional Employeebenefits, which in each case are not routine,

 

except:

 

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(iii)                               for routine wage or salaryincreases or other routine adjustments made in accordance with the NationalBank Group’s customary review policies and procedures which were notified tothe Guarantor prior to the Execution Date; or

 

(iv)                              pursuant to any other commitmentmade by a Group Company before the Execution Date and disclosed to theGuarantor in writing before the Execution Date;

 

(f)                                    does not employ any person in asenior management role (being a role involving more than 600 “Hay points”);

 

(g)                                 does not:

 

(i)                                     issue or purport to issue anyshares, options or other equity securities other than to another Group Company;

 

(ii)                                  declare or pay any Distributionother than (A) as provided for in this Agreement or (B) to another GroupCompany;

 

(iii)                               transfer or purport to transferany shares (including shares held as treasury stock) other than to anotherGroup Company;

 

(iv)                              alter or purport to alter therights attaching to its shares;

 

(h)                                 uses all reasonable endeavours tomaintain its current policies of insurance;

 

(i)                                     does not permit an InsolvencyEvent to occur other than with respect to the Wind-up Companies;

 

(j)                                     does not make any change to theConstitution or the name of any Group Company;

 

(k)                                  does not settle any legalproceedings, other than proceedings in respect of amounts of less thanNZ$500,000;

 

(l)                                     does not make any submission toany regulator or Governmental Authority except (i) in the ordinary course ofbusiness, or (ii) where the submission will not (or is unlikely to) materiallychange the manner in which the NBNZ Group carries on business;

 

(m)                               does not enter into, vary or agreeto terminate or terminate unilaterally any Material Contract or enter into anymajor transaction (as that term is defined in section 129 of the CompaniesAct);

 

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(n)                                 does not divest any of thematerial Property Interests or acquire interests in land and/or buildings,except for any divestment or acquisition in connection with the location of anyautomatic teller machine;

 

(o)                                 does not change any of its lendingcriteria and credit policies in any material respect;

 

(p)                                 does not approve any new largeexposure, any increase to any existing large exposure or any increase to anyexisting exposure so that it becomes a large exposure.  For the purposes of this *clause**5.1(p),*“large exposure” means a Loan exposure the creation of which would requireapproval by Lloyds TSB, under policies and procedures of the NBNZ Group inexistence on the Execution Date;

 

(q)                                 does not make any alteration toits accounting policies or any material change to its accounting procedures;

 

(r)                                    does not transfer or license anyintellectual property owned by the NBNZ Group (other than the DEPOSITPOINTtrade mark registration 299365, and the domain names “lloydsbank.com.au” and“lloydstsb.co.nz”, proposed to be transferred to Lloyds TSB); and

 

(s)                                  does not modify any computersystems used by a Group Company in the conduct of its business other than (i)ordinary course fixes and routine maintenance, or (ii) in the course ofimplementing projects commenced or approved before the Execution Date anddisclosed in writing to the Guarantor before the Execution Date.

 

In addition, the Vendor shallensure that the NBNZ Group promptly notifies the Purchaser of any law suits,claims or investigations involving an amount of more than NZ$500,000 of whichit is aware and which are (during the Interim Period) threatened, brought,asserted or commenced against it, its directors or its employees, involving oraffecting the business of the NBNZ Group.

 

5.2                                 **Consultation**

During the Interim Period, theVendor shall ensure that the NBNZ Group consults with a person nominated by thePurchaser within two Business Days after the Execution Date before the NBNZGroup:

 

(a)                                  incurs any net actual indebtedness to the Lloyds TSB Group(excluding amounts payable under the LTSB Existing Standby Facility), if thetotal amount of that net actual indebtedness would then exceed NZ$250,000,000(two hundred and fifty million New Zealand dollars) or its equivalent in one ormore foreign currencies (or such higher amount as may be approved in writing bythe Purchaser) but this *clause 5.2(a)*doesnot apply to transactions between the LTSB Group and the NBNZ Group inconnection with customer-related activities;

 

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(b)                                 terminates the employment of anEmployee except due to misconduct, poor performance or other just cause afterfollowing a process which is consistent with its obligations under theEmployment Relations Act 2000;

 

(c)                                  commences or settles any legal proceedings;or

 

(d)                                 approves any new large exposure,any increase to any existing large exposure or any increase to any existingexposure so that it becomes a large exposure. For the purposes of this *clause5.2(d)*, “large exposure” means a Loan exposure the creation of whichwould require approval by the Chief Executive of the National Bank, underpolicies and procedures of the NBNZ Group in existence on the Execution Date.

 

5.3                                 **LTSBExisting Standby Facility**

The Purchaser recognises thatduring the Interim Period it may be necessary or appropriate in thecircumstances that the National Bank draw down under the LTSB Existing StandbyFacility for capital adequacy and/or liquidity purposes.  However, Lloyds TSB confirms that, duringthe Interim Period, the maximum principal amount drawn down under that facilitywill not exceed £2,000,000,000 (two billion Pounds Sterling) unless (i) theNational Bank does not have available to it on a timely basis suitablealternative standby funding on generally similar terms as those on which theLTSB Existing Standby Facility is available, or (ii) the prior written consentof the Purchaser is obtained.

 

5.4                                 **Pre-ClosingAccess to Business**

During the Interim Period, theParties shall co-operate with each other so that during such period, thePurchaser and (where relevant) its professional consultants (whose names havebeen notified to Lloyds TSB in writing at least one Business Day before theyhave access to the National Bank) have such access as the Purchaser reasonablymay request to:

 

(a)                                  the National Bank’s head office and its senior executives (and toother Employees, after consultation with relevant National Bank seniorexecutives) for the purposes of preparing for the ownership of the NBNZ Group,including without limitation for the purpose of undertaking certain preparatorybusiness integration tasks that need to be completed with immediate effectfollowing Closing (such as financial reporting processes) so long as such tasksdo not interfere with the day to day operation of the National Bank; and

 

(b)                                 all reports delivered in the Interim Period by the National Bank toLloyds TSB, and other information under the control of Lloyds TSB reasonablyrequired to assist the Purchaser in preparing for the ownership of the NBNZ Group.

 

5.5                                 **Substitution of Lloyds TSB Guarantees**

It is agreed that:

 

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(a)                                  during the Interim Period and, if necessary, following Closing,Lloyds TSB and the Guarantor will co-operate with each other and liaise withthe relevant beneficiaries under the relevant guarantees so that, with effectfrom Closing, the Guarantor is substituted for Lloyds TSB (or any otherrelevant member of the Lloyds TSB Group) as guarantor under the followingguarantees (each a *Parent Guarantee*):

 

(i)                                     the Deed Poll (Constituting Floating Rate Unsecured Loan Notes 2008)dated 10 September 1998 (as amended by Supplemental Deed dated on orabout 20 October 2003) executed by NBNZ Holdings, as issuer, andLloyds TSB Group plc, as guarantor;

 

(ii)                                  three Deeds of Guarantee dated in June 2003 executed by LloydsTSB as guarantor which Deeds of Guarantee are listed in the Disclosure Letter;and

 

(b)                                 where, in respect of a Parent Guarantee, the Guarantor is notsubstituted as guarantor for the relevant member of the Lloyds TSB Group as atClosing then the Guarantor shall:

 

(i)                                     from Closing until such substitution is effected, observe andperform the obligations of the relevant member of the Lloyds TSB Group underthat Parent Guarantee as if the Guarantor had been named as the guarantor inthat Parent Guarantee; and

 

(ii)                                  indemnify the relevant member of the Lloyds TSB Group against anyreasonably foreseeable loss, liability, cost or expense which is suffered orincurred by that member as a result of the failure of the Guarantor to observeand perform the obligations of that member under that Parent Guarantee.

 

5.6                                 **CounterpartyConsents**

It is acknowledged and agreedthat:

 

(a)                                  some of the leases and other contracts to which the NBNZ Group is aparty require the consent of the relevant lessor or contract counterparty as aresult of the change in ownership of NBNZ Holdings;

 

(b)                                 in this regard, during the Interim Period and, if requested by thePurchaser, after Closing, the Parties will co-operate with each other to obtainall relevant lessor consents and consents of relevant counterparties;

 

(c)                                  in respect of the Structured Finance Transactions:

 

(i)                                     during the Interim Period Lloyds TSB will arrange for the NationalBank to work collaboratively with the Purchaser to assist the Purchaser todevelop its understanding of the Structured Finance

 

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Transactions and to communicatewith relevant transaction counterparties to notify them of the change of ultimateownership of the National Bank and the various Group Companies participating inthe Structured Finance Transactions arising from the sale of the Shares to thePurchaser; and

 

(ii)                                  where a contract relating to a Structured Finance Transactionrequires the approval of a contract counterparty arising from such change ofownership, Lloyds TSB and the Purchaser will use all reasonable endeavours tohave the NBNZ Group obtain the relevant approval; and

 

(d)                                 no Party will be required to incur expense (other than reasonableout of pocket expenses) or assume obligations or liabilities for the purpose ofobtaining any relevant contract counterparty consent.

 

5.7                                 **Other Lloyds TSB Group Relationships**

It is agreed that:

 

(a)                                  no later than 12 months after Closing the Guarantor will arrange forLloyds TSB’s New York branch to be replaced as the New York process agent ofthe National Bank and NBNZ International Limited in respect of NBNZInternational Limited’s Commercial Paper Programme which agency is under aletter dated 20 June 2002 from Lloyds TSB’s New York Branch to theNational Bank and NBNZ International Limited;

 

(b)                                 Lloyds TSB will continue as issue agent and principal paying agentwith respect to NBNZ International Limited’s Euro Commercial Paper Programme(under an agreement dated 24 June 2002). As soon as practicable after Closing, Lloyds TSB and the Guarantor willconsult and determine who will be the ongoing issue agent and principal payingagent.  In the absence of agreement inthis regard within 12 months after Closing, Lloyds TSB will retire and bereplaced as the issue agent and principal paying agent*;*

 

(c)                                  no later than 12 months after Closing the Guarantor will arrange forNBNZ International Limited to relocate its London Branch from the premises ofLloyds TSB.  For this purpose Lloyds TSBand the Guarantor will co-operate with each other and with NBNZ InternationalLimited to implement an orderly transition and to deal with any relevantinformation technology issues relating to the Quantum treasury accountingsystem which is installed at Lloyds TSB’s premises; and

 

(d)                                 with effect from Closing, Lloyds TSB will withdraw the letters ofcomfort provided in respect of members of the National Bank Group and disclosedas Document numbers 14.6.1.56, 14.6.1.57 and 14.6.1.58 in the Data Room Index.

 

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5.8                                 **BlackHorse Company Names**

No later than 6 months afterClosing the Purchaser will procure that each member of the NBNZ Group the nameof which includes the words “Black Horse” changes its company name so as toremove those words.

 

5.9                                 **Lloyds TSBManuals**

Where, as at Closing, the NBNZGroup is in possession of any manuals which suggest an association oraffiliation with Lloyds TSB or another member of the Lloyds TSB Group thenwithin 6 months after Closing those manuals shall each include a prominentstatement at the beginning of the manual advising readers of the manual thatthe Lloyds TSB Group accepts no responsibility or liability for any informationincluded in or omitted from the manual.

 

5.10                           **Consultation on Employment Matters**

During the Interim Period theParties will consult with each other and with the National Bank in relation toall communications and other dealings with the Employees and with any unionswhich represent them over employment-related issues arising in connection withthe sale of the NBNZ Group pursuant to this Agreement.  The Purchaser and the Guarantor recognisethat the National Bank takes very seriously its statutory good faith obligation.

 

5.11                           **Post-ClosingRedundancy**

For the avoidance of doubt, itis acknowledged that if, after Closing, an Employee becomes redundant then allredundancy payments (including, without limitation, any payment for a jobsearch period and any component reflecting accumulated sick leave or specialleave, long service leave or other benefit), notice payments, damages,compensation payments and other costs and expenses of, or arising out of, suchredundancy are to be met by the Purchaser or the relevant Group Company andneither the Vendor nor any other member of the Lloyds TSB Group shall have anydirect or indirect liability in respect of, and the Purchaser shall indemnifythe Vendor and each other member of the Lloyds TSB Group against allliabilities and costs arising from, any such redundancy.  For the avoidance of doubt, this *clause 5.11* does not derogate from theVendor Warranties.

 

5.12                           **Employees**

During the period of 18 monthsfrom the date of this Agreement, Lloyds TSB will not, and will take reasonablesteps to ensure that each member of the Lloyds TSB Group does not:

 

(a)                                  target specifically any Employee for employment; or

 

(b)                                 entice any Employee to terminate employment with a Group Company.

 

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6                                          **REPRESENTATIONSAND WARRANTIES**

 

6.1                                 **VendorWarranties**

It is agreed that:

 

(a)                                  in consideration of the Purchaser entering into this Agreement, the Vendor herebyrepresents and warrants to the Purchaser, as at the Execution Date, as set outin the *Third Schedule*;

 

(b)                                 each of the representations andwarranties set out in the *ThirdSchedule *shall be deemed to be repeated as atClosing;

 

(c)                                  for the avoidance of doubt and without limiting *clauses 6.12(a)*to *6.12(f)*, nothing expressed or implied inthis Agreement constitutes any warranty, representation or undertaking by anymember of the Lloyds TSB Group as to:

 

(i)                                     the enforceability of any contract or security in respect of anyLoan (except to the extent that *paragraphs 7.4*and *17* of the *Third Schedule *address compliancewith relevant law or the National Bank’s policies and practices in relation tothe documentation and implementation of Loans and related security arrangementsand variations thereof); or

 

(ii)                                  the collectability of any Loan or any related interest or charges(except to the extent that *paragraphs 7.4*and *17* of the *Third Schedule *address compliancewith relevant law or the National Bank’s policies and practices in relation tothe documentation and implementation of Loans and related security arrangementsand variations thereof); or

 

(iii)                               the creditworthiness of any person having an actual or contingentobligation to any member of the NBNZ Group for or in respect of any Loan orother genre of actual or contingent indebtedness,

 

provided however nothing in this*clause 6.1(c)* is intended tooverride or limit any of the provisions of *Section 7*;and

 

(d)                                 without limiting any other provision in this Agreement, the warranty contained in *paragraph 17* (*Disclosure Information*) of the *Third Schedule *does not apply to information that is:

 

(i)                                     an assumption, opinion, prediction, estimate, projection orforecast; or

 

(ii)                                  sourced from a Governmental Authority; or

 

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(iii)                               publicly available (other than information which is publiclyavailable only because it is published or issued by a Group Company).

 

6.2                                 **Purchase Price Adjustment for Breach of Warranty**

Subject to *clauses 6.4*to *6.11*, the Vendor shall, by way of anadjustment to the Purchase Price, indemnify the Purchaser and hold it harmlessfrom and against each Warranty Loss.

 

6.3                                 **AdjustedPrice Sole Relief**

The Purchaser acknowledges thatthe only relief available to it arising from any breach of a Vendor Warranty isthe right to have the Purchase Price adjusted (by way of payment by the Vendorof a refund) pursuant to *clause 6.2*(subject always to the limitations set out in this *Section 6*) and that the breach of any Vendor Warrantyshall not give rise to any other or separate cause of action for damages orother relief from misrepresentations or breach of representation or warranty orotherwise.

 

6.4                                 **MonetaryLimitations**

It is agreed that:

 

(a)                                  no individual Warranty Loss shallbe recoverable from the Vendor unless the amount of that individual WarrantyLoss is more than NZ$2,500,000 (two million five hundred thousand New Zealand dollars)unless that Warranty Loss is one of a series (that is, two or more) of WarrantyLosses arising from the same event or circumstance or originating cause inwhich case the amounts of all such Warranty Losses may be aggregated in valueand treated as a single Warranty Loss. In calculating the amount of a Warranty Loss for the purposes ofcalculating whether the threshold in this *clause 6.4(a)*has been reached (but for no other purpose), the reference to Tax Savings inthe definition of Warranty Loss shall be ignored;

 

(b)                                 the Vendor shall not be requiredto make a payment under *clause 6.2*in respect of a Warranty Loss unless the amount of that Warranty Loss whenadded to the amount of all other Warranty Losses exceeds the sum ofNZ$25,000,000 (twenty five million New Zealand dollars) (*Warranty Threshold*) and if the WarrantyThreshold is reached then the Vendor shall meet the full amount of such VendorWarranty Claims (subject always to the other limitations in this *Section 6*) and not just in respect ofthe aggregate of all Warranty Losses exceeding the Warranty Threshold; and

 

(c)                                  the provisions of *clause 10.1* (*Vendor Liability Cap*) shall apply toclaims under *clause 6.2*.

 

6.5                                 **Time Limit**

No claim for a breach of aVendor Warranty will be valid unless the claim is notified in writing to LloydsTSB by 31 January 2006.

 

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6.6                                 **General Exceptions to Vendor Warranties**

The Vendor Warranties shall beread, and shall have effect, subject to:

 

(a)                                  any exceptions expressly providedfor under the terms of this Agreement;

 

(b)                                 anythingdone or omitted at the request, or with the approval, of the Purchaser or theGuarantor in writing after the Execution Date;

 

(c)                                  any matter, circumstance orinformation reasonably disclosed in the Disclosure Information (taken as awhole so that all relevant information is taken into account with respect to aparticular subject matter); and

 

(d)                                 any matter recorded in a publicregister held by any of the following bodies (and which would have beendisclosed in a search of the public records of such body) in relation to aGroup Company, namely:

 

(i)                                     High Court of New Zealand;

 

(ii)                                  Registrar of Companies (but theVendor Warranty in *paragraph 16.2* (*Managed Funds*) ofthe *Third Schedule *shall notbe read subject to this *clause 6.6(d)(ii))*;

 

(iii)                               Land Information New Zealand;

 

(iv)                              Intellectual Property Office ofNew Zealand;

 

(v)                                 Domainz; and

 

(vi)                              Personal Property Securities Register.

