Document:

Exhibit 4.1.1

 

	
   

  	
  BLAKE DAWSON WALDRON

  
	
   

  	
  LAWYERS

  
			

 

 

Underwriting Agreement

 

 

Australia and New Zealand Banking Group
Limited

ABN 11 005 357 522

 

Morgan Stanley Dean Witter Australia
Securities Limited

ABN 55 078 652 276

 

Citigroup Global Markets Australia Pty
Limited

ABN 64 003 114 832

 

 

	
   

  	
   

  	
  PRIVILEGED AND CONFIDENTIAL

  
	
   

  	
   

  	
  24 October 2003

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Level 41, Grosvenor Place

  	
   

  	
   

  
	
  225 George Street

  	
   

  	
   

  
	
  Sydney NSW 2000

  	
   

  	
  Ref: SJD.BCM.03-1346-5969

  
	
  Telephone:  (02) 9258 6000

  	
   

  	
   

  
	
  Fax:  (02) 9258 6999

  	
   

  	
   

  

 

© Blake Dawson Waldron 2003

 

 

CONTENTS

 

	
  1.

  	
  INTERPRETATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Definitions

  	
   

  
	
   

  	
  1.2

  	
  Rules for interpreting this agreement

  	
   

  
	
   

  	
  1.3

  	
  Business Days

  	
   

  
	
   

  	
  1.4

  	
  Valid Application

  	
   

  
	
   

  	
  1.5

  	
  Underwriters’ relationship

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  CONDITIONS PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Conditions Precedent to underwriting

  	
   

  
	
   

  	
  2.2

  	
  Additional Conditions Precedent to
  Allotment

  	
   

  
	
   

  	
  2.3

  	
  Obligation to satisfy conditions

  	
   

  
	
   

  	
  2.4

  	
  Waiver

  	
   

  
	
   

  	
  2.5

  	
  Notice

  	
   

  
	
   

  	
  2.6

  	
  Failure to fulfil condition precedent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  APPOINTMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Appointment

  	
   

  
	
   

  	
  3.2

  	
  Agreement to underwrite

  	
   

  
	
   

  	
  3.3

  	
  Agreement to manage

  	
   

  
	
   

  	
  3.4

  	
  Several obligations

  	
   

  
	
   

  	
  3.5

  	
  Sub Underwriting

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Validity of agreement

  	
   

  
	
   

  	
  4.2

  	
  The Company

  	
   

  
	
   

  	
  4.3

  	
  The Underwriters

  	
   

  
	
   

  	
  4.4

  	
  Independent

  	
   

  
	
   

  	
  4.5

  	
  Reliance

  	
   

  
	
   

  	
  4.6

  	
  Notice of breach

  	
   

  
	
   

  	
  4.7

  	
  Repetition

  	
   

  
	
   

  	
  4.8

  	
  Undertakings of the Company

  	
   

  
	
   

  	
  4.9

  	
  Acknowledgement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  OFFER

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Making of Offer

  	
   

  
	
   

  	
  5.2

  	
  Amendment

  	
   

  
	
   

  	
  5.3

  	
  Application for quotation

  	
   

  
	
   

  	
  5.4

  	
  Non Qualifying Foreign Security Holders

  	
   

  
	
   

  	
  5.5

  	
  Supplementary Offer Documents

  	
   

  
	
   

  	
  5.6

  	
  No other Supplementary Offer Document

  	
   

  
	
   

  	
  5.7

  	
  Additional Announcement

  	
   

  
	
   

  	
  5.8

  	
  Preliminary International Institutional
  Supplement

  	
   

  

 

i

 

	
  6.

  	
  INDEMNITY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Indemnity

  	
   

  
	
   

  	
  6.2

  	
  Extent of indemnity

  	
   

  
	
   

  	
  6.3

  	
  Notice

  	
   

  
	
   

  	
  6.4

  	
  Failure to notify

  	
   

  
	
   

  	
  6.5

  	
  Obligation to mitigate

  	
   

  
	
   

  	
  6.6

  	
  Benefits of indemnity

  	
   

  
	
   

  	
  6.7

  	
  Preservation of rights

  	
   

  
	
   

  	
  6.8

  	
  Company entitled to defend or institute
  proceedings

  	
   

  
	
   

  	
  6.9

  	
  Separate representation

  	
   

  
	
   

  	
  6.10

  	
  Obligations of Indemnified Parties

  	
   

  
	
   

  	
  6.11

  	
  Right to assume control of proceedings

  	
   

  
	
   

  	
  6.12

  	
  Conduct of Proceedings

  	
   

  
	
   

  	
  6.13

  	
  Release

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  APPLICATIONS AND ALLOTMENTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Applications

  	
   

  
	
   

  	
  7.2

  	
  Notification of Applications

  	
   

  
	
   

  	
  7.3

  	
  Acceptance of Applications

  	
   

  
	
   

  	
  7.4

  	
  Allotment of Offer Securities

  	
   

  
	
   

  	
  7.5

  	
  Holding Statements

  	
   

  
	
   

  	
  7.6

  	
  Prompt Banking of Cheques

  	
   

  
	
   

  	
  7.7

  	
  Subscription Price

  	
   

  
	
   

  	
  7.8

  	
  Records

  	
   

  
	
   

  	
  7.9

  	
  Relief of Liability

  	
   

  
	
   

  	
  7.10

  	
  No Shortfall

  	
   

  
	
   

  	
  7.11

  	
  Return of Subscription Price and
  termination of obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  OBLIGATIONS OF THE UNDERWRITERS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Notice of Shortfall Rights

  	
   

  
	
   

  	
  8.2

  	
  Certificate to Accompany Notice

  	
   

  
	
   

  	
  8.3

  	
  Certificate Representations and Warranties

  	
   

  
	
   

  	
  8.4

  	
  Bookbuild

  	
   

  
	
   

  	
  8.5

  	
  Payment of Shortfall Amount and Sale Amount

  	
   

  
	
   

  	
  8.6

  	
  Allotment of Shortfall

  	
   

  
	
   

  	
  8.7

  	
  Regulatory Impediment

  	
   

  
	
   

  	
  8.8

  	
  Liability Extinguished

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  FEES, COSTS AND EXPENSES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Payment of fees

  	
   

  
	
   

  	
  9.2

  	
  Costs and expenses

  	
   

  
	
   

  	
  9.3

  	
  Costs on termination

  	
   

  
	
   

  	
  9.4

  	
  Set off

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  EVENTS OF TERMINATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Right of termination

  	
   

  
	
   

  	
  10.2

  	
  Exercise of rights

  	
   

  
	
   

  	
  10.3

  	
  Banking Moratorium Event

  	
   

  

 

ii

 

	
   

  	
  10.4

  	
  Claims

  	
   

  
	
   

  	
  10.5

  	
  Notification

  	
   

  
	
   

  	
  10.6

  	
  Effect of termination

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  ADVERTISING AND PUBLIC ANNOUNCEMENTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Promotion of Offer

  	
   

  
	
   

  	
  11.2

  	
  Responsibility for promotion

  	
   

  
	
   

  	
  11.3

  	
  Disclosure

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  ACCESS TO INFORMATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Access and information

  	
   

  
	
   

  	
  12.2

  	
  ASX
  and ASIC

  	
   

  
	
   

  	
  12.3

  	
  Due diligence materials

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  GST

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.1

  	
  Definitions

  	
   

  
	
   

  	
  13.2

  	
  GST payable in addition to fees

  	
   

  
	
   

  	
  13.3

  	
  GST on claims and expenses

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  NOTICES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.1

  	
  How to give a notice

  	
   

  
	
   

  	
  14.2

  	
  When a notice is given

  	
   

  
	
   

  	
  14.3

  	
  Address for notices

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  AMENDMENT AND ASSIGNMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.1

  	
  Amendment

  	
   

  
	
   

  	
  15.2

  	
  Assignment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  GENERAL

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.1

  	
  Governing
  law

  	
   

  
	
   

  	
  16.2

  	
  Giving effect to this agreement

  	
   

  
	
   

  	
  16.3

  	
  Waiver of rights

  	
   

  
	
   

  	
  16.4

  	
  Operation of this agreement

  	
   

  
	
   

  	
  16.5

  	
  Inconsistency with other documents

  	
   

  
	
   

  	
  16.6

  	
  Time is of the essence

  	
   

  
	
   

  	
  16.7

  	
  Counterparts

  	
   

  
	
   

  	
  16.8

  	
  Attorneys

  	
   

  
	
   

  	
  16.9

  	
  Operation of Indemnities

  	
   

  
	
   

  	
  16.10

  	
  Discretion in exercising rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  DISPUTE RESOLUTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.1

  	
  Procedure for resolving disputes

  	
   

  
	
   

  	
  17.2

  	
  Mediation

  	
   

  
	
   

  	
  17.3

  	
  Notice

  	
   

  
	
   

  	
  17.4

  	
  Appointment of Mediator

  	
   

  
	
   

  	
  17.5

  	
  Confidentiality

  	
   

  
	
   

  	
  17.6

  	
  Privileged discussions

  	
   

  

 

iii

 

	
   

  	
  17.7

  	
  Litigation

  	
   

  
	
   

  	
  17.8

  	
  Costs

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedules

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  1

  	
  CERTIFICATE

  	
   

  
	
   

  	
   

  	
   

  
	
  2

  	
  TIMETABLE

  	
   

  

 

iv

 

UNDERWRITING
AGREEMENT

 

DATE      24
October 2003

 

PARTIES

 

Australia
and New Zealand Banking Group Limited ABN 11 005 357 522 (the Company)

 

Morgan
Stanley Dean Witter Australia Securities Limited ABN 55 078 652 276 (Morgan
Stanley)

 

Citigroup
Global Markets Australia Pty Limited ABN 64 003 114 832 (Citigroup)

 

 

(each an Underwriter and together the Underwriters)

 

RECITALS

 

A.                                   The
Company proposes to make the Rights Offer to raise the Offer Amount.

 

B.                                     The
Underwriters have agreed to underwrite severally the Rights Offer on the terms
and conditions set out in this agreement.

 

OPERATIVE PROVISIONS

 

1.                                       INTERPRETATION

 

1.1                                 Definitions

 

The following definitions apply in this agreement.

 

Acquisition means
the acquisition by ANZ Banking Group (New Zealand) Limited of all the shares in
NBNZ as contemplated by the Acquisition Agreement.

 

Acquisition Agreement means
the Share Sale Agreement relating to the sale by Lloyds Bank Subsidiaries
Limited of all of the shares in NBNZ to ANZ Banking Group (New Zealand)
Limited.

 

Affiliate has the
meaning given to that term in Rule 501(b) under the US Securities Act.

 

Application
means:

 

(a)                                  a duly completed and executed entitlement and
acceptance form to subscribe for Offer Securities in the form of the
entitlement and acceptance form accompanying the Offer Documents; or

 

(b)                                 an Institutional Acceptance.

 

ASIC
means the
Australian Securities and Investments Commission.

 

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

 

 

Authorisation means:

 

(a)                                  an
authorisation, consent, declaration, approval, exemption, notarisation or
waiver, however it is described; and

 

(b)                                 in relation to
anything that could be prohibited or restricted by law if a Government Agency
acts in any way within a specified period, the expiry of that period without
that action being taken,

 

including any renewal or amendment.

 

Banking Moratorium Event means
an event referred to in clause 10.1(b)(xiii)(B).

 

Bookbuild Period means
the period from receipt of the Shortfall Notice by the Underwriters to 8.00am
on 28 November 2003.

 

Business Day has the
meaning given to that expression in the Listing Rules.

 

Certificate means a
certificate in the form of schedule 1 executed by 2 directors or a director and
secretary of the Company.

 

CHESS has the
meaning given to that expression in the Listing Rules.

 

Claim means, in
relation to any person, a claim, action, proceeding or demand made against the
person, however arising, and whether present or future, fixed or unascertained,
actual or contingent.

 

Closing Date means
the date specified in the Timetable as the closing date for the Rights Offer.

 

Company Warranty
means each Warranty set out in part 1 of schedule 3 given by the Company and
each Warranty set out in part 2 of schedule 3.

 

Corporations Act
means the Corporations Act 2001
(Cth).

 

Due Diligence Committee means
the Due Diligence Committee established to undertake due diligence
investigations and enquiries on behalf of the Company, its directors, the
Underwriters and others in connection with the Rights Offer and the preparation
of the Offer Documents.

 

Due Diligence Program means
the due diligence and verification procedures planned and reviewed by the Due
Diligence Committee in relation to the Rights Offer and the Offer Documents.

 

Due Diligence Report
means the report of the Due Diligence Committee to the directors of the Company
including all supporting documents and other work papers to which the
Underwriters are given access for the purposes of due diligence investigations
relating to the preparation of the Due Diligence Report.

 

Due Diligence Results
means the results of the investigations which make up the Due Diligence
Program.

 

Event of Termination means
an event listed in clause 10.1.

 

2

 

First Allotment Date means the date means the date specified as
such in the Timetable.

 

Final Offer Documents
means a final version of the Preliminary International Institutional Supplement
updated as of the Closing Date, and any supplement or amendment to it,
including all documents attached thereto, or incorporated by reference therein,
including the Prospectus, any Supplementary Offer Document and the Annual
Report of the Company on Form 20-F for the year end September 30, 2002.

 

Government Agency
means:

 

(a)                                  a government or
government department or other body;

 

(b)                                 a governmental,
semi-governmental or judicial person; or

 

(c)                                  a person (whether
autonomous or not) who is charged with the administration of a law.

 

Hybrid Issue means a
potential issue of securities which would qualify as Tier 1 capital within the
meaning of the prudential standards of the Australian Prudential Regulatory
Authority not being ordinary equity.

 

Indemnified Claim
means any Claim made against, an Indemnified Party in respect of which that
Indemnified Party has claimed a right to be indemnified by the Company under
clause 6.1.

 

Indemnified Party
has the meaning given to that term in clause 6.1.

 

Institutional Acceptance
means a duly completed and executed application to subscribe for Offer
Securities in the form approved by the Company and the Underwriters for use by
Qualifying Foreign Institutional Security Holders, together with any required
accompanying documents.

 

Investor Representation Letter
means a letter in a form approved by the Underwriters, such approval not to be
unreasonably withheld or delayed, which must be signed by a QIB in the United
States or an institutional Security Holder in a jurisdiction outside Australia,
New Zealand and the United States which confirms their eligibility under
applicable law to participate in the Rights Offer.

 

Listing Rules means
the Listing Rules of ASX (including the SCH Business Rules) as waived or
modified by ASX in respect of the Company or the Rights Offer in any particular
case.

 

Lodgment Date means
the date specified in the Timetable as the lodgment date for the Prospectus.

 

Loss means, in
relation to a person, a damage, loss, cost, expense or liability incurred by
the person.

 

Non-Qualifying Foreign Security Holder means
a person who is registered as a holder of Shares on the Record Date whose
registered address is in a country other than Australia or New Zealand other
than a Qualifying Foreign Institutional Security Holder.

 

3

 

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

 

NZSE means New
Zealand Stock Exchange Limited.

 

Offer  Amount means approximately $3597 million.

 

Offer Documents
means:

 

(a)                                  the
Prospectus; and

 

(b)                                 the
Preliminary International Institutional Supplement

 

and, for the
purposes of any Company Warranty relating to the Offer Documents repeated by
the giving of a Certificate shall include:

 

(c)                                  any
Supplementary Offer Document lodged prior to the giving of the Certificate; and

 

(d)                                 any
amendment or update to the Preliminary International Institutional Supplement
made or issued prior to the giving of the Certificate.

 

Offer Period means
the period commencing on the date of this agreement and ending on the First
Allotment Date.

 

Offer Securities
means approximately 276.7 million Shares which are offered for subscription
pursuant to the Rights Offer.

 

Opening Date means
the date specified in the Timetable as the opening date for the Rights Offer.

 

Planning Memorandum
means the memorandum describing the Due Diligence Program adopted by the Due
Diligence Committee in relation to the Rights Offer and the Offer Documents.

 

Preliminary International Institutional
Supplement means the supplement to the Prospectus to
be prepared by the Company in relation to the distribution of the Rights and
the offer of the Offer Securities by the Company through the Underwriters and
their respective Affiliates to Qualifying Foreign Institutional Security
Holders in transactions exempt from the registration requirements of the US
Securities Act, such supplement to be dated as at the Lodgment Date and in a
form approved by the Underwriters (such approval not to be unreasonably
withheld or delayed) and initialled for the purposes of identification by the
Company and the Underwriters.

 

Prescribed Occurrence
means, in relation to a person, the events set out in section 652C of the
Corporations Act but substituting that person for “target” and provided that
all references in section 652C to “or a subsidiary” are deleted and:

 

(a)                                  the
issue of ANZ Stapled Exchangeable Preferred Securities pursuant to the
prospectus dated 14 August 2003;

 

(b)                                 the
redemption of all or any TrUEPrS Preference Shares;

 

4

 

(c)                                  the
Hybrid Issue;

 

(d)                                 the
issue of the Rights and the Offer Securities;

 

(e)                                  an
issue of securities by the Company pursuant to a dividend or distribution plan
or employee incentive scheme (as those terms are defined in the Listing Rules)
or, as a result of the conversion or exercise of any security issued pursuant
to such plan or scheme; or

 

(f)                                    the
conversion of any convertible securities (as that term is defined in the
Listing Rules) which are on issue as at the date of this document,

 

shall not
constitute a Prescribed Occurrence.

 

Prospectus means the
prospectus including any entitlement and acceptance form to be issued by the
Company in relation to the Rights Offer in a form approved by the Underwriters,
which approval shall not be unreasonably withheld or delayed, and initialled
for the purposes of identification by the Company and the Underwriters.

 

Prospectus Date
means the date of the Prospectus.

 

Publication means
any announcement, advertisement, publicity or roadshow presentation made or
published by the Company with its consent in relation to the Rights Offer or
the Acquisition.

 

QIB means a
“qualified institutional buyer” as defined in Rule 144A.

 

Qualifying Foreign Institutional Security
Holder means a QIB in the United States or an
institutional Security Holder in a jurisdiction other than the United States,
Australia and New Zealand who:

 

(a)                                  is
contacted by the Company or the Underwriters; and

 

(b)                                 confirms
their eligibility under applicable law to participate in the Rights Offer by
signing and returning to the Company or the Underwriters the Investor
Representation Letter.

