Document:

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                                                      [CLAYTON UTZ LOGO]

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SECURITISATION ADVISORY SERVICES PTY. LIMITED
ABN 88 064 133 946
Manager

COMMONWEALTH BANK OF AUSTRALIA
ABN 48 123 123 124
Party A

PERPETUAL TRUSTEE COMPANY LIMITED
ABN 42 000 001 007
Party B

MEDALLION TRUST SERIES 2003-1G
ISDA MASTER AGREEMENT
(CURRENCY SWAP AGREEMENT)

                               [CLAYTON UTZ LOGO]
                                     LAWYERS
          Levels 23-35 No 1 O'Connell Street Sydney NSW 2000 Australia
            PO Box H3 Australia Square Sydney NSW 1215 DX 370 Sydney
                               www.claytonutz.com
                    Tel + 61 2 9353 4000 Fax + 61 2 8220 6700
                OUR REF - 801/784/21723929 CONTACT - BEN SANDSTAD

            SYDNEY O MELBOURNE O BRISBANE O PERTH O CANBERRA O DARWIN

  Liability limited by the Solicitors' Limitation of Liability Scheme approved
                under the Professional Standards Act 1994 (NSW)

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                                    SCHEDULE

                                     TO THE

                                MASTER AGREEMENT

                        DATED AS OF 13 MARCH 2003 BETWEEN

                  SECURITISATION ADVISORY SERVICES PTY. LIMITED
                               ABN 88 064 133 946
                                   ("MANAGER")

                                       AND

                         COMMONWEALTH BANK OF AUSTRALIA
                               ABN 48 123 123 124
                                   ("PARTY A")

                                       AND

                        PERPETUAL TRUSTEE COMPANY LIMITED
                               ABN 42 000 001 007

IN ITS SEVERAL CAPACITIES AS TRUSTEE OF VARIOUS SERIES TRUSTS FROM TIME TO TIME
     ESTABLISHED UNDER THE MASTER TRUST DEED AND VARIOUS SERIES SUPPLEMENTS
                                  ("PARTY B")

PART 1.     TERMINATION PROVISIONS.

In this Agreement:

(a)  "SPECIFIED ENTITY" does not apply in relation to Party A or Party B.

(b)  The definition of "SPECIFIED TRANSACTION" is not applicable.

(c)  (i)   The following provisions of Section 5 will not apply to Party A:

           Section 5(a)(ii)          Section 5(a)(v)
           Section 5(a)(iii)         Section 5(a)(vi)
           Section 5(a)(iv)          Section 5(b)(iv)

     (ii)  The following provisions of Section 5 will not apply to Party B:

           Section 5(a)(ii)          Section 5(a)(v)        Section 5(b)(iv)
           Section 5(a)(iii)         Section 5(a)(vi)
           Section 5(a)(iv)          Section 5(a)(viii)

     (iii) Section 5(b)(ii) will not apply to Party A as the Affected Party
           (subject to Part 5(6)(b) of this Schedule) and Section 5(b)(iii) will
           not apply to Party A as the Burdened Party.

(d)  The "AUTOMATIC EARLY TERMINATION" provisions in Section 6(a) will not apply
     to Party A or Party B.

(e)  PAYMENTS ON EARLY TERMINATION. For the purposes of Section 6(e) of this
     Agreement:

     (i)   Market Quotation will apply; and

                                                                               1

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     (ii)  the Second Method will apply.

(f)  "TERMINATION CURRENCY" means US$ provided that if an amount due in respect
     of an Early Termination Date will be payable by Party B to Party A the
     Termination Currency for the purpose of calculating and paying that amount
     is Australian Dollars.

(g)  "ADDITIONAL TERMINATION EVENT" applies. The following is an Additional
     Termination Event in relation to which both Party A and Party B are
     Affected Parties:

     "An Event of Default (as defined in the Security Trust Deed) occurs and the
     Security Trustee has declared, in accordance with the Security Trust Deed,
     the Relevant Notes immediately due and payable."

     For the purposes of calculating a payment due under Sections 6(d) and (e)
     when an Early Termination Date is designated under Section 6(b) as a result
     of such Additional Termination Event, Party B will be the only Affected
     Party.

PART 2. TAX REPRESENTATIONS

(a)  PAYER TAX REPRESENTATIONS. For the purpose of Section 3(e) of this
     Agreement, Party A and Party B each make the following representation:

     It is not required by any applicable law, as modified by the practice of
     any relevant government revenue authority, of any Relevant Jurisdiction to
     make any deduction or withholding for or on account of any Tax from any
     payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of this
     Agreement) to be made by it to any other party under this Agreement. In
     making this representation, it may rely on:

     (i)   the accuracy of any representation made by that other party pursuant
           to Section 3(f) of this Agreement;

     (ii)  the satisfaction of the agreement contained in Section 4(a)(i) or
           4(a)(iii) of this Agreement and the accuracy and effectiveness of any
           document provided by that other party pursuant to Section 4(a)(i) or
           4(a)(iii) of this Agreement; and

     (iii) the satisfaction of the agreement of that other party contained in
           Section 4(d) of this Agreement,

     PROVIDED THAT it shall not be a breach of this representation where
     reliance is placed on clause (ii) and the other party does not deliver a
     form or document under Section 4(a)(iii) by reason of material prejudice to
     its legal or commercial position.

(b)  PAYEE TAX REPRESENTATIONS. For the purpose of Section 3(f) of this
     Agreement, Party A and Party B each makes the following representation:

     It is an Australian resident and does not derive payments under this
     Agreement in part or whole in carrying on a business in a country outside
     Australia of or through a permanent establishment of itself in that
     country.

PART 3. AGREEMENT TO DELIVER DOCUMENTS

For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party
agrees to deliver to each other party the following documents, as applicable:

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(a)  TAX FORMS, DOCUMENTS OR CERTIFICATES TO BE DELIVERED ARE:

<TABLE>
<CAPTION>
PARTY REQUIRED TO DELIVER DOCUMENT    FORM/DOCUMENT/CERTIFICATE                     DATE BY WHICH TO BE DELIVERED

<S>                                   <C>                                           <C>
Party A and Party B                   Any document or certificate reasonably        On the earlier of (a) learning that
                                      required or reasonably requested by a         such document or certificate is
                                      party in connection with its obligations      required and (b) as soon as
                                      to make a payment under this Agreement        reasonably practicable following a
                                      which would enable that party to make the     request by a party.
                                      payment free from any deduction or
                                      withholding for or on account of Tax or
                                      which would reduce the rate at which
                                      deduction or withholding for or on account
                                      of Tax is applied to that payment
                                      (including, without limitation, any United
                                      States form W-8BEN or other relevant
                                      United States tax form).
</TABLE>

(b)  OTHER DOCUMENTS TO BE DELIVERED ARE:

<TABLE>
<CAPTION>
PARTY REQUIRED TO DELIVER DOCUMENT    FORM/DOCUMENT/CERTIFICATE                     DATE BY WHICH TO BE DELIVERED

<S>                                   <C>                                           <C>
Party A, Party B and the Manager      A certificate specifying the names, title     On the execution of this Agreement
                                      and specimen signatures of the persons        and each Confirmation unless that
                                      authorised to execute this Agreement and      certificate has already been supplied
                                      each Confirmation or other communication      and remains true and in effect and
                                      in writing made pursuant to this Agreement    when the certificate is updated.
                                      on its behalf.

Party A, Party B and the Manager      A legal opinion as to the validity and        Prior to the Closing Date.
                                      enforceability of its obligations under
                                      this Agreement in form and substance (and
                                      issued by legal counsel) reasonably
                                      acceptable to each other party.

Party B                               A certified copy to Party A of each Credit    Not less than 5 Business Days (or
                                      Support Document specified in respect of      such lesser period as Party A agrees
                                      Party B and (without limiting any             to) before the Trade Date of the
                                      obligation Party B may have under the         first occurring Transaction and in
                                      terms of that Credit Support Document to      the case of any amending documents
                                      notify Party A of amendments thereto) a       entered into subsequent to that
                                      certified copy to Party A of any document     date, promptly after each amending
                                      that amends in any way the terms of that      document (if any) has been entered
                                      Credit Support Document.                      into.
</TABLE>

Other than the legal opinions, any Credit Support Document or any document
amending a Credit Support Document (but including any certifications in relation
to such documents), all documents delivered under

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this Part 3(b) are covered by the Section 3(d) representation. For the purposes
of this Part 3(b), a copy of a document is taken to be certified if a director
or secretary of the party providing the document, or a person authorised to
execute this Agreement or a Confirmation on behalf of that party or a solicitor
acting for that party (or in the case of the Credit Support Document in respect
of Party B, a solicitor acting for the Manager) has certified it to be a true
and complete copy of the document of which it purports to be a copy.

PART 4.  MISCELLANEOUS

(a)  ADDRESSES FOR NOTICES. For the purpose of Section 12(a) of this Agreement:

     Address for notices or communications to PARTY A:

     Address:        Commonwealth Bank of Australia
                     Level 1
                     48 Martin Place
                     Sydney  NSW  2000
                     AUSTRALIA

     Attention:      Manager, Securitisation

     Facsimile No.:  612 9378 2481

     Address for notices or communications to PARTY B:

     Address:        Perpetual Trustee Company Limited
                     Level 7
                     9 Castlereagh Street
                     Sydney  NSW  2000
                     AUSTRALIA

     Attention:      Manager, Securitisation Services

     Facsimile No.: 612 9221 7870

     Additionally, a copy of all notices as well as any changes to
     counterparty's address, telephone number or facsimile number should
     be sent to:

     Address:        Securitisation Advisory Services Pty. Limited
                     Level 6
                     48 Martin Place
                     Sydney  NSW  2000
                     AUSTRALIA

     Attention:      Manager, Securitisation

     Facsimile No.:  612 9378 2481

(b)  PROCESS AGENT. For the purpose of Section 13(c) of this Agreement:

     Party A appoints as its Process Agent: Not applicable.

     Party B appoints as its Process Agent: Not applicable.

(c)  OFFICES. The provisions of Section 10(a) will not apply to this Agreement.

(d)  MULTIBRANCH PARTY. For the purpose of Section 10(c) of this Agreement:

     Party A is not a Multibranch Party.

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     Party B is not a Multibranch Party.

(e)  CALCULATION AGENT.

     (i)  The Calculation Agent is:

          (A)  in respect of all notices, determinations and calculations in
               respect of amounts denominated in US$, the Agent Bank; and

          (B)  in respect of all other notices, determinations and calculations,
               the Manager.

     (ii) All determinations and calculations by the Calculation Agent will:

          (A)  be made in good faith and in the exercise of its commercial
               reasonable judgment; and

          (B)  be determined, where applicable, on the basis of then prevailing
               market rates or prices.

          All such determinations and calculations will be binding on Party A
          and Party B in the absence of manifest error. The Manager (or, if the
          Manager fails to do so and Party A notifies Party B, Party B)
          covenants in favour of Party A to use reasonable endeavours
          (including, without limitation, taking such action as is reasonably
          necessary to promptly enforce the obligations of the Agent Bank under
          the Agency Agreement) to ensure that the Agent Bank performs its
          obligations as Calculation Agent under this Agreement.

(f)  CREDIT SUPPORT DOCUMENT. Details of any Credit Support Document:

     (i)  In relation to Party A: Not applicable.

     (ii) In relation to Party B: The Security Trust Deed.

(g)  CREDIT SUPPORT PROVIDER.

     (i)  In relation to Party A: None.

     (ii) In relation to Party B: None.

(h)  GOVERNING LAW. This Agreement will be governed by and construed in
     accordance with the laws in force in the State of New South Wales, except
     the Credit Support Annex, which will be governed by and construed in
     accordance with the laws in force in the State of New York as provided in
     Paragraph 13(m)(iv) of the Credit Support Annex. Section 13(b)(i) is
     deleted and replaced by the following:

     "(i) submits to the non-exclusive jurisdiction of the courts of the State
          of New South Wales and courts of appeal from them; and".

(i)  NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) of this Agreement
     will apply in respect of all Transactions.

(j)  "AFFILIATE" will have the meaning specified in Section 14 of this
     Agreement. However, for the purposes of Section 3(c) Party A and Party B
     are deemed not to have any Affiliates.

PART 5. OTHER PROVISIONS

(1)  PAYMENTS: In Section 2:

     (a)  In Section 2(a)(i) add the following sentence:

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          "Each payment will be by way of exchange for the corresponding payment
          or payments payable by the other party (if any).".

     (b)  In Section 2(a)(ii) the first sentence is deleted and replaced with
          the following sentence:

          "Unless specified otherwise in this Agreement, payments under this
          Agreement by:

          (i)  Party A, will be made by 10.00 am (New York time); and

          (ii) Party B, will be made by 4.00pm (Sydney time),

          on the due date for value on that date in the place of the account
          specified in the relevant Confirmation or otherwise pursuant to this
          Agreement, in freely transferable funds, free of any set-off,
          counterclaim, deduction or withholding (except as expressly provided
          in this Agreement) and in the manner customary for payment in the
          required currency.".

     (c)  Insert a new paragraph (iv) in Section 2(a) immediately after Section
          2(a)(iii) as follows:

          "(iv) The condition precedent in Section 2(a)(iii)(1) does not apply
                to a payment due to be made to a party if it has satisfied all
                its payment obligations under Section 2(a)(i) of this Agreement
                and has no future payment obligations, whether absolute or
                contingent under Section 2(a)(i).".

     (d)  Insert a new paragraph (v) in Section 2(a) immediately after Section
          2(a)(iv) as follows:

          "(v)  Where payments are due pursuant to Section 2(a)(i) by Party A to
                Party B (the "PARTY A PAYMENT") and by Party B to Party A (the
                "PARTY B PAYMENT") on the same day, then Party A's obligation to
                make the Party A Payment will be subject to the condition
                precedent (which will be an "applicable condition precedent" for
                the purpose of Section 2(a)(iii)(3)) that Party A first receives
                either:

                (1)  the Party B Payment; or

                (2)  confirmation from Party B's bank that it holds irrevocable
                     instructions to effect payment of the Party B Payment and
                     that funds are available to make payment.".

     (e)  Add the following new sentence to Section 2(b):

          "Each new account so designated shall be in the same tax jurisdiction
          as the original account.".

     (f)  Delete Section 2(d)(i)(4) in its entirety.

     (g)  In Section 2(d)(ii)(1) delete the following words where they appear:

          "in respect of which X would not be required to pay an additional
          amount to Y under Section 2(d)(i)(4)".

(2)  PARTY B'S PAYMENT INSTRUCTIONS: Party B irrevocably authorises and
     instructs Party A to make payment of:

                                                                               6
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     (i)  the Initial Exchange Amount due from Party A to Party B in respect of
          the Initial Exchange Date by paying that amount direct to the account
          notified in writing by Party B to Party A for that purpose; and

     (ii) any other amount due from Party A to Party B under this Agreement by
          paying that amount direct to the Principal Paying Agent to the account
          outside Australia notified in writing by the Principal Paying Agent to
          Party A for that purpose.

(3)  PARTY A'S PAYMENT INSTRUCTIONS: Party A irrevocably authorises and
     instructs Party B to make payment of:

     (i)  any amount denominated in A$ due from Party B to the account in Sydney
          notified in writing by Party A to Party B from time to time; and

     (ii) any amount denominated in US$ due from Party B to the account notified
          in writing by Party A to Party B from time to time.

(4) REPRESENTATIONS: In Section 3:

     (a)  Section 3(a)(v) is amended by inserting immediately after the words
          "creditors' rights generally" the following:

          "(including in the case of a party being an ADI (as that term is
          defined in the Banking Act, 1959 (Cth)), section 86 of the Reserve
          Bank Act, 1959 (Cth) and section 13A(3) of the Banking Act, 1959 (Cth)
          or any other analogous provision under any law applicable to a
          party).".