 

6.7                                 **Exclusionsfrom Warranty Claims**

No event or circumstanceaffecting the NBNZ Group, nor the amount of any relevant loss, cost, expense ormonetary liability arising therefrom, shall give rise to a Vendor WarrantyClaim (and any Vendor Warranty Claim previously made shall be treated as havingbeen adjusted correspondingly) to the extent that:

 

(a)                                  the relevant amount claimed isspecifically provided for in the Closing Accounts; or

 

(b)                                 the relevant circumstance oramount has been or is made good without cost or liability to the Purchaser or the NBNZ Group; or

 

(c)                                  the relevant amount has beenrecovered by the Purchaser or the NBNZ Group by insurance; or

 

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(d)                                 the relevant event, circumstance,loss, liability, cost or expense would not have arisenbut for an act or omission by the Purchaser or the NBNZ Group after Closing; or

 

(e)                                  the relevant event or circumstance, or a relevant loss, cost,expense or liability of the NBNZ Group, is something in respect of which amember of the NBNZ Group is entitled to be indemnified under the indemnity setout in clause 6.2 of the Share Sale Agreement dated10 September 1998 between Bank of Scotland, BOS Holdings (NewZealand) Limited, Lloyds TSB, NBNZ Holdings and the National Bank; or

 

(f)                                    the relevant claim against the NBNZ Group is brought by a member ofthe ANZ Group.

 

6.8                                 **No DoubleRecoveries**

It is agreed that:

 

(a)                                  the Purchaser shall not be entitled to be paid by the Vendor under *clause 6.2* more thanonce in respect of Warranty Losses arising from the same event or circumstanceor originating cause.  For the avoidanceof doubt, nothing in this *clause 6.8(a)*shallpreclude:

 

(i)                                     payment of claims in relation to a series (that is, two or more)Warranty Losses arising from the same event or circumstances or originatingcause; or

 

(ii)                                  payment of different Warranty Losses suffered by more than one GroupCompany, arising from the same event or circumstances or originating cause; and

 

(b)                                 if thePurchaser or a Group Company recovers from a third party:

 

(i)                                     the amount of any valid claimwhich would, but for the provisions of *clause 6.4(a)*, be avalid claim under *clause 6.2*then the amount payable by the Vendor under *clause 6.2*shall be reduced to the extent of any amount so recovered; or

 

(ii)                                  all or some of the amount of anypayment made by the Vendor to the Purchaser in respect of a valid claim under *clause 6.2*, then the Purchaser shall procure that any amount so recovered isforthwith paid to the Vendor and the relevant Vendor Warranty Claim shall betreated as having been correspondingly withdrawn or the amount thereofadjusted, as the case may require. Without limiting *clause 6.10*,nothing in this *clause 6.8(b)(ii)*shall require the Purchaser to seek recovery from any third party before givingnotice of a Vendor Warranty Claim under *clause6.11(a)*.

 

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6.9                                 **Subrogationof Rights**

If the Vendor makes fullpayment to the Purchaser of an amount for which the Vendor is liable in respectof a Vendor Warranty Claim, then the Purchaser shall use reasonable endeavoursto procure that the Vendor is subrogated to the rights of the Purchaser inrespect of all or any of their respective rights against any other person inrespect of that Vendor Warranty Claim. In exercising its rights of subrogation the Vendor shall consult thePurchaser in a timely manner and shall have regard to risk of damage to thereputation of the business of the NBNZ Group.

 

6.10                           **Duty toMitigate**

The Purchaser shall take reasonable steps tomitigate its loss arising from the occurrence of any event or circumstancegiving rise to any Warranty Loss and, subject to *clause 6.11*, where relevant shall also ensure that eachrelevant Group Company takes reasonable steps to mitigate the loss suffered bythat Group Company arising from any such event or circumstance PROVIDED THATnothing in this *clause 6.10* shallrequire the Purchaser to do anything which could prejudice its ability to makea claim under any insurance held for the Purchaser’s benefit*.*

 

6.11                           **Managementof Claims**

If the Purchaser or theGuarantor becomes aware of any circumstances (*RelevantCircumstances*) that are likely to give rise to a Warranty Loss aclaim for which is not precluded by *clause 6.4*then the Purchaser shall:

 

(a)                                  as soon as reasonably possible(and, in any event, within 2 months after the Purchaser or the Guarantorbecomes aware of the Relevant Circumstances) notify LloydsTSB giving, so far asis reasonably practicable, details of the Relevant Circumstances;

 

(b)                                 not make any admission ofliability, agreement, settlement or compromise in respect of a third partyclaim or otherwise take any action in relation theretoexcept where:

 

(i)                                     a payment is made to satisfy a final and unappealable judgment or isotherwise required by law; or

 

(ii)                                  the Purchaser has notified Lloyds TSB in writing of its proposal todo so and Lloyds TSB has given its prior written consent to such admission ofliability, agreement, settlement or compromise (such consent not to beunreasonably withheld or delayed); or

 

(iii)                               the Relevant Circumstances havegiven rise to a claim by a third party against a Group Company and:

 

(aa)                            the Purchaser has received awritten opinion from a Queen’s Counsel (or equivalent senior lawyer)experienced in the

 

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relevant area of law who has been approved inwriting by Lloyds TSB (such approval not to be unreasonably withheld ordelayed) that there is a remote prospect only of the relevant Group Companysuccessfully defending any such claim on the legal merits of the claim; and

 

(bb)                          the amount to be paid to settle orcompromise the matter does not exceed NZ$2,750,000 (two million seven hundredand fifty thousand New Zealand dollars);

 

(c)                                  give LloydsTSB and itsprofessional advisers reasonable access to all information and documents in itsor their possession or under its or their control relevant to the RelevantCircumstances provided that such access shall not constitute a waiver of thePurchaser’s legal professional privilege; and

 

(d)                                 comply with a reasonable writtenrequest from, or consent of, Lloyds TSB to settle orcompromise any relevant third party claim in accordance with *clause 6.11(b)* or allow Lloyds TSB,at the cost of Lloyds TSB, to conduct the defence of any relevant third partyclaim, subject in either case to Lloyds TSB first acknowledging to thePurchaser that a valid Warranty Claim arises from the Relevant Circumstancesand (if Lloyds TSB has requested such a settlement or compromise) Lloyds TSBmaking available to the Purchaser, or paying to the relevant third party, anyamount required to be paid to the relevant third party to settle or compromisethe relevant claim.  In such casesLloyds TSB must act in full consultation at all times with the Purchaser anduse its reasonable endeavours to avoid the risk of harm to the reputation ofthe business of the NBNZ Group and the ANZ Group.

 

6.12                           **PurchaserRelies on Own Judgement**

Each of the Purchaser and theGuarantor acknowledges and agrees that, except for the Vendor Warranties and *Section *7 and without limiting theVendor’s obligations under *clause 6.2*:

 

(a)                                  it has entered into this Agreementin reliance solely on its own judgement and inspection and not in reliance onany statements, warranties or representations made to, or any informationprovided to, the Purchaser or the Guarantor or to any other person by or onbehalf of Lloyds TSB or the Vendor or any other member of theLloyds TSB Group;

 

(b)                                 it has made such independentenquiry and investigations into the business, the assets and the liabilities of the NBNZ Group (including, without limitation, theoperations, financial condition and prospects of that business) as it hasconsidered appropriate and though various information (including opinions,estimates, projections and forecasts) or statements of fact may have beensupplied or made to the Purchaser or the Guarantor by

 

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or on behalf of Lloyds TSB orthe Vendor or any other member of the Lloyds TSB Groupor its advisers, employees, officers or agents, none of them has given anyrepresentation or warranty as to the financial condition or prospects of anyGroup Company.  Each of the Purchaserand the Guarantor unconditionally waives any claim it may have against LloydsTSB, theVendor and each other member of the Lloyds TSB Group orits representatives, related companies or their respective advisers, employees,officers or agents (whether arising in tort, in contract, by operation of lawor otherwise) in respect of any such information or statements, except anyclaim that the Purchaser or the Guarantor may have for fraudulent conduct;

 

(c)                                  all implied or otherrepresentations or warranties of Lloyds TSB, the Vendor and each other memberof the Lloyds TSB Group in relation to the transactions evidenced by this Agreement are hereby expressly excluded to the maximum extentpermitted by law;

 

(d)                                 to the maximum extent permitted bylaw, any inquiry or determination by a Court into or of any of the followingmatters is precluded:

 

(i)                                     whether a statement, promise, orundertaking was made or given, either in words or byconduct, in connection with or in the course of negotiations leading to themaking of this Agreement;

 

(ii)                                  whether, if it was so made orgiven, it constituted a representation or a term of this Agreement; or

 

(iii)                               whether,if it was a representation, it was relied on;

 

(e)                                  (without limiting the provisions of *clauses 6.12(a)*to *6.12(d)*) butsubject to any right of action arising under *clauses 6.2*and *10.9*, each of the Purchaserand the Guarantor renounces any cause of action (if any) against Lloyds TSB or the Vendor or any other member of the Lloyds TSB Group or any other personwhich, notwithstanding the foregoing provisions of this *clause 6.12*, it may have founded on,and discharges Lloyds TSB, the Vendor and each other member of the Lloyds TSBGroup and other person from, any liability at common law (including, but notlimited to, negligence) or under statute (including, but not limited to, theFair Trading Act 1986 except to the extent prohibited by that Act) arising outof this Agreement; and

 

(f)                                    the acknowledgements and agreements given in theforegoing paragraphs of this clause are promises which confer, and are intendedto confer, a benefit upon Lloyds TSB, the Vendor and each other member of theLloyds TSB Group and their respective advisers, directors, employees, officersand agents and, accordingly, the provisions of the Contracts (Privity) Act 1982apply to each of them.

 

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6.13                           **PurchaserWarranties**

Each of the Purchaser and theGuarantor hereby represents and warrants to the Vendor, as at the ExecutionDate, as set out in the *Fourth Schedule*.  Each of the representations and warrantiesset out in the *Fourth Schedule *shallbe deemed to be repeated in all material respects as at Closing.  No claim for breach of a Purchaser Warrantyshall be valid unless the claim is notified to the Guarantor by31 January 2006.

 

6.14                           **Tax Consequences of Purchase Price Adjustment**

The Parties acknowledge andagree that:

 

(a)                                  should, contrary to the Parties’ understanding, a Purchase Priceadjustment (or part thereof) payable pursuant to *clause 6.2* be gross income to the Purchaser or considerationfor a taxable supply (for GST purposes) by the Purchaser (or the Purchaser’sGST group representative member) then *clauses 6.14(b)*and*(c)*apply;

 

(b)                                 the Purchaser is intended to receive and retain the full amount ofthe relevant Purchase Price adjustment payable pursuant to *clause 6.2* after taking account ofall (or any) tax considerations or effects that apply to or flow from thatpayment or any payment or increased payment required by *clause 6.14(c)*;

 

(c)                                  any Purchase Price adjustment payable pursuant to *clause 6.2*shall, where necessary, beincreased so that, after the subtraction of all of the Purchaser’s (or thePurchaser’s GST group representative member’s) liabilities (if any) for taxesin respect of the payment or payments totalling the increased amount or inrespect of any taxable supply giving rise to such payment or payments (suchliability for tax to be the liability which would arise but for any reliefspecifically relating to that liability available to the Purchaser (or the Purchaser’sGST group representative member)), the Purchaser receives and retains therequired Purchase Price adjustment.

 

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7                                          **TAXATION**

 

7.1                                 **Definitions**

In this *Section 7*:

 

*IRD* means the Inland Revenue Department.

 

*GST Act* means the Goods and Services Tax Act 1985.

 

*ITA*means the Income Tax Act 1994.

 

*TAA* means the Tax Administration Act 1994.

 

7.2                                 **Purchase Price adjustment for Indemnity Loss**

Subject to the limitations setout in this *Section 7*, theVendor shall, by way of an adjustment to the Purchase Price and pursuant to *clause 7.5*, indemnify the Purchaseragainst certain liabilities to taxation incurred or suffered by GroupCompanies.  For this purpose, theParties agree that the amount of an indemnity payment computed in accordancewith this *Section 7*and, inparticular, having regard to *clause 7.9*,is deemed to compensate the Purchaser for any loss it may have suffered inacquiring the Shares.  The Purchaseracknowledges that the only recourse available to it arising in thosecircumstances is the right to claim to have the Purchase Price adjusted (by wayof payment by the Vendor of a refund) pursuant to *clause 7.5* (subject always to the limitations set outin this *Section 7*) and thatthere are no other or separate causes of action for damages or other recoursefrom misrepresentations or breach of representation or warranty or otherwiseavailable to the Purchaser in these circumstances.

 

7.3                                 **TaxWarranties - General**

The Vendor warrants to the Purchaser that,except to the extent the following applies to any transaction in the portfolioof Structured Finance Transactions entered into by certain Group Companieswhere the warranties given pursuant to this clause are not qualified byknowledge, so far as the Vendor is aware, the following is or will be true inall material respects as at the Closing Date:

 

(a)                                  *Full Provisionfor Taxation: *The Closing Accounts will makeprovision or reserve for all taxation every Group Company is or may becomeliable to pay in respect of income, transactions or events subject to taxationfor any (and every) period ending on or before the day before the Closing Date;

 

(b)                                 *DeferredTaxation: *The deferred tax in the Closing Accounts willbe correctly calculated in accordance with the Accounting Policies;

 

(c)                                  *Records: *Each Group Company has kept and preservedthose records which it has been required to keep and preserve for the purposesof taxation by the TAA or by any other relevant law,including without limitation:

 

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(i)                                     copiesof all taxation returns, registrations, elections, notices, and any otherdocuments submitted to the IRD or any other relevant taxation authority;

 

(ii)                                  allrecords required in relation to tax memorandum accounts (including thosedescribed in paragraph (f)); and

 

(iii)                               allrecords necessary for ascertaining capital gains and capital losses (includingnet capital gains and net capital losses);

 

(d)                                 *Returnsetc: *Each GroupCompany has made all taxation returns and made or supplied all registrations, elections,notices and information to the IRD or any other relevant taxation authority as arerequired by law and all such taxation returns made, and all such registrations, elections, noticesand information made or supplied, by each Group Company were correct, disclosedall material items and were made on a proper and timely basis;

 

(e)                                  *Tax PaymentsMade*:  All taxation payments or withholdingsrequired to be made by a Group Company before the Closing Date will have beenmade, and

 

(i)                                     each Group Company has (whererequired by law to do so) accounted to the IRD or any other applicable taxationauthority for any tax so deducted or withheld by it on a timely basis; or

 

(ii)                                  provision for the payment of thesame at a future date will be made in the Closing Accounts, or the amounts thatwere deducted or withheld have been or will be retained and will be availableto the Group Company at the Closing Date pending their payment to the IRD orthe application taxation authority;

 

(f)                                    *Tax MemorandumAccounts: *To theextent that imputation credit accounts, dividend withholding payment accounts,branch equivalent taxationaccounts, conduit tax relief accounts, policyholder credit accounts and othertax memorandum accounts have been or should have been maintained by any GroupCompany under a provision of the ITA or the TAA:

 

(i)                                     thosetax memorandum accountshave been correctly maintained as required by the relevant legislation; and

 

(ii)                                  no Group Company is liable for any taxation payable where therewas a debit balance in any of its tax memorandum accounts at the end of anearlier imputation year; and

 

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(iii)                               none of those tax memorandumaccounts (other than a branch equivalent taxation account) will have a debitbalance on the Closing Date;

 

(g)                                 *Goods andServices Tax*:  For the purposes of GST and as applicable inrespect of all periods ending before the Closing Date:

 

(i)                                     each Group Company has complied(whether as part of a group for GST purposes or otherwise) with all therequirements of the GST Act and in particular has maintained and kept complete,correct and up-to-date records, invoices, credit and debit notes and othernecessary documents for the purposes of that Act;

 

(ii)                                  (without limiting paragraph (e))all GST for which the Group Company was liable to account in respect of taxablesupplies made by any person before the Closing Date has been paid or provisionfor the payment of the same at a future date will be made in the ClosingAccounts or amounts on account of such GST will be retained by and will beavailable to the Group Company at the Closing Date pending their payment to theIRD;

 

(h)                                 *NoDisputes: *As at the Execution Date no Group Company isin any dispute with any taxation authority andno taxation audit, review or investigation by the IRD or any other applicabletaxation authority is presently being undertaken or, so far as the Vendor isaware, is pending as at the Execution Date except for:

 

(i)                                     an IRD audit of the NBNZ Group’sstructured financing arrangements; and

 

(ii)                                  a dispute with the IRD in relationto a Carter Holt Harvey transaction; and

 

(iii)                               completion of IRD audits of GroupCompanies for periods prior to the 1999 income year.;

 

(i)                                     *IRD Rulings andTax Opinions: *A Group Company may rely on eithera non-binding IRD ruling or a taxation opinion obtained by the Group Company inrespect of the tax treatment of or any tax position taken with respect to anytransaction, to the extent that the IRD ruling or taxation opinion was givenwith respect to the transaction or tax position (and in the case of the IRDruling) was stated to apply to the relevant period;

 

(j)                                     *Binding taxationrulings: *All binding taxation rulings received by theGroup Companies bound the IRD when issued, and remained binding on the IRDuntil the end of the period to which they applied or remain binding at Closing,and each transaction entered into by an applicable Group

 

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Company in reliance on a binding ruling is inall material respects the arrangement described in such binding ruling;

 

(k)                                  *No Avoidance orSham:*  No Group Company has at any time:

 

(i)                                     obtained or sought to obtain ataxation advantage for which a penalty or liability may be imposed undersection 141E or 143B of the TAA; or

 

(ii)                                  obtained a taxation advantage fromany arrangement to which section BG1 of the ITA or section 76 of theGST Act applies; or

 

(iii)                               made or entered into anyarrangement undertaking or scheme which was at the time it was entered into asham,

 

for which provision has not been made in theClosing Accounts;

 

(l)                                     *ThinCapitalisation:*  Each Group Company is not and has not been acompany to which the interest apportionment rule in section FG8 or the interestallocation rules in Sub-Part FH of the ITA apply; and

 

(m)                               *Tax BalanceDate:*  Each Group Company that is a New Zealandresident taxpayer has an accounting year for New Zealand income tax purposesending on 31 December of each year.

 

For the avoidance of doubt, a claim for abreach of warranty in this *clause 7.3*can only be made under *clause 7.5(a)*and(in the case of *paragraphs (i)*and*(j)*of *clause 7.3*) under *clause7.5(b)*.