 

Record Date means
the date specified as the record date for the Rights Offer in the Timetable.

 

Regulation S means
Regulation S promulgated under the US Securities Act.

 

Rights means the
renounceable rights to subscribe for Offer Securities granted by the Company to
each Security Holder.

 

Rights Offer means
the 2 for 11 renounceable rights offer of Offer Securities to raise the Offer
Amount.

 

Rule 144A means Rule
144A promulgated under the US Securities Act.

 

Sale Amount means
the amount which is the number of Sold Rights multiplied by the Sale Price.

 

5

 

SCH Business Rules
means the SCH Business Rules as waived or modified by ASX in respect of the
Company or the Rights Offer in any particular case.

 

Second Allotment Date
means the date specified as such in the Timetable.

 

Security Holder
means a person registered as the holder of a Share at 5:00pm on the Record Date
and includes persons jointly registered but does not include a Non Qualifying
Foreign Security Holder.

 

Sale Price means the
sale price for the Shortfall Rights agreed by the Company and the Underwriters
under clause 8.3(c).

 

Share means an
issued ordinary share in the Company.

 

Shortfall Rights has
the meaning given to that term in clause 8.1.

 

Shortfall Amount
means the amount which is the number of Shortfall Shares multiplied by the
Subscription Price.

 

Shortfall Application Date
means the date specified as such in the Timetable.

 

Shortfall Notification Date
means the date specified as such in the Timetable.

 

Shortfall Notification Time
means 5.00pm on the Shortfall Notification Date.

 

Shortfall Notice has
the meaning given to that term in clause 8.1.

 

Shortfall Shares
means the number of Shares that would be issued on exercise of the Shortfall
Rights.

 

Sold Rights means
the number of Shortfall Rights which the Company and the Underwriters agree are
sold through the bookbuild described in clause 8.4.

 

Subscription Price
means, in respect of each Offer Security, $13.00.

 

Supplementary Offer Document
means any supplementary or replacement prospectus to the Prospectus lodged with
ASIC in connection with the Rights Offer.

 

Tax means a tax,
levy, duty, charge, deduction or withholding, however it is described, that is
imposed by a Government Agency, together with any related interest, penalty,
fine or other charge, other than one that is imposed on taxable income.

 

Timetable means the
timetable for the Rights Offer set out in schedule 2.

 

TrUEPrS Preference Shares
means fully paid non converting non cumulative preference shares in the share
capital of the Company issued for USD6.25 per share via Trust Securities issued
in 1998 as follows:

 

(a)                                  64,016,000
TrUEPrS Preference Shares on 23 September 1998; and

 

(b)                                 56,016,000
TrUEPrS Preference Shares on 19 November 1998.

 

6

 

Trust Securities
means Trust Units (in ANZ Exchangeable Preference Trust) exchangeable for
TrUEPrS Preference Shares in ANZ.

 

Underwriter Warranty
means, in respect of an Underwriter, each Warranty set out in part 1 of
schedule 3 given by that Underwriter and each Warranty set out in part 3 of
schedule 3 given by that Underwriter.

 

US Person has the
meaning given to that term in Rule 902(k) under the US Securities Act.

 

US Securities Act
means the United States Securities Act of 1933 as amended.

 

United States has
the meaning given in Regulation S.

 

Valid Application
has the meaning given to that expression by clause 1.4.

 

Verification Material
means the contents of the file maintained by the Due Diligence Committee being
the documents and information provided in verification of statements made in
the Offer Documents.

 

Warranty means a
statement contained in schedule 3.

 

1.2                                 Rules for interpreting this agreement

 

Headings are
for convenience only, and do not affect interpretation.  The following rules also apply in
interpreting this agreement, except where the context makes it clear that a
rule is not intended to apply.

 

(a)                                  A
reference to:

 

(i)                                     legislation
(including subordinate legislation) is to that legislation as amended,
re-enacted or replaced, and includes any subordinate legislation issued under
it;

 

(ii)                                  a
document or agreement, or a provision of a document or agreement, is to that
document, agreement or provision as amended, supplemented, replaced or novated;

 

(iii)                               a
party to this agreement or to any other document or agreement includes a
permitted substitute or a permitted assign of that party;

 

(iv)                              a
person includes any type of entity or body of persons, whether or not it is
incorporated or has a separate legal identity, and any executor, administrator
or successor in law of the person;

 

(v)                                 anything
(including a right, obligation or concept) includes each part of it; and

 

(vi)                              a
date or time means to that date or time in Sydney.

 

(b)                                 A
singular word includes the plural, and vice versa.

 

(c)                                  A
word which suggests one gender includes the other genders.

 

7

 

 

(d)                                 If a word is defined,
another part of speech has a corresponding meaning.

 

(e)                                  If an example is
given of anything (including a right, obligation or concept), such as by saying
it includes something else, the example does not limit the scope of that thing.

 

(f)                                    The word “agreement” includes an undertaking or
other binding arrangement or understanding, whether or not in writing.

 

(g)                                 The words “Court”, “subsidiary”, “holding company” and
“related body corporate” have the
same meanings as in the Corporations Act.

 

(h)                                 References to “applicable law” include all applicable
laws of jurisdictions within or outside Australia including New Zealand and
including the Listing Rules and policies, guidelines, official directives or
requests of or by any Government Agency, whether or not having the force of
law.

 

(i)                                     A reference to “$” is to the lawful currency of Australia.

 

1.3                                 Business Days

 

If the day on or by which a person must do something under this
agreement is not a Business Day:

 

(a)                                  if the act involves a
payment that is due on demand, the person must do it on or by the next Business
Day; and

 

(b)                                 in any other case, the
person must do it on or by the previous Business Day.

 

1.4                                 Valid Application

 

For the purposes of this agreement, an Application received by the
Company in respect of an Offer Security is a Valid Application if it is:

 

(a)                                  an Institutional
Acceptance; or

 

(b)                                 it is made in
accordance with the Offer Documents

 

and the Company receives the Subscription Price in cleared funds.

 

1.5                                 Underwriters’ relationship

 

(a)                                  An obligation of an Underwriter under this
agreement (including an obligation to pay) is several on a 50:50 basis and is
not joint or joint and several.

 

(b)                                 A right of an Underwriter under this
agreement is held by that Underwriter severally and each Underwriter may
exercise its rights, powers and benefits under this agreement individually.

 

(c)                                  Where the consent or approval of an
Underwriter is required under this agreement, that consent or approval must be
obtained from each Underwriter (other than an Underwriter which has given a
notice under clause 10 to terminate its obligations under this agreement).

 

8

 

(d)                                 Nothing
contained or implied in this agreement constitutes an Underwriter, the partner,
agent, or representative of any other Underwriter for any purpose or creates
any partnership, agency or trust between the Underwriters, and none of the
Underwriters has any authority to bind any of the other Underwriters in any
way.

 

(e)                                  Any
reference to the Underwriter in this agreement is a reference to each
Underwriter separately, so that (for example) a representation, warranty or
undertaking is given by each of them separately.

 

2.                                       CONDITIONS PRECEDENT

 

2.1                                 Conditions Precedent to underwriting

 

The
obligations of the Underwriters to underwrite the Rights Offer under clause 3.2
of this agreement do not become binding unless each of the following conditions
is fulfilled (or waived under clause 2.4):

 

(a)                                  the
Company implementing and completing the Due Diligence Program to the reasonable
satisfaction of the Underwriters before the Lodgment Date (each Underwriter
shall be treated as being reasonably satisfied if that Underwriter signs the
Due Diligence Report);

 

(b)                                 the
Due Diligence Report being published by the Lodgment Date;

 

(c)                                  opinions
being delivered to the Due Diligence Committee by the Lodgment Date by:

 

(i)                                     Blake
Dawson Waldron in relation to the Prospectus and the adequacy of the Due
Diligence Program to the reasonable satisfaction of the Underwriters;

 

(ii)                                  Bell
Gully in relation to the Prospectus and the conduct of the Rights Offer in New
Zealand to the reasonable satisfaction of the Underwriters;

 

(iii)                               KPMG
in respect of the adequacy of the Due Diligence Program so far as it applies to
the historical and pro forma financial information relating to the Company
included in the Offer Documents to the reasonable satisfaction of the
Underwriters; and

 

(d)                                 Ernst
& Young delivering to the Due Diligence Committee by the Lodgment Date an
“Agreed Upon Procedures Report of Factual Findings” as contemplated by section
6.6(d)(ix) of the Planning Memorandum to the reasonable satisfaction of the
Underwriters;

 

(e)                                  the
Company obtaining by the Lodgment Date any:

 

(i)                                     waivers
of the Listing Rules; and

 

(ii)                                  any
declarations made, or modifications, by ASIC, under or of, the Corporations
Act,

 

which any
party reasonably believes is required to enable the Company to make the Rights
Offer;

 

9

 

(f)                                    the
Company entering into the Acquisition Agreement by no later than 10.00am 24
October 2003 (or such later date as the Underwriters may agree in writing) and
that agreement not being terminated or terminable or no longer capable of being
performed or not valid, binding or enforceable against the parties to it, or a
condition precedent to it not being satisfied (or waived by the relevant party
or parties) within the time period specified in the agreement;

 

(g)                                 the
Company lodging the Prospectus with ASIC by the Lodgment Date;

 

(h)                                 Bell
Gully delivering to the Due Diligence Committee by the Lodgment Date a legal
due diligence report in respect of the Acquisition.

 

2.2                                 Additional Conditions Precedent to
Allotment

 

The
obligations of the Underwriters to subscribe for the Shortfall Shares under
this agreement do not become binding unless each of the following conditions is
fulfilled (or waived under clause 2.4):

 

(a)                                  Sullivan
& Cromwell delivering to the Underwriters on the Shortfall Notification
Date a legal opinion dated as at the Shortfall Notification Date to the
reasonable satisfaction of the Underwriters;

 

(b)                                 Sullivan
& Cromwell delivering to the Underwriters on the Shortfall Notification
Date a disclosure letter concerning the Final Offer Documents dated as at the
Shortfall Notification Date to the reasonable satisfaction of the Underwriters;

 

(c)                                  KPMG
delivering to the Underwriters by the Shortfall Notification Date a letter
containing statements and information of the type ordinarily included in
accountant’s “comfort letters” to the underwriters with respect to the
financial statements and certain financial information of the Company contained
in the Final Offer Documents dated as at a date no more than 3 Business Days
prior to the Shortfall Notification Date; and

 

(d)                                 Ernst
& Young delivering to the Underwriters on the Shortfall Notification Date
an agreed-upon procedures letter in respect of the financial statements, pro
forma financial statements and certain financial information of NBNZ contained
in the Final Offer Documents.

 

2.3                                 Obligation to satisfy conditions

 

The Company must use its reasonable endeavours to satisfy the
conditions referred to in clauses 2.1 and 2.2.

 

2.4                                 Waiver

 

The Underwriters alone may waive any or all of the conditions referred
to in clause 2.1 or 2.2 by giving notice in writing to the Company to that
effect. If one of the Underwriters does not waive fulfilment of a condition
under this clause 2.4, clause 10.6 will apply.

 

2.5                                 Notice

 

The Company must promptly notify the Underwriters when it has satisfied
any of the conditions referred to in clause 2.1.

 

10

 

2.6                                 Failure to fulfil condition precedent

 

If any of the
conditions referred to in clause 2.1 or 2.2 are not fulfilled (or waived under
clause 2.4 by all the Underwriters) by the time specified in that condition (or
such later time as agreed by the Underwriters) then this agreement (other than
clauses 6, 9, 13, 14 and 16 (except 16.2)) is at an end as to its future
operation except for the enforcement of any right or claim which arises on or
has arisen before this agreement comes to an end.

 

3.                                       APPOINTMENT

 

3.1                                 Appointment

 

The Company
appoints the Underwriters as the underwriters and joint lead managers of the
Rights Offer on the terms and conditions of this agreement and the Underwriters
accept that appointment.

 

3.2                                 Agreement to underwrite

 

The Underwriters agree to severally underwrite subscriptions for Offer
Securities under the Rights Offer up to a maximum aggregate amount of the Offer
Amount on the terms and conditions of this agreement.

 

3.3                                 Agreement to manage

 

The Underwriters agree to jointly act as lead managers of the Rights
Offer and assist the Company in the successful conduct of the Rights Offer.

 

3.4                                 Several obligations

 

The obligations of each of the Underwriters to underwrite the Rights
Offer under clause 3.2 shall be several and not joint, with each Underwriter
being obliged to underwrite 50% of the Shortfall Amount.

 

3.5                                 Sub Underwriting

 

The Underwriters must consult with the Company with respect to the
appointment of sub underwriters and will not unreasonably withhold or delay its
consent to the appointment of a sub underwriter.

 

4.                                       REPRESENTATIONS AND WARRANTIES

 

4.1                                 Validity of agreement

 

Each party represents and warrants in respect of itself that each
Warranty set out in part 1 of schedule 3 is true, accurate and not misleading
as at the date of this agreement.

 

4.2                                 The Company

 

The Company represents and warrants to each Underwriter that each of
the Warranties set out in part 2 of schedule 3 is true, accurate and not
misleading as at the date of this agreement.

 

11

 

4.3                                 The Underwriters

 

Each
Underwriter represents and warrants to the Company that each of the Warranties
set out in part 3 of schedule 3 is true, accurate and not misleading as at the
date of this agreement.

 

4.4                                 Independent

 

Each of the
Warranties shall be construed independently and no Warranty shall be limited by
implications arising from any other Warranty.

 

4.5                                 Reliance

 

Each party
acknowledges that the other parties are entering into this agreement in
reliance on each Warranty.

 

4.6                                 Notice of breach

 

(a)                                  The
Company undertakes to the Underwriters that it will notify each Underwriter
immediately if it becomes aware that:

 

(i)                                     a
Company Warranty was untrue, inaccurate or misleading at the time it was given;
or

 

(ii)                                  a
Company Warranty has ceased to be true and accurate or has become misleading in
any material respect in each case by reference to the facts and circumstances
then existing.

 

(b)                                 Each
of the Underwriters undertakes to the Company that it will notify the Company
immediately if it becomes aware that:

 

(i)                                   an
Underwriter Warranty given by it was untrue, inaccurate or misleading at the
time it was given; or

 

(ii)                                  an
Underwriter Warranty given by it has ceased to be true and accurate in any
material respect or has become misleading by reference in each case to facts
and circumstances then existing.

 

4.7                                 Repetition

 

(a)                                Each
Company Warranty is repeated by the Company when it gives a Certificate as if
made with respect to the facts and circumstances then existing provided that if
the Company has notified each Underwriter under clause 4.6 (Prior Notification) that:

 

(i)                                     a
Company Warranty was untrue, inaccurate or misleading at the time it was given;
or

 

(ii)                                  a
Company Warranty has ceased to be true and accurate or has become misleading in
any material respect in each case by reference to the facts and circumstances
then existing,

 

12

 

and each
Underwriter has informed the Company in writing that it has decided to waive
its rights to terminate the agreement on the basis of the event notified, the
repetition of the relevant Company Warranty will be qualified by the disclosure
made in the Prior Notification.

 

(b)                                 Each
Underwriter Warranty is repeated by each Underwriter on the Shortfall
Application Date and on the First Allotment Date and the Second Allotment Date
as if made with respect to the facts and circumstances then existing.

 

4.8                                 Undertakings of the Company

 

The Company undertakes that :

 

(a)                                  (printed copies) as soon as practicable
after the Prospectus is lodged with ASIC, it will deliver to each of the
Underwriters the number of printed copies of the Prospectus and the Preliminary
International Institutional Supplement that the Underwriters have notified the
Company before the Prospectus Date (up to a maximum of 1000 copies);

 

(b)                                 (dispatch of Prospectus) it will dispatch
the Prospectus to each Security Holder no later than the date required by ASX;

 

(c)                                  (Prescribed Occurrence) during the period
commencing on the date of this agreement and ending 3 months after the expiry
of the Offer Period, no Prescribed Occurrence will occur in respect of the
Company (or any of its related bodies corporate) other than:

 

(i)                                     as
disclosed in the Offer Documents or to the Underwriters in writing as at the
date of this agreement; or

 

(ii)                                  an
issue of equity securities (as defined in the Listing Rules) or any securities
convertible into or exchangeable for any such equity securities which is
permitted under clause 4.8(d);

 

(d)                               (no further issues) during the period
commencing on the date of this agreement and ending on the day which is 3
months after the expiry of the Offer Period, neither the Company or any of its
subsidiaries shall make, agree to make or announce any issues of equity
securities (as defined in the Listing Rules) or any securities convertible into
or exchangeable for any such equity securities, without the prior written
consent of the Underwriters, which consent shall not be unreasonably withheld or
delayed, other than:

 

(i)                                     the
Hybrid Issue and any other issue of securities which are convertible or
exchangeable into Shares;

 

(ii)                                  the
issue of the Rights and the Offer Securities;

 

(iii)                               the
issue of any security for regulatory or prudential reasons;

 

(iv)                              an
issue of securities by the Company pursuant to a dividend or distribution plan
or employee incentive scheme (as those terms are defined

 

13

 

in the Listing Rules) or, as a result of the
conversion or exercise of any securities issued pursuant to such a plan or
scheme; or

 

(v)                                 the
conversion of any convertible securities (as that term is defined in the
Listing Rules) which are on issue as of the date of this agreement;

 

For the avoidance of doubt nothing in this
clause is intended to constrain the Company from issuing securities in the
ordinary course of its business for an aggregate issue price of $250 million or
less.