     (b)  RELATIONSHIP BETWEEN PARTIES. Each party will be deemed to represent
          to the other parties on the date on which it enters into a Transaction
          that (absent a written agreement between the parties that expressly
          imposes affirmative obligations to the contrary for that Transaction):

          (i)   NON-RELIANCE. It is acting for its own account (in the case of
                Party B, as trustee of the Series Trust), and it has made its
                own independent decisions to enter into that Transaction and as
                to whether that Transaction is appropriate or proper for it
                based upon its own judgment (and in the case of Party B, also on
                the judgment of the Manager) and upon advice from such advisers
                as it has deemed necessary. It is not relying on any
                communication (written or oral) of any other party as investment
                advice or as a recommendation to enter into that Transaction; it
                being understood that information and explanations related to
                the terms and conditions of a Transaction will not be considered
                investment advice or a recommendation to enter into that
                Transaction. No communication (written or oral) received from
                any other party will be deemed to be an assurance or guarantee
                as to the expected results of that Transaction.

          (ii)  EVALUATION AND UNDERSTANDING. It is capable of evaluating and
                understanding (on its own behalf or through independent
                professional advice), and understands and accepts, the terms,
                conditions and risks of that Transaction. It is also capable of
                assuming, and assumes, the risks of that Transaction.

          (iii) STATUS OF PARTIES. No other party is acting as a fiduciary or an
                adviser to it in respect of that Transaction.

     (c)  Insert the following new paragraphs (g), (h) and (i) in Section 3
          immediately after Section 3(f):

                                                                               7
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          "(g) SERIES TRUST. By Party B, in respect of Party B only:

               (i)   TRUST VALIDLY CREATED. The Series Trust has been validly
                     created and is in existence at the Trade Date of the first
                     occurring Transaction.

               (ii)  SOLE TRUSTEE. It has been validly appointed as trustee of
                     the Series Trust and is presently the sole trustee of the
                     Series Trust.

               (iii) NO PROCEEDINGS TO REMOVE. No notice has been given to it
                     and to its knowledge no resolution has been passed, or
                     direction or notice has been given, removing it as trustee
                     of the Series Trust.

               (iv)  POWER. It has power under the Master Trust Deed to:

                    (A)  enter into and perform its obligations under this
                         Agreement and each Credit Support Document in relation
                         to Party B in its capacity as trustee of the Series
                         Trust; and

                    (B)  mortgage or charge the Assets of the Series Trust in
                         the manner provided in the Credit Support Document in
                         relation to Party B,

                    and its entry into this Agreement and each Credit Support
                    Document in relation to Party B is in the interests of the
                    beneficiaries of the Series Trust and does not constitute a
                    breach of trust.

               (v)   GOOD TITLE. It is the lawful owner of the Assets of the
                     Series Trust and, subject only to the Credit Support
                     Document in relation to Party B and any Security Interest
                     permitted under the Credit Support Document in relation to
                     Party B, those Assets are free of all other Security
                     Interests (except for Party B's right of indemnity out of
                     the Assets of the Series Trust).

               (vi)  ELIGIBLE CONTRACT PARTICIPANT. The Series Trust was not
                     formed for the specific purpose of constituting an
                     "eligible contract participant" under the Commodity
                     Exchange Act.

               (vii) TOTAL ASSETS. As at close of business on the Trade Date of
                     the first occurring Transaction, following the issue of the
                     Relevant Notes and provided that the aggregate Invested
                     Amount of the Relevant Notes upon issue exceeds
                     USD10,000,000, the Series Trust will have total assets
                     exceeding USD10,000,000.

          (h)  NON-ASSIGNMENT. It has not assigned (whether absolutely, in
               equity, by way of security or otherwise), declared any trust over
               or given any charge over any of its rights under this Agreement
               or any Transaction except, in the case of Party B, for the
               Security Interests created under each Credit Support Document in
               relation to Party B.

          (i)  CONTRACTING AS PRINCIPAL. Each existing Transaction has been
               entered into by that party as principal and not otherwise.".

                                                                               8
<PAGE>

(5)  EVENT OF DEFAULT: In Section 5(a):

     (a)  FAILURE TO PAY OR DELIVER: delete paragraph (i) and replace it with
          the following:

          "(i)  FAILURE TO PAY OR DELIVER. Failure by the party to make, when
                due, any payment under this Agreement or delivery under Section
                2(a)(i) or 2(e) required to be made by it if such failure is not
                remedied at or before:

               (1)  where the failure is by Party B, 10.00am on the tenth day
                    after notice of such failure is given to Party B; and

               (2)  where the failure is by Party A, 10.00am on the tenth day
                    after notice of such failure is given to Party A;";

     (b)  CONSEQUENTIAL AMENDMENTS:

          (i)   delete "or" at the end of Section 5(a)(vii); and

          (ii)  replace the full stop at the end of Section 5(a)(viii) with ";
                or"; and

     (c)  DOWNGRADE OBLIGATIONS: insert the following new paragraph (ix):

          "(ix) DOWNGRADE OBLIGATIONS. In respect of Party A only, Party A fails
                to comply with Part 5(22) of the Schedule if such failure is not
                remedied on or before the tenth Business Day (or such later day
                as Party B and the Manager may agree and which the Rating
                Agencies confirm in writing will not result in a reduction,
                qualification or withdrawal of the credit ratings then assigned
                by them to the Relevant Notes) after notice of such failure is
                given to Party A.".

(6)  TERMINATION EVENTS:

     (a)  ILLEGALITY: In respect of each Transaction, the parties agree that the
          imposition by any Governmental Agency of an Australian jurisdiction of
          any exchange controls, restrictions or prohibitions which would
          otherwise constitute an Illegality for the purposes of Sections
          5(b)(i) or 5(c) will not be an event which constitutes an Illegality
          for the purposes of those Sections so that, following the occurrence
          of that event:

          (i)   neither Party A nor Party B will be entitled to designate an
                Early Termination Date in respect of that Transaction as a
                result of that event occurring;

          (ii)  payment by Party B in accordance with Part 5(3) of this Schedule
                will continue to constitute proper performance of its payment
                obligations in respect of that Transaction; and

          (iii) Party A's obligations in respect of that Transaction or this
                Agreement will, to the extent permitted by law, be unaffected by
                the occurrence of that event.

     (b)  PARTY A'S LIMITED RIGHTS IN RELATION TO TAX EVENT:

          (i)   Notwithstanding Part 1(c)(iii) of this Schedule, but subject to
                Section 6(b)(ii), Party A may designate an Early Termination
                Date if it is an Affected Party following a Tax Event but only
                if the Relevant Note Trustee has notified the parties in writing
                that it is satisfied that all amounts owing to the Relevant
                Noteholders will be paid in full on the date on which the
                Relevant Notes are to be redeemed.

                                                                               9
<PAGE>

          (ii)  If a Tax Event occurs where Party A is the Affected Party and
                Party A is unable to transfer all its rights and obligations
                under this Agreement and each Transaction to an Affiliate
                pursuant to Section 6(b)(ii), Party A may, at its cost, transfer
                all its rights, powers and privileges and all its unperformed
                and future obligations under this Agreement and each Transaction
                to any person provided that:

               (A)  each Rating Agency has confirmed in writing that the
                    transfer will not result in a reduction, qualification or
                    withdrawal of the credit ratings then assigned by them to
                    the Relevant Notes; and

               (B)  that person has a long term credit rating assigned by each
                    Rating Agency of at least the long term credit rating
                    assigned by that Rating Agency to Party A, as at the date of
                    this Agreement.

(7)  TERMINATION:

     (a)  TERMINATION BY TRUSTEE: Party B must not designate an Early
          Termination Date without the prior written consent of the Relevant
          Note Trustee.

     (b)  TERMINATION BY THE RELEVANT NOTE TRUSTEE: If following an Event of
          Default or Termination Event, Party B does not exercise its right to
          terminate a Transaction, then the Relevant Note Trustee may designate
          an Early Termination Date in relation to that Transaction as if it
          were a party to this Agreement.

     (c)  TERMINATION PAYMENTS BY PARTY B: Notwithstanding Section 6(d)(ii), any
          amount calculated as being due by Party B in respect of any Early
          Termination Date under Section 6(e) will be payable on the
          Distribution Date immediately following the date that such amount
          would otherwise be payable under Section 6(d)(ii) (or will be payable
          on that date if that date is a Distribution Date) except to the extent
          that such amount may be satisfied from an earlier distribution under
          the Security Trust Deed or the payment of an upfront premium in
          respect of a Replacement Currency Swap in accordance with Part
          5(17)(b) of this Schedule.

     (d)  TRANSFERS TO AVOID TERMINATION: Section 6(b)(ii) is amended as
          follows:

          (i)   The following sentence is added at the end of the second
                paragraph:

                "However, if Party A is that other party it must, if so
                requested by the Manager, use reasonable efforts (which will not
                require Party A to incur a loss, excluding immaterial,
                incidental expenses) to make such a transfer to an Affiliate
                provided the Rating Agencies have given prior written
                confirmation to the Manager that such a transfer will not result
                in a reduction, qualification or withdrawal of the credit
                ratings then assigned by them to the Relevant Notes.".

          (ii)  The third paragraph is deleted and replaced with the following:

                "Any such transfer by a party under this Section 6(b)(ii) will
                be subject to and conditional upon the prior written consent of
                the other party, which consent will not be withheld:

               (1)  where the other party is Party A, if Party A's policies in
                    effect at such time would permit it to enter into
                    transactions with the transferee on the terms proposed; or

                                                                              10
<PAGE>

               (2)  where the other party is Party B, if the Rating Agencies
                    have confirmed in writing that such transfer will not result
                    in a reduction, qualification or withdrawal of the credit
                    ratings then assigned by them to the Relevant Notes.".

     (e)  DETERMINATION OF MARKET QUOTATION BY PARTY B: If Party B is required
          to determine a Market Quotation in respect of a Terminated Transaction
          pursuant to Section 6(e), Party B must consult with Party A in
          relation to such determination prior to making the determination and
          must provide to each Reference Market-maker in relation to the Market
          Quotation such information in relation to the Terminated Transaction,
          provided by Party A to Party B, as Party A may reasonably request.

(8)  NO SET-OFF: Section 6(e) is amended by deleting the last sentence of the
     first paragraph.

(9)  TRANSFER: Section 7 is replaced with:

     "7.  ESSENTIAL TERM: TRANSFER

     (a)  Neither the interests nor the obligations of any party in or under
          this Agreement (including any Transaction) are capable of being
          assigned or transferred (whether at law, in equity or otherwise),
          charged or the subject of any trust (other than the Series Trust or
          the trusts created pursuant to the Credit Support Document in relation
          to Party B) or other fiduciary obligation. Any action by a party which
          purports to do any of these things is void.

     (b)  Nothing in this Section 7:

          (i)   restricts a transfer by a party after the other parties have
                agreed to the variation of this Agreement in accordance with
                Part 5(20) of the Schedule to the extent necessary to permit
                such transfer;

          (ii)  restricts a novation of the interests and obligations of a party
                in or under this Agreement (including any Transaction) for the
                purposes of giving effect to a transfer under Section 6(b)(ii);

          (iii) restricts a transfer by a party of all or any part of its
                interest in any amount payable to it from a Defaulting Party
                under Section 6(e);

          (iv)  restricts a transfer by Party B or the Manager to a Substitute
                Trustee or Substitute Manager, respectively, in accordance with
                the Master Trust Deed;

          (v)   restricts Party B from granting security over a Transaction or
                this Agreement pursuant to any Credit Support Document in
                relation to Party B; or

          (vi)  limits Parts 5(6)(b)(ii) or 5(22) of the Schedule.

     (c)  Each party acknowledges that the other party enters into this
          Agreement and each Transaction on the basis that this Section 7 must
          be strictly observed and is essential to the terms of this Agreement
          (including each Transaction).".

(10) FACSIMILE TRANSMISSION: In Section 12:

     (a)  delete Section 12(a)(ii); and

     (b)  replace Section 12(a)(iii) with:

                                                                              11

<PAGE>

          "(iii) if sent by facsimile transmission, on the date a transmission
                 report is produced by the machine from which the facsimile was
                 sent which indicates that the facsimile was sent in its
                 entirety to the facsimile number of the recipient notified for
                 the purpose of this Section unless the recipient notifies the
                 sender within one Business Day of the facsimile being sent that
                 the facsimile was not received in its entirety in legible
                 form;".

(11) DEFINITIONS

     In this Agreement, unless the contrary intention appears:

     (a)  MASTER TRUST DEED: subject to Part 5(11)(h) of this Schedule, unless
          defined in this Agreement words and phrases defined in the Master
          Trust Deed and the Series Supplement have the same meaning in this
          Agreement. Subject to Part 5(11)(h) of this Schedule, where there is
          any inconsistency in a definition between this Agreement (on the one
          hand) and the Master Trust Deed or the Series Supplement (on the other
          hand), this Agreement prevails. Where there is any inconsistency in a
          definition between the Master Trust Deed (on the one hand) and the
          Series Supplement (on the other hand), the Series Supplement prevails
          over the Master Trust Deed in respect of the Series Trust. Where words
          or phrases used but not defined in this Agreement are defined in the
          Master Trust Deed in relation to a Series Trust (as defined in the
          Master Trust Deed) such words or phrases are to be construed in this
          Agreement, where necessary, as being used only in relation to the
          Series Trust;

     (b)  TRUSTEE CAPACITY:

          (i)    a reference to Party B is a reference to Party B in its
                 capacity as trustee of the relevant Series Trust only, and in
                 no other capacity;

          (ii)   a reference to the undertaking, assets, business or money of
                 Party B is a reference to the undertaking, assets, business or
                 money of Party B in the capacity referred to in paragraph
                 11(b)(i) only; and

          (iii)  without limiting the foregoing, Section 5(a)(vii) will only
                 apply to Party B in its capacity as trustee of the relevant
                 Series Trust and:

                 (A)   reference in Section 5(a)(vii)(1) to Party B being
                       dissolved is to the relevant Series Trust being
                       dissolved;

                 (B)   Party B in its capacity as trustee of the relevant Series
                       Trust is not insolvent or unable to pay its debts for the
                       purposes of Section 5(a)(vii)(2) to the extent that its
                       obligation to make any payment is limited by any
                       provision in a Transaction Document in relation to the
                       Series Trust; and

                 (C)   the appointment of a Substitute Trustee in relation to
                       the Series Trust in accordance with the Master Trust Deed
                       is not, of itself, an event to which Section 5(a)(vii)
                       applies in relation to Party B.

     (c)  DEFINITIONS: in Section 14:

          (i)    replace the definitions of "AFFECTED TRANSACTIONS" and "LOCAL
                 BUSINESS DAY" with the following:

                                                                              12
<PAGE>

                 ""AFFECTED TRANSACTIONS" means, with respect to a Termination
                 Event, all Transactions."; and

                 ""LOCAL BUSINESS DAY" has the same meaning as "BUSINESS DAY".";
                 and

          (ii)   insert the following new definitions:

                 ""BBSW" or "AUD-BBR-BBSW" in relation to a Calculation Period
                 means the rate appearing at approximately 10.00 am Sydney time
                 on the Reset Date for that Calculation Period on the Reuters
                 Screen page "BBSW" as being the average of the mean buying and
                 selling rates appearing on that page for a bill of exchange
                 having a tenor of three months. If:

                 (a)  on that Reset Date fewer than 4 banks are quoted on the
                      Reuters Screen page "BBSW"; or

                 (b)  for any other reason the rate for that day cannot be
                      determined in accordance with the foregoing procedures,

                 then "BBSW" or "AUD-BBR-BBSW" means such rate as is specified
                 by the Calculation Agent having regard to comparable indices
                 then available.

                 "CREDIT SUPPORT ANNEX" means the Credit Support Annex annexed
                 to this Agreement.

                 "DISTRIBUTION DATE" has the meaning given in Section 16.

                 "MASTER TRUST DEED" means the Master Trust Deed dated 8 October
                 1997 between Party B and the Manager, as amended from time to
                 time.