 

7.4                                 **Tax Warranties – Relevant Transactions**

The Vendor warrants to the Purchaser that thefollowing is or will be true in all material respects as at the Closing Date:

 

(a)                                  *Assumed TaxationConsequence:*  The Relevant Transactions have:

 

(i)                                     the taxation consequences for theapplicable Group Companies throughout their transaction terms which were:

 

(aa)                            described in approval papersprepared by NBNZ Group employees for the purposes of obtaining corporateauthorisations for the Relevant Transactions; and

 

(bb)                          specified in taxation rulings oropinions referred to in the approval papers and obtained for each RelevantTransaction; and

 

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(ii)                                  no other material taxationconsequences for the applicable Group Companies (and without limiting what is amaterial taxation consequence, this term shall include a material net GSTtransaction cost with respect to a transaction);

 

(b)                                 *Transaction One:* Any warranty that relates to taxation consequences given by a GroupCompany in the agreements comprising Transaction One, was true in all materialrespects when made, and will remain so at Closing.

 

For the avoidance of doubt, a claim for abreach of warranty in this *clause 7.4*can only be made under *clause 7.5(b)*.

 

7.5                                 **Indemnity**

Subject in all respects to the other clausesin this *Section 7*, the Vendorcovenants tokeep the Purchaser indemnifiedfrom and against, and to pay to the Purchaser (by way of adjustment to thePurchase Price) an amount equal to, any amount of taxation for which any GroupCompany is or becomes liable to pay:

 

(a)                                  in respect of any period up to theday before the Closing Date, including in respect of or by reference to or as aconsequence of:

 

(i)                                     any income derived or received bya Group Company on or beforethe day before the Closing Date or in respect of any period ending on or before the day beforethe Closing Date and howsoever that liability for taxation arises, includingwithout limitation where the taxation liability arises because of the denial ofany relief expectedto be available to any person (whether directly or through a loss offset election or subventionpayment arrangement); or

 

(ii)                                  any benefit provided or deemed byapplicable law to be provided by a Group Company to its employees on or beforethe day before the Closing Date; or

 

(iii)                               any other event or circumstance orany act or omission which occurred or existed, or was deemed by operation oflaw to occur or exist, on or before the day before the Closing Date for thepurposes of taxation; or

 

(iv)                              anybreach of a tax warranty in *clause 7.3*,

 

whether or not the liability of the relevantGroup Company was a known or contingent liability as at the Closing Date andwhether or not the relevant taxation is primarily chargeable against orattributable to a Group Company or to any other person; and

 

(b)                                 in respect of any periodcommencing on or after the Closing Date:

 

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(i)                                     where that taxation liabilityarises as a direct consequence of:

 

(aa)                            the fraud or a wilful act orwilful omission prior to Closing of or by a Group Company in connection withfiling or returning or providing information to a taxation authority; or

 

(bb)                          a breach of a tax warranty in *clause 7.4*; or

 

(cc)                            a breach of a tax warranty in *clause 7.3(i)*or *(j)*; or

 

(dd)                          the application of the interestapportionment rule in section FG8 or Sub-Part FH of the ITA thatoccurs because a Group Company was a member of the NBNZ Group in the currentincome year; or

 

(ee)                            a debit to a Group Company’s taxmemorandum account (as referred to in *clause 7.3(f)*)(excluding the branch equivalent taxation account) relating to a period priorto Closing that has the consequence of leaving the Group Company’s taxmemorandum account with a debit balance at the end of the current imputationyear; or

 

(ii)                                  where any of *clauses 7.19*, *7.20* and *7.21*apply,

 

and whether or not the liability of therelevant Group Company was a known or contingent liability as at the ClosingDate and whether or not the relevant taxation is primarily chargeable againstor attributable to a Group Company or to any other person.

 

7.6                                 **Claims**

It is agreed by the Parties that:

 

(a)                                  all claims by the Purchaseragainst the Vendor for a Purchase Price adjustment in respect of taxationliabilities of the NBNZ Group must be made only under this *Section 7;*

 

(b)                                 *clause 10.1*shall apply toclaims under *clause 7.5*;

 

(c)                                  the Vendor shall not be requiredto make a payment under *clause 7.5*unless either:

 

(i)                                     an individual amount for which theVendor is liable under that clause exceeds NZ$2,500,000, unless a lesserindividual amount is one of a series (that is two or more) of amounts arisingfrom the same event, circumstance, originating cause or tax issue that sum toat least NZ$2,500,000, in which case all such amounts may be aggregated invalue and treated as a single individual amount; or

 

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(ii)                                  the amount for which the Vendor isliable to pay under that clause exceeds NZ$100,000 and when added to all otherunpaid amounts for which the Vendor is liable to pay under that clause inrespect of an income year exceeds the sum of NZ$2,500,000 (*Annual Tax Indemnity Threshold*);  provided when the period covered by anincome year is other than 12 months, then the amount of the Annual TaxIndemnity Threshold shall be prorated accordingly, to reflect the greater orlesser period as the case may be.  Ifthe Annual Tax Indemnity Threshold is reached in respect of an income year thenthe Vendor shall be required by this *paragraph (ii)*to pay all unpaid amounts validly claimed under that clause to the extent theyeach exceed NZ$100,000.

 

(d)                                 the Vendor will not have anyliability under *clause 7.5*unlessthe Purchaser notifies the Vendor in writing of the relevant claim for aPurchase Price adjustment by 31 December 2009, except:

 

(i)                                     subject to *paragraph (ii)*, where the relevantclaim arises from a taxation return made by a Group Company before the ClosingDate being fraudulent or wilfully misleading or omitting all mention of incomewhich is of a particular nature or derived from a particular source; or

 

(ii)                                  where the time bars for taxationclaims specified in the TAA are amended with an effective date prior to31 December 2004, in which case, if applicable to a taxation returnmade by a Group Company before the Closing Date, the test for reopening ataxation return specified in an amended time bar shall apply,

 

and in either case, the claim, or the eventor circumstance that may give rise to a claim, is notified in writing to theVendor no later than the tenth anniversary of the Closing Date.

 

7.7                                 **Right to require deferral of taxation**

The Vendor may require the Purchaser toprocure each Group Company to defer the payment of taxation for which thePurchaser is indemnified by the Vendor to the maximum extent permitted by law.

 

7.8                                 **Payment**

(a)                                  Wherethe Vendor becomes liable to make any payment to the Purchaser pursuant to *clause 7.5**,*then (without limiting *clause 7.7*)**the due date for the making of that payment shall be:

 

(i)                                     in the case of tax on which use ofmoney interest is then accruing and such use of money interest, the date thatis 2 Business Days after the day on which the Purchaser requests payment; and

 

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(ii)                                  in any other case, the date thatis 2 Business Days before the last date on which the relevant Group Companywould have had to have paid to the appropriate taxation authority the taxationthat has given rise to the liability of the Vendor under this Agreement inorder to avoid incurring a liability for a charge or penalty in respect of thattaxation liability,

 

provided that if any date so determinedprecedes the Closing Date then (subject to *clause7.7*) payment shall be made 2 Business Days after the date on whichthe Purchaser notifies the Vendor of the relevant taxation claim.

 

(b)                                 For the purposes of *clause 7.5* and without limiting *paragraph (a)*of this clause:

 

(i)                                     a Group Company shall be deemed tohave paid an amount of taxation:

 

(aa)                            after the Group Company has fileda return applying any relief otherwise available to it in respect of a periodafter the day before the Closing Date in satisfaction of a taxation liabilitythat may be indemnified under *clause 7.5*;and

 

(bb)                          that return is assessed withoutadjustment with reference to such application; and

 

(ii)                                  subject to the other provisions ofthis *Section 7*, the due datefor payment by the Vendor in respect of the indemnity for the amount oftaxation described in paragraph (a) is the final return date for thetaxation period in which the relief so applied could otherwise have been usedfor the purpose of satisfying another taxation liability of the Group Companyor another company (or deemed company) in the same tax group as the GroupCompany; and

 

(iii)                               the indemnity payment shall equalthe amount of taxation that could have been saved, had the relief still beenavailable for the purposes of satisfying that other taxation liability.

 

7.9                                 **Effect of Purchase Price adjustment/no windfall benefit from indemnity**

Where relevant:

 

(a)                                  the amount of an indemnity paymenteffecting a Purchase Price adjustment must be computed having appropriateregard to any Tax Savings available to a Group Company as a consequence of anevent giving rise to the relevant claim for indemnification by the Purchaser;and

 

(b)                                 *clause 6.14*shallapply mutatis mutandis to a Purchase Price price adjustment payable pursuant tothis *Section 7*.

 

Furthermore, the Vendor and thePurchaser record their intention that:

 

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(c)                                  while the Purchaser is to be indemnified against any liability whichrelates to taxation payable by a Group Company (as specified in *clause 7.5*), the Purchaser is not intendedto receive a windfall gain under the indemnity in *clause 7.5*; and

 

(d)                                 the Purchaser or a Group Company isrequired to disgorge any windfall gain the Group Company subsequently receives,and must, where the Vendor has for the time being fulfilled its indemnityobligations in accordance with the provisions of this *Section 7*, consult in good faith withthe Vendor with respect to any claim by the Vendor that a Group Company hasreceived a windfall gain and with respect to notifying the Vendor that such awindfall gain has arisen.

 

7.10                           **Recoveries**

If the Purchaser or a Group Company recoversfrom a third party an amount on account of taxation which is on the sameaccount or referable to the same matter or transaction or event as any paymentmade by the Vendor to the Purchaser under *clause7.5*then, without limiting *clauses 7.9and 7.16(j)*, the Purchaser shall promptly pay or procure the promptpayment of the amount so recovered (net of costs of recovery and net of tax) tothe Vendor.

 

7.11                           **TaxationClaims Procedures**

The following provisions will apply to taxation claims:

 

(a)                                  without limiting the followingparagraphs:

 

(i)                                     upon the Purchaser or a GroupCompany becoming aware of a taxation claim or any other event or circumstancethat may give rise to a claim by thePurchaser for indemnification by way of adjustment of the Purchase Price under *clause 7.5*,**the Purchaser shall within 7 Business Days of becoming soaware give written notice thereof to the Vendor; and

 

(ii)                                  thePurchaser shall procurethat the relevant Group Company promptly takes such action, and gives suchinformation and assistance in connection with the affairs of the relevant GroupCompany, as the Vendormay reasonably and promptly by written notice request to avoid, resist,appeal or compromise the taxation claim;

 

(b)                                 in the event of the issue of anotice of proposed adjustment *(Tax Notice)*bythe Commissioner ofInland Revenue in respect of the taxation affairs of a Group Company whichcould result in the Vendor being required to make an indemnification payment byway of adjustment of the Purchase Price under *clause7.5*,**the Purchasershall within 7 Business Days of receipt of the Tax Notice give written noticeto the Vendor of such Tax Notice, and:

 

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(i)                                     thePurchaser shall take all reasonable steps to ensure that the relevant Group Company does not make any admissionof liability in respect of such Tax Notice, or take anyother step (other than payment of tax to the extent required by law) which islikely to prejudiceany rejection of, any challenge to or any defence tothe Tax Notice pending consultation under *paragraph(ii)*below;

 

(ii)                                  thePurchaser shall (and, ifrequired by the Vendor, the Purchaser will procure that the relevant Group Company shall) consult with theVendor and with professional advisors nominated by the Vendor in relation to that TaxNotice.  If after such consultation the Vendorshall so request, the Purchaser will procure that the relevant Group Company rejects theproposed adjustment by filing a notice of response *(Response Notice)*as required under the TAA**advising the Commissioner of InlandRevenue of such rejection;

 

(iii)                               following the filingof the Response Notice, the Purchaser shall procure that the relevant Group Companycomplies in all relevant and material respects with the dispute resolutionprocedures in the TAA, including, without limitation:

 

(aa)                            attending any conferences with theCommissioner of Inland Revenue in relation to the proposed adjustment;

 

(bb)                          reviewing the disclosure noticeand statement of position issued by the Commissioner of Inland Revenue;

 

(cc)                            preparing and filing a statementof position in respect of the dispute within the prescribed time as set out in the TAA; and

 

(dd)                          participating and complying in allrespects with the adjudication process as set out in the TAA.

 

The Purchaser shall at all times during theabove process take all reasonable steps to keep the Vendor informed of, and shall consult with the Vendor and the relevant professional advisors as to theconduct of, the dispute and the process;

 

(iv)                              if the rejection is not acceptedin whole or in part by the Commissioner of InlandRevenue, the Purchaserwill give notice of that non-acceptance to the Vendor within7 Business Days of receipt by the Purchaser or the relevant Group Company of suchnon-acceptance;

 

(v)                                 if the Vendor (acting reasonably)determines that a disputable decision of the Commissioner of Inland Revenueshould be challenged in the Taxation Review Authority or the High Court of

 

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NewZealand then the Purchaser will, at the written request of the Vendor, procurethat the Purchaser or the relevant Group Company (at the cost of the Vendor) refers the matter toa counsel experienced in taxation matters, who has not previously been involvedin advising upon the specific disputed issue or transaction, and who is chosenby the Vendor after consultation with the Purchaser for an opinion as to the likelihood ofsuch a challenge being successful.  Ifthe opinion of such counsel is that there is a reasonable likelihood of thechallenge being successful the Purchaser will, at the written request and cost ofthe Vendor, take, or procure that the relevant Group Company takes, such furtheraction as such counsel may recommend to challenge the relevant decisions,unless the Purchaser elects to discontinue the taxation dispute and to thatextent release the Vendor from its indemnity obligation;

 

(vi)                              if the challenge is heard by theTaxation Review Authority or the High Court of New Zealand and is decided against therelevant Group Company, the Purchaser will give notice to the Vendor of thatdecision as soon as itreceives notice of the decision. If requestedto do so in writing by the Vendor (and subject to a recommendation by thecounsel referred to above) the Purchaser will procure that the relevant GroupCompany (at the cost of the Vendor) appeals the decision to the High Court orthe Court of Appeal, as the case may be, unless the Purchaser elects todiscontinue the taxation dispute and to that extent release the Vendor from itsindemnity obligation.  Asimilar requirement shall apply, but with reference to the Privy Council or theSupreme Court of New Zealand (as applicable), with respect to decisions decidedagainst the relevant Group Company in the Court of Appeal;

 

(vii)                           if the challenge procedures setout in TAA are amended in any way, thePurchaser will procure that the relevant Group Company takes such steps withinthe amended legislation as the Vendor may reasonably require and, subject to afavourable counsel’s opinion as mentioned above, cause the challenge or appeal(as the case may be) to be prosecuted to the extent reasonably requestedby the Vendor;

 

(c)                                  ifthe disputes resolution procedures, challenge or appeal (in relation to whichthe Purchaser has previously received a payment under *clause 7.5*) are ultimately successfulin whole or in part and the relevant Group Company receives any tax credit,refund or reimbursement of costs, the Purchaser shall promptly pay to theVendor (to the extent that it does not exceed that amount previously paid bythe Vendor) an amount equal to the amount of that tax credit, refund or coststogether with any interest (net of taxation) which the relevant Group Companyhas received on such tax credit, refund or reimbursement;

 

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(d)                                 *clauses 7.11(b)*and *(c)*shall be deemed modified to the extentnecessary so as to apply to any taxation claim commenced or instigated by anoverseas taxation authority in respect of a Group Company and to all relevantacts and steps, and payments made or received subsequent thereto;

 

(e)                                  uponthe Purchaser or a Group Company receiving formal notice from any taxationauthority of the commencement of a tax audit or similar review or investigationinto the affairs of a Group Company which may result in a taxation claim thatmay give rise to a claim for indemnification by way of adjustment of thePurchase Price under *clause 7.5*,the Purchaser shall:

 

(i)                                     assoon as reasonably practicable give written notice thereof to the Vendor; and

 

(ii)                                  procurethat the relevant Group Company promptly takes such action and gives suchinformation and assistance in connection with its affairs as the Vendor mayreasonably by written notice request to manage the process of the audit orsimilar review or investigation to minimise the risk of such a taxation claim;and

 

(iii)                               procurethat the relevant Group Company does not make any admission of liability inrespect of such a taxation claim or take any other steps (other than thepayment of tax to the extent required by law) which is likely to prejudice themanagement of the audit or similar review or investigation.

 

7.12                           **ExistingTaxation Claims**

The undertakings in *clause 7.11* and in particular theundertaking in *clause 7.11(a)(ii)*shall also apply (with all necessary modifications) with respect to:

 

(a)                                  taxation claims involving Group Companies already existing or beingpursued or prosecuted by a taxation authority at the Closing Date; and

 

(b)                                 all negotiations that involve a Group Company and a third party wherethe third party is liable to indemnify the Group Company in respect of taxation liabilities arising prior to theClosing Date.

 

7.13                           **Procedure for small taxation claim amounts**

Where the Purchaser reasonably determinesthat the amount of tax in dispute (including for this purpose a denial ofdeductions or losses) or tax payable by a Group Company in respect of ataxation claim will not, throughout the duration of the taxation claim, exceedNZ$100,000, then:

 

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(a)                                  *clauses 7.11* and *7.12*will not apply to the taxation claims unless thePurchaser determines that the claim may have a precedent effect on othertransactions and elects to invoke the procedure in *clause 7.11*; and

 

(b)                                 the Purchaser shall procure thatthe Group Company takes all appropriate steps to diligently and in abusiness-like manner dispute or challenge the taxation claim, having due andproper regard to the amount of tax in dispute; and

 

(c)                                  the Purchaser shall notify theVendor, at 6 month intervals, with brief details in respect of the relevantdispute (and of other taxation claims to which this clause applies).

 

7.14                           **Expenses**

(a)                                  Without limiting any other rightof the Purchaser, all out of pocket costs and expenses (including reasonablelegal fees and reasonable disbursements) properly incurred by the Purchaser ora Group Company in connection with any consultation, challenge, appeal or othermatter contemplated by *clause 7.11*or*clause 7.12* in relation to ataxation claim or in connection with the enforcement by the Purchaser of this *Section 7*will be paid or reimbursedby the Vendor.

 

(b)                                 The Vendor and the Purchaser will,at such intervals or occasions as they deem appropriate, discuss and agree thetiming of payments and reimbursements due from the Vendor pursuant to thisclause, with the intent that:

 

(i)                                     significant costs and expensesdescribed in *paragraph (a)*should be paid by the Vendor in advance, or at or about the time they are duefor payment by the Purchaser or a Group Company; and

 

(ii)                                  the payment procedures are to bestreamlined, and so that payments are made as infrequently as possible.

 

(c)                                  In the event the Vendor fails tomake a payment required under this clause to the Purchaser within 30 days ofrequest for payment, then the Purchaser may serve notice on the Vendorspecifying that the Purchaser may conduct the relevant dispute without beingbound by the procedures contemplated by *clauses7.11* and *7.12*.  If the Vendor fails to make the requiredpayment within 30 days of the service of that notice, then the provisions of *clause 7.11* or *clause 7.**12*shall not apply to that dispute and thePurchaser and the relevant Group Company may act as they think fit in relationto that dispute.