 

(e)                                  (conduct of business) during the period
from the date of this agreement until 3 months after the expiry of the Offer
Period, it will carry on its business in the ordinary course and will not
except as disclosed in the Offer Documents:

 

(i)                                     dispose
or charge, agree to dispose of or charge, the whole or any substantial part of
its business (except in the ordinary course of business); or

 

(ii)                                  enter
into any agreement or commitment which is material in the context of the
Company or the Rights Offer,

 

without the prior written consent of the
Underwriters which shall not be unreasonably withheld or delayed;

 

(f)                                    (winding up) during the Offer Period, it
(or any of its related bodies corporate) shall not:

 

(i)                                     pass
any resolution that it be wound up;

 

(ii)                                  enter
into any scheme or composition with or for the benefit of its creditors;

 

(iii)                               be
placed under official management;

 

(iv)                              have
a receiver or manager appointed to the whole or any part of its assets or
undertakings;

 

(v)                                 permit
any breach or default whereby it is liable to be wound up; or

 

(vi)                              have
an administrator appointed to it,

 

if to do so would have a material effect on
the Company or an investment decision in relation to the Offer Securities;

 

(g)                                 it
will deliver to the Underwriters the Final Offer Documents on or before the
Shortfall Notification Date.

 

4.9                                 Acknowledgement

 

The Company acknowledges that the
Underwriters and their Affiliates have the right to sell any Offer Securities
the Underwriters are required to subscribe for or which are allotted to it
pursuant to this agreement on ASX in accordance with Regulation S under the US
Securities Act.

 

14

 

5.                                       OFFER

 

5.1                                 Making of Offer

 

The Company must offer the Offer Securities
for subscription in accordance with the Offer Documents, this agreement, the
Timetable, the Listing Rules, the Corporations Act and all other applicable
laws.

 

5.2                                 Amendment

 

The Timetable may only be amended by the
Company with the consent of:

 

(a)                                  the
Underwriters; and

 

(b)                                 ASX,
if required by the Listing Rules or the Corporations Act.

 

5.3                                 Application for
quotation

 

The Company must within the time required by
the Corporations Act apply for the Offer Securities to be granted official
quotation on ASX, and thereafter use its best endeavours to procure that
official quotation is granted to the Offer Securities by ASX by the First
Allotment Date.

 

5.4                                 Non
Qualifying Foreign Security Holders

 

Offer Securities will not be offered to (and
Rights will not be issued to) Non-Qualifying Foreign Security Holders but
arrangements will be made in accordance with the Listing Rules under which
rights equivalent to the number which would otherwise have been issued to
Non-Qualifying Foreign Security Holders will be sold for the benefit of those
Non-Qualifying Foreign Security Holders.

 

5.5                                 Supplementary
Offer Documents

 

If before the Shortfall Notification Date:

 

(a)                                  there
is a misleading or deceptive statement in the Prospectus or any Supplementary
Offer Document; or

 

(b)                                 there
is an omission from the Prospectus or any Supplementary Offer Document of
material required by the Corporations Act to be included; or

 

(c)                                  there
is a new circumstance that:

 

(i)                                     has
arisen since the Prospectus or any Supplementary Offer Document was lodged; and

 

(ii)                                  would
have been required by the Corporations Act to be included in the Prospectus or
Supplementary Offer Document if it had arisen before the relevant document was
lodged,

 

that is materially adverse from the point of
view of an investor, the Company must immediately notify the Underwriters of
that statement, omission or circumstance and must lodge a Supplementary Offer
Document (in a form approved in writing by the

 

15

 

Underwriters, such approval not to be
unreasonably withheld or delayed) in respect of that statement, omission or
circumstance as soon as practicable afterwards and otherwise comply with the
Corporations Act.  Following the
lodgment of any Supplementary Offer Document the Company must immediately take
all action in respect of the Supplementary Offer Document as may reasonably be
required by the Underwriter (including publication of the Supplementary Offer
Document in a national newspaper and dispatching copies of the Supplementary
Offer Document to all recipients of the Prospectus).

 

5.6                                 No
other Supplementary Offer Document

 

Other than pursuant to clause 5.5 the Company
must not lodge or reissue a Supplementary Offer Document without the prior
written consent of the Underwriters (such consent not to be unreasonably
withheld or delayed).

 

5.7                                 Additional
Announcement

 

If, before the Second Allotment Date, an
event occurs which the Company is required to announce under the Listing Rules
or Chapter 6CA of the Corporations Act or which, if not announced, may result
in the Underwriters contravening Division 3 of Part 7.10 of the Corporations
Act, the Company must:

 

(a)                                  inform
the Underwriters immediately; and

 

(b)                                 promptly
make an announcement to ASX in accordance with the Company’s obligations under
the Listing Rules or the Corporations Act or make generally available the
information which, if not made generally available, may otherwise result in the
Underwriters contravening Division 3 of Part 7.10 of the Corporations Act in a
form approved by the Underwriters, such approval not to be unreasonably
withheld or delayed.

 

5.8                                 Preliminary
International Institutional Supplement

 

If before the Closing Date in the reasonable
judgment of the Company it becomes necessary to amend or issue a supplement to
the Preliminary International Institutional Supplement, the Company must
immediately notify the Underwriters and must issue an amended Preliminary
International Institutional Supplement or a supplement to the Preliminary
International Institutional Supplement (in a form approved in writing by the
Underwriters, such approval not to be unreasonably withheld or delayed).

 

6.                                       INDEMNITY

 

6.1                                 Indemnity

 

Subject to clause 6.2, the Company agrees to
indemnify and keep indemnified each of the Underwriters and its related bodies
corporate, directors and officers (each an “Indemnified
Party” and collectively the “Indemnified
Parties”) from and against all Losses suffered by an Indemnified
Party as a result of:

 

(a)                                  (Offer Documents) the issue of the Offer
Documents, a Supplementary Offer Document or the Final Offer Documents or the
making, conduct, or settlement of the Rights Offer (including Losses arising
out of or in connection with the preparation for, or involvement in,
investigations conducted by ASIC or any other

 

16

 

relevant body in relation to the issue of the
Offer Documents, a Supplementary Offer Document or the Final Offer Documents or
the Rights Offer);

 

(b)                                 (breach) the Company failing to perform or
observe any of its obligations or undertakings under this agreement in a
material respect;

 

(c)                                  (misrepresentation) any representation or
warranty given under this agreement proving to have been untrue or incorrect;

 

(d)                                 (authorised publications) any roadshow
presentation, announcement, advertisement or publicity made or distributed by
or on behalf of an Indemnified Party in relation to the Rights Offer with the
prior approval of the Company; and

 

(e)                                  (generally) any claim that an Indemnified
Party has any liability under the Corporations Act (including sections 1041H
and 1041I) or any other applicable law or regulation in relation to the Rights
Offer,

 

provided that:

 

(f)                                    where
the Loss is also a cost or expense (item)
covered by clause 9.2 and clause 9.2 requires that the item be reasonable in
order for it to be recoverable under that clause, then this indemnity shall
only extend to it to the extent that it is recoverable under that clause and
the maximum amount which may be recovered under this indemnity in respect of
those items shall be limited to $250,000;

 

(g)                                 the
Losses the subject of this indemnity shall not include:

 

(i)                                     sub
underwriting fees, brokerage and other costs and expenses in respect of the
Rights Offer that are the responsibility of the Underwriters;

 

(ii)                                  Loss
suffered simply as a result of an Underwriter being required to perform its
obligations under this agreement (including without limitation) its obligations
in respect of the Shortfall Rights and Shortfall Shares; or

 

(iii)                               Loss
suffered by reason of being required to compensate the Company for a breach by
an Underwriter of its obligations under this agreement.

 

Each of the paragraphs of this clause 6.1
shall be construed independently and no paragraph shall be limited by
implications arising from any other paragraph.

 

6.2                                 Extent of indemnity

 

The indemnity in clause 6.1 does not extend
to and shall not be deemed to be an indemnity against Losses incurred by an
Indemnified Party to the extent that those Losses result primarily from:

 

(a)                                  the
negligence or wilful misconduct or breach of any statutory provision or
fiduciary duty of that Indemnified Party;

 

(b)                                 any
penalty or fine which the Indemnified Party is required to pay for any
contravention by it of the Corporations Act;

 

17

 

(c)                                  any
amount in respect of which the indemnity will be illegal, void or unenforceable
under any applicable law;

 

(d)                                 any
announcements, advertisements or publicity made or distributed by an
Indemnified Party in relation to the Rights Offer or the Acquisition without
the approval of the Company; or

 

(e)                                  a
material breach by an Underwriter of this agreement (except where that breach
is not wilful and occurs solely by reason of reliance on advice or information
provided by or on behalf of the Company).

 

6.3                                 Notice

 

If an Underwriter becomes aware of any matter
in respect of which an Indemnified Party wishes to claim for indemnification
under this clause 6, that Underwriter must promptly notify the Company of the
substance of that matter within 5 Business Days of having become aware of the
matter.

 

6.4                                 Failure to notify

 

The failure of an Underwriter to notify the
Company pursuant to clause 6.3 shall not release the Company from any
obligation or liability which it may have pursuant to this agreement except
that such liability shall be reduced to the extent to which:

 

(a)                                  the
Company has suffered material damage or material loss, or

 

(b)                                 the
amount the subject of the indemnity under clause 6.1 has increased,

 

as a result of
the failure to so notify.

 

6.5                                 Obligation to
mitigate

 

Each Indemnified Party must take reasonable
steps to mitigate any Losses in respect of which it may seek to be indemnified
under clause 6.1 from the time at which the Indemnified Party becomes aware
that it may be entitled to be indemnified under clause 6.1.

 

6.6                                 Benefits of
indemnity

 

Each Indemnified Party, whether or not a
party to this agreement, shall be entitled to the benefit of this clause 6 and
this clause 6 may be enforced on that Indemnified Party’s behalf by the
Underwriters.

 

6.7                                 Preservation of
rights

 

Subject to clause 6.2, the rights of an
Indemnified Party under this agreement shall not in any way be prejudiced or
affected by:

 

(a)                                  any
approval given by that party in relation to the Offer Documents, a
Supplementary Offer Document or the Final Offer Documents or any roadshow presentation,
announcement, advertisement or publicity made or distributed in relation to the
Rights Offer (whether before or after the Prospectus Date) (collectively the “Offer Material”);

 

18

 

(b)                                 any
consent to be named in the Offer Material;

 

(c)                                  termination
of this agreement under clause 2 or any lawful termination by an Underwriter of
its obligations to underwrite the Rights Offer under clause 10; or

 

(d)                                 any
inaccuracy in any representation or warranty made or deemed to have been made
by the Company under this agreement.

 

6.8                                 Company
entitled to defend or institute proceedings

 

Subject to clause 6.11, the Company may
defend or institute in the name of an Indemnified Party legal or other
proceedings concerning an Indemnified Claim and conduct the same under the sole
management and control of the Company with absolute discretion as to the
conduct of those proceedings including any decision to settle, compromise or
consent to the entry of any judgement in relation to the Indemnified Claim the
subject of those proceedings provided that:

 

(a)                                  the
Company must consult with and keep the relevant Indemnified Party informed
concerning the progress of that defence or of those legal or other proceedings
and must take account of the views of the relevant Indemnified Party so far as
is reasonably practicable and must not take any steps which it would be
reasonable to expect would damage the reputation of the relevant Indemnified
Party without the prior written consent of the relevant Indemnified Party (such
consent not to be unreasonably withheld or delayed);

 

(b)                                 no
admission of liability on the part of the Indemnified Party in connection with
the Indemnified Claim may take place without the appropriate Indemnified Party’s
prior written consent; and

 

(c)                                  the
appropriate Indemnified Party has:

 

(i)                                     the
right at any time to; and

 

(ii)                                  must,
if it refuses to give its prior written consent under clause 6.8(a) or 6.8(b);

 

re-assume the defence of any Indemnified
Claim assumed by the Company or any other legal or other proceedings instituted
by the Company in the name of the Indemnified Party in respect of an
Indemnified Claim.

 

6.9                                 Separate
representation

 

Notwithstanding clause 6.8, where the Company
has conduct of the proceedings relating to an Indemnified Claim in the name of
an Indemnified Party, that Indemnified Party may engage its own legal counsel
but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party unless:

 

(a)                                  the
Company and the Indemnified Party mutually agree to the contrary;

 

(b)                                 the
Indemnified Party reasonably concludes that there are significant legal
defences available to it that are different from, or in addition to, those
available to the Company; or

 

19

 

(c)                                  the
named parties in any such proceeding (including any impleaded parties) include
both the Company and the Indemnified Party and representation of both parties
by the same counsel would be inappropriate due to actual differing interests
between them.

 

6.10                           Obligations
of Indemnified Parties

 

The Indemnified Parties must:

 

(a)                                  take
such reasonable action as the Company requests to avoid, dispute, resist,
appeal, compromise or defend any Indemnified Claim in respect of it;

 

(b)                                 not
settle or compromise any Indemnified Claim without the prior written consent of
the Company;

 

(c)                                  render
all reasonable assistance and co-operation to the Company in the conduct of any
legal or other proceedings relating to the Indemnified Claim including giving
the Company any documents in its possession or within its control and signing
all documents, authorities and directions and making available its employees at
such time and for such periods as the Company may reasonably require in relation
to that proceeding; and

 

(d)                                 do
anything reasonably necessary or desirable to ensure that the Company is
subrogated to and enjoys the benefit of the rights of the Indemnified Parties
in relation to an Indemnified Claim including signing documents to assign
choses in action.

 

6.11                           Right
to assume control of proceedings

 

If an Indemnified Party re-assumes the
defence of an Indemnified Claim or any other legal or other proceedings
instituted by the Company in the name of the Indemnified Party in respect of an
Indemnified Claim under clause 6.8(c):

 

(a)                                  it
will have the right to conduct the same under its sole management and control
and will have absolute discretion with regards to the conduct of those
proceedings including any decision to settle, compromise or consent to the
entry of any judgement in relation to any Claims that are the subject of those
proceedings, but in doing so it will consult with and take account of the views
of the Company so far as is reasonably possible; and

 

(b)                                 the
Company will not be bound by the terms of any settlement or compromise and any
indemnity given by the Company under clause 6.1 shall not apply in respect of
any Claims that are the subject of those proceedings.

 

6.12                           Conduct of
Proceedings

 

An Indemnified Party is under no obligation
under clause 6.10 unless at the time the Company requests that Indemnified
Party to take any action, the Company agrees to indemnify that Indemnified
Party against all costs, expenses and charged incurred by or awarded against
that Indemnified Party in taking the action required, as and when they fall
due, including legal costs and disbursements of its lawyers on a full indemnity
basis.

 

20

 

6.13                           Release

 

The Company agrees that no Claim may be made by
it against an Indemnified Party, and the Company unconditionally and
irrevocably releases each Indemnified Party from any Claim that it may have
against an Indemnified Party arising as a result of the participation of that
Indemnified Party in the preparation of the Offer Documents, a Supplementary
Offer Document or the Final Offer Documents or in relation to the making of the
Rights Offer, except where:

 

(a)                                  the
Indemnified Party has been negligent or there has been wilful misconduct or a
breach of any statutory provision or fiduciary duty;

 

(b)                                 the
Indemnified Party has made or distributed any announcements, advertisements or
publicity in relation to the Rights Offer or the Acquisition without the
approval of the Company; or

 

(c)                                  an
Underwriter is in breach of this agreement.

 

If:

 

(d)                                 the
Company makes a Claim against an Underwriter in respect of a breach by it of
this agreement (the “Relevant Breach”);
and

 

(e)                                  that
Underwriter has suffered Loss by reason of the Relevant Breach otherwise than
by reason of the Company making the Claim against it; and

 

(f)                                    that
Underwriter has recovered that Loss from the Company under the indemnity in
clause 6.1,

 

the Company
agrees it will not be entitled to recover from the Underwriter as damages in
respect of the Relevant Breach any amount which the Underwriter has recovered
under the indemnity in clause 6.1.

 

7.                                       APPLICATIONS
AND ALLOTMENTS

 

7.1                                 Applications

 

Each application for Offer Securities
pursuant to the Rights Offer must be made on an entitlement and application
form accompanying the Offer Documents and in accordance with the Offer
Documents or be an Institutional Acceptance.

 

7.2                                 Notification
of Applications

 

The Company must whenever reasonably
requested by the Underwriters during the period beginning on the Opening Date
and ending on the Closing Date notify the Underwriter of:

 

(a)                                  the
number of Applications received;

 

(b)                                 the
number of Applications received which are not Valid Applications and the
grounds on which the Company believes the Application is not valid; and

 

21

 

(c)                                  the
number of Offer Securities in respect of which Valid Applications have been
received.

 

The Underwriters have the right to review the
Applications which are not Valid Applications.

 

7.3                                 Acceptance of
Applications

 

The Company must accept each Application for
Offer Securities which is lodged on or before 6:00pm on the Closing Date which
becomes a Valid Application by 4.00pm on the Shortfall Notification Date.

 

7.4                                 Allotment of
Offer Securities

 

The Company must allot and issue the Offer
Securities in respect of which Valid Applications have been accepted on the
First Allotment Date in accordance with the allotment procedure described in
the Offer Documents.  Those Offer
Securities will be allotted ex the final dividend for the financial year ending
September 30, 2003.

 

7.5                                 Holding Statements

 

The Company must dispatch a new holding
statement in respect of the Offer Securities issued pursuant to the Rights
Offer in accordance with the Corporations Act and the Listing Rules as soon as
practicable after the First Allotment Date.

 

7.6                                 Prompt Banking of
Cheques

 

The Company must promptly bank for collection
all cheques accompanying Applications received by it.  The Company must at its cost arrange for payments to be cleared
by the relevant financial institutions on which the payment is drawn.

 

7.7                                 Subscription Price

 

The Company must comply with section 722
of the Corporations Act in respect of the Subscription Price in respect of an
Offer Security received by it.

 

7.8                                 Records

 

The Company must maintain (and permit the
Underwriters to inspect at any reasonable time) accurate records of the receipt
of Applications, the banking of the Subscription Price in respect of each Offer
Security applied for, the processing of Applications and the dispatch of
holding statements in respect of the Offer Securities issued pursuant to the
Rights Offer.

 

7.9                                 Relief of Liability

 

All Valid Applications which are accepted
will go towards relieving the liability of the Underwriters under this
agreement to underwrite subscriptions for Offer Securities up to an aggregate
maximum amount of the Offer Amount.

 

22

 

7.10                           No Shortfall

 

If by 3:00pm on the Shortfall Notification Date,
Valid Applications are accepted in respect of all of the Offer Securities the
Underwriters’ liability under this agreement to apply for Offer Securities is
extinguished.