                 "PRESCRIBED RATING PERIOD" means in relation to the credit
                 ratings assigned by the Rating Agencies to Party A:

                 (a)  a period of 30 Business Days from the date when a credit
                      rating assigned by a Rating Agency to Party A is less than
                      the relevant Prescribed Rating but greater than or equal
                      to a short term credit rating of A-1 by S&P or a long term
                      credit rating of A- by S&P and a long term credit rating
                      of A3 by Moody's and a short term credit rating of P-2 by
                      Moody's; and

                 (b)  a period of 5 Business Days from the date when a credit
                      rating assigned by a Rating Agency to Party A is less than
                      a short term credit rating of A-1 by S&P or a long term
                      credit rating of A- by S&P and a short term credit rating
                      of P-2 by Moody's and a long term credit rating of A3 by
                      Moody's.

                 "PRESCRIBED RATINGS" means a short term credit rating of A-1+
                 by S&P or a long term credit rating of AA- by S&P, and a long
                 term credit rating of A2 by Moody's and a short term credit
                 rating of P-1 by Moody's.

                 "RELEVANT CALCULATION AMOUNT" has the meaning given in Section
                 16.

                 "RELEVANT NOTES" has the meaning given in Section 16.

                 "RELEVANT NOTE TRUSTEE" has the meaning given in Section 16.

                                                                              13

<PAGE>

                 "RELEVANT NOTEHOLDERS" has the meaning given in Section 16.

                 "SCHEDULED MATURITY DATE" has the meaning given in Section 16.

                 "SECURITY TRUST DEED" has the meaning given to it in
                 Section 16.

                 "SERIES SUPPLEMENT" has the meaning given in Section 16.

                 "SERIES TRUST" has the meaning given in Section 16.

     (d)  INTERPRETATION:

          (i)    references to time are references to Sydney time;

          (ii)   a reference to "WILFUL DEFAULT" in relation to Party B means,
                 subject to Part 5(11)(d)(iii) of this Schedule, any wilful
                 failure by Party B to comply with, or wilful breach by Party B
                 of, any of its obligations under any Transaction Document,
                 other than a failure or breach which:

                 A. (1)  arises as a result of a breach of a Transaction
                         Document by a person other than:

                         (a)  Party B; or

                         (b)  any other person referred to in Part 5(11)(d)(iii)
                              of this Schedule; and

                    (2)  the performance of the action (the non-performance of
                         which gave rise to such breach) is a precondition to
                         Party B performing the said obligation;

                 B. is in accordance with a lawful court order or direction or
                    required by law; or

                 C. is in accordance with any proper instruction or direction of
                    the Investors given at a meeting convened under the Master
                    Trust Deed;

          (iii)  a reference to the "FRAUD", "NEGLIGENCE" or "WILFUL DEFAULT" of
                 Party B means the fraud, negligence or wilful default of Party
                 B and of its officers, employees, agents and any other person
                 where Party B is liable for the acts or omissions of such other
                 person under the terms of any Transaction Document;

          (iv)   a reference to "NEITHER PARTY" will be construed as a reference
                 to "NO PARTY"; and

          (v)    a reference to "OTHER PARTY" will be construed as a reference
                 to "OTHER PARTIES".

     (e)  ISDA DEFINITIONS: The 2000 ISDA Definitions (as published by the
          International Swaps and Derivatives Association, Inc ("ISDA")) (the
          "2000 ISDA DEFINITIONS") as at the date of this Agreement are
          incorporated into this Agreement and each Confirmation.

     (f)  INCONSISTENCY: Subject to Part 5(11)(a) of this Schedule, unless
          specified otherwise, in the event of any inconsistency between any two
          or more of the following documents in respect of a Transaction they
          will take precedence over each other in the following order in respect
          of that Transaction:

                                                                              14
<PAGE>

          (i)    any Confirmation;

          (ii)   this Schedule and Section 13 ("Elections and Variables") of the
                 Credit Support Annex (as applicable);

          (iii)  the 2000 ISDA Definitions; and

          (iv)   the printed form of the 1992 ISDA Master Agreement and the
                 printed form of the ISDA Credit Support Annex which form part
                 of this Agreement.

     (g)  SWAP TRANSACTION: Any reference to a:

          (i)    "SWAP TRANSACTION" in the 2000 ISDA Definitions is deemed to be
                 a reference to a "TRANSACTION" for the purpose of interpreting
                 this Agreement or any Confirmation; and

          (ii)   "TRANSACTION" in this Agreement or any Confirmation is deemed
                 to be a reference to a "SWAP TRANSACTION" for the purpose of
                 interpreting the 2000 ISDA Definitions.

     (h)  INCORPORATED DEFINITIONS AND OTHER TRANSACTION DOCUMENTS AND
          PROVISIONS: Where in this Agreement a word or expression is defined by
          reference to its meaning in another Transaction Document or there is a
          reference to another Transaction Document or to a provision of another
          Transaction Document, any amendment to the meaning of that word or
          expression or to that other Transaction Document or provision (as the
          case may be) will be of no effect for the purposes of this Agreement
          unless and until the amendment is consented to by the parties to this
          Agreement.

(12) LIMITATION OF LIABILITY: Insert the following as Sections 15 and 16, after
     Section 14:

     "15. PARTY B'S LIMITATION OF LIABILITY

          (a)    (LIMITATION ON PARTY B'S LIABILITY): Party B enters into this
                 Agreement only in its capacity as trustee of the relevant
                 Series Trust and in no other capacity. A liability incurred by
                 Party B acting in its capacity as trustee of the relevant
                 Series Trust arising under or in connection with this Agreement
                 is limited to and can be enforced against Party B only to the
                 extent to which it can be satisfied out of the Assets of that
                 Series Trust out of which Party B is actually indemnified for
                 the liability. This limitation of Party B's liability applies
                 despite any other provision of this Agreement (other than
                 Section 15(c)) and extends to all liabilities and obligations
                 of Party B in any way connected with any representation,
                 warranty, conduct, omission, agreement or transaction related
                 to this Agreement.

          (b)    (CLAIMS AGAINST PARTY B): The parties other than Party B may
                 not sue Party B in respect of liabilities incurred by Party B
                 acting in its capacity as trustee of a Series Trust in any
                 other capacity other than as trustee of that Series Trust,
                 including seeking the appointment of a receiver (except in
                 relation to Assets of that Series Trust), or a liquidator, or
                 an administrator, or any similar person to Party B or prove in
                 any liquidation, administration or similar arrangements of or
                 affecting Party B (except in relation to the Assets of that
                 Series Trust).

          (c)    (BREACH OF TRUST): The provisions of this Section 15 will not
                 apply to any obligation or liability of Party B to the extent
                 that it is not satisfied

                                                                              15
<PAGE>

                 because under the Master Trust Deed, the corresponding
                 Series Supplement or any other corresponding Transaction
                 Document or by operation of law there is a reduction in the
                 extent of Party B's indemnification out of the Assets of the
                 relevant Series Trust, as a result of Party B's fraud,
                 negligence or wilful default.

          (d)    (ACTS OR OMISSIONS): It is acknowledged that the Relevant
                 Parties are responsible under the corresponding Transaction
                 Documents for performing a variety of obligations relating to
                 the relevant Series Trust. No act or omission of Party B
                 (including any related failure to satisfy its obligations or
                 any breach of representation or warranty under this Agreement)
                 will be considered fraudulent, negligent or a wilful default of
                 Party B for the purpose of paragraph (c) of this Section 15 to
                 the extent to which the act or omission was caused or
                 contributed to by any failure by any such Relevant Person or
                 any other person appointed by Party B under such a Transaction
                 Document (other than a person whose acts or omissions Party B
                 is liable for in accordance with any such Transaction Document)
                 to fulfil its obligations relating to the relevant Series Trust
                 or by any other act or omission of the Manager or the Servicer
                 or any other such person.

          (e)    (NO OBLIGATION): Party B is not obliged to enter into any
                 commitment or obligation under this Agreement or any
                 Transaction Document (including incur any further liability)
                 unless Party B's liability is limited in a manner which is
                 consistent with this Section 15 or otherwise in a manner
                 satisfactory to Party B in its absolute discretion.

     16.  SEGREGATION

          Party B will enter into each Transaction as trustee of a Series Trust.
          Each Confirmation in relation to a Transaction must specify the name
          of the Series Trust to which the Transaction relates. Notwithstanding
          anything else in this Agreement, but without limiting the generality
          of Section 15, the provisions of this Agreement (including, without
          limitation, the Credit Support Annex) shall have effect severally in
          respect of each Series Trust and shall be enforceable by or against
          Party B in its capacity as trustee of the relevant Series Trust as
          though a separate Agreement applied between Party A, Party B (in its
          capacity as trustee of the Series Trust specified in the relevant
          Confirmation) and the Manager for each of Party B's said several
          capacities, to the intent that (inter alia):

          (a)    (REFERENCES TO PARTY B): unless the context indicates a
                 contrary intention, each reference to "Party B" in this
                 Agreement shall be construed as a several reference to Party B
                 in its respective capacities as trustee of each Series Trust;

          (b)    (SEPARATE AGREEMENTS): this Master Agreement including, without
                 limitation, this Schedule and the Credit Support Annex together
                 with each Confirmation relating to a particular Series Trust
                 will form a single separate agreement between Party A, the
                 Manager and Party B in its capacity as trustee of that Series
                 Trust and references to the respective obligations (including
                 references to payment obligations generally and in the context
                 of provisions for the netting of payments and the calculation
                 of amounts due on early termination) of Party A, the Manager or
                 Party B shall be construed accordingly as a several reference
                 to each mutual set of obligations arising under each such
                 separate agreement between Party A, the Manager and Party B in
                 its several capacity as trustee of the relevant Series Trust;

                                                                              16
<PAGE>

          (c)    (REPRESENTATIONS): representations made and agreements entered
                 by the parties under this Agreement are made and entered
                 severally by Party B in its respective capacities as trustee of
                 each Series Trust and in respect of the relevant Series Trust
                 and may be enforced by Party B against Party A or the Manager
                 severally in Party B's said several capacities (and by Party A
                 or the Manager against Party B in Party B's said several
                 capacities);

          (d)    (TERMINATION): rights of termination, and obligations and
                 entitlements consequent upon termination, only accrue to Party
                 A against Party B severally in Party B's respective capacities
                 as trustee of each Series Trust, and only accrue to Party B
                 against Party A severally in Party B's said several capacities;

          (e)    (EVENTS OF DEFAULT AND TERMINATION EVENTS): without limiting
                 Section 15, the occurrence of an Event of Default or
                 Termination Event in respect of one Series Trust shall not in
                 itself constitute an Event of Default or Termination Event in
                 respect of any other Series Trust; and

          (f)    (DEFINITIONS):

                 (i)   the term "SERIES TRUST":

                       (A)  in this Section 16, means each Series Trust (as
                            defined in the Master Trust Deed) specified or to be
                            specified, as the context requires, as the relevant
                            Series Trust in the Confirmation for a Transaction;
                            and

                       (B)  elsewhere in this Agreement, means each such Series
                            Trust severally in accordance with the preceding
                            provisions of this Section 16;

                 (ii)  the term "TRANSACTION":

                       (A)  in this Section 16, means each Transaction governed
                            by this Agreement; and

                       (B)  elsewhere in this Agreement, means each such
                            Transaction entered into by the trustee as Trustee
                            of the relevant Series Trust;

                 (iii) the term "AGREEMENT":

                       (A)  in this Section 16, and elsewhere if so specified,
                            means this Master Agreement, including, without
                            limitation, this Schedule and the Credit Support
                            Annex, and all Confirmations governed by this Master
                            Agreement; and

                       (B)  elsewhere, unless specified otherwise, means the
                            separate agreement referred to in Section 16(b) in
                            respect of each particular Series Trust;

                 (iv)  the terms "DISTRIBUTION DATE", "RELEVANT CALCULATION
                       AMOUNT", "RELEVANT NOTE TRUSTEE", "RELEVANT NOTES",
                       "RELEVANT NOTEHOLDERS", "SCHEDULED MATURITY DATE",
                       "SECURITY TRUST DEED" and "SERIES SUPPLEMENT" in this

                                                                              17
<PAGE>

                       Agreement to the extent that it applies in relation to a
                       Series Trust have the respective meanings given to them
                       in the Confirmations for the Transactions of that Series
                       Trust.".

(13) FURTHER ASSURANCES: Each party will, upon request by the other party (the
     "REQUESTING PARTY") at the expense of the requesting party, perform all
     such acts and execute all such agreements, assurances and other documents
     and instruments as the requesting party reasonably requires (and, in the
     case of Party B, are within the powers granted to Party B under the Master
     Trust Deed) to assure and confirm the rights and powers afforded, created
     or intended to be afforded or created, under or in relation to this
     Agreement and each Transaction or other dealing which occurs under or is
     contemplated by it.

(14) PROCEDURES FOR ENTERING INTO TRANSACTIONS

     (a)  With respect to each Transaction entered into pursuant to this
          Agreement and for the purposes of Section 9(e)(ii), Party A will, by
          or promptly after the relevant Trade Date, send Party B and the
          Manager a Confirmation substantially in the form set out in Annexure 1
          (or in such other form as may be agreed between Party A, Party B and
          the Manager), and Party B and the Manager must promptly then confirm
          the accuracy of and sign and return, or request the correction of,
          such Confirmation; and

     (b)  Party B will enter into each Transaction in its capacity as trustee of
          the Series Trust.

(15) AUTHORISED OFFICER: Each party will be entitled to assume, in the absence
     of any knowledge to the contrary, that any Confirmation, notice or other
     written communication, which is issued in respect of this Agreement and
     which is purported to be signed on behalf of another party by a person
     specified in the certificate provided by that other party under Part 3(b)
     of this Schedule, is authorised by that other party.

(16) RECORDED CONVERSATIONS: Each party:

     (a)  consents to the electronic recording of its telephone conversations
          with another party (or any of its associated persons) with or without
          the use of an automatic tone warning device;

     (b)  will provide transcripts of such recordings (if any) upon reasonable
          request by the other party (at the reasonable cost of the party
          requesting);

     (c)  acknowledges that such recordings and transcripts can be used as
          evidence by either party in any dispute between them; and

     (d)  acknowledges that no party is obligated to maintain copies of such
          recordings and transcripts for the benefit of the other party.

(17) REPLACEMENT CURRENCY SWAP AGREEMENT:

     (a)  If any Transaction under this Agreement is terminated prior to the day
          upon which the Relevant Notes are redeemed in full, Party B may, at
          the direction of the Manager, enter into one or more currency swaps
          which replace that Transaction (collectively a "REPLACEMENT CURRENCY
          Swap") provided that:

          (i)  the Rating Agencies confirm in writing that the entry into the
               Replacement Currency Swap by Party B does not result in a
               reduction, qualification or withdrawal of the credit ratings then
               assigned by them to the Relevant Notes; and

                                                                              18
<PAGE>

          (ii) the liability of Party B under the Replacement Currency Swap is
               limited to at least the same extent that its liability is limited
               under that Transaction.

     (b)  If Party B enters into a Replacement Currency Swap pursuant to
          paragraph (a) and a Settlement Amount is payable by Party B to Party A
          upon termination of the Transaction referred to in Part 5(17)(a) of
          this Schedule, Party B must, on the direction of the Manager, pay any
          upfront premium to enter into the Replacement Currency Swap received
          by Party B from the Replacement Currency Swap provider to Party A in
          satisfaction of and to the extent of Party B's obligation to pay the
          Settlement Amount to Party A, and to the extent such premium is not
          greater than or equal to the Settlement Amount, the balance may be
          satisfied by Party B as an Expense.

     (c)  If Party B enters into a Replacement Currency Swap pursuant to
          paragraph (a) and a Settlement Amount is payable by Party A to Party B
          upon termination of the Transaction referred to in Part 5(17)(a) of
          this Schedule, Party B may direct Party A to pay that amount to the
          Replacement Currency Swap provider in satisfaction of or towards and
          to the extent of Party B's obligation (if any) to pay an upfront
          premium to the Replacement Currency Swap provider to enter into the
          Replacement Currency Swap.

     (d)  The obligations of Party B (and the rights of Party A) under this Part
          5(17) will survive the termination of this Agreement.