 

7.15                           **TaxationReturns**

The following provisions shall apply inrelation to taxation returns:

 

(a)                                  theVendor shall arrange for each Group Company to prepare sign and file taxreturns and tax computations for all relevant taxation periods ended prior to the ClosingDate *(Returns prior to the Closing Date),*to theextent

 

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that thesame shall not have been prepared before the Closing Date;  the Returns prior to the Closing Date shallbe prepared in a manner that is consistent with the prior practice adopted bythe Vendor in filing tax returns;  andthe Purchaser shall procure that the Group Companies co-operate with the Vendoror its agents to the extent necessary to allow that process to be completed;

 

(b)                                 theVendor shall beentitled to conduct whatever negotiations are necessary with the IRD or anyother relevant taxation authority in order to agree the Returns prior to theClosing Date;  the Purchaser maynominate a person to attend those negotiations as an observer;  and the Purchaser shall procure that eachGroup Company shall, if so required in writing by the Vendor, give the Vendor or itsagents all such assistance as may be reasonably required to agree the Returnsprior to the Closing Date with the appropriate taxation authorities;

 

(c)                                  the Purchaser shall procure thateach Group Company shall, in relation to tax returns (other than Returns priorto the Closing Date) required by law for the period current at the Closing Dateand for any period ending before the Closing Date (including the Returns forthe 2003 and 2004 income years), disclose to the Vendor and use its bestendeavours to agree with the Vendor any variations in the information in thosetax returns that would give rise to any change in the taxation liabilityin relation to the Closing Accounts as if those financial statementsrepresented the year end financial statements. Where there is any disagreement between the Purchaser and the Vendor asto the content of the tax returns and the determination of thecontent by the Purchasermay give rise to a claim under *clause 7.5*, the tax returns and the contentthereof will be as determined by the Purchaser;  however,**thePurchaser will procure that the relevant Group Company will file a Notice of Proposed Adjustment (*NOPA*) as defined insection 3(1) ofthe TAA and that that NOPA will adopt the approach advocated by the Vendor onthe relevant taxation issue (or will take any analogous or such other stepsapplicable for the purposes of any other relevant jurisdiction or taxationauthority other than New Zealand and the IRD and also adopt the approachadvocated by the Vendor on the relevant taxation issue).  In the event that the Commissioner of InlandRevenue rejects the NOPA the Purchaser shall ensure that theTaxation Claims Proceduresin *clause 7.11*, as modifiedfor the fact that the dispute has been triggered by a taxpayerinitiated NOPA (or other steps described in the preceding sentence), are thenfollowed; and

 

(d)                                 wherenecessary to give effect to assumptions or matters explicit or implicit in theClosing Accounts, the Purchaser shall also procure the Group Companies, inconsultation with the Vendor or its agents, to prepare adequate part yearaccounts (consistent with the Closing Accounts) for the purpose of the ITA andfor furnishing to the Commissioner of Inland Revenue, including, withoutlimitation for carrying forward losses to the

 

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day beforethe Closing Date and/or for the purposes of allowing companies to undertakeloss offset transaction arrangements, and to agree those accounts with theVendor or its agents.

 

7.16                           **Limitations on Purchase Price adjustment**

The Vendor’s covenant given in *clause 7.5*to adjust the Purchase Price inrespect of certain taxation liabilities of Group Companies shallnot cover any taxation liability of a Group Company:

 

(a)                                  tothe extent that a provision or reserve for the amount of that taxationliability (includinga general unspecified provision or reserve not directly related to thattaxation liability) has been made in the Closing Accounts or in respect of which such aprovision or reserve has been made in the Closing Accounts for that taxationliability which is insufficient only by reason of any increase in rates oftaxation made after the Closing Date; or

 

(b)                                 to the extent that any relief of aGroup Company arising:

 

(i)                                     as a consequence of or byreference to any event which occurred on or before the Closing Date, relates tothe relevant taxation claim; or

 

(ii)                                  in respect of a period ended on orbefore the Closing Date,

 

is available to that GroupCompany to relieve that taxation liability; or

 

(c)                                  subjectto *clause 7.18(a),* to the extentthat that taxation liability would not have arisen, or would have beenreduced or eliminated, but for an act or omission of or on the part of a GroupCompany on or after the Closing Date, including without limitation a failure oran act or omission onthe part of a GroupCompany on or after the Closing Date:

 

(i)                                     to file a tax return (includingwhere applicable with supporting and/or part year financial statements) on aproper and timely basis or to make any claim or election or to give any noticeor consent the makingor giving of which was taken into account (explicitly or implicitly) incomputing a provision or reserve for taxation made in the Closing Accounts and(provided the Purchaser requests the Vendor in writing to do so) were notifiedin writing by the Vendor to the Purchaser on or before the date described in *paragraph 2.2*of *Schedule 2*; or

 

(ii)                                  that causes a binding ruling tocease to bind the IRD; or

 

(d)                                 to the extent that that taxationliability would not have arisen but for:

 

(i)                                     the agreement to sell or the saleof the Shares; or

 

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(ii)                                  any other change in ownership(including by reference to direct or indirect voting interests or market valueinterests) in a Group Company after the Closing Date,

 

excluding a taxation liability indemnifiedpursuant to *clause 7.5(b)(i)(dd)*and *(ee)*but including withoutlimitation a taxation liability that arises by reason of the application of theinterest apportionment rule in section FG 8 of the ITA that occurssolely because of the circumstances described above; or

 

(e)                                  without limiting *clause 7.16(d)*to the extent that thetaxation liability arises as a direct consequence of the inability of any GroupCompany to carry forward tax credits or net losses because of the sale of the Shares under thisAgreement; or

 

(f)                                    tothe extent that the taxation liability arises solely because of or as aconsequence of a refund or credit of tax that, on or after the Closing Date, isclaimed or available for or in respect of a period ending prior to, orincluding, the Closing Date; or

 

(g)                                 in the case of the Vendor’scovenant in *clause 7.5(a)*but not in *clause 7.5(b)*, inrelation to any taxation on income or services or other items of propertyattributable to, or to transactions performed in, a period after the day beforethe Closing Date irrespective of and whether such liability arises as a resultof a contract or agreement entered into by a Group Company on or before the daybefore the Closing Date; or

 

(h)                                 to the extent that a taxationliability arises as a result of:

 

(i)                                     an amendment to, or a request toamend, any Return for any period prior to the Closing Date or any other returnfor taxation approved by the Vendor for the purposes of this Agreement, in eachcase where the amendment or request is made without the written consent of theVendor; or

 

(ii)                                  without limiting *paragraph (h)(i)* and other than a changeagreed in writing by the Purchaser and the Vendor,**a change in accounting principles of the Group Company or achange in the treatment of any item for taxation purposes of the Group Companyin respect of any Return prior to the Closing Date (as defined in *clause 7.15(a)*) or any other return fortaxation approved by the Vendor for the purposes of this Agreement and being areturn that relates to a period ending on or before 31 December 2003; or

 

(i)                                     the change (following the ClosingDate) of the balance date of a New Zealand resident Group Company taxpayer, butonly in respect of the 2003/2004 income year; or

 

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(j)                                     to the extent that that taxationliability is something in respect of which a member of the NBNZ Group isentitled to be indemnified under the indemnity set out in clause 8.3 ofthe Share Sale Agreement dated 10 September 1998 between Bank ofScotland, BOS Holdings (New Zealand) Limited, Lloyds TSB, NBNZ Holdingsand the National Bank; or

 

(k)                                  to the extent that:

 

(i)                                     a binding taxation ruling issuedby the IRD (other than a binding taxation ruling issued in respect of any ofthe Transaction Four Transactions):

 

(aa)                            never bound, or prior to Closingceased to bind, the IRD; and

 

(bb)                          the reason that taxation rulingnever bound or ceased to bind the IRD was a direct consequence of an act oromission of a person other than a Group Company; and

 

(ii)                                  the taxation liability:

 

(aa)                            is a liability in respect of aperiod commencing on or after the Closing Date; and

 

(bb)                          could not have been imposed if thetaxation ruling bound the IRD.

 

7.17                           **PurchaserObligations**

The Purchaser and the Guarantor will procure that:

 

(a)                                  no Group Company will:

 

(i)                                     (except as may be required directlyor indirectly in relation to the Permitted Dividends) offset in accordance withsection LE2(4)(b) of the ITA any credit to which that Group Company isentitled under section LE2(2) of that Act against any income year or partincome year for taxation purposes in which the Vendor owned the Shares; or

 

(ii)                                  provided Lloyds TSB has on orbefore Closing specified in writing to NBNZ Holdings the actions that GroupCompanies cannot take, take any other action which results in the Vendor orLloyds TSB not being entitled to, or being entitled to a reduced amount of, any relief, credit or other benefit to which,but for such action taken by that Group Company, it would lawfully be entitledunder United Kingdom taxation law with respect to dividends paid by that GroupCompany in the six years before the Closing Date; and

 

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(b)                                 the relevant Group Company willprovide to the Vendor and Lloyds TSB such information and documentation (all ofwhich shall be held by the Vendor or Lloyds TSB, as the case might be, on aconfidential basis) held by it as may reasonably be required to assist theVendor or Lloyds TSB (as the case may be) to obtain any relief, credit or otherbenefit to which it is lawfully entitled under United Kingdom taxation law withrespect to dividends paid by that Group Company in the six years before theClosing Date.

 

7.18                           **CertainConfirmations**

For the avoidance of doubt:

 

(a)                                  nothing done by a Group Company inthe course of properly exercising a right or performing an obligation under orwith respect to a transaction document that is or may be the subject of ataxation claim:

 

(i)                                     where the right or obligationexists in the transaction document in the form the transaction document was inimmediately prior to Closing (including voting to exercise a put option inrelation to any Transaction Four Transaction); or

 

(ii)                                  where the exercise or performanceof the right or obligation is in the ordinary course of business of the NBNZGroup and consistent with the manner in which the NBNZ Group has conducted itstaxation affairs prior to Closing; or

 

(iii)                               with the prior written approval ofthe Vendor, such approval not to be unreasonably withheld; or

 

(iv)                              pursuant to *clauses 7.11*, *7.12*and *7.13*,

 

shall limit the indemnityin *clause 7.5*; and

 

(b)                                 nothing prevents the Purchaserfrom making a demand under *clause 7.5(a)*and *clause 7.5(b)* in respectof any single taxation claim and whether at the same time or at differenttimes.

 

7.19                           **TransactionTwo**

(a)                                  The parties agree that:

 

(i)                                     Transaction Two shall be unwound as soon as reasonably practicableafter Closing; and

 

(ii)                                  for this purpose:

 

(aa)                            Lloyds TSB shall repay its loan from Transaction Two – Entity One (*Entity One*);

 

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(bb)                          Entity One shall redeem its preference shares issued to TransactionTwo – Entity Two (*Entity Two*);and

 

(cc)                            such other steps as the parties agree to unwind the transactionshall be taken including, if agreed, repaying the Loan Notes (*Unwind*); and

 

(iii)                               Entity One may pay a dividend to Entity Two.

 

(b)                                 The Vendor and the Purchaser shall consult with respect to the stepsand/or transactions and/or timing required to effect the Unwind.

 

(c)                                  The Vendor shall indemnify the Group Companies pursuant to *clause 7.5(b)*for all taxation arisingwith respect to:

 

(i)                                     the Unwind; and

 

(ii)                                  the dividend paid to Entity Two described in *paragraph (a)*, but only where withthe agreement of the Vendor, the Unwind occurs more than 30 days after Closing.

 

7.20                           **TransactionThree Swaps**

(a)                                  The parties agree that the Transaction Three Swaps will be unwoundon their respective transaction maturity dates (unless the Purchaser determinesto extend either transaction beyond its current maturity, in which case thisclause shall not apply).

 

(b)                                 For this purpose:

 

(i)                                     all loans made by Group Companies for the purpose of one of theTransaction Three Swaps (*Swap transaction*)shall be repaid;

 

(ii)                                  various units issued by Group Companies for the purposes for theSwap transaction shall be redeemed;

 

(iii)                               various preference shares issued by Group Companies for the purposesof the Swap transaction shall be redeemed;

 

(iv)                              borrowings undertaken by the National Bank for the purposes of theSwap transaction shall be repaid; and

 

(v)                                 such other steps as the parties agree are necessary to unwind eachSwap transaction shall be taken (*Unwind*).

 

(c)                                  The Vendor and the Purchaser shall consult with respect to the stepsand/or transactions required to effect each Unwind.

 

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(d)                                 The Vendor shall indemnify the Group Companies pursuant to *clause 7.5(b)* for all taxationarising on an Unwind, other than with respect to interest and dividends and/orother amounts of income that correspond to the period from the Closing Date.

 

7.21                           **TransactionFour Transactions**

With respect to eachTransaction Four Transaction, the parties agree that:

 

(a)                                  the Purchaser will or will procure that the National Bank continuesto take all business like steps consistent with its practice prior to Closingto protect and maintain the relevant Group Companies interests in theTransaction Four Transaction and the taxation rulings obtained with respect tothe Transaction Four Transaction, including without limitation auditing andjustifying the Transaction Four Transaction on the assumptions on which it wasentered into (including as specified in the taxation ruling); and

 

(b)                                 if the put option with respect to the Transaction Four Transactionis exercised and the NBNZ Group receives a net return on its overall investmentin the Transaction Four Transaction in excess of 5% per annum (for theavoidance of doubt on a tax effected basis), the Purchaser shall promptly payto the Vendor an amount equal to such excess; and

 

(c)                                  should the put option be exercised and for any reason a bindingtaxation ruling obtained by the NBNZ Group for the Transaction Four Transactiondoes not bind the IRD, the Vendor shall indemnify the Purchaser pursuant to *clause 7.5(b)* for any taxation liabilitythat any Group Company may incur with respect to the Transaction FourTransaction, to the extent that taxation liability would not have been incurredhad the IRD been bound by the binding ruling.

 

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**8**                                         **NON-COMPETITIONCOVENANT**

 

8.1                                 **Definitions**

For the purposes of this *Section 8*:

 

*Acquired Company* means acompany or other legal or business entity domiciled inside or outsideNew Zealand that either itself or through a subsidiary or other entitycontrolled by it engages in any Restricted Activity.

 

*Restricted Activity* meanscarrying on in New Zealand any banking, funds management or other business in competition with the business carried onby the NBNZ Group as at Closing.

 

*Term* means the periodcommencing at Closing and ending on the seventh******anniversary of the Closing Date.

 

8.2                                 **No Competition**

Unless the prior writtenconsent of the Guarantor is given and subject always to *clauses 8.3* and *8.4*, Lloyds TSB will not, and will procure that each othermember of the Lloyds TSB Group does not, during the Term directly or indirectlycarry on or be engaged or involved in (whether by itself or through anotherperson), or manage any company or another legal entity which carries on or isengaged in, any Restricted Activity.

 

8.3                                 **Exceptions to Restricted Activities**

The following activities shallnot be in breach of *clause 8.2*:

 

(a)                                  Lloyds TSB or any other member of the Lloyds TSB Group holding up to5% (or if it is an asset management company acting in the ordinary course itsbusiness, a higher percentage) of the issued share capital of any company orcorporation which directly or indirectly carries on or is engaged in anyRestricted Activity;

 

(b)                                 Lloyds TSB or another member of the Lloyds TSB Group, in theordinary course of business, subscribing for, purchasing, holding or otherwisedealing in, or conducting transactions in respect of, debt securities issued byany entity which directly or indirectly carries on or is engaged in anyRestricted Activity;

 

(c)                                  Lloyds TSB or any other member of the Lloyds TSB Group acquiringissued voting shares in an Acquired Company if:

 

(i)                                     the Restricted Activity is not the principal business of therelevant Acquired Company; and/or

 

(ii)                                  Lloyds TSB can reasonably demonstrate that a principal purpose ofthe acquisition is to acquire the relevant Acquired Company for

 

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reasons other than theRestricted Activity or the Acquired Company divests the business involved inthe Restricted Activity within one year from the date of the relevantacquisition;

 

(d)                                 access to the banking, funds management or other businessesconducted by Lloyds TSB or another member of the Lloyds TSB Group outside NewZealand being available to persons located in New Zealand by virtue of physicalmailing or by virtue of the internet or other electronic or telecommunicationstechnology so long as the relevant services and products are not establishedfor the purposes of conducting a business in New Zealand and are notspecifically targeted at persons resident in New Zealand;

 

(e)                                  the transaction of business in or with New Zealand by personstransacting through the use of any credit card, debit card, charge card orsimilar card issued outside New Zealand by Lloyds TSB or another member of theLloyds TSB Group;

 

(f)                                    the participation by a member of the Lloyds TSB Group domiciledoutside New Zealand as a member (including as manager or agent) of a consortiumor syndicate providing loan finance or other financial accommodation to, or providingpaying agency services or other financial agency services to, a New Zealandentity or to the foreign affiliate of a New Zealand entity, or in respect of aproject or other activity in New Zealand, where that participation arises inthe ordinary course of the international financing activities of the Lloyds TSBGroup;

 

(g)                                 the investment by a member of the Lloyds TSB Group in any company orother legal entity which carries on or is engaged in a Restricted Activity ifsuch investment does not give the Lloyds TSB Group member a controllinginterest, and is in connection only with an employee superannuation and/orbenefit plan, fund or scheme operated and/or managed by that member, whether onits own account or on behalf of another member of the Lloyds TSB Group or athird party;

 

(h)                                 (for the avoidance of doubt) the acquisition of a member of theLloyds TSB Group by any person or entity that directly or indirectly carries onor is engaged in a Restricted Activity; and

 

(i)                                     (for the avoidance of doubt) conducting customary correspondentbanking relationships with New Zealand registered banks.

 

8.4                                 **Cessationof Restraint**

The provisions of *clause 8.2* shall not cease to have effect even if thePurchaser shall sell or otherwise dispose of any of the Shares.

 

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8.5                                 **RestraintReasonable**

The Parties consider therestraint in this *Section 8* to be reasonable in all the circumstances.

 

8.6                                 **Modification**

If any part of *clause 8.2*is held to be invalid as an unreasonable restraint of trade or for any otherreason, but that clause would be valid if that part was deleted or the periodreduced or the range of activities or area dealt with reduced in scope, thenthat clause is to apply with such modifications as may be necessary to make itvalid and effective.