 

7.11                           Return
of Subscription Price and termination of obligations

 

If all the Offer Securities in respect of
which Valid Applications are accepted have not been allotted to applicants by
the later of 2 Business Days after the First Allotment Date (or such later date
as the Underwriters may agree in writing in its absolute discretion):

 

(a)                                  the
Company must immediately refund all application moneys received to all
applicants including the Underwriters; and

 

(b)                                 all
of the Underwriters’ obligations under this agreement will immediately
terminate.

 

8.                                       OBLIGATIONS
OF THE UNDERWRITERS

 

8.1                                 Notice of
Shortfall Rights

 

If, as at 4.00pm on the Shortfall
Notification Date, the Company has not received Valid Applications in respect
of all the Offer Securities, the Company must by 5:00pm on the Shortfall
Notification Date (or such longer period agreed in writing by the
Underwriters), give a written notice to the Underwriters (the “Shortfall Notice”) specifying the number of
the Offer Securities in respect of which Valid Applications have not been
accepted and therefore the number of Rights which have not been exercised (the
number of Rights so specified being the Shortfall
Rights).

 

8.2                                 Certificate
to Accompany Notice

 

The Shortfall Notice given pursuant to clause
8.1 must be accompanied by a Certificate.

 

8.3                                 Certificate
Representations and Warranties

 

The Company:

 

(a)                                  represents
and warrants in giving the Certificate under clause 8.2 that the Shortfall
Notice specifying the number of Offer Securities in respect of which Valid
Applications have not been accepted and therefore the number of Shortfall
Rights is true and accurate as at the date of the Shortfall Notice; and

 

(b)                                 undertakes
to notify the Underwriters of any change in a material respect in any of the
matters set out in the Certificate as soon as practicable after such change
becomes known to the Company if such change occurs before the extinguishment of
the Underwriters’ liability under this agreement.

 

8.4                                 Bookbuild

 

(a)                                  On
receipt of the Shortfall Notice the Underwriters will, during the Bookbuild
Period, offer the Shortfall Rights for sale via a bookbuild process to
determine demand for the Shortfall Rights at various possible sale prices.

 

23

 

(b)                                 The
Underwriters must offer each Shortfall Right for sale on condition that a
purchaser of that Shortfall Right must exercise that Shortfall Right and pay
the Company the Subscription Price in respect of that Shortfall Right on the
Second Allotment Date.

 

(c)                                  The
Underwriters will advise the Company of the outcome of the bookbuild process
referred to in clause 8.4(a) by 8.00am on the First Allotment Date.  Having regard to the outcome of the
bookbuild, the Sale Price and the number of Shortfall Rights sold will be
agreed by the Company and the Underwriters having regard to the level of demand
at different prices at which purchasers have bid for the Shortfall Rights, the
quality of those bids and what price will enable the Underwriters to clear the
book.

 

(d)                                 The
Company and the Underwriters will use their best endeavours to agree the
persons, to whom the Shortfall Rights will be allocated for sale.  If the Underwriters and the Company fail to
so agree, the Underwriters may determine to whom the Shortfall Rights will be
allocated for sale.

 

(e)                                  The
Underwriters will be entitled to charge a commission of .25% of the Sale
Amount.

 

8.5                                 Payment
of Shortfall Amount and Sale Amount

 

Unless:

 

(a)                                  this
document has been rescinded or terminated under clause 2 or in accordance with
clause 10 on or before the Shortfall Notification Time;

 

(b)                                 the
Company has not complied with its obligations under clause 8.2,

 

each
Underwriter must pay or procure payment to:

 

(a)                                  the
Company of 50% of the Shortfall Amount in cleared funds (less any amounts which
that Underwriter is entitled to be paid or deduct under clause 9.4);

 

(b)                                 to
the Company of 50% of the Sale Amount (less the commission referred to in
clause 8.4(e)) in cleared funds,

 

on or before
10.00am on the Second Allotment Date.

 

For the
avoidance of doubt, the parties acknowledge that it is not intended that the Underwriters
will acquire any beneficial ownership in the Shortfall Rights.

 

8.6                                 Allotment of
Shortfall

 

On receipt of
the Shortfall Amount (less any amounts which an Underwriter is entitled is
entitled to be paid or deduct under clause 9.4), the Company must allot and
issue the Shortfall Shares and dispatch new holding statements in respect of
the Shortfall Shares in accordance with the Corporations Act and the Listing
Rules as soon as practicable after the Second Allotment Date.

 

24

 

8.7                                 Regulatory
Impediment

 

Each
Underwriter must ensure that it does not acquire Shares in breach of the
Financial Sector (Shareholdings) Act or any other applicable law in fulfilling
its obligations under this agreement and must, if necessary, procure other
subscribers for the Shortfall Shares if an acquisition by it would breach those
laws.

 

8.8                                 Liability
Extinguished

 

Upon clause
8.5 being complied with by an Underwriter, the liability of that Underwriter
under this agreement with respect to underwriting the Rights Offer shall cease
and be extinguished.

 

9.                                       FEES, COSTS AND EXPENSES

 

9.1                                 Payment of fees

 

Subject to
clause 9.3, the Company must pay to each of the Underwriters on the Second
Allotment Date in immediately available funds:

 

(a)                                  an
underwriting fee of 0.30% of the Offer Amount; and

 

(b)                                 a
management fee of 0.075% of the Offer Amount.

 

9.2                                 Costs and expenses

 

(a)                                  Subject
to paragraph (b), in addition to the fees referred to in clause 9.1, the
Company must on receipt of notice from an Underwriter, pay or procure the
payment to that Underwriter (or as it directs) of all reasonable travel and
out-of-pocket expenses and reasonable legal costs and disbursements incurred by
that Underwriter in relation to the preparation and execution of this
agreement.

 

(b)                                 The
maximum amount payable by the Company to all the Underwriters under paragraph
(a) is limited to $250,000.

 

9.3                                 Costs on termination

 

In the event
that:

 

(a)                                  the
obligations of an Underwriter under this agreement is terminated pursuant to
clause 2 or 10:

 

(i)                                     the Company shall
not be obliged to pay to that Underwriter the fee referred to in clause 9.1;
and

 

(ii)                                  the Company shall be
obliged to pay to that Underwriter within five Business Days of termination of
the obligations of that Underwriter (to the extent that it has not already done
so) the costs, expenses and disbursements referred to in clause 9.2;

 

25

 

(b)                                 the
Rights Offer does not proceed or is not completed for any reason:

 

(i)                                     the Company shall
not be obliged to pay the fee referred to in clause 9.1; and

 

(ii)                                  the Company shall be
obliged to pay within 5 Business Days of the Rights Offer not proceeding or
completing (to the extent it has not already done so) the costs, expenses and
disbursements referred to in clause 9.2.

 

9.4                                 Set off

 

An Underwriter
may at any time on or after the Second Allotment Date apply any payment in
respect of an Offer Security received by an Underwriter, or a related body
corporate of an Underwriter, by reason of delivery versus payment occurring
through CHESS in respect of that Offer Security on the Second Allotment Date in
satisfaction of the obligations of the Company under clauses 9.1 or 9.2.  To the extent the obligations of the Company
under those clauses are not fully satisfied by such application, the Company
will not be relieved of its obligations under those clauses.  An Underwriter must promptly give written
notice to the Company of any amounts set off by that Underwriter pursuant to
this clause 9.4.

 

10.                                 EVENTS OF
TERMINATION

 

10.1                           Right of termination

 

Subject to
clause 10.2 and 10.3, if any one or more of the following events occurs at any
time in the period from (and including) the date of this agreement to the
Shortfall Notification Time (or, in the case of a paragraph which specifies a
particular period, from (and including) the date of this agreement to (and
including) the date or period referred to in the relevant paragraph), then at
any time on or before the Shortfall Notification Time (or the particular period
specified) either Underwriters may, terminate any of its obligations under this
agreement which have not been performed at that time (without cost or liability
to themselves) by notice in writing to the Company (with a copy to the other
Underwriter) specifying the relevant event:

 

(a)                                  (i)          (ASX approval) unconditional approval (or
conditional approval, provided such condition would not, in the reasonable
opinion of the Underwriters, have a material adverse effect on the success or
settlement of the Rights Offer) by the ASX for official quotation of the Offer
Securities is refused, or is not granted before the Shortfall Application Date
(or such later date agreed in writing by the Underwriters in their absolute discretion)
or is withdrawn on or before the Shortfall Application Date;

 

(ii)                                  (withdrawal) the Company withdraws the
Offer Documents or the Rights Offer;

 

(iii)                               (trading of Offer Securities) the Company
is removed from the official list of ASX or the Shares cease to be quoted on
ASX;

 

(iv)                              (Timetable) any event specified in the
Timetable is delayed for more than 5 Business Days without the prior approval
of the Underwriters; or

 

26

 

(b)                                 (i)                                     (Offer Documents) an Offer Document, a
Supplementary Offer Document or the Final Offer Document omits any material
required by the Corporations Act or any applicable law or contains a statement
which is misleading or deceptive or otherwise fails to comply with the
Corporations Act or any other applicable law;

 

(ii)                                  (unauthorised alterations) the Company
alters its share capital or its constitution in any material respect;

 

(iii)                               (trading in Shares) trading in Shares on
ASX is suspended (which for the avoidance of doubt does not include a trading
halt) for more than 3 consecutive Business Days;

 

(iv)                              (material contracts) the Acquisition
Agreement is terminated (whether by breach or otherwise), rescinded, altered or
amended in a material respect or any such contract is found to be void or
voidable;

 

(v)                                 (compliance) a contravention by the Company
of any provision of its constitution, the Corporations Act or any requirement
of the ASX or any other applicable law (except to the extent that compliance
with any applicable law has been waived, or an exemption granted, by a
Government Agency having authority to do so);

 

(vi)                              (change of law) there is introduced into
the Parliament of the Commonwealth of Australia or any State or Territory of
Australia or the Federal or any State Congress in the United States or any new
regulation is made under any law or a Government Agency adopts a policy, or
there is an official announcement on behalf of the Government of the
Commonwealth of Australia or any State or Territory of Australia or the Federal
or any State Congress in the United States or a Government Agency that such a
law or regulation will be introduced or policy adopted (as the case may be)
(other than a law or regulation or policy which has been announced before the
date of this agreement); or

 

(vii)                           (consent) if any person whose consent to
the issue of the Prospectus is required by the Corporations Act refuses to give
their consent prior to lodgment of the Prospectus with ASIC or withdraws their
consent after lodgment of the Prospectus with ASIC;

 

(viii)                        (breach) the Company fails to perform or
observe any of its obligations under this agreement;

 

(ix)                                (misrepresentation) a Company Warranty is
or becomes untrue or incorrect;

 

(x)                                   (late lodgment) the Company fails to lodge
the Prospectus with ASIC on or before the Lodgment Date (or such later date
agreed in writing by the Underwriters);

 

27

 

(xi)                                (ASIC)

 

(A)                              ASIC
gives notice of an intention to hold a hearing or issues an order under
section 739(1) of the Corporations Act or an interim order under
section 739(3) of the Corporations Act;

 

(B)                                an
application is made by ASIC for an order under Part 9.5 in relation to the
Prospectus or ASIC commences any investigation or hearing under Part 3 of the Australian
Securities and Investments Commission Act 1989 (Cwlth) in relation to the
Prospectus;

 

(xii)                             (certificate) any Certificate which must be
given by the Company under this agreement is not given when required or a
statement in that Certificate is untrue or incorrect in respect of events and
circumstances applicable as at the date the Certificate is given;

 

(xiii)                          (market or trading disruption) there is:

 

(A)                              a
suspension or material limitation in trading in securities generally on ASX; or

 

(B)                                a
general moratorium on commercial banking activities in Australia, the United
States or the United Kingdom is declared by the relevant authorities, or there
is a material disruption in commercial banking or securities settlement or
clearance services in those places;

 

(xiv)                         (material adverse change) there is a
material adverse change in the financial position, results of operations or
prospects of ANZ or of NBNZ from that reflected in the Offer Documents.

 

10.2                           Exercise of rights

 

No event
specified in clause 10.1(b) shall entitle an Underwriter to exercise its rights
to terminate its obligations under this agreement pursuant to clause 10.1 or
otherwise unless, in the reasonable opinion of that Underwriter, the event:

 

(a)                                  has,
or is likely to have, a material adverse effect on the success or settlement of
the Rights Offer; or

 

(b)                                 leads,
or is likely to lead:

 

(i)                                     to
a contravention by the Underwriter of, or the Underwriter being involved in a
contravention of, the Corporations Act or any other applicable law; or

 

(ii)                                  to
a liability for the Underwriter under the Corporations Act or any other
applicable law.

 

28

 

10.3                           Banking
Moratorium Event

 

If a Banking
Moratorium Event occurs at any time during the period from the date of this
agreement to the Shortfall Notification Time and as a direct or indirect result
of the occurrence of the Banking Moratorium Event:

 

(a)                                  the
Company is prevented from, or delayed in, performing its obligations under
clause 7.6;

 

(b)                                 payments
which the Company has arranged with the relevant financial institutions to
clear under clause 7.6 are not cleared;

 

(c)                                  delivery
versus payment is prevented from occurring through CHESS on the Second
Allotment Date; or

 

(d)                                 the
Underwriters are prevented from, or delayed in, performing their obligations
under clause 8.5,

 

then:

 

(e)                                  the
obligations of the parties under this agreement are suspended to the extent to
which they are effected by the relevant Banking Moratorium Event as long as the
Banking Moratorium Event continues; and

 

(f)                                    in
addition to the requirements of clause 10.2, an Underwriter may not terminate
its obligations under this agreement, unless the Banking Moratorium Event
continues for more than 5 Business Days.

 

10.4                           Claims

 

Nothing contained
in this clause 10 shall prejudice or nullify any claim for damages or other
right which the Underwriters or any other Indemnified Party (as defined in
clause 6.1) may have against the Company, or which the Company may have against
the Underwriters, for or arising out of any breach of covenant, warranty or
representation or failure to observe or perform an obligation under this
agreement.

 

10.5                           Notification

 

The Company
must notify the Underwriters in writing immediately after becoming aware that
an Event of Termination has occurred.

 

10.6                           Effect of
termination

 

(a)                                  In
the event that:

 

(i)                                     an
Underwriter terminates its obligations under this agreement pursuant to clause
10.1 (the Terminating Underwriter);
or

 

29

 

(ii)                                  an
Underwriter refuses to waive fulfilment of a condition under clause 2.4 (a Non-waiving Underwriter)

 

the
Terminating Underwriter or the Non-waiving Underwriter shall thereupon be
relieved of its obligations under this agreement and shall be entitled to
reimbursement in accordance with clause 9.3.

 

(b)                                 The
exercise by the Terminating Underwriter of its rights upon the happening of an
event specified in clause 10.1 or the refusal of a Non-waiving Underwriter to
waive a condition under clause 2.4 does not automatically terminate the
obligations of the other Underwriter (the Remaining
Underwriter).

 

(c)                                  If
the Terminating Underwriter gives notice to the Remaining Underwriter of its
intention to terminate its obligations under this agreement upon the happening
of an event specified in clause 10.1, the Remaining Underwriter must elect by
notice in writing to the Terminating Underwriter and the Company within 2
Business Days of receipt of such notice to:

 

(i)                                     also
terminate its obligations under this agreement as a result of the happening of
that event; or

 

(ii)                                  assume
the obligations of the Terminating Underwriter under this agreement.

 

If the
Remaining Underwriter fails to give notice under this clause 10.5(c) it shall
be treated as having also terminated its obligations under this agreement.

 

(d)                                 If
the Non-waiving Underwriter gives notice of its intention to refuse to waive
fulfilment of a condition under clause 2.4, the Remaining Underwriter must
elect by notice in writing to the Non-waiving Underwriter and the Company
within 2 Business Days of receipt of such notice:

 

(i)                                     to
also terminate its obligations under this agreement as a result of the failure
to fulfil that condition; or

 

(ii)                                  to
assume the obligations of the Non-waiving Underwriter under this agreement.

 

If the
Remaining Underwriter fails to give notice under this clause 10.6(d) it shall
be treated as having also terminated its obligations under this agreement.

 

(e)                                  Termination
of this agreement by the Terminating Underwriter but not by the Remaining
Underwriter will not affect the rights or obligations of the Remaining
Underwriter under this agreement except that if the Remaining Underwriter gives
notice under paragraph (c) that it will assume the obligations of the
Terminating Underwriter under this agreement the Remaining Underwriter will be
entitled to the fee under clause 9.1 which would have been payable to the
Terminating Underwriter.

 

(f)                                    The
refusal to waive the fulfilment of a condition under clause 2.4 by a
Non-waiving Underwriter but not by the Remaining Underwriter will not affect
the rights or obligations of the Remaining Underwriter under this agreement
except

 

30

 

that if the
Remaining Underwriter gives notice under paragraph (d) that it will assume the
obligations of the Non-waiving Underwriter under this agreement the Remaining
Underwriter will be entitled to the fee under clause 9.1 which would have been
payable to the Non-waiving Underwriter.

 

11.                                 ADVERTISING
AND PUBLIC ANNOUNCEMENTS

 

11.1                           Promotion of Offer

 

The Company
must at its own cost provide such assistance in connection with the promotion,
advertising and marketing of the Rights Offer as is reasonably required by the
Underwriters from time to time.  The
content and other details of any Publication must be agreed between the Company
and the Underwriters prior to any statement or release.

 

11.2                           Responsibility
for promotion

 

The Company is
fully responsible for:

 

(a)                                  the
contents of any promotional material relating to the Rights Offer except where
the content of that promotional material has not been agreed under clause 11.1;
and

 

(b)                                 all
announcements and disclosures in respect of the Rights Offer which have been
agreed between the Company and the Underwriters.

 

11.3                           Disclosure

 

The Company
agrees that subject to any disclosure required by the Corporations Act or the
Listing Rules or any other applicable law it must not make any public or media
announcement or disclosure in relation to the Rights Offer or the Acquisition,
its progress or the results of the Rights Offer without the prior approval of
the Underwriters which must not be unreasonably withheld or delayed.