(18) KNOWLEDGE OR AWARENESS: Subject to Section 12(a), each party will only be
     considered to have knowledge or awareness of, or notice of, a thing or
     grounds to believe anything by virtue of the officers of that party or any
     Related Body Corporate of that party which have the day to day
     responsibility for the administration or management of that party's (or a
     Related Body Corporate of that party's) obligations in relation to the
     Series Trust or the Transactions entered into under this Agreement having
     actual knowledge, actual awareness or actual notice of that thing, or
     grounds or reason to believe that thing (and similar references will be
     interpreted in this way).

(19) RESTRICTIONS ON PARTY B'S RIGHTS: Party B must at all times act in
     accordance with the instructions of the Manager in relation to this
     Agreement.

(20) AMENDMENT TO THIS AGREEMENT: The parties to this Agreement may only amend
     this Agreement in accordance with clause 33.1(b) of the Series Supplement.

(21) APPOINTMENT OF MANAGER: Party B hereby exclusively appoints the Manager as
     its attorney to act on Party B's behalf and exercise all rights and powers
     of Party B with respect to this Agreement. Without limiting the generality
     of the foregoing, the Manager may issue and receive on behalf of Party B
     all notices, certificates and other communications to or by Party A under
     this Agreement until such time as Party B serves written notice on Party A
     of the revocation of the Manager's authority to act on behalf of Party B in
     accordance with this Part 5(21).

(22) RATINGS DOWNGRADE:

     (a)  (DOWNGRADE): If, as a result of the reduction or withdrawal of the
          credit rating of Party A, Party A is assigned a credit rating by a
          Rating Agency less than the relevant Prescribed Rating, Party A must
          by the expiry of the Prescribed Rating Period in relation to the
          credit ratings assigned by the Rating Agencies to Party A at that time
          (or such greater period as is agreed to in writing by each relevant
          Rating Agency), at its cost alone and at its election:

                                                                              19
<PAGE>

          (i)    provided that the short term credit rating by S&P is greater
                 than or equal to A-1 or the long term credit rating by S&P is
                 greater than or equal to A-, lodge collateral in accordance
                 with the Credit Support Annex in an amount equal to the
                 Collateral Amount as defined in Part 5(22)(b) of this Schedule;

          (ii)   enter into an agreement novating Party A's rights and
                 obligations under this Agreement and each Transaction to a
                 replacement counterparty acceptable to the Manager and which
                 the Rating Agencies confirm in writing will not result in a
                 reduction, qualification or withdrawal of the credit ratings
                 then assigned by them to the Relevant Notes; or

          (iii)  enter into such other arrangements in respect of each
                 Transaction which the Rating Agencies confirm in writing will
                 not result in a reduction, qualification or withdrawal of the
                 credit ratings then assigned by them to the Relevant Notes.

          Notwithstanding that Party A has elected to satisfy its obligations
          pursuant to this Part 5(22)(a) in a particular manner, it may
          subsequently and from time to time vary the manner in which it
          satisfies its obligations pursuant to this Part 5(22)(a) (but will not
          be entitled to any additional grace period in relation to such a
          variation).

     (b)  (COLLATERAL AMOUNT): For the purpose of this Part 5(22) the Collateral
          Amount will be an amount equal to the greater of the following:

          (i)    zero;

          (ii)   if the credit rating of Party A is below the Prescribed Rating
                 in relation to S&P, CCR; and

          (iii)  if the credit rating of Party A is below the Prescribed Rating
                 in relation to Moody's, an amount acceptable to Moody's and
                 sufficient to maintain the credit rating assigned to the
                 Relevant Notes by Moody's immediately prior to the review of
                 the credit rating of Party A by Moody's.

          Where:

          CCR = CR x 1.030

          CR = MTM + VB

          MTM means the aggregate mark-to-market value (whether positive or
          negative) of each Transaction determined in accordance with Part
          5(22)(c) of this Schedule no earlier than 3 Business Days prior to the
          date that the Collateral Amount is lodged.

          VB means the volatility buffer, being the value calculated by
          multiplying the Relevant Calculation Amount as at the most recent
          Distribution Date by the relevant percentage obtained from the
          following table:

<TABLE>
<CAPTION>
          --------------------------------------------------------------------------------------------------
          PARTY A'S LONG      WHERE THE PERIOD     WHERE THE PERIOD BETWEEN       WHERE THE PERIOD BETWEEN
          TERM CREDIT         BETWEEN THE DATE     THE DATE OF RECALCULATION      THE DATE OF RECALCULATION
          RATING BY S&P       OF RECALCULATION     AND THE SCHEDULED MATURITY     AND THE SCHEDULED MATURITY
                              AND THE SCHEDULED    DATE IS GREATER THAN 5 YEARS   DATE IS GREATER THAN
                              MATURITY DATE IS     AND LESS THAN OR EQUAL TO      10 YEARS
                              LESS THAN OR EQUAL   10 YEARS
                              TO 5 YEARS
          --------------------------------------------------------------------------------------------------
<S>                           <C>                  <C>                            <C>
          A+                  1.05                 1.75                           3.0
          --------------------------------------------------------------------------------------------------
          A                   1.35                 2.45                           4.5
          --------------------------------------------------------------------------------------------------
          A-                  1.5                  3.15                           6
          --------------------------------------------------------------------------------------------------
</TABLE>

                                                                              20
<PAGE>

     (c)  (MARK TO MARKET VALUE): If collateral has been lodged or is to be
          lodged under Part 5(22)(a)(i) of this Schedule and Part 5(22)(b)(ii)
          of this Schedule applies, Party A must calculate the mark-to-market
          value of each Transaction by obtaining 2 bids from counterparties with
          the Prescribed Ratings willing to provide each Transaction in the
          absence of Party A. The mark-to-market value may be a positive or a
          negative amount. A bid has a negative value if the payment to be made
          is from the counterparty to Party A and has a positive value if the
          payment to be made is from Party A to the counterparty. The
          mark-to-market value is the higher of the bids (on the basis that any
          bid of a positive value is higher than any bid of a negative value).

     (d)  (RECALCULATION): If collateral has been lodged under Part 5(22)(a)(i)
          of this Schedule then, unless collateral is no longer required to be
          lodged in accordance with Part 5(22)(a) of this Schedule, Party A must
          recalculate the Collateral Amount (including, if Part 5(22)(b)(ii) of
          this Schedule applies, the CCR and the mark-to-market value) on each
          Valuation Date. If:

          (i)    the Value on such Valuation Date of all Posted Credit Support
                 held by the Secured Party is less than the recalculated
                 Collateral Amount, the difference is the Delivery Amount in
                 relation to that Valuation Date; or

          (ii)   the Value on such Valuation Date of all Posted Credit Support
                 held by the Secured Party is greater than the recalculated
                 Collateral Amount, the difference is the Return Amount in
                 relation to that Valuation Date.

     (e)  (DEFINITIONS): For the purposes of this Part 5(22) "Delivery Amount",
          "Posted Credit Support", "Return Amount", "Secured Party", "Value" and
          "Valuation Date" have the same meaning as in the Credit Support Annex.

(23) NO AMENDMENT: Each of Party B and the Manager agrees that it will not
     consent to any amendment to any provision in any Transaction Document in
     relation to the Series Trust dealing with the ranking, priority or
     entitlement of Party A in respect of any security or moneys relating to the
     Series Trust without the prior written consent of Party A.

                                                                              21
<PAGE>

ANNEXURE 1

                   FORM OF CONFIRMATION [NAME OF SERIES TRUST]

                             [LETTERHEAD OF PARTY A]

[DATE]

TO:  Perpetual Trustee Company Limited       Securitisation Advisory Services
     as trustee of the Series Trust            Pty. Limited
     Level 7                                 Level 6
     9 Castlereagh Street                    48 Martin Place
     Sydney  NSW  2000                       Sydney  NSW  2000
     AUSTRALIA                               AUSTRALIA

     ATTENTION:  Manager, Securitisation     ATTENTION: Manager, Securitisation
                 Services

CONFIRMATION - [NAME OF TRANSACTION]

The purpose of this letter is to confirm the terms and conditions of the
Transaction entered into between us on the terms specified below (the
"TRANSACTION"). This letter constitutes a "CONFIRMATION" as referred to in the
Master Agreement specified below.

This Confirmation is entered into by Perpetual Trustee Company Limited, ABN 42
000 001 007 as trustee of the Medallion Trust Series [         ] (the "SERIES
TRUST").

This Confirmation supplements, forms part of, and is subject to, the 1992 ISDA
Master Agreement dated as of [         ], as amended, novated or supplemented
from time to time (the "AGREEMENT"), between Commonwealth Bank of Australia ABN
48 123 123 124 ("PARTY A"), Perpetual Trustee Company Limited ABN 42 000 001 007
as trustee of, inter alia, the Series Trust ("PARTY B") and Securitisation
Advisory Services Pty. Limited ABN 88 064 133 946 (the "MANAGER"). All
provisions contained in the Agreement govern this Confirmation except as
expressly modified below.

This Confirmation incorporates the Definitions Schedule which forms part of, and
is subject to, this Confirmation.

The terms of the particular Transaction to which this Confirmation relates are
specified below:

1.      OUR REFERENCE:        [                         ]

2.      TRADE DATE:           [                         ]

3.      EFFECTIVE DATE:       Issue Date in respect of the Relevant Notes

4.      TERMINATION DATE:     The earlier of:

                              (a)   the date that the Relevant Notes have been
                                    redeemed in full in accordance with the Note
                                    Conditions; and

                              (b)   the Scheduled Maturity Date.

                                                                              22
<PAGE>

5.      FLOATING AMOUNTS

5.1     FLOATING AMOUNTS PAYABLE BY
        PARTY A (SUBJECT TO PARAGRAPH
        9 OF THIS CONFIRMATION):

(a)     Floating Rate Payer:            Party A

        Calculation Amount:             For each Floating Rate Payer Payment
                                        Date, the aggregate Invested Amount of
                                        the Relevant Notes as at the first day
                                        of the Calculation Period ending on but
                                        excluding that Floating Rate Payer
                                        Payment Date. The Calculation Amount for
                                        the initial Calculation Period will be
                                        USD1,000,000,000. The Calculation Amount
                                        will not ever exceed USD1,000,000,000
                                        for any Calculation Period.

        Floating Rate Payer Payment     Each Distribution Date during the period
        Dates:                          commencing on and including [      ] and
                                        ending on and including the Termination
                                        Date, subject to adjustment in
                                        accordance with the Following Business
                                        Day Convention

        Floating Rate Option:           USD-LIBOR-BBA except that:

                                        (a)  references to "London Banking Days"
                                             in section 7.1(a)(w)(xvii) and (xx)
                                             of the Annex (June 2000 version) to
                                             the 2000 ISDA Definitions will be
                                             replaced with references to
                                             "Banking Days" as that expression
                                             is defined in the Note Conditions:

                                        (b)  references to "Telerate Page 3750"
                                             in section 7.1(w)(xvii) of the
                                             Annex (June 2000 version) to the
                                             2000 ISDA Definitions will be
                                             replaced with references to "Rate
                                             Page" as that expression is defined
                                             in the Note Conditions; and

                                        (c)  if USD-LIBOR-BBA cannot be
                                             determined in accordance with the
                                             2000 ISDA Definitions as varied
                                             above (including endeavouring to
                                             determine a rate under the
                                             definition of "USD-LIBOR-Reference
                                             banks" in section 7.1(w)(xx)), it
                                             will remain as the most recently
                                             determined rate obtained from a
                                             Rate Page for a preceding
                                             Calculation Period.

        Designated Maturity:            [       ] months

        Spread:                         [            ]

                                                                              23
<PAGE>

        Floating Rate Day Count       Actual/360
        Fraction:

        Reset Dates:                  The first day of each Calculation Period

        Compounding:                  Inapplicable

(b)     Class A-1 Unpaid Coupon       If on any Distribution Date there is an
        Amount:                       A$ Class A-1 Unpaid Interest Amount,
                                      then on the Floating Rate Payer Payment
                                      Date which falls on that Distribution
                                      Date, Party A will pay to Party B an
                                      amount calculated as follows:

                                                       LIBOR
                                      $US UC = $A UC x ----- x US$ Exchange Rate
                                                       BBSW

                                      where:

                                      $US UC = the amount to be paid by Party A;

                                      $A UC =  the A$ Class A-1 Unpaid Interest
                                               Payment in relation to that
                                               Distribution Date;

                                      LIBOR =  the Floating Rate Option under
                                               this paragraph 5.1 in respect of
                                               the Reset Date which is the same
                                               day as that Floating Rate Payer
                                               Payment Date;

                                      BBSW =   the Floating Rate Option under
                                               paragraph 5.2 in respect of the
                                               Reset Date which is the same day
                                               as that Floating Rate Payer
                                               Payment Date.

5.2     FLOATING AMOUNTS PAYABLE BY
        PARTY B (SUBJECT TO PARAGRAPH
        9 OF THIS CONFIRMATION):

(a)     Floating Rate Payer:          Party B

        Calculation Amount:           For each Floating Rate Payer Payment Date,
                                      the A$ Equivalent of the aggregate
                                      Invested Amount of the Relevant Notes as
                                      at the first day of the Calculation Period
                                      ending on but excluding that Floating Rate
                                      Payer Payment Date

        Floating Rate Payer Payment   Each Distribution Date during the period
        Dates:                        commencing on and including [        ] and
                                      ending on and including the Termination
                                      Date, subject to adjustment in accordance
                                      with the Following Business Day Convention

        Floating Rate Option:         AUD-BBR-BBSW

        Designated Maturity:          [       ] months

        Spread:                       [           ]

                                                                              24
<PAGE>

        Floating Rate Day Count       Actual/365 (Fixed)
        Fraction:

        Reset Dates                   The first day of each Calculation Period

        Compounding:                  Inapplicable

(b)     A$ Class A-1 Unpaid Interest  If on any Distribution Date there is an A$
        Amount:                       Class A-1 Unpaid Interest Amount, then on
                                      the Floating Rate Payer Payment Date which
                                      falls on that Distribution Date Party B
                                      will pay to Party A the A$ Class A-1
                                      Unpaid Interest Payment in relation to
                                      that Distribution Date.

5.3     NO LIMIT TO RIGHTS:           Nothing in paragraphs 5.1(b) or 5.2(b) is
                                      to be construed as limiting Party A's or
                                      Party B's rights in relation to a failure
                                      by the other to pay the full amount of a
                                      Floating Amount calculated in accordance
                                      with paragraphs 5.1(a) or 5.2(a), as
                                      applicable, on a Floating Rate Payer
                                      Payment Date (including any right to
                                      designate an Early Termination Date in
                                      accordance with Section 6(a) of the
                                      Agreement).

6.      EXCHANGES

6.1     INITIAL EXCHANGE:

        Initial Exchange Date:        Closing Date

        Party A Initial Exchange      The A$ Equivalent of the Party B Initial
        Amount:                       Exchange Amount, being A$[        ]

        Party B Initial Exchange      The Initial Invested Amount of the
        Amount:                       Relevant Notes on the Issue Date, being
                                      US$[        ]

                                      Notwithstanding Section 2(a)(ii) of the
                                      Agreement, Party A must pay the Party A
                                      Initial Exchange Amount to Party B by
                                      4.00pm (Sydney time) on the Initial
                                      Exchange Date and Party B must pay Party A
                                      the Party B Initial Exchange Amount by
                                      4.00pm (New York time) on the Initial
                                      Exchange Date. Section 2(a)(v) of the
                                      Agreement will not apply to the payments
                                      of the Initial Exchange Amounts.