 

8.7                                 **Assessmentof Purchase Price**

The Parties acknowledge thatthe Purchase Price was assessed and accepted by the Purchaser being dependentupon Lloyds TSB giving the covenant described in *clause 8.2* and that theprovisions contained in *clause 8.2* are solely for theprotection of the Purchaser.

 

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**9**                                         **GUARANTEES**

 

9.1                                 **Definitions**

In this *Section 9*:

 

*Beneficiary*means:

 

(i)                                     in respect of the guarantee set out in *clause 9.2(a),*the Purchaser; and

 

(ii)                                  in respect of the guarantee set out in *clause 9.2(b),*the Vendor.

 

*GuaranteedParty* means:

 

(i)                                     in respect of the guarantee set out in *clause 9.2(a),*the Vendor; and

 

(ii)                                  in respect of the guarantee set out in *clause 9.2(b),*the Purchaser.

 

*Guarantor*means:

 

(i)                                     in respect of the guarantee set out in *clause 9.2(a),*Lloyds TSB; and

 

(ii)                                  in respect of the guarantee set out in *clause 9.2(b),*Australia and New Zealand Banking GroupLimited,

 

and *Guarantee*shall be construed accordingly.

 

9.2                                 **Guarantees**

In consideration of the Vendor agreeing tosell, and the Purchaser agreeing to purchase, the Shares on the terms andconditions set out in this Agreement:

 

(a)                                  Lloyds TSB unconditionally andirrevocably guarantees to the Purchaser the due and punctual observance andperformance by the Vendor of all of the covenants and obligations, whether expressed orimplied, that the Vendor is required to observe or perform under this Agreementand the due and punctual discharge of any liability of the Vendor which mayarise under this Agreement and covenants with the Purchaser that if the Vendorshall fail to duly and punctually observe or perform any such covenant orobligation or to discharge any such liability then Lloyds TSB shall forthwithobserve or perform that covenant or obligation or discharge thatliability.  For the avoidance of doubtthe aggregate liability of Lloyds TSB under or arising out of this *clause 9.2(a)* shall not exceed theapplicable amount under *clause 10.1 (VendorLiability Cap)*; and

 

(b)                                 Australia and New Zealand BankingGroup Limited unconditionally and irrevocably guarantees to the Vendor the due and punctual observance and performanceby the Purchaser of all of the covenants and obligations, whetherexpressed or implied,that the Purchaser is required to observe or

 

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performunder this Agreement and the due and punctual discharge of any liability of thePurchaser which mayarise under this Agreement and covenants with the Vendor that if the Purchaser shall fail to duly andpunctually observe or perform any such covenant or obligation or to discharge anysuch liability then Australiaand New Zealand Banking Group Limited shall forthwith observe or performthat covenant or obligation or discharge that liability.

 

9.3                                 **Non-Prejudiceof Guarantee**

The liability of the Guarantor under itsGuarantee shall notbe abrogated, prejudiced or affected by any of the following:

 

(a)                                  thegranting of time, credit or any indulgence or other concession to the Guarantor or any otherParty by the Beneficiary, or any compounding, compromise, release, abandonment,waiver, variation, relinquishment or renewal of any rights of the Beneficiary against the Guarantoror any other Party or anything done or omitted or neglected to be doneby the Beneficiary in the exercise of the authorities, powers and discretionsvested in the Beneficiary by this Agreement;

 

(b)                                 thewinding up, liquidation or insolvency of the Guaranteed Party;

 

(c)                                  thealteration, modification or variation of, or addition to, this Agreement; or

 

(d)                                 anyother dealing, matter or thing which, but for this *clause 9.3*, might operate to abrogate, prejudice or affectthat Guarantee.

 

9.4                                 **Guarantora Principal Obligor**

Although as between the Guaranteed Party andthe Guarantor the latter may only be a surety yet as between the Guarantor andthe Beneficiary the Guarantor shall be deemed a principal obligor and itsliability shall not be affected or diminished by any of the matters mentionedin *clause 9.3.*

 

9.5                                 **Exercise ofRights**

The Beneficiary shall be entitled to exerciseits rights against the Guarantor under its Guarantee directly against theGuarantor without first exercising its rights against any other Party.

 

9.6                                 **Waiverof Subrogation Rights**

The Guarantor hereby irrevocably waives allrights of subrogation (whether contractual or at common law or under anystatute, whether or not a statute of New Zealand, or otherwise) to the claimsof the Beneficiary against the Guaranteed Party and all contractual, statutoryor common law rights of contribution, reimbursement, indemnification, andsimilar rights and claims against the Guaranteed Party which may arise inconnection with, or as a result of, its Guarantee.

 

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9.7                                 **NoCompetition**

Without limiting *clause 9.6*, in the event of the liquidation or statutorymanagement of the Guaranteed Party or the Guaranteed Party entering into acomposition with creditors or like scheme of management or arrangement, theGuarantor will not prove in such liquidation, statutory management, compositionor scheme in competition with the Beneficiary in relation to moneys due andowing to the Beneficiary under this Agreement and the Guarantor herebyauthorises the Beneficiary to prove for all moneys owing to the Beneficiary andwhich have not been paid to the Beneficiary by the Guaranteed Party and toretain and to carry to a suspense account and appropriate at the discretion ofthe Beneficiary any amount received until the Beneficiary shall have received100 cents in the dollar in respect of all moneys due and owing to theBeneficiary.  If the Guarantor shallreceive any money contrary to the intent of *clause9.6* or this *clause 9.7*then such money shall be held in trust for the Beneficiary.

 

9.8                                 **Reinstatement**

If any payment made by the Guaranteed Partyto the Beneficiary pursuant to this Agreement shall be voided by law then suchpayment shall be deemed not to have discharged or affected the liability of theGuaranteed Party therefore.  In thatevent the Beneficiary and the Guaranteed Party shall be restored to theposition in which each would have been entitled to exercise all the rightswhich each would have had if such payment had not been made.

 

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**10****                                  MISCELLANEOUS**

 

10.1                           **VendorLiability Cap**

It is agreed that:

 

(a)                                  subject to *clause 10.1(b)*,the maximum aggregate amount for which Lloyds TSB and the Vendor collectivelyshall be liable (for the avoidance of doubt, with respect to all incidents (inthe aggregate) giving rise (or which would give rise, in the absence of this *clause 10.1(a)*) to liability) to thePurchaser and the Guarantor collectively under or by virtue of this Agreementon any account whatsoever (other than *clause7.5*) (whether under or by virtue of the Vendor Warranties, *Section 7*, in tort or otherwisewhatsoever) shall not exceed NZ$2,500,000,000 (two billion and five hundredmillion New Zealand dollars); and

 

(b)                                 the maximum aggregate amount for which Lloyds TSB and the Vendorcollectively shall be liable (for the avoidance of doubt, with respect to allincidents (in the aggregate) giving rise (or which would give rise, in theabsence of this *clause 10.1(b)*)to liability) at any point in time to the Purchaser and the Guarantorcollectively in respect of any new claim under or by virtue of:

 

(i)                                     *clause 6.2**(Purchase Price Adjustment for Breach of Warranty)*onaccount of breaches of the Vendor Warranties set out in *paragraphs 2.1**(Title)*, *8.1 (LatestAnnual Accounts)*, *8.2(June Accounts)*, and *8.3**(Closing Accounts)* of the *Third Schedule*; and

 

(ii)                                  *clause 7.5 (Tax Indemnity)*,

 

shall not exceed the amountarrived at by deducting from NZ$5,700,000,000 (five billion seven hundredmillion New Zealand dollars) the aggregate amount paid or payable by Lloyds TSBand the Vendor collectively to the Purchaser and the Guarantor collectivelyunder or by virtue of this Agreement or otherwise on any account whatsoever(whether under or by virtue of the Vendor Warranties, *Section 7,* in tort or otherwisewhatsoever).

 

10.2                           **Announcements**

Except where disclosure ispermitted under *clause 10.3*,no Party shall make or authorise any media release or other public announcementrelating or referring to the matters dealt with in this Agreement without theprior agreement of the other Parties, such agreement not to be unreasonablywithheld.  However, if a Party isrequired to make an announcement of the existence of this Agreement then it maydo so provided that it has first consulted with the other Parties in a timelyfashion as to the content of such announcement.

 

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10.3                           **Confidentiality**

No Party shall disclose to anyother person (who is not another Party or a Related Company of another Party)any information relating or referring to the transactions contemplated by thisAgreement except:

 

(a)                                  with the prior written consent of the other Parties; or

 

(b)                                 pursuant to *clause 10.2*;or

 

(c)                                  disclosure in accordance with the Listing Rules of a recognisedstock exchange on which the shares of that Party or a Related Company of thatParty are listed or quoted or are intended to be listed or quoted; or

 

(d)                                 where disclosure is required by law (including, without limitation,under any statutory requirement of the Australian Prudential RegulationAuthority, the Reserve Bank of Australia, the Reserve Bank of New Zealand, theAustralian Securities and Investments Commission or the New Zealand SecuritiesCommission, and any taxation authority) or is made in compliance with the orderof any Court of competent jurisdiction or any Governmental Authority; or

 

(e)                                  disclosure of information which is in the public domain, if therelevant information has entered the public domain otherwise than by reason ofa breach of this clause by that Party or a Related Company of that Party; or

 

(f)                                    disclosure to an internationally recognised rating agency for thepurposes of the rating of securities issued by that Party or a Related Companyof that Party; or

 

(g)                                 disclosure to a Related Company of the disclosing Party where thedisclosing Party has informed the relevant Related Company that the relevantinformation is confidential and has taken such reasonable steps as are withinits powers to ensure that the relevant Related Company does not disclose suchinformation; or

 

(h)                                 disclosure to a financial institution or a shareholder of thedisclosing Party, or in any offering document issued to prospective investorsunder a public offering of securities, where necessary in connection with theraising of finance by the disclosing Party or a Related Company of thedisclosing Party; or

 

(i)                                     disclosure to an independent financial, legal or accounting advisoror consultant to the disclosing Party or a Related Company of the disclosingParty where such advisor or consultant needs to know such information for thepurposes of providing advice to the disclosing Party or to a Related Company ofthe disclosing Party and the relevant advisor or consultant is

 

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under a duty or obligation tomaintain the confidentiality of the information being disclosed to,

 

AND, with effect from Closing,the Confidentiality Deed shall terminate and be superseded by the provisions ofthis Agreement.  During the InterimPeriod, the Guarantor and the Purchaser need not comply with any provision ofthe Confidentiality Deed to the extent that that provision conflicts with this *clause 10.3* (for the avoidance ofdoubt, this release will cease to apply with immediate effect if Closing is noteffected on the Closing Date due to the default of the Purchaser).

 

10.4                           **No Action**

The Purchaser and the Guarantorwill not take, and at all times after Closing they will ensure that no GroupCompany takes, any action, proceeding, claim or demand against:

 

(a)                                  any present or former director, officer or employee of any member ofthe Lloyds TSB Group or of the NBNZ Group; or

 

(b)                                 any present or former shareholder of (or beneficial owner of sharesin the capital of) any member of the Lloyds TSB Group or the NBNZ Group,

 

in respect of any act,omission, matter or thing relating to any Group Company and arising prior tothe Closing except (i) insofar as such act, omission, matter or thing is theresult of dishonesty on the part of the present or former director, officer oremployee concerned, or (ii) a bona fide claim by the Purchaser against theVendor or Lloyds TSB under this Agreement, provided that this *clause 10.4*shall not prevent a GroupCompany taking any bona fide action in relation to an employee of that GroupCompany under the contract of employment between that Group Company and thatemployee.  This undertaking contained inthis clause is given for the benefit of each present or former director,officer, employee or shareholder of (or beneficial owner of shares in thecapital of) any member of the Lloyds TSB Group or the NBNZ Group.

 

10.5                           **No Assignment**

No Party shall transfer orassign its interest in, or any of its rights and obligations under, thisAgreement.

 

10.6                           **Notices**

Any notice or communicationwhich a Party is required or intends to give to another Party concerning anymatter or thing related to this Agreement shall be in writing. Notices to aParty shall be delivered to the designated address of the Party to which the notice is tobe given or shall be sent by facsimile message to the relevant Party at thataddress.  Any such notice orcommunication shall be deemed to have been given:

 

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(a)                                  on the day of delivery, where thenotice or communication is delivered during business hours on a Business Day inthe city of delivery;

 

(b)                                 on the following Business Day,where the notice or communication is delivered after the end of business hoursor on a day that is not a Business Day (in either case) in the city of delivery;

 

(c)                                  onthe day of despatch, where a facsimile message is despatched on a Business Day and duringbusiness hours in the city to where the message is sent; and

 

(d)                                 onthe day after despatch,where a facsimile message is despatched after the end ofbusiness hours or on a day that is not a Business Day (in either case) inthe city to where the message is sent.

 

10.7                           **DesignatedAddresses**

A designated addressfor the purpose of this Agreement shall be that specifically designated in thisclause, or such other address as shall be specifically designated by a Party bynotice given to the other Parties in substitution therefor. The addressesdesignated pursuant to this clause are:

 

**Vendor andLloyds TSB**

Lloyds TSB Bank plc25 Gresham StreetLondon EC2V 7HNEnglandAttention:  Director, Group CorporateDevelopmentFacsimile No:  +44 207489 3484

 

**Purchaser**

ANZBanking Group (New Zealand) LimitedLevel 15 ANZ Tower215-229 Lambton QuayWellingtonNew ZealandAttention:  General Counsel/CompanySecretaryFacsimile No. +64 4 496 8872

 

**Guarantor**

Australiaand New Zealand Banking Group LimitedLevel 6100 Queen StreetMelbourneAustraliaAttention:  General CounselFacsimile No. +61 3 9273 0552.

 

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10.8                           **Giving****of Notices and Consents**

For the purposes of this Agreement:

 

(a)                                  anotice given by or to, and any permission, approval or consent given by, Lloyds TSB shall be deemed to have also been given by or to the Vendor(but not vice versa); and

 

(b)                                 anotice given by orto, and any permission, approval or consent given by, the Guarantor shall be deemed to have also been given byor to the Purchaser (but not vice versa).

 

10.9                           **NoCancellation**

Neither the Purchaser nor theGuarantor shall be entitled to rescind or cancel this Agreement by reason of(i) Lloyds TSB, NBNZ Holdings, the National Bank or another member of the NBNZGroup failing to act in accordance with *clauses 5.1*to *5.3*or (ii) anybreach of any Vendor Warranty (except the Vendor Warranties in *paragraphs 2.1, 2.2*and *2.3* of the *Third Schedule*) or of any warranty in *clause 7.3* or  *clause 7.4*.  The Purchaser acknowledges that its soleremedy for a breach of any such clause or Vendor Warranty (other than thoseVendor Warranties specifically identified above) is a cause of action indamages against the Vendor (whose obligation to pay any such damages isguaranteed by Lloyds TSB under *clause 9.2(a)*).

 

10.10                     **Waiver**

It is agreed that:

 

(a)                                  the performance of any covenant or agreement of this Agreement by a Party may be expressly waived in writing by each other Party, as appropriate;

 

(b)                                 any waiver hereundershall be effective only in the specific instance and for the purpose of thewaiver; and

 

(c)                                  no failure on the part of a Party to exercise, and no delay by aParty in exercising, any right under this Agreement will operate as a waiver thereof, nor will any single orpartial exercise of any right under this Agreement preclude any other orfurther exercise thereof or the exercise of any other right.

 

10.11                     **Expenses**

All costs and expenses (including,without limitation, fees and disbursements of counsel, financial advisers andaccountants) incurred in connection with the preparation and negotiation of this Agreement shallbe paid by the Party incurring such costs and expenses, whether or not Closing shall have occurred.

 

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10.12                     **Contracts(Privity) Act**

The provisions ofSection 4 of the Contracts (Privity) Act 1982 shall not apply to this Agreementand no person not explicitly a party to this Agreement is intended to derive,nor shall derive, any benefit of an enforceable nature from any of theprovisions of this Agreement, except that (i) each relevant member of theLloyds TSB Group may enforce *clause 5.4*,and (ii) the persons referred to in *clause 6.12(f)*may enforce *clause 6.12*,and (iii) the persons referred to in *clause10.4(a)* and *(b)* mayenforce *clause 10.4*.  But those clauses may be varied under *clause 10.20*without the approval ofany such person who is not a Party.

 

10.13                     **Governing Law**

This Agreement shall beconstrued and take effect in accordance with the laws of New Zealand and anydispute between any two or more of the Parties touching or concerning theconstruction, meaning or effect of this Agreement or the rights or liabilitiesof the Parties hereunder shall be governed by the laws of New Zealand.

 

10.14                     **Submissionto Jurisdiction**

The Parties agree that anylegal action, suit or proceedings (each a *Proceeding*)in connection with this Agreement or the transactions contemplated hereby maybe brought in the New Zealand courts, which shall have non-exclusivejurisdiction to settle any disputes arising out of or in connection with thisAgreement.  Each Party herebyirrevocably and unconditionally consents to submit to the non-exclusivejurisdiction of the courts of New Zealand for any Proceeding arising out of orrelating to this Agreement and the transactions contemplated hereby.  Each Party further irrevocably andunconditionally waives any objection to the laying of venue of any Proceedingarising out of or relating to this Agreement or the transactions contemplatedhereby, in the courts of New Zealand, and hereby further irrevocably andunconditionally waives the right and agrees not to plead or claim to any suchcourt that such Proceeding is brought in an inconvenient forum.  Each Party further irrevocably andunconditionally agrees that a judgment in any Proceeding may be enforced in thecourts of any other jurisdiction.  Theforegoing submission to the jurisdiction of the courts of New Zealand shall notlimit the right of a Party to bring a Proceeding against another Party in anyother court of competent jurisdiction, nor shall the taking of a Proceeding inone or more jurisdictions preclude the taking of a Proceeding in any otherjurisdiction whether concurrently or not.