 

12.                                 ACCESS TO
INFORMATION

 

12.1                           Access and
information

 

Subject to
entering into any appropriate confidentiality undertakings, the Company agrees
to allow the Underwriters and their appropriate officers reasonable access to
its books and records at all reasonable times upon reasonable notice:

 

(a)                                  before
the Second Allotment Date;

 

(b)                                 during
any regulatory inquiry or litigation proceedings in relation to the Rights
Offer

 

to enable the
Underwriters to obtain any information which the Underwriters reasonably
require in relation to the Rights Offer.

 

12.2                           ASX and ASIC

 

Without
limiting the generality of clause 12.1, the Company must promptly give the
Underwriters copies of notifications to and approvals of ASX, NZSE and ASIC or
any

 

31

 

other
regulatory body relating to the Offer Documents, evidence of any lodging of the
Prospectus and any other similar material relating to the Rights Offer.

 

12.3                           Due diligence
materials

 

The Company
must provide the Underwriters with full and free access to, and on request,
copies of, the Due Diligence Report, the Verification Materials and all
materials and documents used or created in connection with the preparation of
the Due Diligence Report and the Verification Materials and must maintain those
materials and documents for at least six years from the Second Allotment Date
for that purpose.

 

13.                                 GST

 

13.1                           Definitions

 

Words defined
in the A New Tax System (Goods and Services
Tax) Act 1999 (Cth) have the same meaning in this clause.

 

13.2                           GST payable
in addition to fees

 

In addition to
paying the fees, costs, expenses and disbursements referred to in clauses 9.1
and 9.2 (which are exclusive of GST) and in addition to any other amounts, the
Company must:

 

(a)                                  pay to an Underwriter
an amount equal to any GST payable on any supply by that Underwriter under or
in connection with this agreement, without deduction or set-off of any other
amount; and

 

(b)                                 make that payment:

 

(i)                                     as and when the
fees, costs, expenses and disbursements referred to in clauses 9.1 and 9.2 or
other consideration or part of it must be paid or provided; and

 

(ii)                                  if later, such later
time being not more than 5 Business Days after a tax invoice has been issued by
an Underwriter

 

provided that
before that payment is due to be made that Underwriter has given a tax invoice
to the Company in respect of the GST so payable.

 

13.3                           GST on claims and
expenses

 

Without
limiting the operation of clause 13.2:

 

(a)                                  if a payment to
satisfy a claim or a right to claim under or in connection with this agreement
(for example, for misleading or deceptive conduct or for misrepresentation or
for a breach of any warranty or for indemnity or for reimbursement of any cost
or expense) or any other payment made under or in connection with this
agreement which is not covered by clause 13.2 gives rise to a liability to pay
GST, the payer must pay, and indemnify the payee against the amount of that
GST; and

 

32

 

(b)                                 if a party has a claim under or in
connection with this agreement for a cost or expense on which that party must
pay GST, the claim is for the cost or expense plus all GST except any GST for
which that party is entitled to an input tax credit.

 

14.                                 NOTICES

 

14.1                           How to give a notice

 

A notice, consent or other communication under this document is only
effective if it is:

 

(a)                                  in writing, signed by or on behalf of the
person giving it;

 

(b)                                 addressed to the person to whom it is to be
given; and

 

(c)                                  either:

 

(i)                                     delivered or sent by pre-paid mail (by
airmail, if the addressee is overseas) to that person’s address; or

 

(ii)                                  sent by fax to that person’s fax number and
the machine from which it is sent produces a report that states that it was
sent in full.

 

14.2                           When a notice is given

 

A notice, consent or other communication that complies with this clause
is regarded as given and received:

 

(a)                                  if it is delivered or sent by fax:

 

(i)                                     by 5:00pm (local time in the place of
receipt) on a Business Day - on that day; or

 

(ii)                                  after 5:00pm (local time in the place of
receipt) on a Business Day, or on a day that is not a Business Day - on the
next Business Day; and

 

(b)                                 if it is sent by mail - on actual receipt.

 

14.3                           Address for notices

 

A person’s address and fax number are those set out below, or as the
person notifies the sender:

 

	
  Company

  	
   

  	
   

  
	
  Address:

  	
   

  	
  Level 6, 100 Queen Street, Melbourne, Victoria, 3000

  
	
  Fax number:

  	
   

  	
  (03) 9273 1203

  
	
  Attention:

  	
   

  	
  Mike Dontschuk, Group Treasurer

  
	
   

  	
   

  	
   

  
	
  Morgan Stanley Dean Witter Australia
  Securities Limited

  
	
  Address:

  	
   

  	
  Level 38, The Chifley Tower, 2 Chifley Square, Sydney NSW 2000,
  Australia

  
	
  Fax number:

  	
   

  	
  +61 2 9770 1129

  
	
  Attention:

  	
   

  	
  Rick Ball/Matt Hanning

  

 

 

33

 

	
  Citigroup Global Markets Australia Pty
  Limited

  
	
  Address:

  	
   

  	
  Citigroup Centre, 2 Park Street, Sydney NSW 2000, Australia

  
	
  Fax Number:

  	
   

  	
  61 2 8225 5410

  
	
  Attention:

  	
   

  	
  Chris Scougall/Mark Bartels

  

 

15.                                 AMENDMENT AND ASSIGNMENT

 

15.1                           Amendment

 

This agreement can only be
amended, supplemented, replaced or novated by another agreement signed by the
parties.

 

15.2                           Assignment

 

A party may only dispose of,
declare a trust over or otherwise create an interest in its rights under this
agreement with the consent of the other parties.

 

16.                                 GENERAL

 

16.1                           Governing
law

 

(a)                                  This agreement is governed by the law in
force in Victoria.

 

(b)                                 Each party submits to the non-exclusive
jurisdiction of the courts exercising jurisdiction in Victoria, and any court
that may hear appeals from any of those courts, for any proceedings in
connection with this agreement, and waives any right it might have to claim
that those courts are an inconvenient forum.

 

16.2                           Giving effect to this agreement

 

Each party must do anything
(including execute any document), and must ensure that its employees and agents
do anything (including execute any document), that the other party may
reasonably require to give full effect to this agreement.

 

16.3                           Waiver
of rights

 

A right may only be waived in
writing, signed by the party giving the waiver, and:

 

(a)                                  no other conduct of a party (including a
failure to exercise, or delay in exercising, the right) operates as a waiver of
the right or otherwise prevents the exercise of the right;

 

(b)                                 a waiver of a right on one or more occasions
does not operate as a waiver of that right if it arises again; and

 

(c)                               the exercise of a right does not prevent any
further exercise of that right or of any other right.

 

16.4                           Operation of this agreement

 

(a)                                  This agreement contains the entire agreement
between the parties about its subject matter. 
Any previous understanding, agreement, representation or warranty

 

34

 

relating to
that subject matter is replaced by this agreement and has no further effect.

 

(b)                                 Any right that a
person may have under this agreement is in addition to, and does not replace or
limit, any other right that the person may have (including, for the avoidance
of doubt, in the case of Morgan Stanley any right it may have to be indemnified
by the Company in respect of its role as financial adviser in connection with a
possible acquisition, merger or other business combination with NBNZ under its
mandate letter dated 16 October 2003 and the indemnity from the Company dated
30 July 2003.).  For the avoidance of
doubt Morgan Stanley’s right to be indemnified in respect of its roles as underwriter
and joint lead manager of the Rights Offer is governed entirely by this
agreement.

 

(c)                                  Any provision of this
agreement which is unenforceable or partly unenforceable is, where possible, to
be severed to the extent necessary to make this agreement enforceable, unless
this would materially change the intended effect of this agreement.

 

16.5                           Inconsistency
with other documents

 

If this
agreement is inconsistent with any other document or agreement between the
parties, this agreement prevails to the extent of the inconsistency.

 

16.6                           Time is of the
essence

 

Time is of the
essence of this agreement.

 

16.7                           Counterparts

 

This agreement
may be executed in counterparts.

 

16.8                           Attorneys

 

Each person
who executes this agreement on behalf of a party under a power of attorney
declares that he or she is not aware of any fact or circumstance that might
affect his or her authority to do so under that power of attorney.

 

16.9                           Operation of
Indemnities

 

(a)                                  Each
indemnity in this agreement survives the expiry or termination of this
agreement.

 

(b)                                 A party may recover a
payment under an indemnity in this agreement before it makes the payment in
respect of which the indemnity is given.

 

16.10                     Discretion
in exercising rights

 

A party may
exercise a right or remedy or give or refuse its consent in any way it considers
appropriate (including by imposing conditions) unless this agreement expressly
states otherwise.

 

35

 

17.                                 DISPUTE RESOLUTION

 

17.1                           Procedure
for resolving disputes

 

(a)                                  The Company and the
Underwriters agree that all disputes between any of them or all of them
relating to or arising out of this agreement (Disputes)
shall be resolved in accordance with this clause 17.

 

(b)                                 It is a condition
precedent to the referral of a Dispute to litigation under clause 17.7 that the
parties to the Dispute first refer the Dispute to mediation in accordance with
this clause 17.

 

17.2                           Mediation

 

The expression mediation means a process in which a person (a mediator) independent of the parties facilitates a
negotiation between the parties with the aim of reaching a binding agreement as
a solution to the Dispute.

 

17.3                           Notice

 

If a Dispute
arises then any party to the Dispute may give notice to the other parties to
the Dispute which notice must:

 

(a)                                  be in writing;

 

(b)                                 state that it is a
notice under this clause 17.3; and

 

(c)                                  include or be
accompanied by reasonable particulars of the Dispute.

 

17.4                           Appointment of
Mediator

 

(a)                                  If a notice is given
under clause 17.3, then the parties which either gave or received a notice must
together appoint a mediator within 5 Business Days of the giving of a mediation
notice under clause 17.3. If they do not agree within that time as to the
person to be appointed they must apply to the Chairman (or his or her delegate)
for the time being of the Victorian Bar Council (or its successor body).  The mediation must be conducted in
accordance with the Victorian Bar Dispute Resolution Scheme.

 

(b)                                 The parties to the
mediation must pay the appointment fee fixed by the Victorian Bar Council,
promptly sign whatever reasonable terms of engagement the mediator requires and
use reasonable endeavours acting in good faith to resolve the dispute.

 

17.5                           Confidentiality

 

The parties
must at all times maintain confidentiality about any matter arising in the mediation,
except to the extent that the matter is already public, or to the extent agreed
between the parties, or as required by law.

 

36

 

17.6                           Privileged
discussions

 

(a)                                  All discussions and
negotiations during the mediation are on a privileged, “without prejudice”
basis except to the extent that the parties waive privilege in whole or in part
by written agreement.

 

(b)                                 A party to the
mediation must not:

 

(i)                                     refer in any
subsequent proceedings to any such privileged discussions and negotiations;

 

(ii)                                  require the mediator
to do so;

 

(iii)                               have access to any of
the mediator’s notes; or

 

(iv)                              call the mediator as a
witness in any proceedings.

 

17.7                           Litigation

 

If a Dispute
is not resolved within 30 Business Days after the date on which the notice
under clause 17.3 is received (or such later date as the parties to the Dispute
may agree), any party to the Dispute may commence proceedings for the
resolution of the Dispute.

 

17.8                           Costs

 

(a)                                  Each party to a
mediation must bear its own costs in connection with the mediation proceedings.

 

(b)                                 The costs of the
mediator must be borne equally between the parties to the mediation, unless
otherwise agreed.

 

37

 

SCHEDULE
1

 

CERTIFICATE

 

 

	
  To:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Morgan
  Stanley

  
	
   

  	
   

  	
  Citigroup

  
	
   

  	
   

  	
   

  
	
  Attention:

  	
   

  	
  Rick
  Ball/Matt Hanning

  
	
   

  	
   

  	
  Chris
  Scougall/Mark Bartels

  

 

We hereby
certify on behalf of Australia and New Zealand Banking Group Limited (the Company) that the following statements are,
to the best of our knowledge having made due inquiries of all of the directors
and the Chief Financial Officer of the Company, true and not misleading or
deceptive:

 

(a)                                  each of the
conditions set out in clause 2.1 has been satisfied or otherwise waived by the
Underwriters;

 

(b)                                 the Company has
complied with all of its obligations in respect of the Rights Offer whether
arising under the Underwriting Agreement, the Corporations Act, the Listing
Rules, the Offer Documents or the Timetable;

 

(c)                                  the Company Warranties
are true and correct as at the date of this certificate in respect of the facts
and circumstances existing as at that date except to the extent previously
notified to the Underwriters under clause 4.6(a); and

 

(d)                                 no event has occurred
which the Company is required to announce under the Listing Rules or Chapter
6CA of the Corporations Act which if not made generally available may result in
any person contravening Division 3 of Part 7.10 of the Corporations Act;

 

(e)                                  no Event of
Termination has occurred.

 

For the
purposes of this Certificate:

 

(a)                                  “Underwriting Agreement” means the
underwriting agreement for the issue of Offer Securities dated on or about 24
October 2003 between Morgan Stanley and Citigroup and the Company; and

 

(b)                                 words and expressions
used shall have the meanings ascribed to them in the Underwriting Agreement.

 

38

 

SCHEDULE
2

 

TIMETABLE

 

	
  Event

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  Announcement
  of Rights Issue

  Commence Trading Halt

  Lodge Appendix 3B

  	
   

  	
  24 October 2003

  
	
   

  	
   

  	
   

  
	
  Lodgment
  Date

  	
   

  	
  24 October 2003

  
	
   

  	
   

  	
   

  
	
  First day of
  trading after trading halt

  	
   

  	
  28 October 2003

  
	
   

  	
   

  	
   

  
	
  Ex trading
  commences

  Rights trading commences

  	
   

  	
  29 October 2003

  
	
   

  	
   

  	
   

  
	
  Record Date
  (7.00pm)

  	
   

  	
  31 October 2003

  
	
   

  	
   

  	
   

  
	
  Dispatch of
  Prospectus with Entitlement and Acceptance Forms

  	
   

  	
  3 November 2003

  
	
   

  	
   

  	
   

  
	
  Opening Date
  for the Rights Offer

  	
   

  	
  3 November 2003

  
	
   

  	
   

  	
   

  
	
  Rights
  Trading ends

  	
   

  	
  17 November 2003

  
	
   

  	
   

  	
   

  
	
  Deferred
  Settlement Trading commences

  	
   

  	
  18 November 2003

  
	
   

  	
   

  	
   

  
	
  Closing Date
  for the Rights Offer

  	
   

  	
  24 November 2003

  
	
   

  	
   

  	
   

  
	
  Shortfall
  Notification Date – Shortfall Notice and Certificate to be given

  	
   

  	
  27 November 2003

  
	
   

  	
   

  	
   

  
	
  First
  Allotment Date

  	
   

  	
  28 November 2003

  
	
   

  	
   

  	
   

  
	
  Shortfall
  Application Date

  	
   

  	
  3 December 2003

  
	
   

  	
   

  	
   

  
	
  Second
  Allotment Date

  	
   

  	
  3 December 2003

  

 

39

 

 

SCHEDULE 3

 

WARRANTIES

 

Part 1: The Parties

 

1.                                       Capacity

 

1.1                                 (status) It is a company limited by shares
under the Corporations Act.

 

1.2                                 (capacity) It has full legal capacity and
power to enter into this agreement and to carry out the transactions that this
agreement contemplates.

 

1.3                                 (corporate authority) It has taken all
corporate action that is necessary or desirable to authorise its entry into
this agreement and its carrying out the transactions that this agreement
contemplates.

 

1.4                                 (Authorisation) It holds each Authorisation
that is necessary to:

 

(i)                                     execute this
agreement and to carry out the transactions that this agreement contemplates;

 

(ii)                                  ensure that this
agreement is legal, valid, binding and admissible in evidence; and

 

(iii)                               enable it to properly
carry on its business,

 

and it is complying with any conditions to which any of these
Authorisations is subject except, in the case of the Company, as may be
required under U.S state securities (or Blue Sky) laws in connection with the
distribution of the Rights or the distribution or purchase of the Offer
Securities by the Underwriters.

 

1.5                                 (agreement effective) This agreement
constitutes its legal, valid and binding obligations, enforceable against it in
accordance with its terms subject to any necessary stamping or registration.

 

1.6                                 (no contravention) Neither its execution of
this agreement nor the carrying out by it of the transactions that this
agreement contemplates, does or will:

 

(a)                                  contravene any law to
which it is subject or any order of any Government Agency that is binding on
it;

 

(b)                                 contravene any
Authorisation;

 

(c)                                  contravene any
undertaking or instrument binding on it; or

 

(d)                                 contravene its
constitution

 

except, in the case of the Company, as may be required under U.S state
securities (or Blue Sky) laws in connection with the distribution of the Rights
or the distribution or purchase of the Offer Securities by the Underwriters.

 

40

 

Part 2: Company

 

1.                                       Rights Offer

 

1.1                                 (Offer Documents) The Offer Documents:

 

(a)                                  comply with all
applicable laws, including the Corporations Act (as varied by any modification
of, or any exemption from, the Corporations Act given by ASIC pursuant to the
Corporations Act);

 

(b)                                 unless the
Underwriters otherwise consent in writing, will be issued in the form
initialled by the Company and the Underwriters (and in no other form);

 

(c)                                  will not contain a
statement which is misleading or deceptive and will not be one from which there
is an omission of information required by the Corporations Act or any other
applicable law;

 

(d)                                 will not be misleading
or deceptive and will not be likely to mislead or deceive.

 

1.2                                 (conduct) It has not engaged in, and will
not engage in, conduct that is misleading or deceptive or which is likely to
mislead or deceive in connection with the issue of the Offer Documents or the
making of the Rights Offer.

 

1.3                                 (publicity) At the time of publication, a
Publication shall:

 

(a)                                  not be misleading or
deceptive or be likely to mislead or deceive; and

 

(b)                                 comply with all
applicable laws.

 

1.4                                 (Certificate) The contents of each
Certificate given under this agreement will be true and correct as at the date
the Certificate is given.

 

1.5                                 (Offer Securities) The Offer Securities
will be validly issued and allotted free from all liens, charges and other
encumbrances.