6.2     INTERIM EXCHANGE:

        Interim Exchange Date:        Each Distribution Date (other than the
                                      Final Exchange Date)

        Party A Interim Exchange      In respect of an Interim Exchange Date
        Amount:                       means the US$ Equivalent of the A$ Class
                                      A-1 Principal Amount in relation to the
                                      Distribution Date occurring on that
                                      Interim Exchange Date

        Party B Interim Exchange      In respect of an Interim Exchange Date
        Amount:                       means the A$ Class A-1 Principal Amount in
                                      relation to the Distribution Date
                                      occurring on that Interim Exchange Date

                                                                              25
<PAGE>

6.3     FINAL EXCHANGE:

        Final Exchange Date:            Termination Date

        Party A Final Exchange Amount:  The US$ Equivalent of the A$ Class A-1
                                        Principal Amount in relation to the
                                        Distribution Date which is the Final
                                        Exchange Date

        Party B Final Exchange Amount:  The A$ Class A-1 Principal Amount in
                                        relation to the Distribution Date which
                                        is the Final Exchange Date

7.      EXCHANGE RATES:

        For the purpose of the
        definitions of "A$ EQUIVALENT"
        and "US$ EQUIVALENT":

        US$ Exchange Rate:              [                  ]

        A$ Exchange Rate:               [                  ]

8.      ACCOUNT DETAILS:

8.1     PAYMENTS TO PARTY A

        Account for payments in US$     The account notified in writing by Party
                                        A to Party B in accordance with Part
                                        5(3)(ii) of the Schedule to the
                                        Agreement

        Account for payments in A$      The account notified in writing by Party
                                        A to Party B in accordance with Part
                                        5(3)(i) of the Schedule to the Agreement

8.2     PAYMENTS TO PARTY B

        Account for payments in US$:    The account notified in writing by the
                                        Principal Paying Agent to Party A in
                                        accordance with Part 5(2)(ii) of the
                                        Schedule to the Agreement

        Account for payments in A$:     The account notified in writing by Party
                                        B to Party A in accordance with Part
                                        5(2)(i) of the Schedule to the Agreement

9.      NOTIFICATIONS TO PARTY A        On or before the Determination Time in
                                        respect of each Distribution Date the
                                        Manager must notify Party A in writing
                                        of:

                                        (a)  the A$ Class A-1 Principal Amount
                                             which the Manager has directed
                                             Party B to pay to Party A on that
                                             Distribution Date pursuant to
                                             clause 10.5(b)(i) of the Series
                                             Supplement;

                                        (b)  the A$ Class A-1 Interest Payment
                                             in

                                                                              26
<PAGE>

                                             relation to that Distribution Date;

                                        (c)  the amounts (if any) allocated to
                                             the Class A-1 Notes in respect of
                                             any Principal Charge-off or
                                             Principal Charge-off Reimbursement
                                             on the immediately preceding
                                             Determination Date in accordance
                                             with Conditions 7.9 and 7.10 of the
                                             Note Conditions; and

                                        (d)  the A$ Class A-1 Unpaid Interest
                                             Payment (if any) in relation to
                                             that Distribution Date.

10.     OFFICES:                        The Office of Party A for each
                                        Transaction is Sydney.

                                        The Office of Party B for each
                                        Transaction is Sydney.

Please confirm that the above correctly sets out the terms of our agreement in
respect of each Transaction to which this Confirmation relates by signing and
returning this Confirmation to us by facsimile today.

Executed documents will follow by mail.

Yours sincerely

SIGNED for and on behalf of
COMMONWEALTH BANK
OF AUSTRALIA ABN 48 123 123 124

By:
       (Authorised Officer)

Name:

Title:

CONFIRMED AS AT THE DATE FIRST             CONFIRMED AS AT THE DATE FIRST
WRITTEN ABOVE:                             WRITTEN ABOVE:

SIGNED for and on behalf of                SIGNED for and on behalf of
PERPETUAL TRUSTEE                          SECURITISATION ADVISORY SERVICES PTY.
COMPANY LIMITED ABN 42 000 001 007         LIMITED ABN 88 064 133 946
as trustee of the Medallion Trust Series
[       ]

By:                                         By:
     (Authorised Officer )                       (Authorised Officer )

Name:                                       Name:

Title:                                      Title:

                                                                              27
<PAGE>

DEFINITIONS SCHEDULE

In this Confirmation and in the Agreement to the extent that it relates to the
Series Trust, unless the context otherwise requires:

"A$ CLASS A-1 UNPAID INTEREST PAYMENT" means in relation to a Distribution Date
the amount available to be allocated towards payment to Party A in respect of A$
Class A-1 Unpaid Interest Amounts on that Distribution Date in accordance with
clause 10.2(k)(i) of the Series Supplement determined on the basis that all
amounts allocated towards payment of A$ Class A-1 Interest Amounts and A$ Class
A-1 Unpaid Interest Amounts pursuant to clause 10.2(k)(i) of the Series
Supplement are allocated first towards payment of A$ Class A-1 Interest Amounts
and then, once the A$ Class A-1 Interest Amounts are paid in full, towards
payment of A$ Class A-1 Unpaid Interest Amounts.

"DETERMINATION TIME" in relation to a Distribution Date means on or about
11.00am Sydney time 1 Business Day prior to that Distribution Date.

"DISTRIBUTION DATE" has the same meaning as in the Series Supplement.

"NOTE CONDITIONS" means the terms and conditions of the Relevant Notes annexed
to the Relevant Notes.

"RELEVANT CALCULATION AMOUNT" means the Calculation Amount referred to in
paragraph 5.1 of this Confirmation.

"RELEVANT NOTES" means the Class A-1 Notes issued by the Trustee under the US
Dollar Note Trust Deed.

"RELEVANT NOTEHOLDERS" means the Class A-1 Noteholders as that term is defined
in the US Dollar Note Trust Deed.

"RELEVANT NOTE TRUSTEE" means The Bank of New York, New York Branch or, if The
Bank of New York is removed or retires as the trustee for the Class A-1
Noteholders, any person appointed from time to time in its place in accordance
with the US Dollar Note Trust Deed.

"SCHEDULED MATURITY DATE" has the same meaning as in the Series Supplement.

"SECURITY TRUST DEED" means the Security Trust Deed dated on or about the date
of this Confirmation between Party B, the Manager, the Relevant Note Trustee and
P.T. Limited ABN 67 004 454 666.

"SERIES SUPPLEMENT" means the Series Supplement dated on or about the date of
this Confirmation between Party A, Homepath Pty Limited ABN 35 081 986 530,
Party B and the Manager.

"US DOLLAR NOTE TRUST DEED" means the US Dollar Note Trust Deed dated on or
about the date of this Confirmation between Party B, the Manager and the
Relevant Note Trustee.

Terms defined in the Note Conditions have the same meaning in this Confirmation
unless otherwise defined in this Confirmation.

                                                                              28
<PAGE>

PARAGRAPH 13 TO NEW YORK LAW CREDIT SUPPORT ANNEX

(13)     ELECTIONS AND VARIABLES

         (a)     SECURITY INTEREST FOR "OBLIGATIONS"

                 The term "Obligations" as used in this Annex includes the
                 additional obligations referred to in Paragraph 13(m)(vii)(B).

         (b)     CREDIT SUPPORT OBLIGATIONS

                 (i)      DELIVERY AMOUNT AND RETURN AMOUNT

                          "DELIVERY AMOUNT" for a Valuation Date means the
                          amount of collateral calculated in accordance with
                          Part 5(22)(d)(i) of the Schedule to this Agreement for
                          that Valuation Date.

                          "RETURN AMOUNT" for a Valuation Date means the amount
                          of collateral calculated in accordance with Part
                          5(22)(d)(ii) of the Schedule to this Agreement for
                          that Valuation Date.

                 (ii)     ELIGIBLE COLLATERAL. The following items will qualify
                          as "Eligible Collateral" for Party A provided that the
                          items specified in paragraphs (E), (F), (G) and (H)
                          will only qualify as "Eligible Collateral" of Party A
                          upon receipt by Party B of an opinion as to the
                          perfection of the Secured Party's security interest in
                          such items in form and substance (and issued by legal
                          counsel) satisfactory to Party B:

                                                                       VALUATION
                                                                      Percentage
                     (A)   negotiable debt obligations issued by the        98%
                           U.S. Treasury Department having a remaining
                           maturity of not more than one year
                     (B)   negotiable debt obligations issued by the        95%
                           U.S. Treasury Department having a remaining
                           maturity of more than one year but not more
                           than five years
                     (C)   negotiable debt obligations issued by the        93%
                           U.S. Treasury Department having a remaining
                           maturity of more than five years but not more
                           than ten years
                     (D)   negotiable debt obligations issued by the        90%
                           U.S. Treasury Department having a remaining
                           maturity of more than ten years
                     (E)   Agency Securities having a remaining maturity    97%
                           of not more than one year
                     (F)   Agency Securities having a remaining maturity    94%
                           of more than one year but not more than five
                           years
                     (G)   Agency Securities having a remaining maturity    92%
                           of more than five years but not more than ten
                           years
                     (H)   Agency Securities having a remaining maturity    89%
                           of more than ten years
                     (I)   Cash                                            100%
                     (J)   other Eligible Credit Support and Valuation
                           Percentage agreed by the parties and
                           acceptable to each Rating Agency

                                                                              29
<PAGE>

                    Notwithstanding the foregoing to the contrary, the Valuation
                    Percentage with respect to all Eligible Credit Support shall
                    be deemed to be 100% with respect to a Valuation Date which
                    is an Early Termination Date.

                    "AGENCY SECURITIES" means negotiable debt obligations which
                    are fully guaranteed as to both principal and interest by
                    the Federal National Mortgage Association, the Government
                    National Mortgage Corporation or the Federal Home Loan
                    Mortgage Corporation and which have been assigned a short
                    term credit rating of A-1+ by S&P, but exclude: (i) interest
                    only and principal only securities; and (ii) collateralized
                    mortgage obligations, real estate mortgage investment
                    conduits and similar derivative securities.

              (iii) OTHER ELIGIBLE SUPPORT

                    Not applicable.

              (iv)  THRESHOLDS

                    (A)  "MINIMUM TRANSFER AMOUNT" means with respect to both
                         Party A and Party B: US$100,000.

                    (B)  ROUNDING. The Delivery Amount and the Return Amount
                         will be rounded to the nearest integral multiple of
                         US$10,000.

          (c)  VALUATION AND TIMING

               (i)   "VALUATION AGENT" means Party A.

               (ii)  "VALUATION DATE" means the last Business Day of each week
                     and, at the option of Party A, any Business Day between
                     Valuation Dates.

               (iii) "VALUATION TIME" means the close of business on the
                     Business Day before the Valuation Date; provided that the
                     calculations of Value and Exposure will be made as of
                     approximately the same time on the same date.

               (iv)  "NOTIFICATION TIME" means 11:00 am New York time on the
                     second Business Day after the Valuation Date.

          (d)  CODITIONS PRECEDENT AND SECURED PARTY'S RIGHTS AND REMEDIES

               There are no "SPECIFIED CONDITIONS" applicable to Party A. The
               following is a Specified Condition with respect to Party B:

               "If an Early Termination Date has been designated in respect of
               the each Transaction provided that if an amount is due by Party A
               to Party B in respect of that Early Termination Date pursuant to
               Section 6, that amount has been paid in full.".

          (e)  SUBSTITUTION

               (i)   "SUBSTITUTION DATE" has the meaning specified in Paragraph
                     4(d)(ii).

               (ii)  CONSENT. The Pledgor must obtain the Secured Party's
                     consent for any substitution pursuant to Paragraph 4(d).
                     However such consent is not to be unreasonably withheld and
                     the parties agree that not wanting to accept a particular
                     type of Substitute Credit Support is not in itself a
                     reasonable basis for withholding consent if the Substitute
                     Credit Support is Eligible Collateral. The consent may be
                     provided in a manner described in Section 12 or otherwise,
                     including orally.

                                                                              30

<PAGE>

          (f)  DISPUTE RESOLUTION

               (i)   "RESOLUTION TIME" means 11:00 am New York time.

               (ii)  "VALUE". Not applicable.

               (iii) "ALTERNATIVE". The provisions of Paragraph 5 will apply.

          (g)  HOLDING AND USING POSTED COLLATERAL

               (i)   ELIGIBILITY TO HOLD POSTED COLLATERAL; CUSTODIANS.

                     Party A: Not Applicable.

                     Party B is not entitled to hold Posted Collateral. It must
                     appoint a Custodian to hold Posted Collateral on its behalf
                     pursuant to paragraph 6(b). Party B may only appoint a
                     Custodian to hold Posted Collateral on its behalf if the
                     following conditions are satisfied:

                     (A)   Party B is not a Defaulting Party;

                     (B)   Party B's Custodian will always be the Principal
                           Paying Agent, unless that party is Party A;

                     (C)   if the Principal Paying Agent is Party A, then Party
                           B must appoint a Custodian which is a Bank (as
                           defined in the Federal Deposit Insurance Act, as
                           amended) outside Australia, whose rating (with
                           respect to its long term unsecured, unsubordinated
                           indebtedness) is at all times at least Aa2 by Moody's
                           and its short term debt rating is A-1+ by S&P, and
                           Party B must notify Party A in writing of this
                           appointment and of the relevant account for Paragraph
                           13(l); and

                     (D)   Posted Collateral may only be held in one or more
                           accounts in the name of Party B in the United States
                           and any account established by Party B's Custodian to
                           hold Posted Collateral shall be established and
                           maintained for the sole purpose of receiving
                           deliveries of and holding Posted Collateral.

               (ii)  USE OF POSTED COLLATERAL. The provisions of paragraph 6(c)
                     will not apply to Party B and its Custodian. Party B's
                     Custodian will permit Party B to secure Party B's
                     obligations under the Relevant Notes by granting to the
                     Security Trustee the charge under the Security Trust Deed
                     over Party B's rights in relation to the Posted Collateral,
                     but subject to Paragraph 13(m)(vi) of this Annex.

          (h)  DISTRIBUTIONS AND INTEREST AMOUNT

               (i)   INTEREST RATE. The "Interest Rate", in respect of Posted
                     Collateral which is denominated in US$, for any day means
                     the Federal Funds Overnight Rate. For the purposes hereof,
                     "Federal Funds Overnight Rate" means, for any day, an
                     interest rate per annum equal to the rate published as the
                     Federal Funds Effective Rate that appears on Telerate Page
                     118 for such day. The "Interest Rate" in respect of Posted
                     Collateral denominated in any other Eligible Currency means
                     the rate as agreed between the parties.

               (ii)  TRANSFER OF INTEREST AMOUNT. The Transfer of Interest
                     Amount will be made monthly on the second Business Day of
                     each calendar month.

               (iii) ALTERNATIVE TO INTEREST AMOUNT. The provisions of Paragraph
                     6(d)(ii) will apply.

                                                                              31
<PAGE>

          (i)  ADDITIONAL REPRESENTATION(S)

               None.

          (j)  OTHER ELIGIBLE SUPPORT AND OTHER POSTED SUPPORT

               "VALUE" and "TRANSFER" with respect to Other Eligible Support and
               Other Posted Support means: not applicable.

          (k)  DEMANDS AND NOTICES

               All demands, specifications and notices under this Annex will be
               made pursuant to the Section 12 of this Agreement; provided, that
               any such demand, specification or notice may be made by telephone
               ("TELEPHONE NOTICE") between duly authorised employees of each
               party if such Telephone Notice is confirmed by a subsequent
               written instruction (which may be delivered via facsimile) by the
               close of business of the same day that such Telephone Notice is
               given.

          (l)  ADDRESSES FOR TRANSFERS

               Party A:  Party A to specify account for returns of collateral.

               Party B:  Party B must notify Party A of its Custodian's account.

          (m)  OTHER PROVISIONS

               (i)   Paragraph 4(b) of the Annex is replaced by the following:

                     "(b)  TRANSFER TIMING. Subject to Paragraph 4(a) and 5 and
                           unless otherwise specified, if a demand for the
                           Transfer of Eligible Credit Support or Posted Credit
                           Support is made by the Notification Time, then the
                           relevant Transfer will be made within three Business
                           Days of receipt of the demand; if a demand is made
                           after the Notification Time, then the relevant
                           Transfer will be made within four Business Days of
                           receipt of the demand.".

               (ii)  EVENT OF DEFAULT

                     Paragraph 7(i) of the Annex is amended, on line 3, by
                     replacing "two Business Days" with "three Business Days".

               (iii) PARTY A'S EXPENSES

                     Subject to Section 15 of the Agreement, Party B agrees to
                     pay Party A's costs and expenses in relation to or caused
                     by any breach by Party B of its obligations under this
                     Annex. Party A acknowledges and agrees that its obligations
                     under this Annex will not be affected by a failure by Party
                     B to comply with its obligations under this paragraph
                     (m)(iii).