 

10.15                     **Process Agent**

Each of the Vendor and LloydsTSB hereby irrevocably appoints the firm of Chapman Tripp (Attention: BarryBrown) at its address at Level 6, Optimation House, 1-13 Grey Street,Wellington, New Zealand (or such other New Zealand address of Chapman Tripp asLloyds TSB or Chapman Tripp may notify the Guarantor in writing) as its agentto accept service of process in any Proceeding commenced in the courts ofNew Zealand.  The Guarantor herebyirrevocably appoints the Purchaser as its agent to accept service of process inany Proceeding commenced in the courts of New Zealand.  The address in New Zealand of the Purchaseris its address for service under the Companies Act.  Each Party agrees

 

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that service of any process,summons, notice or document by delivery to the above mentioned address of itsprocess agent shall be effective service of process for any Proceeding broughtagainst that Party in a New Zealand court.

 

10.16                     **Severability**

If any provision of thisAgreement shall be held to be illegal, invalid or unenforceable under anyapplicable law, then such contravention or invalidity or unenforceability shallnot invalidate or render unenforceable the entire Agreement.  Such provision shall be deemed to bemodified to the extent necessary to render it legal, valid and enforceable, andif no such modification shall render it legal, valid and enforceable then thisAgreement shall be construed as if not containing the provision held to beinvalid, illegal or unenforceable, and the rights and obligations of theParties shall be construed and enforced accordingly.

 

10.17                     **No Merger**

Notwithstanding any rule of lawto the contrary, the agreement and undertakings set out in this Agreement shallnot merge in the instruments of transfer executed pursuant to this Agreementbut (to the extent that they have not been completed by performance at thecompletion of Closing) shall remain in full force and effect and enforceable tothe fullest extent.

 

10.18                     **FurtherAssurances**

The Parties shall execute anddeliver any documents, including transfers of title, and do all things as mayreasonably be required to enable the Parties to obtain the full benefit of thisAgreement according to its true intent.

 

10.19                     **EntireAgreement**

This Agreement and theConfidentiality Deed constitute the entire agreement between the Parties withrespect to the matters dealt with herein and there areno oral or written understandings, representations or commitments of anykind, express or implied, not expressly set out in this Agreement or the Confidentiality Deed.

 

10.20                     **Amendments**

Any amendments to thisAgreement shall be executed by each Party in the same mannerand with the same formality as this Agreement is executed.

 

10.21                     **Executionand Delivery**

This Agreement shall not bebinding on any Party until it has been executed and delivered by each of theParties. An executed copy of this Agreement which is delivered by a Party byfacsimile shall be binding on that Party as if it was an original.

 

10.22                     **Counterparts**

This Agreement may be executed in two or morecounterparts, each of which will be deemed to be an original, and all of whichtogether shall constitute one and

 

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the same instrument.  Delivery by a Party of an executedsignature page by facsimile transmission shall be as effective as delivery of amanually executed counterpart. Furthermore, where a Party executes this Agreement by having it signedby more than one person then those persons may sign the same or differentsignature pages either or both of which signature pages may be delivered byfacsimile.

 

**IN WITNESS WHEREOF** this Agreementhas been executed as a Deed on the date first written above.

 

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**FIRST SCHEDULE - SUBSIDIARIES**

*(Clause 1.1)*

 

**Part 1 – Wholly Owned Operating Subsidiaries**

 
| **No.** |   | **Name**                                    |   | **Country  of Incorporation** |   | **Registered  No.** |   | **Directors**                                                                                                                                                                                          |
|---------|--------|---------------------------------------------|--------|-------------------------------|--------|---------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1       |   | Airlie Investments Limited                  |   | New Zealand              |   | AK 1211493          |   | SM Fyfe, JK Greenslade, MS Nyein                                                                                                                                                        |
| 2       |   | Alos Holdings Limited                       |   | New Zealand              |   | WN 344800           |   | JA Anderson, SM Fyfe, MS Nyein                                                                                                                                                          |
| 3       |   | Arawata Investments Limited                 |   | New Zealand              |   | WN 16446            |   | JA Anderson, MS Nyein, SM Fyfe (alternate for  JA Anderson)                                                                                                                        |
| 4       |   | Argitis Holdings Limited                    |   | New Zealand              |   | WN 372458           |   | JA Anderson, SM Fyfe, MS Nyein                                                                                                                                                          |
| 5       |   | Black Horse Finance Limited                 |   | New Zealand              |   | WN 37835            |   | JA Anderson, SM Fyfe, JK Greenslade (alternate for JA  Anderson)                                                                                                                        |
| 6       |   | Black Horse Holdings Limited                |   | New Zealand              |   | WN 275068           |   | JA Anderson, SM Fyfe, MS Nyein                                                                                                                                                          |
| 7       |   | Black Horse Investments Limited             |   | New Zealand              |   | WN 273474           |   | JA Anderson, SM Fyfe, MS Nyein                                                                                                                                                          |
| 8       |   | Black Horse Properties Limited              |   | New Zealand                   |   | WN 469435           |   | JA Anderson, SM Fyfe, MS Nyein                                                                                                                                                          |
| 9       |   | Black Horse Securities Limited              |   | New Zealand              |   | WN 273475           |   | JA Anderson, SM Fyfe, MS Nyein                                                                                                                                                          |
| 10      |   | Burnley Investments Limited                 |   | New Zealand              |   | AK 1219154          |   | SM Fyfe, JK Greenslade, MS Nyein                                                                                                                                                                  |
| 11      |   | CBC Finance Limited                         |   | British Virgin Islands        |   | N/A                 |   | A Directors: RM Richards (alternate = SP Harvey), TL Slattery  (alternate = KE Moss)  B Director: CM Wiscarson (alternate = AM Basing)  C Director: SM Fyfe (alternate = JK Greenslade) |
| 12      |   | Control Nominees Limited                    |   | New Zealand              |   | WN 40482            |   | JA Anderson, SM Fyfe, MS Nyein                                                                                                                                                          |
| 13      |   | Cortland Finance Limited                    |   | New Zealand              |   | WN 10614137         |   | SM Fyfe, JK Greenslade                                                                                                                                                                                 |
| 14      |   | Countrywide Funds Management Limited        |   | New Zealand                   |   | WN 373203           |   | JA Anderson, PK Lockery                                                                                                                                                                           |
| 15      |   | Countrywide Superannuation Services Limited |   | New Zealand                   |   | WN 556330           |   | JA Anderson, PK Lockery                                                                                                                                                                           |
| 16      |   | Culver Finance Limited                      |   | New Zealand                   |   | WN 1134375          |   | SM Fyfe, JK Greenslade, MS Nyein (alternate for SM Fyfe)                                                                                                                                     |
| 17      |   | Elf Productions Limited                     |   | New Zealand                   |   | WN 889172           |   | SM Fyfe, JK Greenslade, MS Nyein                                                                                                                                                                  |
| 18      |   | Eventide Holdings Limited                   |   | New Zealand                   |   | WN 615158           |   | JA Anderson, SM Fyfe, MS Nyein                                                                                                                                                          |

 

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| **No.** |   | **Name**                                             |   | **Country  of Incorporation** |   | **Registered  No.** |   | **Directors**                                                                                                                                                             |
|---------|--------|------------------------------------------------------|--------|-------------------------------|--------|---------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 19      |   | Goblin Productions Limited                           |   | New Zealand                   |   | WN 1145975          |   | SM Fyfe, JK Greenslade, MS Nyein                                                                                                                                     |
| 20      |   | Harcourt Corporation Limited                         |   | New Zealand                   |   | WN 275714           |   | SM Fyfe, JK Greenslade, MS Nyein                                                                                                                                     |
| 21      |   | Harcourt Investments Limited                         |   | New Zealand                   |   | WN 1152283          |   | SM Fyfe, JK Greenslade, MS Nyein                                                                                                                                     |
| 22      |   | Moginie Holdings Limited                             |   | New Zealand                   |   | WN 36923            |   | JA Anderson, SM Fyfe, MS Nyein                                                                                                                             |
| 23      |   | National Bank of New Zealand Custodians Limited |   | New Zealand                   |   | WN 5874             |   | JA Anderson, SM Fyfe, MS Nyein                                                                                                                             |
| 24      |   | Nationwide Home Loans Limited                        |   | New Zealand                   |   | WN 704812           |   | JA Anderson, PK Lockery                                                                                                                                              |
| 25      |   | NBNZ Finance Limited                                 |   | New Zealand                   |   | WN 344792           |   | JA Anderson, SM Fyfe, MS Nyein                                                                                                                             |
| 26      |   | NBNZ International Limited                           |   | New Zealand                   |   | WN 328154           |   | JA Anderson, SM Fyfe, MS Nyein                                                                                                                             |
| 27      |   | NBNZ Life Insurance Limited                          |   | New Zealand                   |   | WN 428369           |   | RA Ford, SM Fyfe, KY Wales                                                                                                                                           |
| 28      |   | Repton Group Limited                                 |   | New Zealand                   |   | WN 615161           |   | JA Anderson, SM Fyfe, MS Nyein                                                                                                                             |
| 29      |   | Salient Holdings                                     |   | New Zealand                   |   | WN 949448           |   | SM Fyfe, JK Greenslade                                                                                                                                          |
| 30      |   | Salient Holdings (No. 2)                             |   | New Zealand                   |   | WN 966073           |   | SM Fyfe, JK Greenslade                                                                                                                                          |
| 31      |   | Sefton Finance Limited                               |   | New Zealand                   |   | AK 1272956          |   | SM Fyfe, JK Greenslade, MS Nyein                                                                                                                                     |
| 32      |   | Ship Finance Limited                                 |   | New Zealand                   |   | WN 261053           |   | JA Anderson, SM Fyfe, MS Nyein                                                                                                                             |
| 33      |   | South Pacific Merchant Finance Limited               |   | New Zealand                   |   | WN 26351            |   | JA Anderson, SM Fyfe, MS Nyein                                                                                                                             |
| 34      |   | Southpac Corporation Limited                         |   | New Zealand                   |   | WN 40594            |   | JA Anderson, SM Fyfe, MS Nyein                                                                                                                             |
| 35      |   | Southpac Securities Limited                          |   | New Zealand                   |   | WN 40593            |   | JA Anderson, SM Fyfe, MS Nyein                                                                                                                             |
| 36      |   | The National Bank of New Zealand Limited        |   | New Zealand                   |   | WN 276922           |   | JA Anderson, BMJ Dineen, SM Fyfe, NMT Geary,  JW Gilks, DP Pritchard, DT Spring, SC Targett,  WJ Whineray, CM Wiscarson |
| 37      |   | Trillium Holdings Limited                            |   | New Zealand                   |   | WN 949251           |   | SM Fyfe, JK Greenslade                                                                                                                                               |
| 38      |   | Urchin Productions Limited                           |   | New Zealand                   |   | WN 27280            |   | SM Fyfe, JK Greenslade, MS Nyein                                                                                                                           |

 

**Part 2 – Wholly OwnedNon-Operating Subsidiaries**

 
| 1 |   | Abbey Life Limited           |   | New Zealand |   | WN 21087   |   | JA Anderson, SM Fyfe, MS Nyein |
|---|--------|------------------------------|--------|------------------|--------|------------|--------|-----------------------------------------------|
| 2 |   | Corvine Investments Limited  |   | New Zealand      |   | AK 1074900 |   | SM Fyfe, JK Greenslade, MS Nyein         |
| 3 |   | Karapiro Investments Limited |   | New Zealand |   | WN 876248  |   | JK Greenslade, MS Nyein                  |

 

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| 4  |   | Lloyds NZA Pty Limited                                 |   | Australia        |   | ACN 077769594 |   | JA Anderson, SM Fyfe, GC Harris              |
|----|--------|--------------------------------------------------------|--------|------------------|--------|---------------|--------|-------------------------------------------------------------|
| 5  |   | NBNZ Holdings (Hong Kong) Limited                      |   | Hong Kong        |   | 236261        |   | SNR Evans, KL Lee (known as Clemence), MS Nyein   |
| 6  |   | NBNZ Holdings (Australia) Pty Limited                  |   | Australia        |   | ACN 067055921 |   | JA Anderson, SM Fyfe, MJ Kunstler, GC Harris |
| 6  |   | Nationwide Mortgage Brokers Limited                    |   | New Zealand      |   | WN 919988     |   | DR O’Callaghan                                         |
| 7  |   | Philodendron Investments Limited                       |   | New Zealand |   | WN 32453      |   | JA Anderson, SM Fyfe, MS Nyein               |
| 8  |   | Receivables Warehouse Limited                          |   | New Zealand      |   | AK 965276     |   | AG Blackie                                                  |
| 9  |   | Ronaldo Enterprises Limited                            |   | New Zealand      |   | AK 899010     |   | JK Greenslade, AG Blackie                              |
| 10 |   | South Pacific Merchant Finance (Australia) Pty Limited |   | Australia        |   | ACN 077769512 |   | JA Anderson, SM Fyfe, GC Harris              |
| 11 |   | Southpac Corporation (Australia) Pty Limited           |   | Australia        |   | ACN 077332864 |   | JA Anderson, SM Fyfe, GC Harris                             |
| 12 |   | Southpac Holdings Limited                              |   | New Zealand      |   | WN 40592      |   | JA Anderson, SM Fyfe, MS Nyein               |
| 13 |   | Southpac Investment Management (Australia) Pty Limited |   | Australia        |   | ACN 077332800 |   | JA Anderson, SM Fyfe, GC Harris              |
| 14 |   | Southpac Trusts Limited                                |   | New Zealand |   | WN 40472      |   | JA Anderson, SM Fyfe, MS Nyein               |
| 15 |   | VPM Investments Limited                                |   | New Zealand |   | WN 573530     |   | JA Anderson, PK Lockery                           |

 

**Part 3 – Partly OwnedSubsidiaries**

 
| **No.** |   | **Name  and Ownership  Percentage**   |   | **Country  of Incorporation** |   | **Registered  No.** |   | **Directors**                                                              |
|---------|--------|---------------------------------------|--------|-------------------------------|--------|---------------------|--------|----------------------------------------------------------------------------|
| 1       |   | Amberley Investments (50%)            |   | New Zealand                   |   | AK 1278452          |   | GM Baldes, RD Beran, SM Fyfe, JK Greenslade,  MS Nyein |
| 2       |   | Gold Liquid Investments Limited (25%) |   | Cayman Islands                |   | N/A                 |   | D Brealey, RR Seggins, NC Edmonds, BW du Pon, AJ Senior          |
| 3       |   | Maplestead Corporation (65%)          |   | United States of America      |   | N/A                 |   | SH Sitver, DL Poling, KM Furlong                                      |
| 4       |   | Nerine Finance No 2 (65%)             |   | New Zealand                   |   | AK 1210175          |   | JJ Cassano, DL Poling                                                      |
| 5       |   | Northpac Holdings Limited (53%)       |   | New Zealand              |   | WN 33669            |   | JA Anderson, SM Fyfe, MS Nyein                              |
| 6       |   | Three Starz Corporation (65%)         |   | United States of America      |   | N/A                 |   | A Barkle, A Geczy, MP Humes, WH Wolf                                  |
| 7       |   | Whitelaw Investments (99.9%)          |   | New Zealand              |   | AK 1219683          |   | PL Reddy, AR Meehan, MD Lang                                               |

 

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**Part4 – Other Companies In Which Shares Beneficially Held By NBNZ Group Members**

 
| **No.** |   | **Name  and Ownership  Percentage**           |   | **Country  of Incorporation** |   | **Registered  No.** |   | **Shares  Held**                        |
|---------|--------|-----------------------------------------------|--------|-------------------------------|--------|---------------------|--------|-----------------------------------------|
| 1       |   | Electronic Transaction Services Limited (25%) |   | New Zealand              |   | WN 438574           |   | 22,500 ordinary                         |
| 2       |   | ILSC Limited (11.63%)                         |   | New Zealand                   |   | WN 816575           |   | 100,000 ordinary                        |
| 3       |   | Interchange and Settlement Limited (12.66%)   |   | New Zealand              |   | WN 642067           |   | 1,732 ordinary                          |
| 4       |   | Mondex New Zealand Limited (20%)         |   | New Zealand              |   | WN 806135           |   | 12 ordinary                             |
| 5       |   | Pukete Industrial Holdings Limited (0.01%)    |   | New Zealand              |   | WN 343179           |   | 10,000 ordinary                         |
| 6       |   | Visa New Zealand Limited (20%)           |   | New Zealand              |   | AK 1228250          |   | 1 Principal Share and 1 Plus Share |

 

**Part 5 – Other Entities In WhichInterests Beneficially Held By NBNZ Group Members**

 
| **No.** |   | **Name**                               |   | **Ownership  Percentage** |
|---------|--------|----------------------------------------|--------|---------------------------|
| 1       |   | Countrywide Endeavour Building Society |   | 100%                      |
| 2       |   | Salient Trust                          |   | 100%                      |
| 3       |   | Salient Trust II                       |   | 100%                      |
| 4       |   | Starz Trust                            |   | 65%                       |
| 5       |   | The Fellowship Syndicate Partnership   |   | 25%                       |
| 6       |   | The King Returns Syndicate Partnership |   | 40%                       |
| 7       |   | The Towers Syndicate Partnership       |   | 30%                       |
| 8       |   | Southpac Property Trust No. 3          |   | Unknown                   |
| 9       |   | Southpac Global Trust                  |   | Unknown                   |
| 10      |   | Southpac Global Fixed Interest Trust   |   | Unknown                   |
| 11      |   | Southpac NZ Fixed Interest Trust       |   | Unknown                   |

 

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**SECOND****SCHEDULE - CLOSING****ACCOUNTS**

 

*(Clause 3.5)*

 

1                                          **ACCOUNTING POLICIES**

 

1.1                                 The Closing Accounts will be prepared:

 

(a)                                  in accordance with NZ GAAP applied in a manner which is consistentwith the manner in which it was applied for the purposes of theJune Accounts, subject to *paragraphs1.1(b)* and *1.1(c);*

 

(b)                                 so as to apply the accounting policies stated in the notes to theJune Accounts and applied in the preparation of the June Accounts,subject to *paragraph 1.1(c)*; and

 

(c)                                  so as to apply the specific accounting policies referred to in *paragraph 1.2*. The inclusion in *paragraph 1.2*of one or more specificaccounting policies which are also applicable under NZ GAAP and/or under theaccounting policies stated in the notes to the June Accounts does not, initself, limit the application of NZ GAAP or those accounting policies inrelation to other matters.