 

1.6                                 (continuously quoted securities) The Offer
Securities are “continuously quoted securities” for the purposes of
section 713(1)(a) of the Corporations Act and no determination has been
made by ASIC under section 713(6) of the Corporations Act so as to entitle
the Company to issue a prospectus that complies with section 713 of the
Corporations Act.

 

2.                                       Due Diligence

 

2.1                                 (due diligence) The Due Diligence Program
will be properly implemented and fully carried out in accordance with the
Planning Memorandum, statements contained in the Offer Documents will be
verified by appropriately qualified persons, the Due Diligence Results will be
the results of the investigations described in the Planning Memorandum and the
Verification Material will contain the material collected to verify the
statements made in the Offer Documents (and will be accurate in all material
respects).

 

41

 

2.2                                 (ongoing due diligence) It will continue
throughout the Offer Period to conduct the Due Diligence Program substantially
in accordance with the Planning Memorandum.

 

3.                                       Compliance

 

3.1                                 (no contravention of disclosure obligations)
It is not in breach of, and will not during the Offer Period breach, Chapter
6CA of the Corporations Act or any provision of Chapter 3 of the Listing Rules.

 

3.2                                 (no contravention) It (or any of its
related bodies corporate) has not contravened, and before the expiry of the
Offer Period will not contravene, in any material respect, any provision of its
constitution, the Corporations Act (as varied by any modification of, or
exemption from, Corporations Act given by ASIC pursuant to section 741 of the
Corporations Act) and any other applicable law (except, in the case of a
Listing Rule, where compliance with that Listing Rule has been waived in
writing by ASX or any agreement binding on it).

 

4.                                       US Warranties

 

4.1                                 (no general solicitation) None of it or, any
of its Affiliates, or any person acting on its or any of its Affiliates behalf
(other than the Underwriters or any of their Affiliates or any person acting on
behalf of any of them, as to whom the Company makes no representation) has
offered or sold (or will offer or sell) any Rights or Offer Securities in the
United States using any form of general solicitation or general advertisement
within the meaning of Rule 502(c) under the US Securities Act.

 

4.2                                 (no directed selling efforts) With respect
to those Rights or Offer Securities sold in reliance on Regulation S under the
US Securities Act, none of it, any of its Affiliates or any person acting on
its or any of its Affiliates behalf (other than the Underwriters or any of
their Affiliates or any person acting on behalf of any of them, as to whom the
Company makes no representation) has engaged nor will it engage in any directed
selling efforts within the meaning of Rule 902(c) under the US Securities Act.

 

4.3                                 (no integration) It has not solicited any
offer to buy or offered to sell, and will not solicit any offer to buy or offer
to sell, in the United States or to any U.S. person, any security which is or
would be integrated with the distribution of the Rights or the sale of the
Offer Securities in a manner that would require the Offer Securities to be
registered under the US Securities Act.

 

4.4                                 (no registration) Subject to compliance by
the Underwriters with their obligations under this agreement, it is not
necessary in connection with the initial offer, sale and delivery of the Rights
or Offer Securities in the manner contemplated by this agreement to register
the Offer Securities under the US Securities Act.

 

4.5                                 (investment company) It is not, and upon
the allotment of the Offer Securities and the application of the net proceeds
from the allotment of the Offer Securities will not be, required to register as
an “investment company” under the US Investment Company Act of 1940, as
amended.

 

42

 

4.6                                 (independent accountants) The accountants
who certified the financial statements and supporting schedules included in the
Offer Documents are independent certified public accountants with respect to
ANZ and its Related Corporations under Australian Statement of Auditing
Practice AUP 32 “Audit Independence” and The Institute of Chartered Accountants
in Australia’s Code of Professional Conduct.

 

Part 3: The Underwriters

 

1.                                       United States

 

1.1                                 (QIB) It is a QIB or it is not a US Person.

 

1.2                                 (general solicitation) It and each of its
Affiliates and each person acting on behalf of it or its Affiliates has not
offered, sold, or solicited offers for or offered to sell, and will not offer,
sell, solicit offers for or offer to sell, the Rights or the Offer Securities
in the United States or to, or for the account or benefit of, US Persons using
any form of general solicitation or general advertising within the meaning of
Rule 502(c) under the US Securities Act.

 

1.3                                 (Broker-dealer) All offers and sales of
Rights or Offer Securities in the United States by it and any of its Affiliates
and each person acting on behalf of it or its Affiliates will be effected only
in accordance with all applicable U.S. broker-dealer requirements.

 

1.4                                 (non-registration) It understands that the
Rights and the Offer Securities have not been, and will not be, registered
under the US Securities Act and may not be offered or sold in the United States
to, or for the account or benefit of, US Persons (except in transactions exempt
from the registration requirements of the US Securities Act and the laws of any
state or other jurisdiction in the United States).

 

1.5                                 (directed selling efforts) With respect to
Rights or Offer Securities to be offered and sold outside the United States in
reliance on Regulation S, it, its Affiliates and each person acting on behalf
of it or its Affiliates has not engaged, and will not engage, in any “directed
selling efforts” within the meaning of Rule 902(c) under the US Securities Act.

 

1.6                                 (Restrictions on Offers):

 

(a)                                  with respect to
offers and sales of Rights or Offer Securities within the United States, it,
and its Affiliates and any person acting on its behalf, will offer and sell
such Rights or Offer Securities in the United States only to a limited number
of persons that it reasonably believes to be QIBs and will deliver to each such
QIB the Final Offer Documents, as amended or supplemented, and an Institutional
Acceptance, in which QIBs confirm the representations and warranties set forth
under the section “Transfer Restrictions – U.S. Purchasers” in the
Preliminary International Institutional Supplement and it will not sell Offer
Securities to any U.S. person who has not executed an Investor Representation
Letter or an Institutional Acceptance;

 

43

 

(b)                                 with respect to offers
and sales outside the United States, such Underwriter and its Affiliates has
offered the Rights and the Offer Securities, and will offer and sell the Rights
and the Offer Securities, to non-U.S. persons only in compliance with
Regulation S and only to persons that have signed and delivered to the
Underwriters an Application in accordance with the Prospectus.  With respect to those Rights and Offer
Securities sold in reliance on Regulation S, none of the Underwriter and its
Affiliates or any person acting on any of their behalf has engaged or will
engage in any directed selling efforts within the meaning of Regulation S.

 

1.7                                 (restrictions on resale) It, its Affiliates
and any person acting on its behalf, at or prior to confirmation of sales of
the Offer Securities will have sent to each non-US Person that is a
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases Offer Securities from it from the date of this
agreement until 40 days after the Second Allotment Date, a confirmation or
notice to substantially the following effect:

 

“The Shares covered hereby have not been registered under the US
Securities Act of 1933 (“US Securities Act”) and may not be offered and sold
within the United States or to, or for the account or benefit of, any US Person
(i) as part of their distribution at any time or ii) otherwise until 40 days
after the Second Allotment Date, except in either case in accordance with
Regulation S (or Rule 144A if available) under the US Securities Act.

 

Terms used above have the meaning given to them by Regulation S under
the US Securities Act.”; and

 

1.8                                 (Sales in US) It and its Affiliates will
not offer or sell in the United States any Offer Securities it is required to
subscribe for or which are allotted to it pursuant to this agreement.

 

2.                                       General

 

2.1                                 (Compliance) The distribution of Rights and
each offer and sale of Offer Securities by it and its Affiliates and any person
acting on its or their behalf shall be made only in accordance with the
directions of the Company with respect to the applicable legal and other
requirements of the jurisdiction in which the offer or sale is made.

 

2.2                                 (Licences) Each Underwriter holds a
securities dealers licence issued by ASIC.

 

44

 

EXECUTED as an
agreement.

 

	
  EXECUTED by AUSTRALIA AND NEW

  ZEALAND BANKING GROUP

  LIMITED under power of attorney in the

  presence of:

  	
   

  
	
   

  	
   

  
	
  /s/ S. Dulhunty

  	
   

  	
  /s/ D. Valentine

  	
   

  
	
  Signature of Witness

  	
  Signature of attorney

  
	
   

  	
   

  
	
   

  	
   

  
	
  Sarah Dulhunty

  	
   

  	
  David Valentine

  	
   

  
	
  Name

  	
  Name

  
	
   

  	
  23 October 2003

  	
   

  
	
   

  	
  Date of power of attorney

  
	
   

  	
   

  
	
   

  	
   

  
	
  EXECUTED by MORGAN STANLEY

  DEAN WITTER AUSTRALIA

  SECURITIES LIMITED under power of

  attorney in the presence of:

  	
   

  
	
   

  	
  Signature of attorney

  
	
   

  	
   

  
	
  /s/ K. Evans Cullen

  	
   

  	
  /s/ M. Hanning

  	
   

  
	
  Signature of witness

  	
  Name

  
	
   

  	
   

  
	
  Karen Evans Cullen

  	
   

  	
  21
  October 2003

  	
   

  
	
  Name

  	
  Date of power of attorney

  

 

45

 

	
  SIGNED for CITIGROUP GLOBAL

  MARKETS AUSTRALIA PTY LIMITED

  under power of attorney in the presence of:

  	
  /s/ Philip Holt

  	
   

  
	
   

  	
  Signature of attorney

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ S. Dulhunty

  	
   

  	
  PHILIP HOLT

  	
   

  
	
  Signature of witness

  	
  Name

  
	
   

  	
   

  
	
  Sarah Dulhunty

  	
   

  	
  23
  OCTOBER 2003

  	
   

  
	
  Name

  	
  Date of power of attorney

  

 

46Exhibit
4.1.2

 

Share Sale Agreement

 

Lloyds TSB Bank plc

 

Lloyds Bank Subsidiaries
Limited

 

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

 

ANZ Banking Group (New Zealand)
Limited

 

 

 

 

TABLE OF CONTENTS

 

	
  1

  	
  INTERPRETATION

  	
   

  
	
  1.1

  	
  Definitions

  	
   

  
	
  1.2

  	
  Construction of References

  	
   

  
	
  1.3

  	
  General Interpretation

  	
   

  
	
  1.4

  	
  Deemed New Zealand
  Companies

  	
   

  
	
  1.5

  	
  Currencies

  	
   

  
	
   

  	
   

  	
   

  
	
  2

  	
  SALE AND PURCHASE OF SHARES

  	
   

  
	
  2.1

  	
  Sale and Purchase

  	
   

  
	
  2.2

  	
  No Encumbrances

  	
   

  
	
  2.3

  	
  Rights and Privileges

  	
   

  
	
  2.4

  	
  Title

  	
   

  
	
  2.5

  	
  Permitted Dividends

  	
   

  
	
  2.6

  	
  No Trustee or Nominee

  	
   

  
	
  2.7

  	
  Condition

  	
   

  
	
  2.8

  	
  Date for Fulfilment

  	
   

  
	
  2.9

  	
  Reasonable Steps
  to Satisfy Condition

  	
   

  
	
  2.10

  	
  Waiver

  	
   

  
	
  2.11

  	
  Non-Fulfilment

  	
   

  
	
  2.12

  	
  Underwriting
  Agreement Termination

  	
   

  
	
  2.13

  	
  LTSB/NBNZ Fault

  	
   

  
	
  2.14

  	
  ANZ Bad Faith

  	
   

  
	
  2.15

  	
  Break Fees

  	
   

  
	
   

  	
   

  	
   

  
	
  3

  	
  CALCULATION
  AND PAYMENT OF PURCHASE PRICE

  	
   

  
	
  3.1

  	
  Purchase Price

  	
   

  
	
  3.2

  	
  Adjustment of Purchase
  Price

  	
   

  
	
  3.3

  	
  Payment for Shares

  	
   

  
	
  3.4

  	
  Replacement
  of LTSB Existing Standby Facility

  	
   

  
	
  3.5

  	
  Closing Accounts

  	
   

  
	
  3.6

  	
  Default Interest

  	
   

  
	
  3.7

  	
  Lowest Price

  	
   

  
	
  3.8

  	
  Calculation of Interest

  	
   

  
	
  3.9

  	
  Payments

  	
   

  
	
   

  	
   

  	
   

  
	
  4

  	
  CLOSING

  	
   

  
	
  4.1

  	
  Venue and Time

  	
   

  
	
  4.2

  	
  Delivery of Documents

  	
   

  
	
  4.3

  	
  Payment at Closing

  	
   

  
	
  4.4

  	
  Default in Closing

  	
   

  
	
  4.5

  	
  Company Documents and
  Records

  	
   

  
	
   

  	
   

  	
   

  
	
  5

  	
  CONDUCT OF BUSINESS

  	
   

  
	
  5.1

  	
  Pre-Closing Conduct of
  Business

  	
   

  

 

 

	
  5.2

  	
  Consultation

  	
   

  
	
  5.3

  	
  LTSB Existing Standby
  Facility

  	
   

  
	
  5.4

  	
  Pre-Closing Access to
  Business

  	
   

  
	
  5.5

  	
  Substitution of
  Lloyds TSB Guarantees

  	
   

  
	
  5.6

  	
  Counterparty Consents

  	
   

  
	
  5.7

  	
  Other Lloyds TSB
  Group Relationships

  	
   

  
	
  5.8

  	
  Black Horse Company Names

  	
   

  
	
  5.9

  	
  Lloyds TSB Manuals

  	
   

  
	
  5.10

  	
  Consultation on
  Employment Matters

  	
   

  
	
  5.11

  	
  Post-Closing Redundancy

  	
   

  
	
  5.12

  	
  Employees

  	
   

  
	
   

  	
   

  	
   

  
	
  6

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
   

  
	
  6.1

  	
  Vendor Warranties

  	
   

  
	
  6.2

  	
  Purchase
  Price Adjustment for Breach of Warranty

  	
   

  
	
  6.3

  	
  Adjusted Price Sole Relief

  	
   

  
	
  6.4

  	
  Monetary Limitations

  	
   

  
	
  6.5

  	
  Time Limit

  	
   

  
	
  6.6

  	
  General
  Exceptions to Vendor Warranties

  	
   

  
	
  6.7

  	
  Exclusions from
  Warranty Claims

  	
   

  
	
  6.8

  	
  No Double Recoveries

  	
   

  
	
  6.9

  	
  Subrogation of Rights

  	
   

  
	
  6.10

  	
  Duty to Mitigate

  	
   

  
	
  6.11

  	
  Management of Claims

  	
   

  
	
  6.12

  	
  Purchaser Relies on
  Own Judgement

  	
   

  
	
  6.13

  	
  Purchaser Warranties

  	
   

  
	
  6.14

  	
  Tax
  Consequences of Purchase Price Adjustment

  	
   

  
	
   

  	
   

  	
   

  
	
  7

  	
  TAXATION

  	
   

  
	
  7.1

  	
  Definitions

  	
   

  
	
  7.2

  	
  Purchase
  Price adjustment for Indemnity Loss

  	
   

  
	
  7.3

  	
  Tax Warranties - General

  	
   

  
	
  7.4

  	
  Tax Warranties –
  Relevant Transactions

  	
   

  
	
  7.5

  	
  Indemnity

  	
   

  
	
  7.6

  	
  Claims

  	
   

  
	
  7.7

  	
  Right to require
  deferral of taxation

  	
   

  
	
  7.8

  	
  Payment

  	
   

  
	
  7.9

  	
  Effect
  of Purchase Price adjustment/no windfall benefit from indemnity

  	
   

  
	
  7.10

  	
  Recoveries

  	
   

  
	
  7.11

  	
  Taxation Claims Procedures

  	
   

  
	
  7.12

  	
  Existing Taxation Claims

  	
   

  
	
  7.13

  	
  Procedure
  for small taxation claim amounts

  	
   

  
	
  7.14

  	
  Expenses

  	
   

  
	
  7.15

  	
  Taxation Returns

  	
   

  
	
  7.16

  	
  Limitations on
  Purchase Price adjustment

  	
   

  
	
  7.17

  	
  Purchaser Obligations

  	
   

  

 

 

	
  7.18

  	
  Certain Confirmations

  	
   

  
	
  7.19

  	
  Transaction Two

  	
   

  
	
  7.20

  	
  Transaction Three Swaps

  	
   

  
	
  7.21

  	
  Transaction Four
  Transactions

  	
   

  
	
   

  	
   

  	
   

  
	
  8

  	
  NON-COMPETITION COVENANT

  	
   

  
	
  8.1

  	
  Definitions

  	
   

  
	
  8.2

  	
  No Competition

  	
   

  
	
  8.3

  	
  Exceptions to
  Restricted Activities

  	
   

  
	
  8.4

  	
  Cessation of Restraint

  	
   

  
	
  8.5

  	
  Restraint Reasonable

  	
   

  
	
  8.6

  	
  Modification

  	
   

  
	
  8.7

  	
  Assessment of Purchase
  Price

  	
   

  
	
   

  	
   

  	
   

  
	
  9

  	
  GUARANTEES

  	
   

  
	
  9.1

  	
  Definitions

  	
   

  
	
  9.2

  	
  Guarantees

  	
   

  
	
  9.3

  	
  Non-Prejudice of Guarantee

  	
   

  
	
  9.4

  	
  Guarantor a Principal
  Obligor

  	
   

  
	
  9.5

  	
  Exercise of Rights

  	
   

  
	
  9.6

  	
  Waiver of Subrogation
  Rights

  	
   

  
	
  9.7

  	
  No Competition

  	
   

  
	
  9.8

  	
  Reinstatement

  	
   

  
	
   

  	
   

  	
   

  
	
  10

  	
  MISCELLANEOUS

  	
   

  
	
  10.1

  	
  Vendor Liability Cap

  	
   

  
	
  10.2

  	
  Announcements

  	
   

  
	
  10.3

  	
  Confidentiality

  	
   

  
	
  10.4

  	
  No
  Action

  	
   

  
	
  10.5

  	
  No Assignment

  	
   

  
	
  10.6

  	
  Notices

  	
   

  
	
  10.7

  	
  Designated Addresses

  	
   

  
	
  10.8

  	
  Giving of Notices and Consents

  	
   

  
	
  10.9

  	
  No Cancellation

  	
   

  
	
  10.10

  	
  Waiver

  	
   

  
	
  10.11

  	
  Expenses

  	
   

  
	
  10.12

  	
  Contracts (Privity) Act

  	
   

  
	
  10.13

  	
  Governing Law

  	
   

  
	
  10.14

  	
  Submission to Jurisdiction

  	
   

  
	
  10.15

  	
  Process Agent

  	
   

  
	
  10.16

  	
  Severability

  	
   

  
	
  10.17

  	
  No
  Merger

  	
   

  
	
  10.18

  	
  Further Assurances

  	
   

  
	
  10.19

  	
  Entire Agreement

  	
   

  
	
  10.20

  	
  Amendments

  	
   

  
	
  10.21

  	
  Execution and Delivery

  	
   

  

 

 

	
  10.22

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  
	
  FIRST
  SCHEDULE - SUBSIDIARIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECOND
  SCHEDULE - CLOSING ACCOUNTS

  	
   

  
	
   

  	
   

  	
   

  
	
  THIRD
  SCHEDULE - VENDOR WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  FOURTH
  SCHEDULE - PURCHASER WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX ONE –
  PROPERTY INTERESTS

  	
   

  

 

 

SHARE SALE AGREEMENT

 

Date:  24 October  2003

 

PARTIES

 

Lloyds TSB Bank plc at London, England

 

Lloyds Bank
Subsidiaries Limited at London,
England

 

Australia and New
Zealand Banking Group Limited (ABN 11
005 357 522) at Melbourne, Australia

 

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

 

BACKGROUND

 

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

 

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

 

IT IS AGREED between the Parties as follows:

 

1                                          INTERPRETATION

 

1.1                                 Definitions

In this Agreement, unless
inconsistent with the context, the following terms shall have the following
meanings:

 

Accounting
Period means the period commencing on
1 January 2003 and ending on the day before the Closing Date.