               (iv)  GOVERNING LAW NOTWITHSTANDING

                     Notwithstanding that the Agreement is expressed to be
                     governed by the laws of the State of New South Wales, this
                     Annex (but not any other provisions of the Agreement) shall
                     be governed by and construed in accordance with the laws of
                     the State of New York without giving effect to choice of
                     law doctrine and parties hereto agree that proceedings
                     relating to any dispute arising out of or in connection
                     with this Annex shall be subject to the non-exclusive
                     jurisdiction of the federal or state courts of competent
                     jurisdiction in the Borough of Manhattan in New York City,
                     State of New York.

                                                                              32
<PAGE>

               (v)    NO TRIAL BY JURY

                      Each party waives, to the fullest extent permitted by
                      applicable law, any right it may have to a trial by jury
                      in respect of any suit, action or proceeding relating to
                      this Annex.

               (vi)   NO POOLING OF COLLATERAL WITH OTHER SECURITY TRUST
                      SECURITY

                      Notwithstanding any provision in the Master Trust Deed,
                      Series Supplement or Security Trust Deed, but without
                      prejudice to Party B's rights under Paragraph 8(a) of this
                      Annex, no party shall be entitled to deal with the Posted
                      Collateral in any manner inconsistent with the rights of
                      the Pledgor under Paragraphs 3(d), 4(b) or 8(b)(iii) of
                      this Annex, and each party covenants to the other that it
                      shall not permit any other person to gain any rights in
                      relation to the Posted Collateral that are inconsistent
                      with the rights of the Pledgor.

               (vii)  PLEDGOR AND SECURED PARTY

                      In this Annex:

                      (a)  "PLEDGOR" means only Party A; and

                      (b)  "SECURED PARTY" means only Party B.

               (viii) NON-AUSTRALIAN ASSETS

                      Party A must only Transfer Posted Collateral to the
                      Secured Party from its assets held outside Australia.

               (ix)   DISPUTE RESOLUTION

                      Paragraph 5(i) is amended by:

                      (A)  replacing the word "Exposure" with the words "the
                           Delivery Amount or the Return Amount, as the case may
                           be" in the first paragraph of Paragraph 5(i);

                      (B)  adding the word "and" at the end of Paragraph 5(i)(A)
                           and deleting Paragraph 5(i)(B).

               (x)    SPECIFIED CONDITION

                      (A)  In Paragraph 4(a)(ii) the words "or Specified
                           Condition" are deleted.

                      (B)  In Paragraph 8(b) the words "or Specified Condition"
                           are deleted and replaced with the following "with
                           respect to the Secured Party or a Specified Condition
                           has occurred".

                                                                              33Employment Agreement for Stephen W. Lilienthal

 

Exhibit 10.10

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT
AGREEMENT (the “Agreement”) is made as of the 25th day of
July, 2002 (the “Signing Date”), by and between CNA Financial Corporation, a
Delaware corporation (the “Company”), and Stephen W.
Lilienthal (“Executive”);

WITNESSETH:

     WHEREAS, the Executive currently serves as the President and Chief
Executive Officer, Property and Casualty Operations and a member of the Board
of Directors of the Company, pursuant to an employment agreement dated as of
July 23, 2001 (“Prior Employment Agreement”);

     WHEREAS, the Company wishes to employ Executive as Chief Executive Officer
of the Company and as Chairman and Chief Executive Officer of the CNA Insurance
Companies (collectively, the Company and the CNA Insurance Companies are
referred to as the “CNA Companies”); and

     WHEREAS, the Company and the Executive wish to terminate the Prior
Employment Agreement and to enter into a new written agreement setting forth
the terms of their future employment relationship as set forth below.

     NOW, THEREFORE, in consideration of the foregoing premises and the
promises and covenants herein, the parties hereto agree as follows:

     1.     Employment Term. The Company and Executive agree that the Company
shall employ Executive to perform the duties of Chief Executive Officer of the
Company and as Chairman and Chief Executive Officer of the CNA Insurance
Companies for the period commencing on August 26, 2002 (“Effective Date”) and
ending on December 31, 2005, or such earlier date as of which Executive’s
employment is terminated in accordance with Section 6 hereof. The covenants
set forth in Sections 7, 8, 9, 10, 11, 12, 13, 14 through 16 shall survive the
term of Executive’s employment.

     2.     Duties of Executive.

          (a) Executive shall serve as the Chief Executive Officer of the Company
and as the Chairman and Chief Executive Officer of the CNA Insurance Companies
and such other subsidiaries of the Company as may be determined by the Board of
Directors of the Company (“Board”), and shall continue as a member of the
Board. As Chief Executive Officer of the Company, Executive shall have
responsibility for the day to day operations of the CNA Companies and for
development and implementation of the CNA Companies’ business plans and
strategies. Executive shall report to the Board. Executive shall be elected
and shall serve as a member and chairman of the board of directors of the CNA
Insurance Companies, and of such of the other CNA Companies as may be
determined by the Board, and if so elected, Executive agrees to serve on such
boards in such capacity without additional compensation.

          (b) Executive shall diligently and to the best of his abilities assume,
perform, and discharge the duties and responsibilities of Chief Executive
Officer of the Company, and

 

 

Chairman and Chief Executive Officer of the CNA Insurance Companies, as
well as such other specific duties and responsibilities not inconsistent with
Executive’s such titles, offices, status and responsibilities as the Board
shall assign or designate to Executive from time to time. Executive shall
devote substantially all of his working time to the performance of his duties
as set forth herein and shall not during the term of his employment, without
the prior written consent of the Board, accept other employment or render or
perform other services, nor shall he have any direct or indirect ownership
interest in any other business which is in competition with the business of the
CNA Companies, other than in the form of publicly traded securities
constituting less than five percent (5%) of the outstanding securities of a
corporation (determined by vote or value) or limited partnership interests
constituting less than five percent (5%) of the value of any such partnership.
The foregoing shall not preclude Executive from engaging in charitable,
professional, and personal investment activities, and Executive shall be
permitted to continue to engage in such charitable and professional activities
engaged in by Executive during the term of his Prior Employment Agreement,
provided in any case that, in the reasonable judgment of the Board, such
activities do not materially interfere with his performance of his duties and
responsibilities hereunder.

     3.     Compensation.

          (a) Base
Compensation. The Company or its subsidiaries shall pay to
Executive for the period he is employed by the Company hereunder, an annual
base salary at a rate of no less than $950,000.00, payable not less frequently
than monthly (the “Base Compensation”). Such Base Compensation shall be
reviewed by the Board not less frequently than annually, as of each March,
during the term of the Agreement commencing, with a view to making such
positive adjustments as the Board deems equitable and appropriate, beginning
with March of 2003, based on market considerations, Executive’s
responsibilities and performance, and the increased amount shall thereafter be
considered Executive’s Base Compensation for all purposes under this Agreement.
In no event shall Executive’s salary rate be reduced to an amount that is less
than $950,000.00, or after any increase in Base Compensation hereafter to an
amount that is less than such increased amount that he was previously
receiving, without Executive’s written consent.

          (b) Annual
Incentive Cash Award. The Executive shall be entitled to an
annual cash award (“Bonus”) pursuant to the CNA Financial Corporation 2000
Incentive Compensation Plan (the “Incentive Compensation Plan”). The
Executive’s target Bonus thereunder shall be not less than the rate of one
hundred percent (100%) of his Base Compensation and his maximum Bonus shall be
not more than the rate of two hundred percent (200%) of his Base Compensation;
provided, subject to Incentive Compensation Committee (“Committee”) approval,
Executive’s 2002 Bonus shall be not less than the sum of: (i) the full-year
cash award due to Executive under the Prior Employment Agreement (determined
without regard for the termination of his Prior Employment Agreement
hereunder), plus (ii) not less than $400,000, upon achievement of a goal of
$2,600,000,000 net written property casualty premium for the CNA Companies for
the last two fiscal quarters of 2002, offset by one-third (1/3) of the amount
payable pursuant to clause (i). The amount of Executive’s annual Bonus shall
be based on performance criteria (the “Performance Criteria”) established by
the Committee pursuant to the Incentive Compensation Plan for each of the years
included in the term of this Agreement, and payment of Executive’s annual Bonus
shall otherwise be in accordance with the provisions

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of the Incentive Compensation Plan, including the requirement of annual
review and certification by the Committee of the awards; provided, that
satisfaction of the Performance Criteria shall be based on Net Operating Income
as defined in the Incentive Compensation Plan; and provided further, that the
Committee shall not exercise its negative discretion under the Incentive
Compensation Plan to decrease the amount of Executive’s Bonus for any year by
more than 10 percent.

          (c) Special
Long-Term Incentive Award. Executive shall be awarded a
special stock option grant of 15,000 shares of CNA Financial Corporation stock
as of August 8, 2002, pursuant to the terms and conditions set forth in the
attached Addendum (the “Addendum”), which is incorporated by reference into
this Agreement.

          (d) Long-Term
Incentive Awards. Subject to the approval of the Committee
(as provided in Section 3 of the attached Addendum), Executive shall
additionally be awarded a targeted stock option grant of 55,000 shares of CNA
Financial Corporation stock annually pursuant to the terms and provisions set
forth in the Addendum that are comparable to such awards to senior executives
of the Company, and such other awards under the Incentive Compensation Plan as
the Committee shall in its sole discretion from time to time grant to
Executive. Such stock option, restricted stock and other equity incentive
awards, and all other stock option, restricted stock and other equity incentive
awards granted to Executive pursuant to subsection 3(c) and this subsection
3(d) are referred as “Stock Options” hereunder.

          (e) Prior
Incentive Awards. All stock option, restricted stock and other
equity incentive awards granted to Executive prior to the Effective Date shall
continue in accordance with the terms thereof (except that “December 31, 2005”
shall be substituted for “March 1, 2004” as the latest “Offer Date” to
constitute a “Triggering Termination” thereunder).

          (f) Section 162(m)
Compliance; Deferral. For avoidance of doubt,
respecting awards to Executive under Section 3(b) or 3(d) hereof, the Committee
shall retain such discretion as may be provided under the Incentive
Compensation Plan to satisfy Section 162(m) of the Internal Revenue Code of
1986 (“Code”) or any successor provision. The Company may defer the payment of
all compensation to which Executive is entitled hereunder or otherwise to
enable it to comply with Section 162(m) of the Code or any successor provision
with respect to deductibility of executive compensation. All such deferred
compensation will be credited to the Executive’s SES-CAP account and shall be
subject to the terms thereof.

          (g) S-CAP/SES-CAP
Earnings. Executive’s compensation and pensionable
earnings under the CNA Savings & Capital Accumulation Plan
(“S-CAP”) and the
CNA Supplemental Savings & Capital Accumulation Plan
(“SES-CAP”) will be
calculated as specified in the plan documents; provided, such compensation and
earnings, as the case may be, shall include the sum of Executive’s Base
Compensation, annual Bonus and all other cash incentive awards payable to
Executive for each year, not to exceed a sum of $1,900,000 per year, with such
amounts to be includible at the time they would otherwise be paid to Executive
in the absence of any elective deferral by Executive or pursuant to Section
3(f) hereof.

     4.     Other Benefits. Executive shall be entitled to participate in the
various benefit plans, programs or arrangements established and maintained by
the Company from time to time

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 and applicable to senior executives of the Company such as, but not by way
of limitation, vacation pay, health and major medical insurance, dental
insurance, life insurance, long-term disability insurance, both qualified and
supplemental savings plans, and long-term incentive compensation plans, and to
receive all fringe benefits and perquisites made available to Band 660
employees of the Company, including but not limited to club memberships
($10,000 annually and a $10,000 one-time initiation fee). Executive’s
entitlement to participate in any such plan, program or arrangement shall, in
each case, be subject to the terms and conditions thereof; however,
notwithstanding the foregoing, in the event of termination of employment,
Executive’s severance entitlement shall be determined solely in accordance with
Section 6 hereof.

     5.     Expense Reimbursement. Executive shall be entitled to reimbursement by
the Company for all reasonable and customary travel and other business expenses
incurred by Executive in carrying out his duties under this Agreement (and any
outstanding reimbursable expenses under the Prior Employment Agreement), in
accordance with the general reimbursement policies adopted by the Company from
time to time for its senior executives. Executive shall report all such
expenditures not less frequently than monthly accompanied by adequate records
and such other documentary evidence as required by the Company or by Federal or
state tax statutes or regulations governing the substantiation of such
expenditures. The Company shall promptly reimburse Executive for all
reasonable professional expenses incurred in connection with the negotiation
and preparation of this Agreement.

     6.     Termination of Employment. If Executive’s employment with the Company
shall terminate during the term of this Agreement, the following conditions set
forth herein shall apply with respect to Executive’s compensation and benefits
hereunder. Either party may terminate Executive’s employment with the Company
during the term of this Agreement by written notice to the other party
effective as of the date specified in such notice and Executive’s employment
shall automatically terminate in the event of Executive’s death. Upon
termination of Executive’s employment during the term of this Agreement, the
rights of the parties under this Agreement shall be determined pursuant to this
Section 6. All payments made hereunder shall be subject to applicable
withholding required by federal, state or local law and shall be made either to
Executive or to his personal representatives, heirs or beneficiaries as the
case may be. In the event of Executive’s termination during the term of this
Agreement, unless otherwise specified in this Agreement, Executive’s rights, if
any, under any of the Company’s retirement, savings, benefit, pension,
incentive or other plans of any nature shall be governed by the terms of such
plans.

     6.1 Death and Disability. In the event of the death of Executive or, at
the Company’s election, in the event of his Permanent Disability (as defined
below) during the term of this Agreement, provided it had not already
terminated, Executive’s employment shall terminate. Upon such termination:

          (a) The Company shall pay to Executive, or his personal representatives,
heirs or beneficiaries, as the case may be:

		
	 	     (i) within 30 days after such termination, his (“Accrued
Obligations”): (1) unpaid Base Compensation at the rate in effect
at the time of notice of

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	 	termination and current year’s target Bonus prorated to the
date of termination; (2) any previous year’s earned but unpaid
Bonus and other earned and unpaid incentive cash compensation; and
(3) unused vacation time, unpaid expense reimbursements and other
unpaid cash entitlements earned by Executive or payable to his
beneficiaries as of the date of termination pursuant to the terms
of the applicable Company plan or program accrued prior to the date
of the date of termination;
	 
	 	     (ii) In the event that the termination occurs during a
Performance Period (as defined under the Incentive Compensation
Plan) with respect to which the Committee has not yet made an award
of Stock Options (or affirmatively determined not to make an award)
pursuant to subsection 3(d), an amount equal to the cash equivalent
(determined under the methodology described in subsection
6.3(a)(iv)), as of the date of termination and without any present
value discount) of the target amount referred to in subsection 3(d)
for such Performance Period multiplied by a fraction, the numerator
of which is the number of days in such Performance Period through
and including the date of termination and the denominator of which
is the total number of days in such Performance Period; and
	 
	 	     (iii) Any unexercised Stock Option held by Executive upon
termination of employment may be exercised by Executive (or his
heirs or personal representative) following such termination to the
extent of the sum of the number of shares with respect to which the
Stock Option was vested but unexercised immediately prior to such
termination, plus an additional number of shares determined by
multiplying the unvested portion of the Stock Option by the
fraction described in subsection 6.1(a)(ii), and rounded to the
next higher number of whole shares. Such portion of the Stock
Options may be exercised through the one-year anniversary of such
date of termination, but in no event later than the date on which
such option would expire if Executive had remained employed by the
Company. Other options held by Executive may be exercised during
the same period, but only to the extent vested under the terms of
such options. The provisions of this subsection 6.1(a)(iii) shall
apply notwithstanding any contrary provision in any agreement
governing any Stock Option or other option.

          (b) For
purposes of this Agreement, the term “Permanent Disability” means
a physical or mental condition of Executive which, as determined by an
independent physician selected by the Company after consultation with Executive
(or, if Executive is incapable of consulting with the Company, with Executive’s
personal physician), based on all available medical information, is expected to
continue indefinitely and which renders Executive incapable of performing any
substantial portion of the services contemplated hereunder.