 

1.2                                 The following specific accounting policies shall apply to thepreparation of the Closing Accounts:

 

(a)                                  *Properties: *Land and buildings with a writtendown book value of more than $1 million as at 30  September 2003will be included in the Closing Accounts at their market values as determinedon an ongoing use basis by reference to independent valuations conducted  during the Interim Period by CB RichardEllis or such other valuer as may be agreed between Lloyds TSB and thePurchaser such valuations to be undertaken in a manner consistent with NewZealand Property Institute *ValuationStandard 3 – Valuations for Financial Statements*.  The valuations are to assume notional leasesover owner occupied properties, on market terms and conditions reflecting asimilar tenant profile and of a similar type and location.  The valuation reports shall set out thebasic terms of the assumed lease including the notional lease term, marketrental, responsibility for outgoings, the basis and frequency of rental reviewsand any other terms and conditions applicable to a typical lease of like naturein the market at the date of the valuation;

 

(b)                                 *Provisioning:*  The following policies, being theprovisioning policies applied in the preparation of the June Accounts,shall apply to provisioning for bad or doubtful debts in the Closing Accountsand accordingly:

 

(i)                                     there will not be any general provision;

 

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(ii)                                  a statistically based specific provision will be made in relation tothe National Bank’s personal banking portfolio (comprising home lending, retail overdrafts, personal lending and creditcards) based on the application of the same methodology as was applied to thespecific provision in relation to that portfolio for the purposes of theJune Accounts:

 

(iii)                               in relation to the National Bank’s other portfolios (being Treasury,rural, corporate and commercial and business banking portfolios and all otherlending that is not included in the personal banking portfolio referred to in(ii) above) specific provisioning shall be based on an assessment of theappropriate specific provisioning that should be made as at the Closing Datehaving regard to NZ GAAP and the National Bank’s accounting policies as appliedfor the purposes of the June Accounts. For the avoidance of doubt specific provisions may be created as at theClosing Date even though a particular customer was not named in the NationalBank’s Watchlist A Report, Watchlist B Report or Watchlist C Report on the datefalling one month prior to the Closing Date.

 

(c)                                  *Bonuses:*  It is agreed that:

 

(i)                                     full provision will be made for any outstanding balances forretention bonuses;

 

(ii)                                  provision will be made in accordance with normal accrual accountingfor the  pro-rata proportion of bonusespayable to staff under bonus arrangements existing at the Closing Date; and

 

(iii)                               For the avoidance of doubt any payment which Lloyds TSB hascontracted to make to an employee on account of or in relation to the sale ofthe Shares shall not be treated as a payment by the NBNZ Group.

 

(d)                                 *Superannuation Fund: *A provisionshall be made in the amount of NZ$63 million (with a correspondingincrease of NZ$20 million in the deferred tax asset) for the purposes ofensuring that the shortfall in the superannuation Fund Shortfall as at 30April 2003 is fully provided by the NBNZ Group other than to the extentthe shortfall has been met as at the day before the Closing Date.

 

(e)                                  *Project Accruals:*  For the avoidance of doubt,no accrual will be made in respect of any project for the integration of theNBNZ Group with the business of the Purchaser or the Guarantor (or the businessof a subsidiary of either of them).

 

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(f)                                    *Tax Provision: *The unallocated provision for Tax ofNZ$11.6 million in the June Accounts shall be maintained.

 

(g)                                 *Equity*Accounting*: *Subjectto satisfying the materiality criteria, investments in associated companiesshall be equity accounted as required by law.

 

(h)                                 *Maintenance of Provisions: *The ClosingAccounts should maintain appropriate levels of “operating” and “other”provisions, utilising the same accounting policies as were used in creating theprovisions that were reflected in the “Other Liabilities” section of theJune Accounts.

 

1.3                                 If:

 

(a)                                  there is any inconsistency between NZ GAAP and the accountingpolicies applied in the preparation of the June Accounts then, in thepreparation of the Closing Accounts, the accounting policies applied in thepreparation of the June Accounts will prevail; and

 

(b)                                 there is any inconsistency between, on the one hand, NZ GAAP and/orthe accounting policies applied in the preparation of the June Accountsand, on the other hand, the specific accounting policies referred to in *paragraph 1.2* then, in the preparation ofthe Closing Accounts, the specific accounting policies referred to in *paragraph 1.2* will prevail.

 

2                                          **PREPARATIONOF CLOSING ACCOUNTS**

 

2.1                                 *Preparation ofAccounts: *As soon as is practicable after the ClosingDate the Purchaser will arrange for NBNZ Holdings to prepare (in accordancewith the Accounting Policies):

 

(a)                                  a consolidated statement offinancial performance for the NBNZ Group for the Accounting Period;

 

(b)                                 a consolidated statement of theNBNZ Group’s financial position as at the day before the Closing Date;

 

(c)                                  a consolidated statement ofmovements in equity for the NBNZ Group for the Accounting Period;

 

(d)                                 a statement of the accountingpolicies (including, as applicable, particular policies stated or referred toin the Accounting Policies) applied in the preparation of the statementsreferred to in (a), (b) and (c); and

 

(e)                                  the notes accompanying, andforming part of, the statements referred to in (a), (b), and (c)  above,

 

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with the intention that such financial statements shall be available tobe audited no later than 30 Business Days after the Closing Date*.*

 

2.2                                 *Audit:*  Lloyds TSB and the Purchaser will arrangefor PricewaterhouseCoopers to audit the financial statements referred to in *paragraph 2.1* with the intention that suchaudited financial statements shall be available to the Parties no later than 50Business Days after the Closing Date. Those financial statements shall be accompanied by an audit opinion fromPricewaterhouseCoopers to Lloyds TSB and the Purchaser that such financialstatements give a true and fair view of the financial position of the NBNZGroup as at the day before the Closing Date and its financial performance forthe Accounting Period and that they comply with the Accounting Policies.

 

2.3                                 *Nature of Accounts*:  The preparation and auditof the financial statements referred to in *paragraph 2.1*shall be as full and complete as if they were financial year-end and taxyear-end financial statements of the NBNZ Group.

 

2.4                                 *Materiality:* In the audit of the financial statements referred to in *paragraph 2.1*, PricewaterhouseCoopersshall apply a materiality threshold of NZ$2.5 million or such higheramount as may be agreed in writing between Lloyds TSB and the Purchaser.

 

2.5                                 *Provision of Information: *The Parties shall, and the Purchaser shallprocure that the NBNZ Group shall:

 

(a)                                  provide or ensure the provision ofall information and assistance (including, without limitation, access to allrelevant books and records) which may reasonably be required byPricewaterhouseCoopers in connection with the preparation and audit of theClosing Accounts; and

 

(b)                                 co-operate fully with each otherand PricewaterhouseCoopers in relation to the expeditious preparation, deliveryand audit of the Closing Accounts including, without limitation, complying withany reasonable direction of PricewaterhouseCoopers concerning the preparationor audit of the Closing Accounts.

 

2.6                                 *Review ofStatement: *On completion of the preparation and audit ofthe financial statements referred to in *paragraph 2.1*:

 

(a)                                  Lloyds TSB and the Purchaser will arrange for delivery of drafts ofthe financial statements and the audit opinion referred to in *paragraph 2.2*to Lloyds TSB and thePurchaser and, in the absence of manifest error, the audited financialstatements so delivered will be conclusive and binding on the Parties;

 

(b)                                 unless, within 10 Business Daysafter the delivery to Lloyds TSB and the Purchaser of a draft of the financialstatements pursuant to

 

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*paragraph 2.6(a),* Lloyds TSB or the Purchaser notifies the other of them in writingthat there is a manifest error in such financial statements which means thatthey do not give a true and fair view of the financial position of the NBNZGroup as at the day before the Closing Date and/or its financial performancefor the Accounting Period and/or that they do not comply with the AccountingPolicies (and provides details of any such error) then at the end of thatperiod of 10 Business Days those financial statements will become, and bedeemed to be designated, the Closing Accounts.

 

2.7                                 *AgreedCorrection:*  If:

 

(a)                                  within 10 Business Days after the delivery to Lloyds TSB and the Purchaser of the draftfinancial statements pursuant to *paragraph 2.6(a)*,either of Lloyds TSB or the Purchaser makes a notification to the other inaccordance with *paragraph 2.6(b)*;and

 

(b)                                 PricewaterhouseCoopers agrees thatthere is a manifest error and a correction is required,

 

then Lloyds TSB and the Purchaser willarrange for PricewaterhouseCoopers to make the necessary correction to thosedraft financial statements whereupon PricewaterhouseCoopers will sign theiraudit report and deliver it with the final corrected financial statements toLloyds TSB and the Purchaser.  As soonas those documents are so delivered then those financial statements (as socorrected) will become, and be deemed to be designated, the Closing Accounts.

 

2.8                                 *Disputes: *If there is a dispute between Lloyds TSB andthe Purchaser as to whether there is such a manifest error in the draftfinancial statements delivered under *paragraph 2.6(a)*then unless they agree a resolution of the matter in writing within 10 Business Days after the delivery of those financialstatements under *paragraph 2.6(a)*,the matter in dispute will be referred for determination pursuant to *paragraph 3* and upon thedetermination of the dispute such financial statements (amended, if necessary,to take into account such determination) will become, and be designated, theClosing Accounts.

 

**3****                                         DETERMINATION OF DISPUTES**

 

3.1                                 If a matter in dispute is requiredto be referred for determination pursuant to *paragraph 2.8* then:

 

(a)                                  the matter in dispute shall bereferred by either Lloyds TSB or the Purchaser to an independentinternationally recognised firm of chartered accountantsagreed by Lloyds TSB and the Purchaser or, in default of such agreement,appointed by the President for the time being of the Institute of CharteredAccountants of New Zealand;

 

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(b)                                 that firm will review all relevantdocuments and information and it  will state in a signed decision its opinionregarding the disputed item or items and what correction (if any) is necessaryto the financial statements prepared pursuant to *paragraph 2.1* to correct any relevant manifest errorand upon delivery of that decision to Lloyds TSB and the Purchaser thosefinancial statements as so adjusted will become, and be designated as, theClosing Accounts;

 

(c)                                  such determination shall be:

 

(i)                                     made by that firm as an expert,and not as an arbitrator (and the Arbitration Act 1996 shall not apply to the firm’s consideration of the matter);

 

(ii)                                  delivered within 10 Business Daysof that firm receiving its instructions; and

 

(iii)                               be final and binding on theParties; and

 

(d)                                 the Parties shall co-operate witheach other to provide and the Purchaser will ensure that the NBNZ Groupprovides, the relevant firm with all informationreasonably required by it to complete its determination.

 

2                                          **FEES AND DISBURSEMENTS OF ACCOUNTING FIRMS**

 

The fees and disbursements ofPricewaterhouseCoopers and of any firm appointed under *paragraph 3* shall be borne by Lloyds TSBand the Purchaser in equal shares.

 

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**THIRD SCHEDULE - VENDOR WARRANTIES**

 

*(Clause 6.1)*

 

1                                          **LLOYDSTSB CORPORATE AUTHORITY**

 

1.1                                 **Power andAuthority**:  Each of the Vendor and Lloyds TSB has full power, authority and legal right to enterinto those of this Agreement and the Trade Mark Licence to which it is a partyand to observe and perform its respective obligations hereunder and thereunderand has taken all necessary corporate and other action, and obtained allconsents, necessary to authorise its execution, delivery and performance ofthose of this Agreement and the Trade Mark Licence to which it is a party.

 

1.2                                 **Binding andenforceable obligations: **This Agreement and the Trade MarkLicence constitute the legal, valid and binding obligations of each of theVendor (in the case of this Agreement only) and Lloyds TSB enforceable againstthe Vendor (in the case of this Agreement only) and Lloyds TSB respectively inaccordance with its terms, except as such enforceability may be limited byequitable principles or by bankruptcy, moratorium, insolvency, reorganisation,liquidation or other laws relating to or affecting creditors’ rights.

 

1.3                                 **No Breach or****Violation: **The execution and delivery of this Agreementand the Trade Mark Licence by the Vendor (in the case of this Agreement only)and Lloyds TSB and the performance by each of them of their respectiveobligations under this Agreement does not and will not exceed any power granted to either of themby, or constitute, or result in, a breach or violation of:

 

(a)                                  any provision of any law or anyrule or directive of any court or governmental or regulatory agency orauthority to which the Vendor or Lloyds TSB is subject; or

 

(b)                                 any agreement or instrument towhich the Vendor or Lloyds TSB is a party or by which it is bound.

 

1.4                                 **Solvency and Purpose: **Each of the Vendor and Lloyds TSB is:

 

(a)                                  notinsolvent; and

 

(b)                                 enteringinto this Agreement and (in the case of Lloyds TSB only) the Trade Mark Licencein good faith and for a proper purpose and in its best interests.

 

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2                                          **THE SHARES**

 

2.1                                 **Title:** The Vendor haslegal and beneficialtitle to the Shares freeand clear of all encumbrances.

 

2.2                                 **Power andauthority: **The Vendor has full right, power andauthority to sell the Shares to the Purchaser pursuant to this Agreement freeand clear of all encumbrances.

 

2.3                                 **Fully PaidShares: **The Shares comprise all of the issued sharesin the capital of NBNZ Holdings and are fully paid and no other payments are due or payable to NBNZ Holdings or any other personon or in respect of the Shares.

 

2.4                                 **No obligation todispose of****Shares:**  Neither the Vendor nor anyGroup Company is under any obligation of any kind, whether actual orcontingent, to sell, encumber or otherwise dispose of or deal with any of theShares or any interest in the Shares, except as is provided for in *clause 2.1*of this Agreement.

 

3                                          **EQUITY CAPITAL AND OTHER INTERESTS**

 

3.1                                 **Further issue ofcapital, options: **Other than, in the case of NBNZHoldings, the Shares and, in the case of each other Group Company listed in *Part 1* or *Part 2*of the *FirstSchedule*, shares in that Group Company held by NBNZ Holdings oranother Group Company, no such Group Company has issued to any person anyequity securities (as defined in the Securities Act 1978).  No third party has any right to call for theissue, allotment or transfer of any shares or other equity securities held byany Group Company in any other Group Company, except as provided for in *clause 2.1* of this Agreement.

 

3.2                                 **Rights attachingto Shares: **All of the rights, powers,privileges, entitlements, conditions and restrictions attaching to the shares in the capital ofeach Group Company (other than Countrywide Endeavour Building Society) arespecified in its Constitution (or its equivalent constitutive document) orspecified in section 36 of the Companies Act (or in anyrelevant statutory equivalent).

 

3.3                                 **Dividends anddistributions: **No Distribution (whether of, or onaccount of, the profits, retained earnings orcapital of a Group Company or otherwise) has been declared, made or paid by aGroup Company during the period since 30 June 2003, except for (i) thePermitted Dividends and (ii) dividends paid from one Group Company to another.

 

3.4                                 **PermittedDividends:**  All of the requirements of the Companies Actin relation to the payment of the Permitted Dividends have been, or will be,complied with.

 

3.5                                 **Subsidiaries: **All of the shares in the capital of each ofthe companies named in *Part 1* and*Part 2* of the *First Schedule *are beneficially ownedby NBNZ Holdings or another Group Company.

 

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3.6                                 **Other shares:** No Group Company beneficially owns any shares in any other company,other than another Group Company or another company referred to in *Part 3* or *Part 4*of the *First Schedule*.

 

3.7                                 **Partly-OwnedSubsidiaries and Associated entities: **The NBNZ Group beneficially ownsthe shares referred to in *Part 3*and *Part 4* of the *First Schedule*.

 

3.8                                 **Non-CorporateEntities:**  A Group Company beneficially holds thatownership percentage in each of the entities listed in *Part 5* of the *First Schedule *as is stated in that *Part 5*.

 

4                                          **NBNZGROUP CORPORATE EXISTENCE**

 

4.1                                 **Form ofConstitution:**  The form of Constitution or equivalentconstitutive document of each relevant Group Company filed with the Registrar of Companies as at30 September 2003 is the current and complete Constitution of that GroupCompany.

 

4.2                                 **No Breach of Constitution:**  Neither the execution of this Agreement, northe transfer of the Shares to the Purchaser pursuant to this Agreement, willcause a breach of the Constitution of any Group Company.

 

4.3                                 **CorporateExistence:**  Each Group Company has the corporate powerto own its own assets and to carry on the business being carried on byit as at the Execution Date.

 

4.4                                 **Branches: **No Group Company incorporated in New Zealandconducts business outside New Zealand other than NBNZ International Limitedwhich operates a London branch and the National Bank whose ordinary bankingactivities involve the conduct of business (including through internet banking)outside New Zealand.

 

4.5                                 **Non OperatingCompanies: **No Group Company named in *Part2* of the *First Schedule *is presently carrying on business.

 

4.6                                 **No InsolvencyEvent:**  As at the Execution Date, no InsolvencyEvent has occurred and is continuing, or is threatened, except that steps arebeing taken to wind up or otherwise dissolve the Wind-up Companies.

 

5                                          **PROPERTY INTERESTS**

 

5.1                                 **CompleteList: **As at the Execution Date the PropertyInterests comprise all the interests of the NBNZ Group in land and buildingsowned by, or leased to, any Group Company.

 

5.2                                 **Title: **Each Group Company has marketable title toeach of the freehold Property Interests of that Group Company, free from anyencumbrance or tenancy (other 

 

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than Permitted Encumbrances), and is entitled to vacantpossession of the relevant properties, save for certain leases of retail space granted bya Group Company, informationon which leases has been provided to the Purchaser in the DisclosureInformation.

 

5.3                                 **LeaseholdInterests: **Where a Group Company occupies premises pursuant to a lease then,as at the Execution Date, that Group Company has not received notice of anymaterial breach by it of the terms of that lease or notice of the terminationof the relevant lease (other than termination by the effluxion of time) and, so far as the Vendor isaware, that Group Company has not committed any subsisting material breach ofthat lease.

 

5.4                                 **HarmfulSubstances:**  So far as the Vendor is aware, as at theExecution Date no hazardous substance (as defined in the Hazardous Substancesand New Organisms Act 1996) and no contaminant or harmful substance (as definedin the Resource Management Act 1991) has been used by a Group Company inconnection with, or deposited or discharged by a Group Company onto or beneaththe surface of, any land or buildings presently owned or occupied by any GroupCompany except as permitted by law.

 

6                                          **LITIGATION**

 

6.1                                 **No litigation: **As at the Execution Date, no Group Company isengaged or involved in any litigation, arbitration, mediation, claim,prosecution or other legal proceedings *(proceedings),*whether as plaintiff, defendant or otherwise, other than:

 

(a)                                  the matters listed in the boardpaper number 5(b) for the meeting of the board of directors of the NationalBank held on 24 July 2003 (being Document 14.10.1.4 in the Data Room Index); and

 

(b)                                 debt collection matters involvingthe collection of not more than NZ$5,000,000 in the aggregate in the ordinarycourse of business,

 

and, sofar as the Vendor is aware, there are no proceedingspending or threatened as at the Execution Date.