 

Accounting
Policies means the accounting
policies referred to in paragraph 1 of
the Second Schedule to the
extent that that paragraph requires those policies to be applied in the
preparation of the Closing Accounts.

 

Adjustment
Date means the day falling 10
Business Days after the Closing Accounts are designated as such in accordance
with the Second Schedule.

 

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

 

1

 

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

 

ANZ Group means the Guarantor and its subsidiaries.

 

Balance Date means 31 December 2002.

 

Black Box
Documents means the documents in
Section 17 the Data Room Index.

 

Business Day means:

 

(a)                                  in clause 10.6, a day
on which banks are
open for general over-the-counter banking business in
London and Wellington; and

 

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

 

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

 

Closing
Accounts means the consolidated
financial statements of the NBNZ Group as at midnight on (that is, at the end
of) the day before the Closing Date and for the Accounting Period to be
prepared and audited pursuant to clause 3.5 and the Second Schedule comprising:

 

(a)                                  consolidated statement of financial performance for the Accounting
Period;

 

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

 

(c)                                  consolidated statement of movements in equity for the Accounting
Period,

 

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

 

Closing Date means:

 

(a)                                  1 December 2003; or

 

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

 

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

 

Companies Act means the Companies Act 1993.

 

2

 

Confidentiality
Deed means the Confidentiality Deed
dated 13 June 2003 executed by the Guarantor in favour of Lloyds TSB.

 

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

 

Data Room
Index means the index of written
information made available by Lloyds TSB to the Purchaser and/or the Guarantor
for inspection in the Data Room, a copy of which has been initialled (for the
purposes of identification) by or on behalf of Lloyds TSB and the Purchaser and
is to be held by KPMG under the terms of an escrow letter.

 

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

 

Disclosure
Information means the following
information:

 

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

 

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

 

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

 

in each case for the purposes
of the Guarantor’s and/or the Purchaser’s due diligence investigation of the
NBNZ Group, copies of which written information are in an agreed collection of
folders, each of which folders (for the purposes of identification) includes a
confirmation form signed by or on behalf of Lloyds TSB and the Purchaser and
all of which folders are to be held by KPMG under the terms of an escrow
letter, but for the avoidance of doubt excludes the National Bank’s individual
customer loan and credit files reviewed by or on behalf of the Purchaser and/or
the Guarantor.

 

Disclosure
Letter means the disclosure letter
dated the Execution Date and provided to the Purchaser by or on behalf of the
Vendor before the execution of this Agreement and recording certain exceptions
to the Vendor Warranties and containing other information.

 

3

 

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

 

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

 

Execution
Date means the date of this
Agreement.

 

Governmental
Authority means a minister of the
Crown, department of state, government authority, regional council, territorial
authority or other statutory or regulatory authority, industry regulator or
ombudsman having jurisdiction or authority to perform or exercise functions or
powers.

 

Group Company:

 

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

 

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

 

GST means goods and services tax chargeable under the Goods and Services
Tax Act 1985.

 

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

 

Insolvency
Event means, in relation to any Group
Company:

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

(d)                                 the Group Company:

 

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

 

(ii)                                  stopping or suspending payment of all or a class of its debt other
than as the result of a failure to pay a debt or claim the subject of a good
faith dispute;

 

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

 

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

 

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

 

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

 

Interest Rate
means:

 

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

 

(i)                                     the “FRA” rate for 30 day bank accepted bills of exchange (expressed
as a percentage) as quoted on the Reuters page BKBM (or any successor page) at
10.45am on the first Business Day of the period in respect of which such rate
is to be calculated; or

 

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

 

5

 

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

 

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

 

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

 

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

 

Interim
Period means the period commencing on
the Execution Date and ending at Closing.

 

June Accounts
means the audited consolidated
financial statements of the NBNZ Group as at 30 June 2003 comprising:

 

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

 

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

 

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

 

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

 

and includes the notes to those
financial statements.

 

Latest Annual
Accounts means:

 

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

 

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

 

6

 

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

 

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

 

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

 

and includes the notes to those
financial statements; and

 

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

 

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

 

Lloyds TSB
Group means Lloyds TSB Group plc (a
company incorporated in Scotland) and its subsidiaries and unless inconsistent
with the context, means each such company individually.

 

Lloyds TSB
Trade Marks means the Trade Marks
listed in the First Schedule of the Trade Mark Licence.

 

Loan means:

 

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

 

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

 

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

 

7

 

LTSB Existing
Standby Facility means the standby
credit facility in a principal amount of up to £4 billion provided by Lloyds
TSB to the National Bank and existing as at the Execution Date.

 

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

 

Managed Funds
means:

 

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

 

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

 

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

 

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

 

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

 

(f)                                    the Staff Superannuation Fund.

 

Material
Adverse Effect in relation to a
person means a material adverse effect on that person’s financial condition or
operations or on the consolidated financial condition or operations of it and
its subsidiaries taken as a whole.

 

Material
Contract means any contract or
agreement, whether written or oral, and including any amendments thereto (each
a contract) to which a Group
Company is a party and under which a Group Company has unperformed obligations
or has

 

8

 

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

 

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

 

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

 

(c)                                  is not:

 

(i)                                     a Loan contract; or

 

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

 

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

 

month means calendar month.

 

National Bank
means The National Bank of New
Zealand Limited a company incorporated in New Zealand (Registered Number WN
276922).

 

National Bank
Group means the National Bank and its
subsidiaries (and includes Countrywide Endeavour Building Society) and, unless
inconsistent with the context, means each such company or other entity
individually.

 

NBNZ Group means NBNZ Holdings and its subsidiaries, including members of the
National Bank Group and, unless inconsistent with the context, means each such
company or other entity individually.

 

NBNZ Group
Trade Marks means those trade marks
of which a Group Company is registered as the proprietor.

 

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

 

Net Tangible
Assets means the amount by which
Total Tangible Assets as disclosed in the Closing Accounts exceed Total
Liabilities as disclosed in the Closing Accounts.

 

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

 

9

 

a Party means the Vendor, the Purchaser, Lloyds TSB or the
Guarantor, as the case may be, and the
Parties means them collectively.

 

Permitted
Dividends means the imputed dividend
and the supplementary dividend referred to in clause
2.5.

 

Permitted
Encumbrance means:

 

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

 

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

 

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

 

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

 

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

 

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

 

Property
Interests means the NBNZ Group’s
freehold and leasehold interests in land (including its leases or tenancies of
buildings) described in the schedule attached to this Agreement as Appendix One.

 

Purchase
Price means the purchase price for
the Shares being the price referred to in clause
3.1 as the same may be adjusted pursuant to clause 3.2.

 

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

 

10

 

Purchaser
Warranties means the representations and warranties of the
Purchaser and the Guarantor created by clause
6.13 and
set out in the Fourth Schedule.

 

Related
Company has the meaning given to that
term in section 2(3) of the Companies Act.

 

Relevant
Transactions means the seven
transactions specified in Part 1 of Document number 17.4.1 in the Data
Room Index.

 

Shares means 357,781,904 fully paid ordinary shares in the capital of NBNZ
Holdings.

 

Staff
Superannuation Fund means the
National Bank Staff Superannuation Fund being a registered superannuation
scheme under the Superannuation Schemes Act 1989 and established under a Deed
dated 1 April 1900 between the National Bank and the Public Trust (as
Trustee) and governed by Rules deemed (under a Trust Deed dated
31 March 1979 between the National Bank and the Trustees) to have
come into force on 1 June 1978 (Registered Number AS 2294).

 

Structured
Finance Transactions means the
transactions specified in parts 1 and 2 of Document number 17.4.1 in the Data
Room Index.

 

subsidiary has the meaning given to it in section 5(1) of the Companies
Act.

 

Superannuation
Funding Shortfall means the excess of
the accrued liabilities of the Staff Superannuation Fund over the market value
of the assets of the Staff Superannuation Fund, as determined by the actuary to
the Staff Superannuation Fund pursuant to the provisions of Professional Standard
Number 2 (Actuarial Reporting for Superannuation Schemes) promulgated by the
New Zealand Society of Actuaries.

 

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

 

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

 

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

 

11

 

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

 

Total
Liabilities means the aggregate of
all liabilities of the NBNZ Group on a consolidated basis ascertained in
accordance with the Accounting Policies.

 

Total
Tangible Assets means the aggregate
of the book values of the tangible assets of the NBNZ Group on a consolidated
basis ascertained in accordance with the Accounting Policies.

 

Trade Mark
Licence means the trade mark licence
between Lloyds TSB and the National Bank, in the form agreed between Lloyds TSB
and the Purchaser on or before the Execution Date and initialled on behalf of
those Parties for the purposes of identification.

 

Transaction
Four Transactions means the three
transactions identified as the Transaction Four Transactions in Document number
17.4.1 in the Data Room Index and includes a reference to each such Transaction
Four Transactions individually.

 

Transaction
One means the funding and arrangement
transaction identified as Transaction One in Document number 17.4.1 in the Data
Room Index.

 

Transaction
Three Swaps means the two funding
swap transactions identified as Transaction Three Swaps in Document number
17.4.1 in the Data Room Index.

 

Transaction
Two  means the financing transaction identified as Transaction Two and
Document number 17.4.1 in the Data Room Index.

 

Transaction
Two - Entity One and  Entity Two mean the entities respectively
described as such in Document number 17.4.1 in the Data Room Index.

 

Underwriting
Agreement means the Underwriting
Agreement dated on or about 24 October 2003 between the Guarantor (as
issuer) and Morgan Stanley Dean Witter Australia Securities Limited and
Citigroup Global Markets Australia Pty Limited (as underwriters) a copy of
which has been initialled on behalf of the Parties for the purposes of
identification.

 

Vendor means Lloyds Bank Subsidiaries Limited a company incorporated in
England.

 

Vendor
Warranties means the representations
and warranties of the Vendor and Lloyds TSB created by clause  6.1
and set out in the Third Schedule.

 

Vendor
Warranty Claim means a claim under clause 6.2 (but which is not precluded by another
provision in Section 6)
by the Purchaser for
compensation by the Vendor for a Warranty Loss.

 

12

 

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

 

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

 

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

 

Wind-up
Companies means the following Group
Companies and, unless inconsistent with the context, means each such company
individually:

 

(a)                                  Countrywide
Superannuation Services Limited;

 

(b)                                 Lloyds NZA
Pty Limited;

 

(c)                                  Northpac
Holdings Limited;

 

(d)                                 Pukete
Industrial Holdings Limited;

 

(e)                                  Receivables
Warehouse Limited;

 

(f)                                    Ronaldo
Enterprises Limited;

 

(g)                                 South
Pacific Merchant Finance (Australia) Pty Limited;

 

(h)                                 Southpac
Corporation (Australia) Pty Limited; and

 

(i)                                     Southpac
Investment Management (Australia) Pty Limited.

 

1.2                                 Construction
of References

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

 

13

 

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

 

encumbrance means a debenture, mortgage, charge (whether fixed or floating),
pledge, lien or other security interest whether legal or equitable and
references to encumber are to be
construed accordingly.

 

person includes an individual, body corporate, an association of persons
(whether corporate or not), a trust and a state or agency of a state (in each
case, whether or not having separate legal personality and whether incorporated
or existing in New
Zealand or elsewhere).

 

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

 

so far as the
Vendor is aware is a reference to the
actual knowledge (and not the constructive knowledge) of:

 

(a)                                  employees of Lloyds TSB after reasonable enquiry on their behalf has
been made of the Chief Executive and Chief Financial Officer of the National
Bank and (for the purposes of the Third
Schedule only) also of the Head of Technology of the National
Bank; and

 

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

 

taxation or tax includes:

 

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

 

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

 

14

 

proceedings of whatsoever
nature and wheresoever undertaken in connection with any of them.

 

taxation
authority means the Inland Revenue
Department and any other governmental or other authority whatsoever competent
to impose or collect any form of taxation whether in New Zealand or elsewhere.

 

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

 

1.3                                 General
Interpretation

In this Agreement:

 

(a)                                  a reference to a Group Company includes a reference to its successor
company;

 

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

 

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

 

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

 

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

 

(f)                                    expressions referring to writing shall be construed as including
references to words printed, type-written, telexed, communicated by electronic
mail or on computer disk, lithographed or otherwise traced, copied or
reproduced;

 

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

 

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

 

15

 

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

 

1.4                                 Deemed
New Zealand Companies

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

 

1.5                                 Currencies

All references in this
Agreement to:

 

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

 

(b)                                 Australian dollars and A$ are references
to the lawful currency of Australia; and

 

(c)                                  New Zealand dollars and NZ$ are
references to the lawful currency of New Zealand,

 

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

 

16

 

2                                          SALE
AND PURCHASE OF SHARES

 

2.1                                 Sale and
Purchase

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

 

2.2                                 No
Encumbrances

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

 

2.3                                 Rights  and Privileges

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

 

2.4                                 Title

Following payment at Closing of:

 

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

 

(b)                                 the amount required to be paid at
Closing pursuant to clause 3.4(b) and
clause 4.3(b),

 

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

 

2.5                                 Permitted
Dividends

No later than the day before
the Closing Date the Vendor will procure that NBNZ Holdings pays (in New
Zealand dollars) a dividend (which may carry imputation credits) of
NZ$575,000,000 (five hundred and seventy five million New Zealand dollars)
payable out of the retained earnings of NBNZ Holdings, together with a
supplementary dividend (as defined in Section OB 1 of the Income Tax Act
1994) calculated in New Zealand dollars by reference to the imputation credits
attached to the first mentioned dividend and also payable in New Zealand
dollars.

 

2.6                                 No Trustee
or Nominee

For the avoidance of doubt, it
is hereby acknowledged that notwithstanding any other provision of this
Agreement:

 

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

 

17

 

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

 

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

 

2.7                                 Condition

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

 

2.8                                 Date for
Fulfilment

If, as at midnight (Australian
Eastern Time) on 28 November 2003 (or on such other date as may be agreed
in writing by Lloyds TSB and the Purchaser for the fulfilment of that
condition):

 

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

 

(b)                                 either:

 

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

 

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

 

then the condition set out in clause 2.7 shall be treated as not having
been fulfilled.

 

2.9                                 Reasonable Steps to Satisfy Condition

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

 

18

 

2.10                           Waiver

The condition set out in clause
2.7 has been inserted for the benefit of the Purchaser and may only be waived
by the Purchaser.

 

2.11                           Non-Fulfilment

If, as at midnight (Australian
Eastern Time) on 28 November 2003 (or on such other date as may be agreed
in writing by Lloyds TSB and the Purchaser for the fulfilment of the
condition), the condition set out in clause
2.7 is treated as not having been fulfilled under clause 2.8 then:

 

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

 

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

 

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

 

2.12                           Underwriting Agreement Termination

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

 

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

 

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

 

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

 

19

 

2.13                           LTSB/NBNZ Fault

Clause
2.12(c) shall not apply where:

 

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

 

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

 

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

 

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

 

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

 

2.14                           ANZ Bad Faith

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

 

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

 

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

 

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

 

2.15                           Break Fees

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

 

20

 

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

 

21

 

3                                          CALCULATION AND PAYMENT OF PURCHASE  PRICE

 

3.1                                 Purchase Price

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

 

3.2                                 Adjustment
of Purchase Price

The purchase price stated in clause 3.1 shall be
adjusted as follows:

 

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

 

(b)                                 if the amount of Net Tangible Assets is more than the Agreed NTA
then the purchase
price for the Shares shall be increased dollar for dollar by the amount by
which the amount of the Net Tangible Assets is more than the
Agreed NTA.

 

Any adjustment pursuant to this
clause 3.2 shall be made on the
Adjustment Date in
accordance with clause 3.3(b).

 

3.3                                 Payment for Shares

The Purchase Price shall be
paid as follows:

 

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

 

(b)                                 on the Adjustment Date either of
the following payments shall be made, as the case may
require:

 

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

 

(ii)                                  if Net Tangible Assets is less
than the Agreed NTA then
the Vendor shall pay
to the Purchaser (in
New Zealand dollars) the
amount of such shortfall together with interest on that
shortfall calculated at the Interest Rate for the period from (and including) the Closing Date to (but
excluding) the Adjustment Date.

 

3.4                                 Replacement of LTSB Existing Standby Facility

It is agreed that:

 

22

 

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

 

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

 

(c)                                  Lloyds TSB and the Purchaser
shall arrange for the LTSB Existing Standby Facility to be cancelled with
effect on and from Closing.

 

3.5                                 Closing Accounts

The Closing Accounts will be
prepared, audited and designated in accordance with the Second Schedule.