     6.2 Termination for Cause by the Company.

          (a) In the event that Executive shall engage in any conduct that the Board
shall determine constitutes Cause, as defined in the following sentence, the
Board shall have the right to terminate Executive’s employment with the Company
by written notice to Executive

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effective as of the date of such notice. For purposes of this Agreement,
“Cause” shall mean conduct: (i) which would constitute a felony or other act
involving fraud, dishonesty, moral turpitude, unlawful conduct or breach of
fiduciary duty, other than due to Limited Vicarious Liability, (ii) which is
inconsistent with the dignity and character of an executive of the Company,
(iii) which is a substantial breach of any material provision of this
Agreement, (iv) constituting willful or reckless material misconduct in the
performance of the Executive’s duties, or (v) constituting the habitual neglect
of duties; provided, however: (x) that the Board in good faith determines that
such conduct has had a material adverse effect on the business or prospects of
the Company; (y) for purposes of clauses (iv) and (v), Cause shall not include
any one or more of the following: bad judgment, negligence or any act or
omission believed by the Executive in good faith to have been in or not opposed
to the interest of the Company (without any intent by the Executive to gain,
directly or indirectly, a profit to which he was not legally entitled); and (z)
“Limited Vicarious Liability” shall mean any liability which is (1) based on
acts of the Company for which Executive is responsible solely as a result of
his office(s) with the Company and (2) provided that (A) he was not directly
involved in such acts and either had no prior knowledge of such intended
actions or promptly acted reasonably and in good faith to attempt to prevent
the acts causing such liability or (B) he did not have a reasonable basis to
believe that a law was being violated by such acts. If the Executive agrees to
resign from his employment with the Company in lieu of being terminated for
Cause, he may be deemed to have been terminated for Cause for purposes of this
Agreement.

          (b) Upon terminating the Executive for Cause, other than paying the
Executive within 30 days of such termination his Accrued Obligations, the
Company shall have no further obligations under this Agreement, and all rights
or options with regard to Stock Options as provided in this Agreement and the
Addendum hereto shall thereupon expire.

     6.3 Termination by the Company Without Cause / Termination by Executive
for Good Reason. In the event Executive’s employment is terminated by the
Company for any reason not described in subsections 6.1 and 6.2, or in the
event Executive terminates his employment for Good Reason, as defined herein,

          (a) The Company shall pay to Executive:

		
	 	     (i) Within 30 days after such termination, his Accrued
Obligations;
	 
	 	     (ii) Termination payments at the annual rate equal to three
hundred percent (300%) of Executive’s annual rate of Base
Compensation as in effect immediately prior to his date of
termination (disregarding any reduction in Base Compensation
constituting Good Reason for such termination) with such
termination payments to be made in substantially equal
installments, not less frequently than monthly, for a period of
thirty-six (36) months following such termination;
	 
	 	     (iii) A target Bonus for the Performance Period in which the
termination occurs prorated to the date of termination. Executive
shall not be entitled to any Bonus for the period following
termination, it being the intent of the parties that the portion of
the termination payments described in

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	 	subsection 6.3(a)(ii) that exceeds his Base Compensation shall
be in lieu of such Bonus; and
	 
	 	     (iv) A payment equal to the cash equivalent of all Stock
Options which he would have received if his employment had
continued until December 31, 2005, and if the target number of
Stock Options described in subsection 3(d) had been granted for
each remaining Performance Period between the last Performance
Period for which an award was made (or for which the Committee
affirmatively determined to make no award) prior to the date of
termination and December 31, 2005. The cash equivalent of a future
Stock Option grant shall be equal to 48% of the fair market value
of the number of shares of stock to be covered by the Stock Option,
determined based on the on the fair market value of the stock on
the date of termination, and then discounted from January 1 of the
year for which the Stock Option would have been granted to the date
of termination using an interest rate equal to the prime rate for
the date of termination as reported in The Wall Street Journal
(Midwest Edition). Fair market value of the stock shall be
determined by taking the average of the highest and lowest sales
prices of the stock on the date of termination, as reported as the
New York Stock Exchange-Composite Transactions for such day, or if
the stock was not traded on the New York Stock Exchange on such day
then on the next preceding day on which the stock was traded, all
as reported by The Wall Street Journal (Midwest Edition) under the
heading New York Stock Exchange-Composite Transactions, or, if the
stock ceases to be listed on such exchange, as reported on the
principal national securities exchange or national automated stock
quotation system on which the stock is traded or quoted, but in no
event shall the price be less than the par value of the stock.
Payment pursuant to this subsection 6.3(a)(iv) shall be made as
soon as practicable after the date of Executive’s termination.

          (b) Any unexercised Stock Option held by Executive upon termination of his
employment shall be fully vested on the date of termination and may be
exercised by Executive at any time up to the first anniversary of Executive’s
date of termination (but not later than the date on which such Stock Option
would expire if Executive had remained employed by the Company). Subject to
the provisions of Section 3(e), any options other than Stock Options may be
exercised during the same period but only to the extent vested under the terms
of such option. The provisions of this subsection 6.3(b) shall apply
notwithstanding any contrary provision in any agreement governing any Stock
Option or other option.

          (c) In addition, Executive shall continue to participate in such health,
dental, vision, life, and disability plans in which he is enrolled throughout
the 36-month term of the payments set forth in subsection 6.3(a)(ii), as if he
were still employed by the Company, said period of participation to run
concurrently with any period of COBRA coverage to which Executive may be
entitled; provided, to the extent that Executive cannot participate in the
Company’s health, dental and vision plans beyond the termination of the COBRA
benefit continuation period, Executive shall be entitled to equivalent such
health, dental and vision benefits as are provided to senior executives of the
Company under the Company’s benefit plans.

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           (d) In the event that Executive dies before all payments pursuant to this
Section 6.3 have been paid, all remaining payments shall be made to the
beneficiary specifically designated by the Executive in writing prior to his
death, or, if no such beneficiary was designated (or the Company is unable in
good faith to determine the beneficiary designated), to his personal
representative or estate.

          (e)
“Good Reason” as set forth herein is defined as, without the
Executive’s consent: (i) a reduction in the rate of Executive’s Base
Compensation below that which is provided for in Section 3(a) above or a
reduction of Executive’s annual target Bonus or maximum Bonus below that which
is provided for in Section 3(b) above (other than an exercise by the Committee
of negative discretion to the extent permitted by subsection 3(b) and, further
provided for the avoidance of doubt, a stock option grant for an amount less
than the target amount set forth in Section 3(d) above shall not, alone,
constitute “Good Reason”); (ii) the assignment to Executive of any duties
inconsistent with his position (including status, offices, titles and reporting
relationships), authority, duties or responsibilities, all as in effect on the
Signing Date, or any other action by the Company which results in a diminution
in any respect in such position, authority, duties or responsibilities; (iii)
any reduction in any benefits provided under Section 4 or a material diminution
under the expense reimbursement policies of the Company provided under Section
5 of this Agreement, that is not generally applicable to all similarly situated
executives of the Company; (iv) a substantial breach of any material provision
of this Agreement by the Company; (v) the Company’s requiring Executive to be
based at any office or location that is more than 35 miles from his office or
location in Chicago, Illinois, as of the Signing Date; (vi) the failure to
reelect or otherwise maintain Executive as a director of the CNA Financial
Corporation Board of Directors; or (vii) the failure of the Company to obtain
the assumption in writing of its obligation to perform this Agreement by any
successor to all or substantially all of the assets of the Company within
fifteen (15) calendar days after a merger, consolidation, sale or similar
transaction; provided, however, that for purposes of clauses (i), (ii) and
(iii), the Company shall have ten (10) calendar days after the date that
written notice has been given to the Company by Executive of such Good Reason
in which to cure such conduct not engaged in by the Company in bad faith.

     6.4 Voluntary Resignation by Executive. In the event that Executive’s
employment is terminated by Executive other than pursuant to Good Reason under
subsection 6.3 or other than as a direct result of his death or Permanent
Disability (as described in subsection 6.1), other than paying the Executive
within 30 days of such termination his Accrued Obligations, the Company shall
have no further obligations under this Agreement, and all rights or options
with regard to Stock Options as provided in this Agreement and the Addendum
hereto shall thereupon expire. Executive agrees to be bound by the covenants
set forth herein effective as of the termination date.

     6.5 Failure to Extend Agreement.

          (a) Following December 31, 2005, if the Company terminates Executive’s
employment for any reason other than for Cause (in the case of a termination
for Cause, subsection 6.2 shall apply), or if the Company and Executive have
not mutually agreed to the terms of, and entered into a new agreement prior to
March 31, 2006, Executive’s employment shall terminate on April 1, 2006 and the
Company’s obligations shall be the same as they would

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have been, and Executive shall receive the same payments and other
benefits that he would have received, had the Company terminated his employment
pursuant to subsection 6.3 (but not including any additional payment with
respect to Stock Options pursuant to subsection 6.3(a)(iv)).

          (b) On or before December 31, 2005, the Company may offer to Executive in
writing an extension of the period of Executive’s employment under this
Agreement or a new Agreement in principle with Executive, in either case having
a term of employment commencing January 1, 2006. If the Company does not make
such written offer to Executive on or before December 31, 2005, then
Executive’s employment shall terminate on December 31, 2005 and Executive shall
receive all amounts and benefits set forth in subsection 6.5(a). If the
Company makes such an offer by December 31, 2005, then Executive’s employment
after December 31, 2005 shall constitute an employment at will from month to
month and, during the period from January 1, 2006 to March 31, 2006, Executive
shall receive: (i) a salary during such employment at the annual rate of 400%
of his annual Base Compensation as of December 31, 2005; (ii) the terms of this
Agreement that governed Executive’s benefits and perquisites prior to January
1, 2006 will continue to apply, and will be in addition to Executive’s salary
specified in clause (i) above; and (iii) Executive shall be entitled to payment
with respect to the annual Bonus for calendar year 2005, and Stock Option
awards for the performance period ending December 31, 2005 to the extent
provided by this Agreement and the Addendum, but Executive will not be entitled
to an annual Bonus, or Stock Option awards or any other incentive compensation
award for performance periods beginning after December 31, 2005.

     6.6 No Offset, No Mitigation. The Company’s obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including
without limitation any set-off, counterclaim, recoupment, defense or other
right which the Company may have against Executive or others. In no event
shall Executive be obligated to seek other employment or take any other action
by way of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement, and such amounts shall not be reduced whether or
not the Executive obtains other employment.

     7.     Confidentiality. Executive agrees that while he is employed by the
Company, and at all times thereafter, Executive shall not reveal or utilize
information, knowledge or data which is confidential as defined in this
Agreement and learned during the course of or as a result of his employment
which relates to (a) the Company and/or any other business or entity in which
the Company during the course of the Executive’s employment has directly or
indirectly held a greater than a 10% equity interest whether voting or
non-voting; (b) the Company’s customers, employees, agents, brokers and
vendors. The Executive acknowledges that all such confidential information is
commercially valuable and is the property of the Company. Upon the termination
of his employment Executive shall return all confidential information to the
Company, whether it exists in written, electronic, computerized or other form.
Notwithstanding the foregoing provisions of this Section 7, the Executive may
disclose or use any such information (i) as such disclosure or use may be
required or appropriate in the course of his employment with the Company, (ii)
when required by a court of law, by any governmental agency having supervisory
authority over the business of the Company or by any administrative or
legislative body (including a committee thereof) with apparent jurisdiction,
provided that in the event Executive

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 believes he is so required to make such disclosure or use he will notify
the Company in writing of the basis for that belief before actually making such
disclosure or use in order to permit the Company to take steps to protect the
Company’s interests and will cooperate with the Company in all reasonable
respects to permit the Company to oppose such disclosure or use, or (iii) with
the prior written consent of the Company.

     8.     “Confidential Information” Defined. For purposes of this Agreement
“confidential information” includes all information, knowledge or data (whether
or not a trade secret or protected by laws pertaining to intellectual property)
not generally known outside the Company (unless as a result of a breach of any
of the obligations imposed by this Agreement) concerning the business and
technical information of the Company or other entities as described in Section
7 above. Such information may without limitation include information relating
to data, finances, marketing, pricing, profit margins, underwriting, claims,
loss control, marketing and business plans, renewals, software, processing,
vendors, administrators, customers or prospective customers, products, brokers,
agents and employees.

     9.     Competition. Executive hereby agrees that, while he is employed by the
Company, and for a period of 24 months following the date of his termination of
his employment with the Company for any reason (the
“Restriction Period”), he
will not, directly or indirectly, without the prior written approval of the
Board, enter into any business relationship (either as principal, agent, board
member, officer, consultant, stockholder, employee or in any other capacity)
with any business or other entity that for the duration of the Restriction
Period is engaged in any of the principal businesses of the Company (a
“Competitor”); provided, however, that such prohibited activity shall not
include the ownership of less than 5% of the outstanding securities of any
publicly traded corporation (determined by vote or value) regardless of the
business of such corporation. Upon the written request of Executive, the Board
will reasonably determine whether a business or other entity constitutes a
“Competitor” for purposes of this Section 9; provided that the Board may
require Executive to provide such information as the Board determines to be
necessary to make such determination; and further provided that the current and
continuing effectiveness of such determination may be conditioned on the
accuracy of such information, and on such other factors as the Board may
determine.

     10.     Solicitation. Executive agrees that while he is employed by the
Company, and for a period of 36 months following his termination of employment
with the Company for any reason, he will not employ, offer to employ, engage as
a consultant, or form an association with any person who is then, or who during
the preceding one year was, an employee of the Company, nor will he assist any
other person in soliciting for employment or consultation any person who is
then, or who during the preceding one year was, an employee of the Company.

     11.     Non-interference. Executive agrees that while he is employed by the
Company, and for a period of 36 months following his termination of employment
for any reason, he will not disturb or attempt to disturb any business
relationship or agreement between either the Company or an Affiliate and any
other person or entity.

     12.     Assistance with Claims. Executive agrees that, while he is employed
by the Company, and for a reasonable period (not less than 36 months)
thereafter, he will be available, on a reasonable basis, to assist the Company
and its subsidiaries and affiliates in the prosecution

10

 

 or defense of any claims, suits, litigation, arbitrations, investigations,
or other proceedings, whether pending or threatened (“Claims”) that may be made
or threatened by or against the Company or any of its subsidiaries or
affiliates. Executive agrees, unless precluded by law, to promptly inform the
Company if he is requested (i) to testify or otherwise become involved in
connection with any Claim against the Company or any subsidiary or affiliate or
(ii) to assist or participate in any investigation (whether governmental or
private) of the Company or any subsidiary or affiliate or any of their actions,
whether or not a lawsuit has been filed against the Company or any of its
subsidiaries or affiliates relating thereto. The Company agrees to provide
reasonable compensation, in advance, including, without limitation,
transportation, lodging and meals expenses, and a reasonable stipend for his
time of not less than $3,653 per day to Executive for such assistance.

     13.     Return of Materials. Executive shall, at any time upon the request of
the Company, and in any event upon the termination of his employment with the
Company, for whatever reason, immediately return and surrender to the Company
all originals and all copies, regardless of medium, of property belonging to
the Company created or obtained by Executive as a result of or in the course of
or in connection with his employment with the Company regardless of whether
such items constitute proprietary information, provided that Executive shall be
under no obligation to return written materials acquired from third parties
which are generally available to the public. Executive acknowledges that all
such materials are, and will remain, the exclusive property of the Company.

     14.     Scope of Covenants.

          (a) The Executive acknowledges that: (i) as a senior executive of the
Company he had access to confidential information concerning the entire range
of businesses in which the Company was engaged; (ii) that the Company’s
businesses are conducted nation-wide; and (iii) that the Company’s confidential
information, if disclosed or utilized without its authorization would
irreparably harm the Company in: (1) obtaining renewals of existing customers;
(2) selling new business; (3) maintaining and establishing existing and new
relationships with employees, agents, brokers, vendors; and (4) other ways
arising out of the conduct of the businesses in which the Company is engaged.

          (b) To protect such information and such existing and prospective
relationships, and for other significant business reasons, the Executive agrees
that it is reasonable and necessary that: (i) the scope of this agreement be
nation-wide; (ii) its breadth include those segments of the entire insurance
industry in which the Company conducts business; and (iii) the duration of the
restrictions upon the Executive be as indicated therein.