 

6.2                                 **No****enquiries ordispute: **As at the Execution Date no Group Company isinvolved in any enquiry by, or in dispute with, a governmental,regulatory or municipal authority or board of enquiry or commission or any other administrative body (whetherjudicial or quasi-judicial), except for the matters referred to in *clause 7.3(h)*and matters involving otherparticipants (in each case including the Purchaser) in the New Zealand bankingindustry.

 

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7                                          **LEGAL COMPLIANCE**

 

7.1                                 **Company holds allconsents:**  Each Group Company holds those statutory andregulatory consents the absence of which would materially adversely affect thebusiness of the NBNZ Group but neither this *paragraph 7.1*nor *paragraph 7.2*appliesto the National Bank’s banking licence which is dealt with in *paragraph 7.3*.

 

7.2                                 **No withdrawal orrevocation of consents:**  No Group Company has done oromitted to do any act or thing which will cause any of those statutory andregulatory consents to be revoked or withdrawn.

 

7.3                                 **Status as a registered bank: **The National Bank is presentlycomplying with all the conditions imposed on it by the Reserve Bank of New Zealand under the ReserveBank of New Zealand Act 1989 in granting to it status as aregistered bank.

 

7.4                                 **GeneralLegal Compliance**:  As at the Execution Date,each Group Company has, in a manner and to an extent generally consistent withcustoms and practices adopted by the Purchaser and all or some of the other NewZealand registered banks in the New Zealand banking industry generally,complied in all material respects with all relevant laws and other directives,codes or other requirements of Government Authorities with whose directives,codes or other requirements New Zealand registered banks customarily comply.

 

8                                          **FINANCIALSTATEMENTS**

 

8.1                                 **Latest Annual Accounts:**  The Latest Annual Accounts ofthe NBNZ Group:

 

(a)                                  complied with generally accepted accounting practice in New Zealandas at 31 December 2002; and

 

(b)                                 gave, as at 31 December 2002, a true and fair view of thefinancial position of NBNZ Holdings and the NBNZ Group as at that date andtheir financial performance and cash flows for the year ended on that date.

 

8.2                                 **June ****Accounts: **The June Accounts:

 

(a)                                  complied with generallyaccepted accounting practice in New Zealand as at 30 June 2003; and

 

(b)                                 gave, as at 30 June 2003, a true and fair view of the financialposition of NBNZ Holdings and the NBNZ Group as at that date and theirfinancial performance and cash flows for the6 months ended on that date.

 

8.3                                 **Closing Accounts:**  The Closing Accounts will give a true andfair view of the financial position of NBNZ and the NBNZ Group as at the daybefore the Closing

 

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Date and their financial performancefor the Accounting Period, if the Purchaser has ensured that the ClosingAccounts (which will be prepared after Closing) are prepared in accordance withthe Accounting Policies.

 

9                                          **ASSETS**

 

9.1                                 **Watchlist A Report:**  The Watchlist A Report as at 30 September 2003 provided to the Purchaserbefore the Execution Date as part of the Black Box Documents forming part ofthe Disclosure Information (Item 17.2 in the Data Room Index) was prepared inaccordance with the same watchlist policies as those consistently applied bythe National Bank since 1 January 2003.

 

9.2                                 **Title to assets**: As at 30 June 2003 a GroupCompany owned each asset that the NBNZ Group is shown to ownin the June Accounts and as at the Closing Date a Group Company will owneach asset that the NBNZ Group is shown to own in the Closing Accounts.

 

9.3                                 **Noencumbrances: **No Group Company will have createdor agreed to create  any encumbranceover any assets it is shown to own in the Closing Accounts, except forPermitted Encumbrances.

 

10                                    **MATERIAL CONTRACTS**

 

10.1                           **Disclosure:**  All Material Contracts have been disclosedas part of the Disclosure Information.

 

10.2                           **Compliance:** Each Material Contract is being complied with in all material respectsby the Group Company that is a party to that contract except for, to the extentapplicable, any non-compliance arising from the sale of the Shares.

 

10.3                           **Disputes andTermination:**  As at the Execution Date:

 

(a)                                  there are no unresolved disputesunder a Material Contract between that Group Company and another party to thatcontract; and

 

(b)                                 so far as the Vendor is aware, noGroup Company has received notice of the termination of a Material Contract(other than termination by the effluxion of time).

 

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11                                    **EMPLOYEES AND SUPERANNUATION**

 

11.1                           **SeniorExecutives: **The details about the employmentpackage of the senior executives of the National Bank disclosed to thePurchaser in the Schedule of Senior Executive Remuneration Details beingone of the Black Box Documents forming part of the Disclosure Information (Item17.1 in the Data Room Index) are true and correct as at the Execution Date.

 

11.2                           **Termination: **There are no contracts of employment orconsultancy or service agreements or other similar employment contracts betweenany Group Company and any of its directors or employees that, under the terms(other than any terms which may be unilaterally imposed by any court ortribunal of competent jurisdiction) of the relevant contract, cannot beterminated by the relevant Group Company without the payment of compensation(including redundancy compensation) or damages on three months’ notice.

 

11.3                           **Companyobligation to contribute to superannuation schemes: **NoGroup Company is under any present or future obligation to make anycontribution to, or other payment on account of, any superannuation, pension, retirement or similar scheme orarrangement, other than contributions to the Staff Superannuation Fund.

 

11.4                           **Change to termsof employment:**  Since 30 June 2003 no GroupCompany has made, or agreed to make, any additions or alterations in theremuneration or conditions of employment of any employee other than (i) routinewage or salary increases or other routine adjustments made in accordance withthe National Bank Group’s customary review policies and procedures (includingthe annual review of the remuneration of the National Bank’s managerialpersonnel as at 1 October 2003) which were notified to the Guarantorprior to the Execution Date, and (ii) pursuant to any other commitment made bya Group Company before the Execution Date and disclosed in writing to the Guarantorbefore the Execution Date.

 

11.5                           **No shareincentive, option or profit sharing schemes:** Other than (i) the National Bank’s usual performance relatedremuneration schemes (which were disclosed in the Disclosure Information) and(ii) certain other arrangements which have been disclosed to the Guarantor inthe Disclosure Letter, neither the Vendor nor Lloyds TSB nor any Group Companyhas in existence in respect of any employee of any Group Company any shareincentive scheme, share option scheme or profit sharing scheme.

 

11.6                           **No commissionarrangements:**  Other than (i) the National Bank’s usualperformance related remuneration scheme (which were disclosed in the DisclosureInformation) and (ii) its mobile mortgage manager commission arrangements (ineach case as disclosed in the Disclosure Information), there are no schemes inoperation in relation to the business of any Group Company under which anyemployee of that Group Company or any 

 

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other Group Company or any other person is entitled to a commission orremuneration of any other sort calculated by reference to the whole or part ofthe turnover, profits or gross assets of that Group Company.

 

11.7                           **StaffSuperannuation Fund:**  With respect to the Staff SuperannuationFund there are no outstanding unpaid contributions to that Fund onthe part of any Group Company, except the Superannuation Funding Shortfall.

 

11.8                           **ACC Rating:** The National Bank’s experience rating under the Accident Rehabilitationand Compensation Insurance (Experience Rating) Regulations 1993 has not led toits basic ACC employer premium being increased or loaded in the current premiumliability year.

 

12                                    **BOOKSAND RECORDS**

 

12.1                           **Maintenance ofbooks: **Each Group Company has properly kept andmaintained in all material respects and has in its possession all necessarybooks of account (reflecting, in accordance with the Accounting Policies, alltransactions effected by that Group Company or to which it has been a party), minute books, records, its share register and otherstatutory registers and books.  Allfinancial transactions of the NBNZ Group have been accurately recorded in allmaterial respects in such books and records.

 

12.2                           **No Resolutions:** Since the Balance Date no Group Company has passed, and pending Closing will not pass, any resolution in generalmeeting or any resolution pursuant tosection 122 of the Companies Act except for ordinary resolutions (i)approving the Latest Annual Accounts and the June Accounts, (ii)appointing Directors andauditors, and (iii)facilitating the payment of the Permitted Dividends.

 

13                                    **TRADEMARKS**

 

13.1                           **Ownership:**  Lloyds TSB is the sole beneficial owner ofthe Lloyds TSB Trade Marks (except for the DEPOSITPOINT trade mark registration299365 (which is proposed to be transferred from the National Bank to LloydsTSB)) and the National Bank is the sole beneficial owner of the NBNZ TradeMarks.

 

13.2                           **Registration:**  Each of the Lloyds TSB Trade Marks and theNBNZ Trade Marks which is a registered trade mark is validly registered in NewZealand under the Trade Marks Act 2003.

 

13.3                           **Disputes: **As at the Execution Date none of the LloydsTSB Trade Marks or the NBNZ Trade Marks is:

 

(a)                                  the subject of any outstanding or threatened challenge, dispute,claim or proceeding for infringement or contested ownership; or

 

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(b)                                 subject to any proceeding for cancellation, revocation, oppositionor rectification of the New Zealand registration.

 

13.4                           **Rights:**  None of the Lloyds TSB Trade Marks or theNBNZ Trade Marks infringes the rights of any other person.

 

13.5                           **Infringement:**  As at the Execution Date none of the LloydsTSB Trade Marks or the NBNZ Trade Marks is being infringed by any person, sofar as the Vendor is aware.

 

14**                                    OTHER INTELLECTUAL PROPERTY**

 

14.1                           **Ownership:**  A Group Company is:

 

(a)                                  the sole beneficial owner of those domain names of which it is theregistered proprietor; and

 

(b)                                 owns, or is entitled to use, those copyrights in promotional andadvertising materials reasonably required for its publicity and promotionalstrategies.

 

14.2                           **No Infringements:**  So far as the Vendor isaware as at the Execution Date, none of the intellectual property assetsreferred to in *paragraph 14.1*infringes the rights of any other person.

 

15                                    **INFORMATIONTECHNOLOGY**

 

15.1                           **Access to Hardware and Software:**  The NBNZ Group’s mainoperating system hardware and main operating system software, and its othermaterial hardware and material software, are owned by, or otherwise availableto, the NBNZ Group.

 

15.2                           **Access to Data:**  The NBNZ holds, or has the requisitecontractual access to, that of its stored electronic data to which access bythe NBNZ Group is necessary for the operation of the NBNZ Group’s business.

 

16                                    **MANAGEDFUNDS**

 

16.1                           **Scope: **Those managed funds listed in the definitionof “Managed Funds” in this Agreement comprise all of the investment orsuperannuation funds of which a Group Company is the issuer or the manager.

 

16.2                           **Allotment:**  No allotment of any security in relation toany Managed Fund has been made except pursuant to a registered prospectus(where such a prospectus is required by law).

 

16.3                           **Unit Pricing:**  As at the Execution Date, no claims havebeen made or threatened and, so far as the Vendor is aware, are likely to bemade or threatened, arising out of the failure of a Group Company to calculateproperly

 

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any distribution of money from a Managed Fundor the amount payable to or by that Managed Fund on the issue or redemption ofsecurities in that Managed Fund.

 

16.4                           **Financial Statements:**  The Latest Annual Accountsof each Managed Fund:

 

(a)                                  complied with generally accepted accounting practice in New Zealandas at the date as at which they were prepared; and

 

(b)                                 gave, as at the end of its most recently completed financial year, atrue and fair view of the financial position of the relevant Managed Fund as atthe end of that financial year and its financial performance and cash flows forthat financial year.

 

16.5                           **No Breach:**  As at the Execution Date no Group Companyhas received notice that a Group Company is in breach of its obligations underany trust deed constituting a Managed Fund or a management agreement underwhich a Group Company manages a Managed Fund.

 

16.6                           **Trust Deed: **During the Interim Period each GroupCompany that is the manager of a Managed Fund will comply in all materialrespects with its obligations under the Trust Deed constituting that ManagedFund.

 

16.7                           **No Winding Up:**  As at the Execution Date no steps have beentaken by a Group Company or the relevant Trustee to wind up a Managed Fund.

 

17                                    **DISCLOSURE INFORMATION**

 

So far as the Vendor is aware, as at theExecution Date, the Disclosure Information (when taken as a whole so that allrelevant information is taken into account with respect to the particularsubject matter) does not:

 

(a)                        contain any untrue information which is material in the context ofthat particular subject matter; or

 

(b)                       omit to state any information which is material in the context ofthat particular subject matter.

 

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**FOURTH SCHEDULE - PURCHASERWARRANTIES**

 

*(Clause 6.13)*

 

1**                                         ****LEGALAUTHORITY**

 

1.1                                 **Power and Authority:**  Eachof the Purchaser and the Guarantor has full power, authority and legal right toenter into this Agreement and to observe and perform itsobligations hereunder and has taken all necessary corporate and other action toauthorise its execution, delivery and performance of this Agreement.

 

1.2                                 **Binding Obligations: **This Agreement constitutes the legal, validand binding obligations of the Purchaser and the Guarantor enforceable againsteach of them in accordance with its terms, except as such enforceability may belimited by equitable principles or by bankruptcy, moratorium, insolvency,reorganisation, liquidation or other laws relating to or affecting creditors’rights.

 

1.3                                 **No Breach ofViolation: **The execution and delivery of this Agreementby the Purchaser and the Guarantor and the performance by each of them of theirrespective obligations under this Agreement do not and will not exceed anypower granted to either of them by, or constitute, or result in, a breach orviolation of any provisionsof:

 

(a)                                  any consent or any law or any ruleor directive of any court or governmental or regulatory agency or authority towhich the Purchaser or the Guarantor is subject; or

 

(b)                                 the Constitution or otherconstitutive documents of the Purchaser or the Guarantor.

 

1.4                                 **Solvency and Purpose: **Each of the Purchaser and the Guarantor is:

 

(a)                                  notinsolvent; and

 

(b)                                 enteringinto this Agreement in good faith and for a proper purpose and in its bestinterests.

 

2                                          **GENERAL**

 

2.1                                 **Consents: **All consents required to be obtained, made or effected by the Purchaser or the Guarantor under or byvirtue of the laws of NewZealand or any othercountry by which the Purchaser or the Guarantor is bound, in connection with,or arising out of the execution and delivery by the Purchaser and the Guarantorof, and the performance by the Purchaser and the Guarantor of their respectiveobligations under, this Agreement or, where relevant, the transfer of theShares to the Purchaser have been duly obtained and are at the Execution Date,and will be at the Closing Date, in full force and effect (subject to law) and

 

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any conditioncontained therein or otherwise applicable thereto has been, and as at the Closing Date will have been,complied with or fulfilled.

 

2.2                                 **NoLitigation: **Neither the Purchaser nor theGuarantor is involved, whether as plaintiff or defendant or otherwise, in any legal action, proceeding or arbitration in connection with this Agreement or thepurchase of the Shares and no such legal action, proceeding or arbitration ispending or threatened.

 

2.3                                 **Vendor Warranties**: As at the Execution Date, neither the Purchaser nor the Guarantor isaware of any breach of any Vendor Warranty or of any warranty set out in *clause 7.3*which may give rise to aclaim by either of them against the Vendor or Lloyds TSB under or arising outof this Agreement.

 

2.4                                 **Closing Accounts:**  The Closing Accounts willbe prepared in accordance with the Accounting Policies.

 

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| **EXECUTED** by**Lloyds TSB Bank plc**by  being signed by its Attorney in the  presence of:                         |                                                 |
|--------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------|
|                                                                                                                     |                                                 |
| **/s/ Nicola Lawson**                                                                                                    |                                                 | /s/ GR Taylor |   |
|                                                                                                                     | Name: Graham Taylor                                  |
| Name: Nicola Lawson                                                                                                      | Title: Deputy Director, Group Corporate  Development |
|                                                                                                                     |                                                 |
| Occupation: Barrister                                                                                                    |                                                 |
|                                                                                                                     |                                                 |
| Address: London                                                                                                          |                                                 |
|                                                                                                                     |                                                 |
|                                                                                                                     |                                                 |
| **EXECUTED** by**Lloyds Bank Subsidiaries Limited**  by  being signed by its Attorney in the  presence of:          |                                                 |
|                                                                                                                     |                                                 |
| **/s/ Nicola Lawson**                                                                                                    |                                                 | /s/ GR Taylor |   |
|                                                                                                                     | Name: Graham Taylor                                  |
| Name: Nicola Lawson                                                                                                      | Title: Deputy Director, Group Corporate  Development |
|                                                                                                                     |                                                 |
| Occupation: Barrister                                                                                                    |                                                 |
|                                                                                                                     |                                                 |
| Address: London                                                                                                          |                                                 |
|                                                                                                                     |                                                 |
|                                                                                                                     |                                                 |
| **EXECUTED** by**Australia and New Zealand Banking  Group Limited** by  being signed by its Attorney in the presence of: |                                                 |
|                                                                                                                     |                                                 |
| **/s/ G Davis**                                                                                                          |                                                 | /s/ DB Valentine |   |
|                                                                                                                     | Name: David Bruce Valentine                          |
| Name: Garry Davis                                                                                                        | Title: General, Manager, Mergers &  Aquisitions  |
|                                                                                                                     |                                                 |
| Occupation: Solicitor                                                                                                    |                                                 |
|                                                                                                                     |                                                 |
| Address: Auckland                                                                                                        |                                                 |
|                                                                                                                          |                                                      |  |  |  |

 

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| **EXECUTED** by**ANZ Banking Group (New Zealand)  Limited** by being signed by its authorised  signatories in the presence of: |                                                |
|--------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------|
|                                                                                                                           |                                                |
| **/s/ Peter Castle**                                                                                                           |                                                | /s/ DB Valentine |   |
| Name: Peter Castle                                                                                                             | Name: David Bruce Valentine                         |
|                                                                                                                           | Title: General, Manager, Mergers &  Aquisitions |
| Occupation: Solicitor                                                                                                          |                                                |
|                                                                                                                           |                                                |
| Address: Wellington                                                                                                            | /s/ Peter Jones Stirling                            |   |
|                                                                                                                           | Name: Peter Jones Stirling                          |
|                                                                                                                           | Title: Deputy General Counsel                       |
|                                                                                                                                |                                                     |  |  |

 

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