          (c) The Executive acknowledges that the Company’s customer, employee and
business relationships are long-standing, indeed, near permanent and therefore
are of great value to the Company. The Executive agrees that neither any of
the provisions in this Agreement nor the Company’s enforcement of it alters or
will alter his ability to earn a livelihood for himself and his family and
further that both are reasonably necessary to protect the Company’s legitimate
business and property interests and relationships, especially those which he
was responsible for developing or maintaining. The Executive agrees that his
actual or threatened breach of the covenants set forth in Sections 7 through 13
above would cause the Company irreparable harm

11

 

and that the Company is entitled to an injunction, in addition to whatever
other remedies may be available, to restrain such actual or threatened breach.
The Executive agrees that if bond is required in order for the Company to
obtain such relief, it need only be in a nominal amount. The Executive
consents to the filing of any such suit against him in the state or federal
courts located in Illinois or any state in which he resides. He further agrees
that in the event of such suit or any other action arising out of or relating
to this Agreement, the parties shall be bound by and the court shall apply the
internal laws of the State of Illinois and irrespective of rules regarding
choice of law or conflicts of laws.

          (d) If he has not already done so Executive agrees to continue to be bound
by and to execute the Company’s Confidentiality, Computer Responsibility and
Professional Certification Agreement.

          (e) For
purposes of Sections 7 through 14 hereof, the “Company” shall
include the “CNA Insurance Companies”, as well.

     15.     Effect of Covenants. Nothing in Sections 7 through 14 shall be
construed to adversely affect the rights that the Company would possess in the
absence of the provisions of such Sections.

     16.     Indemnification. Except as otherwise required by law, the Company
agrees that Executive shall be entitled to indemnification as provided for, and
pursuant to the terms of, Article X of its Corporate by-laws in effect on the
date hereof, or as may be amended hereafter provided such amendment is not less
favorable to Executive than the by-laws in effect on the date hereof. Except
as otherwise required by law, the indemnification of Executive under the Prior
Employment Agreement shall survive the termination of the Prior Employment
Agreement hereunder.

     17.     Revision. The parties hereto expressly agree that in the event that
any of the provisions, covenants, warranties or agreements in this Agreement
are held to be in any respect an unreasonable restriction upon Executive or are
otherwise invalid, for whatsoever cause, then the court or arbitrator so
holding is hereby authorized to (a) reduce the territory to which said
covenant, warranty or agreement pertains, the period of time in which said
covenant, warranty or agreement operates or the scope of activity to which said
covenant, warranty or agreement pertains or (b) effect any other change to the
extent necessary to render any of the restrictions contained in this Agreement
enforceable.

     18.     Severability. Each of the terms and provisions of this Agreement is
to be deemed severable in whole or in part and, if any term or provision of the
application thereof in any circumstances should be invalid, illegal or
unenforceable, the remaining terms and provisions or the application thereof to
circumstances other than those as to which it is held invalid, illegal or
unenforceable, shall not be affected thereby and shall remain in full force and
effect.

     19.     Binding Agreement; Assignment. This Agreement shall be binding upon
the parties hereto and their respective heirs, successors, personal
representatives and assigns. The Company shall have the right to assign this
Agreement to any successor in interest to the business, or any majority part
thereof, of the Company or any joint venture or partnership to

12

 

 which the Company is a joint venturer or general partner which conducts
substantially all of the Company’s business. Executive shall not assign any of
his obligations or duties hereunder and any such attempted assignment shall be
null and void.

     20.     Controlling Law; Jurisdiction. This Agreement shall be governed by,
interpreted and construed according to the laws of the State of Illinois
(without regard to conflict of laws principles).

     21.     Entire Agreement. Except as otherwise expressly set forth herein,
this Agreement contains the entire agreement of the parties with regard to the
subject matter hereof, supersedes all prior agreements and understandings,
written or oral, including the Prior Employment Agreement, and may only be
amended by an agreement in writing signed by the parties thereto.
Notwithstanding the foregoing or any other term or provision of this Agreement,
that certain Addendum to Employment Agreement between the Company and
Executive, made as of July 23rd, 2001, remains in full force and effect except
as modified pursuant to Section 3(e) of this Agreement. In the case of any
conflict between the terms of this Agreement (the “Terms”) and the provisions
of any plan, policy, or practice of the Company, or agreement or award
thereunder, as in effect from time to time (the “Provisions”), Executive’s
rights or the Company’s obligations shall be established by whichever of the
Terms or Provisions would be more beneficial to Executive, with the reservation
that resolution of any such conflict must be consistent with the terms and
provisions of the Incentive Compensation Plan, the Company’s Securities
Compliance Policy and applicable law and regulation thereunder. If the choice
between the Terms or the Provisions is unclear at the time such choice must be
made, the Executive may, in his sole discretion, but subject to the foregoing
reservation, choose to be treated under either the Terms or the Provisions.

     22.     Additional Documents. Each party hereto shall, from time to time,
upon request of the other party, execute any additional documents which shall
reasonably be required to effectuate the purposes hereof.

     23.     Incorporation. The introductory recitals hereof are incorporated in
this Agreement and are binding upon the parties hereto.

     24.     Failure to Enforce. The failure to enforce any of the provisions of
this Agreement shall not be construed as a waiver of such provisions. Further,
any express waiver by any party with respect to any breach of any provision
hereunder by any other party shall not constitute a waiver of such party’s
right to thereafter fully enforce each and every provision of this Agreement.

     25.     Survival. Except as otherwise set forth herein, the obligations
contained in this Agreement shall survive the termination, for any reason
whatsoever, of Executive’s employment with the Company.

     26.     Headings. All numbers and headings contained herein are for reference
only and are not intended to qualify, limit or otherwise affect the meaning or
interpretation of any provision contained herein.

13

 

     27.     Notices. Notices and all other communications provided for in this
Agreement shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid
(provided that international mail shall be sent via overnight or two-day
delivery), or sent by facsimile or prepaid overnight courier to the parties at
the addresses set forth below (or such other addresses as shall be specified by
the parties by like notice). Such notices, demands, claims and other
communications shall be deemed given:

          (a) in the case of delivery by overnight service with guaranteed next day
delivery, the next day or the day designated for delivery;

          (b) in the case of certified or registered U.S. mail, five days after
deposit in the U.S. mail; or

          (c) in the case of facsimile, the date upon which the transmitting party
received confirmation of receipt by facsimile, telephone or otherwise;
provided, however, that in no event shall any such communications be deemed to
be given later than the date they are actually received. Communications that
are to be delivered by the U.S. mail or by overnight service or two-day
delivery service are to be delivered to the addresses set forth below:

If to the Company:

     CNA Financial Corporation
     CNA
Plaza
     Chicago,
IL 60685
     Attn:
Corporate Secretary

If to Executive:

     Stephen W. Lilienthal
     CNA
Financial Corporation
     CNA
Plaza
     Chicago,
IL 60685

or to such other address as either party shall furnished to the other party in
writing in accordance with the provisions of this Section 27.

     28.     Gender. The masculine, feminine or neuter pronouns used herein shall
be interpreted without regard to gender, and the use of the singular or plural
shall be deemed to include the other whenever the context so requires.

     29.     Arbitration of All Disputes. Any controversy or claim arising out of
or relating to this Agreement (or the breach thereof) shall be settled by
final, binding and non-appealable arbitration in Chicago, Illinois by three
arbitrators. Except as otherwise expressly provided in this Section 29, the
arbitration shall be conducted in accordance with the rules for resolution of
employment disputes of the American Arbitration Association (the
“Association”)
then in effect. One of the arbitrators shall be appointed by the Company, one
shall be appointed by Executive, and the third shall be appointed by the first
two arbitrators. If the first two arbitrators cannot agree on the third
arbitrator within 30 days of the appointment of the second arbitrator, then the

14

 

 third arbitrator shall be appointed by the Association. This Section 29
shall not be construed to limit the Company’s right to obtain relief under
Section 14 with respect to any matter or controversy subject to Section 14 and,
pending a final determination by the arbitrator with respect to any such matter
or controversy, the Company shall be entitled to obtain any such relief by
direct application to state, federal or other applicable court, without being
required to first arbitrate such matter or controversy.

     30.     Section 280G Gross-Up. If Executive becomes entitled to any payments
or benefits (collectively, “Payments”) whether pursuant to the terms of or by
reason of this Agreement or any other plan, arrangement, agreement, policy or
program with the Company, any successor to the Company or to all or a part of
the business or assets of the Company (whether direct or indirect, by purchase,
merger, consolidation, spin off, or otherwise and regardless of whether such
payment is made by or on behalf of the Company or such successor) which
Payments are subject to the tax imposed by Section 4999 or any successor
provision of the Internal Revenue Code of 1986, as amended, or any similar
state or local tax, or any interest or penalties are incurred by Executive with
respect to such excise tax (such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as the
“Excise Tax”),
the Company shall pay Executive an additional amount
(“Gross-Up Payment”) such
that the net amount retained by Executive, after deduction or payment of (i)
any Excise Tax on the Payments, (ii) any federal, state and local income or
employment tax and Excise Tax upon the Payment, and (iii) any additional
interest and penalties imposed because the Excise Tax is not paid when due,
shall be equal to the full amount of the Payments.

     31.     Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original copy of this
Agreement and all of which, when taken together, shall be deemed to constitute
one and the same agreement.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the Signing Date.

	 	 	 	 	 
	 	 	CNA FINANCIAL CORPORATION
	 	 	 	 	 
	 	 	
By:
	 	/s/ Jonathan D. Kantor
	 	 	 	 	

	 	 	
Title:
	 	Executive Vice President,

General Counsel and Secretary
	 	 	 	 	

	 	 	 	 	 
	 	 	/s/ Stephen W. Lilienthal
	 	 	

	 	 	Stephen W. Lilienthal

15

 

ADDENDUM TO

EMPLOYMENT AGREEMENT

GRANT OF OPTION RIGHTS

     THIS ADDENDUM TO
EMPLOYMENT AGREEMENT (the “Addendum”) is made as of even
date with the Employment Agreement to which it is attached and into which it is
incorporated (the “Agreement”), by and between CNA Financial Corporation, a
Delaware corporation (the “Company”), and Stephen W. Lilienthal (the
“Executive”);

WITNESSETH:

     WHEREAS, the Company and the Executive wish to enter into a written
agreement setting forth the terms and conditions for the granting of certain
option rights as set forth below.

     NOW, THEREFORE, in consideration of the foregoing premises and the
promises and covenants in the Agreement and in this Addendum, the parties
hereto agree as follows:

     1.     Option
To Purchase Stock. Upon execution of the Agreement and this
Addendum by both parties, the Executive shall be granted the option to purchase
15,000 shares (the “Option Stock”) of the common stock of CNA Financial
Corporation (the “Option”). The Executive’s exercise of all Option rights shall
be effected in accordance with the terms of the CNA Financial Corporation 2000
Incentive Compensation Plan (the “Plan”). For all purposes of this Agreement
and Addendum, the Grant Date shall be August 8, 2002. The Executive’s right to
purchase the Option Stock pursuant to this provision shall accrue as described
in the vesting period provision set forth in Section 2 below (the “Vesting
Period”). The Executive may exercise such Option at any time prior to the tenth
anniversary of the effective date of the Agreement and this Addendum. The price
at which the Option shall be exercisable by the Executive shall be 100% of the
Fair Market Value (as that term is defined in the Plan) of the Option Stock on
the Grant Date, determined by the Company and agreed by Executive to be
Twenty-five dollars and fifty-five cents ($25.55) per share. Executive’s rights
with respect to all shares that are the subject of this provision shall be
governed by the terms of the Plan.

     2.     Vesting
Period. (a) With respect to all shares of Option Stock which
are the subject of the rights and/or Option(s) described in the provisions set
forth above, the Vesting Period shall begin on the Grant Date. The Vesting
Period with respect to each installment shown on the schedule shall end on the
Vesting Date applicable to such installment:

	INSTALLMENT	VESTING DATE
APPLICABLE TO
INSTALLMENT
	3,750 Options	
August 8, 2003
	3,750 Options	
August 8, 2004
	3,750 Options	
August 8, 2005
	3,750 Options	
August 8, 2006

     (b). In the event of any expiration or termination of Executive’s
employment by the Company and all of its subsidiaries, Executive’s rights and
options with respect to any unvested

 

 

Option Stock shall be exercisable only as provided for in Section 6 of the
Agreement. All Option Stock shall be subject to any restrictions imposed by the
Securities Act of 1933 or the Securities Exchange Act of 1934, as amended, or
the rules thereto.

     3.     Additional
Options to Purchase Stock. Beginning on a date in 2003
to be determined by the Company and subject to vesting requirements to be
determined by the Company for its senior executives and the approval of said
Incentive Compensation Committee, Executive shall, for so long as he is
employed pursuant to the Agreement, be awarded an annual targeted stock option
grant (the “Annual Grant”) of 55,000 shares of the Company’s common stock. The
Annual Grant shall, if feasible, be submitted for consideration to said
Incentive Compensation Committee during or prior to its May meeting each such
year. Subject to share availability, the Annual Grant may be increased at the
discretion of said Incentive Compensation Committee. Any Annual Grant or
portion of Annual Grant that has not vested on the effective date of any
termination of Executive’s employment with the Company and all of its
subsidiaries shall be exercisable only in accordance with the provisions of
Section 6 of the Agreement. All rights of Executive with respect to the Annual
Grant shall be subject to the terms of the Plan and any restrictions imposed by
the Securities Act of 1933 or the Securities Exchange Act of 1934, as amended,
or the rules thereto.

     4.     Effective
Date. Any term or provision contained in this Addendum to
the contrary herein notwithstanding, the terms and provisions of this Addendum
and all rights and/or options granted herein shall be subject to the provisions
of the Plan and to the prior review and approval of the Incentive Compensation
Committee of the Company’s Board of Directors.

     5.     Application
of IRC Section 162(m). In the event the Executive is or
becomes a proxy-named executive or the Company in relation to the Executive is
otherwise subject to the provisions of Section 162(m) of the Internal Revenue
Code, the Company may defer the payment of all compensation to which Executive
is entitled pursuant to this Addendum or otherwise take all measures, the
Company reasonably deems necessary or advisable to comply with said Section
162(m) of the Internal Revenue Code or any successor provision with respect to
deductibility of executive compensation. All deferred compensation will be
credited to the Executive’s SES-CAP account and shall be subject to the terms
thereof.

     6.     Entire
Agreement. Subject to the Employment Agreement to which this
Addendum is attached as an addendum thereunder, this addendum, in conjunction
with the Agreement in its entirety, contains the entire agreement of the
parties with regard to the subject matter hereof, supersedes all prior
agreements and understandings, regarding such subject matter, whether written
or oral, and may only be amended by an agreement in writing signed by the
parties thereto. Notwithstanding the foregoing or any other term or provision
of this Addendum or the Agreement, that certain Addendum to Employment
Agreement made as of July 23rd, 2001 remains in full force and effect, except
as modified pursuant to Section 3(e) of the Agreement.

     7.     No
Effect on Agreement. Except as otherwise specifically set forth
in this Addendum, all terms and conditions contained in the Agreement of which
this Addendum is made part are and shall remain unmodified hereby. In the event
of any conflict or inconsistency between the provisions of this Addendum and
the provisions of the Agreement, this Addendum shall be controlling.

2

 

     8.     Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original copy of this
Agreement and all of which, when taken together, shall be deemed to constitute
one and the same agreement.

     IN WITNESS WHEREOF, the parties hereto have executed this Addendum as of
the date set forth hereinabove.

	 	 	 	 	 
	 	 	
CNA FINANCIAL CORPORATION
	 	STEPHEN W. LILIENTHAL
	 	 	 	 	 
	By:	 	
/s/ Jonathan D. Kantor
	 	/s/ Stephen W. Lilienthal
	 	 	

	 	

	 	 	 	 	 
	Title:	 	
Executive Vice President,

General Counsel and Secretary	 	 
	 	 	

	 	 

3

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