 

3.6                                 Default
Interest

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

 

3.7                                 Lowest Price

For the purposes of:

 

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

 

(i)                                     that the Final Purchase Price is the lowest price (determined under
section OB7 of the Income Tax Act 1994, to the extent the consideration
payable is denominated in a foreign currency) they would have agreed for the
Shares, on the Execution Date, if payment would have been required in full at
the time the first right in the contracted property (being the Shares) was
transferred;

 

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

 

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

 

23

 

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

 

3.8                                 Calculation
of Interest

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

 

3.9                                 Payments

All payments pursuant to this Agreement shall
be:

 

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

 

(b)                                 made
in New Zealand dollars unless (i) another payment currency is specified in this
Agreement, or (ii) the Parties agree in writing that the relevant payment will
be made in another currency.

 

24

 

4                                          CLOSING

 

4.1                                 Venue and Time

Closing shall take place on the Closing Date:

 

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

 

(b)                                 no later than 1600 (GMT) in order
to facilitate the payment on the Closing Date of Pounds Sterling pursuant to clause
3.3(a).

 

4.2                                 Delivery
of Documents

At Closing, the Vendor shall deliver to the Purchaser:

 

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

 

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

 

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

 

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

 

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

 

(ii)                                  resignations of the NBNZ Group’s
nominated Directors on the Boards of the companies listed in Part 3 and Part 4 of the First
Schedule (other than those Directors who the Purchaser has
notified the Vendor in writing at least 5 Business Days prior to the Closing
Date are not required to resign) from the office of Director of the relevant
company,

 

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

 

25

 

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

 

(e)                                  a direction to the bank/s of each
Group Company to cancel all authorities of signatories who are appointees of the NBNZ
Group (other than those signatories who the Purchaser has notified the Vendor
in writing at least 5 Business Days prior to the Closing Date are not required
to resign) to operate
the relevant bank accounts;

 

(f)                                    duly executed transfers, in favour of NBNZ Holdings or the National
Bank, of all shares (if any) in a wholly-owned subsidiary
of which a person other than a Group Company is the registered holder (as
nominee) together with the share certificates (if any) for any such shares or (where relevant) a
certificate from the relevant Group Company that no share certificate for the
relevant shares has been issued.  With
respect to shares held by an individual in this regard, the Vendor need only
use its reasonable endeavours to deliver a transfer or certificate under this clause 4.2(f) concerning those
shares;

 

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

 

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

 

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

 

4.3                                 Payment at Closing

At Closing the documents delivered pursuant
to clause 4.2 shall be held
in escrow at the Closing venue for the Vendor and the Purchaser for their respective
rights and interests until:

 

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

 

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

 

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

 

26

 

4.4                                 Default in
Closing

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

 

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

 

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

 

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

 

(i)                                     sue the defaulting Party for
specific performance; or

 

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

 

(d)                                 where the Vendor is entitled to
cancel this Agreement the entry by the Vendor into an unconditional contract
for the resale of all or some of the Shares by the Vendor shall take effect as
a cancellation of this Agreement by the Vendor if this Agreement has not
previously been cancelled and such resale shall be deemed to have occurred
after cancellation.

 

4.5                                 Company
Documents and Records

The Vendor shall procure that on the Closing
Date there will
be in the possession
or control of the NBNZ Group:

 

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

 

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

 

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

 

27

 

(iii)                               all current books of record and
account and tax records of
each Group Company and all
computerised records of each
Group Company;

 

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

 

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

 

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

 

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

 

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

 

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

 

in each case taking effect as
at completion of Closing.

 

28

 

5                                          CONDUCT OF
BUSINESS

 

5.1                                 Pre-Closing
Conduct of Business

During the Interim Period,
unless the prior written consent of the Purchaser is obtained in each
particular case (which consent (i) shall be given on behalf of the
Purchaser by a person who will be nominated by the Purchaser within
two Business Days after the Execution Date and who will be available to
give consents under this clause 5.1 which
may be needed to facilitate the ongoing conduct of the business of the NBNZ
Group, and (ii) shall not be unreasonably withheld or delayed), the Vendor
shall ensure that the NBNZ Group:

 

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

 

(b)                                 does not incur or make any
commitment to incur capital expenditure in excess of NZ$500,000 for an individual
item or NZ$4,000,000 in the aggregate other than in performance of a
contractual obligation existing as at the Execution Date and disclosed to the
Guarantor before the Execution Date;

 

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

 

(d)                                 does not give any guarantee or
indemnity, or otherwise incur any actual or contingent liability, to secure
liabilities or obligations of:

 

(i)                                     any member of the Lloyds TSB
Group; or

 

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

 

(e)                                  does not:

 

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

 

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

 

except:

 

29

 

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

 

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

 

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

 

(g)                                 does not:

 

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

 

(ii)                                  declare or pay any Distribution
other than (A) as provided for in this Agreement or (B) to another Group
Company;

 

(iii)                               transfer or purport to transfer
any shares (including shares held as treasury stock) other than to another
Group Company;

 

(iv)                              alter or purport to alter the
rights attaching to its shares;

 

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

 

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

 

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

 

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

 

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

 

(m)                               does not enter into, vary or agree
to terminate or terminate unilaterally any Material Contract or enter into any
major transaction (as that term is defined in section 129 of the Companies
Act);

 

30

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5.2                                 Consultation

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

 

(a)                                  incurs any net actual indebtedness to the Lloyds TSB Group
(excluding amounts payable under the LTSB Existing Standby Facility), if the
total amount of that net actual indebtedness would then exceed NZ$250,000,000
(two hundred and fifty million New Zealand dollars) or its equivalent in one or
more foreign currencies (or such higher amount as may be approved in writing by
the Purchaser) but this clause 5.2(a) does
not apply to transactions between the LTSB Group and the NBNZ Group in
connection with customer-related activities;

 

31

 

(b)                                 terminates the employment of an
Employee except due to misconduct, poor performance or other just cause after
following a process which is consistent with its obligations under the
Employment Relations Act 2000;

 

(c)                                  commences or settles any legal proceedings;
or

 

(d)                                 approves any new large exposure,
any increase to any existing large exposure or any increase to any existing
exposure so that it becomes a large exposure. 
For the purposes of this clause
5.2(d), “large exposure” means a Loan exposure the creation of which
would require approval by the Chief Executive of the National Bank, under
policies and procedures of the NBNZ Group in existence on the Execution Date.

 

5.3                                 LTSB
Existing Standby Facility

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

 

5.4                                 Pre-Closing
Access to Business

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

 

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

 

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

 

5.5                                 Substitution of Lloyds TSB Guarantees

It is agreed that:

 

32

 

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

 

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

 

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

 

(b)                                 where, in respect of a Parent Guarantee, the Guarantor is not
substituted as guarantor for the relevant member of the Lloyds TSB Group as at
Closing then the Guarantor shall:

 

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

 

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

 

5.6                                 Counterparty
Consents

It is acknowledged and agreed
that:

 

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

 

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

 

(c)                                  in respect of the Structured Finance Transactions:

 

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

 

33

 

Transactions and to communicate
with relevant transaction counterparties to notify them of the change of ultimate
ownership of the National Bank and the various Group Companies participating in
the Structured Finance Transactions arising from the sale of the Shares to the
Purchaser; and

 

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

 

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

 

5.7                                 Other Lloyds TSB Group Relationships

It is agreed that:

 

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

 

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

 

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

 

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

 

34

 

5.8                                 Black
Horse Company Names

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

 

5.9                                 Lloyds TSB
Manuals

Where, as at Closing, the NBNZ
Group is in possession of any manuals which suggest an association or
affiliation with Lloyds TSB or another member of the Lloyds TSB Group then
within 6 months after Closing those manuals shall each include a prominent
statement at the beginning of the manual advising readers of the manual that
the Lloyds TSB Group accepts no responsibility or liability for any information
included in or omitted from the manual.

 

5.10                           Consultation on Employment Matters

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

 

5.11                           Post-Closing
Redundancy

For the avoidance of doubt, it
is acknowledged that if, after Closing, an Employee becomes redundant then all
redundancy payments (including, without limitation, any payment for a job
search period and any component reflecting accumulated sick leave or special
leave, long service leave or other benefit), notice payments, damages,
compensation payments and other costs and expenses of, or arising out of, such
redundancy are to be met by the Purchaser or the relevant Group Company and
neither the Vendor nor any other member of the Lloyds TSB Group shall have any
direct or indirect liability in respect of, and the Purchaser shall indemnify
the Vendor and each other member of the Lloyds TSB Group against all
liabilities and costs arising from, any such redundancy.  For the avoidance of doubt, this clause 5.11 does not derogate from the
Vendor Warranties.

 

5.12                           Employees

During the period of 18 months
from the date of this Agreement, Lloyds TSB will not, and will take reasonable
steps to ensure that each member of the Lloyds TSB Group does not:

 

(a)                                  target specifically any Employee for employment; or

 

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

 

35

 

6                                          REPRESENTATIONS
AND WARRANTIES

 

6.1                                 Vendor
Warranties

It is agreed that:

 

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

 

(b)                                 each of the representations and
warranties set out in the Third
Schedule shall be deemed to be repeated as at
Closing;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(ii)                                  sourced from a Governmental Authority; or

 

36

 

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

 

6.2                                 Purchase Price Adjustment for Breach of Warranty

Subject to clauses 6.4 to 6.11, the Vendor shall, by way of an
adjustment to the Purchase Price, indemnify the Purchaser and hold it harmless
from and against each Warranty Loss.

 

6.3                                 Adjusted
Price Sole Relief

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

 

6.4                                 Monetary
Limitations

It is agreed that:

 

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

 

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

 

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

 

6.5                                 Time Limit

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

 

37

 

6.6                                 General Exceptions to Vendor Warranties

The Vendor Warranties shall be
read, and shall have effect, subject to:

 

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

 

(b)                                 anything
done or omitted at the request, or with the approval, of the Purchaser or the
Guarantor in writing after the Execution Date;

 

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

 

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

 

(i)                                     High Court of New Zealand;

 

(ii)                                  Registrar of Companies (but the
Vendor Warranty in paragraph 16.2 (Managed Funds) of
the Third Schedule shall not
be read subject to this clause 6.6(d)(ii));

 

(iii)                               Land Information New Zealand;

 

(iv)                              Intellectual Property Office of
New Zealand;

 

(v)                                 Domainz; and

 

(vi)                              Personal Property Securities Register.

 

6.7                                 Exclusions
from Warranty Claims

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

 

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

 

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

 

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

 

38

 

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

 

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

 

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

 

6.8                                 No Double
Recoveries

It is agreed that:

 

(a)                                  the Purchaser shall not be entitled to be paid by the Vendor under clause 6.2 more than
once in respect of Warranty Losses arising from the same event or circumstance
or originating cause.  For the avoidance
of doubt, nothing in this clause 6.8(a) shall
preclude:

 

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

 

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

 

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

 

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

 

(ii)                                  all or some of the amount of any
payment made by the Vendor to the Purchaser in respect of a valid claim under clause 6.2, then the Purchaser shall procure that any amount so recovered is
forthwith paid to the Vendor and the relevant Vendor Warranty Claim shall be
treated as having been correspondingly withdrawn or the amount thereof
adjusted, as the case may require. 
Without limiting clause 6.10,
nothing in this clause 6.8(b)(ii)
shall require the Purchaser to seek recovery from any third party before giving
notice of a Vendor Warranty Claim under clause
6.11(a).

 

39

 

6.9                                 Subrogation
of Rights

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

 

6.10                           Duty to
Mitigate

The Purchaser shall take reasonable steps to
mitigate its loss arising from the occurrence of any event or circumstance
giving rise to any Warranty Loss and, subject to clause 6.11, where relevant shall also ensure that each
relevant Group Company takes reasonable steps to mitigate the loss suffered by
that Group Company arising from any such event or circumstance PROVIDED THAT
nothing in this clause 6.10 shall
require the Purchaser to do anything which could prejudice its ability to make
a claim under any insurance held for the Purchaser’s benefit.

 

6.11                           Management
of Claims

If the Purchaser or the
Guarantor becomes aware of any circumstances (Relevant
Circumstances) that are likely to give rise to a Warranty Loss a
claim for which is not precluded by clause 6.4
then the Purchaser shall:

 

(a)                                  as soon as reasonably possible
(and, in any event, within 2 months after the Purchaser or the Guarantor
becomes aware of the Relevant Circumstances) notify Lloyds
TSB giving, so far as
is reasonably practicable, details of the Relevant Circumstances;

 

(b)                                 not make any admission of
liability, agreement, settlement or compromise in respect of a third party
claim or otherwise take any action in relation thereto
except where:

 

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

 

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

 

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

 

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

 

40

 

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

 

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

 

(c)                                  give Lloyds
TSB and its
professional advisers reasonable access to all information and documents in its
or their possession or under its or their control relevant to the Relevant
Circumstances provided that such access shall not constitute a waiver of the
Purchaser’s legal professional privilege; and

 

(d)                                 comply with a reasonable written
request from, or consent of, Lloyds TSB to settle or
compromise any relevant third party claim in accordance with clause 6.11(b) or allow Lloyds TSB,
at the cost of Lloyds TSB, to conduct the defence of any relevant third party
claim, subject in either case to Lloyds TSB first acknowledging to the
Purchaser that a valid Warranty Claim arises from the Relevant Circumstances
and (if Lloyds TSB has requested such a settlement or compromise) Lloyds TSB
making available to the Purchaser, or paying to the relevant third party, any
amount required to be paid to the relevant third party to settle or compromise
the relevant claim.  In such cases
Lloyds TSB must act in full consultation at all times with the Purchaser and
use its reasonable endeavours to avoid the risk of harm to the reputation of
the business of the NBNZ Group and the ANZ Group.

 

6.12                           Purchaser
Relies on Own Judgement

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

 

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

 

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

 

41

 

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

 

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

 

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

 

(i)                                     whether a statement, promise, or
undertaking was made or given, either in words or by
conduct, in connection with or in the course of negotiations leading to the
making of this Agreement;

 

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

 

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

 

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

 

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

 

42

 

6.13                           Purchaser
Warranties

Each of the Purchaser and the
Guarantor hereby represents and warrants to the Vendor, as at the Execution
Date, as set out in the Fourth Schedule.  Each of the representations and warranties
set out in the Fourth Schedule shall
be deemed to be repeated in all material respects as at Closing.  No claim for breach of a Purchaser Warranty
shall be valid unless the claim is notified to the Guarantor by
31 January 2006.

 

6.14                           Tax Consequences of Purchase Price Adjustment

The Parties acknowledge and
agree that:

 

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

 

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

 

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

 

43

 

7                                          TAXATION

 

7.1                                 Definitions

In this Section 7:

 

IRD means the Inland Revenue Department.

 

GST Act means the Goods and Services Tax Act 1985.

 

ITA means the Income Tax Act 1994.

 

TAA means the Tax Administration Act 1994.

 

7.2                                 Purchase Price adjustment for Indemnity Loss

Subject to the limitations set
out in this Section 7, the
Vendor shall, by way of an adjustment to the Purchase Price and pursuant to clause 7.5, indemnify the Purchaser
against certain liabilities to taxation incurred or suffered by Group
Companies.  For this purpose, the
Parties agree that the amount of an indemnity payment computed in accordance
with this Section 7 and, in
particular, having regard to clause 7.9,
is deemed to compensate the Purchaser for any loss it may have suffered in
acquiring the Shares.  The Purchaser
acknowledges that the only recourse available to it arising in those
circumstances is the right to claim to have the Purchase Price adjusted (by way
of payment by the Vendor of a refund) pursuant to clause 7.5 (subject always to the limitations set out
in this Section 7) and that
there are no other or separate causes of action for damages or other recourse
from misrepresentations or breach of representation or warranty or otherwise
available to the Purchaser in these circumstances.

 

7.3                                 Tax
Warranties - General

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

 

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

 

(b)                                 Deferred
Taxation:  The deferred tax in the Closing Accounts will
be correctly calculated in accordance with the Accounting Policies;

 

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

 

44

 

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

 

(ii)                                  all
records required in relation to tax memorandum accounts (including those
described in paragraph (f)); and

 

(iii)                               all
records necessary for ascertaining capital gains and capital losses (including
net capital gains and net capital losses);

 

(d)                                 Returns
etc:  Each Group
Company has made all taxation returns and made or supplied all registrations, elections,
notices and information to the IRD or any other relevant taxation authority as are
required by law and all such taxation returns made, and all such registrations, elections, notices
and information made or supplied, by each Group Company were correct, disclosed
all material items and were made on a proper and timely basis;

 

(e)                                  Tax Payments
Made:  All taxation payments or withholdings
required to be made by a Group Company before the Closing Date will have been
made, and

 

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

 

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

 

(f)                                    Tax Memorandum
Accounts:  To the
extent that imputation credit accounts, dividend withholding payment accounts,
branch equivalent taxation
accounts, conduit tax relief accounts, policyholder credit accounts and other
tax memorandum accounts have been or should have been maintained by any Group
Company under a provision of the ITA or the TAA:

 

(i)                                     those
tax memorandum accounts
have been correctly maintained as required by the relevant legislation; and

 

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

 

45

 

(iii)                               none of those tax memorandum
accounts (other than a branch equivalent taxation account) will have a debit
balance on the Closing Date;

 

(g)                                 Goods and
Services Tax:  For the purposes of GST and as applicable in
respect of all periods ending before the Closing Date:

 

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

 

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

 

(h)                                 No
Disputes:  As at the Execution Date no Group Company is
in any dispute with any taxation authority and
no taxation audit, review or investigation by the IRD or any other applicable
taxation authority is presently being undertaken or, so far as the Vendor is
aware, is pending as at the Execution Date except for:

 

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

 

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

 

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

 

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

 

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

 

46

 

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

 

(k)                                  No Avoidance or
Sham:  No Group Company has at any time:

 

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

 

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

 

(iii)                               made or entered into any
arrangement undertaking or scheme which was at the time it was entered into a
sham,

 

for which provision has not been made in the
Closing Accounts;

 

(l)                                     Thin
Capitalisation:  Each Group Company is not and has not been a
company to which the interest apportionment rule in section FG8 or the interest
allocation rules in Sub-Part FH of the ITA apply; and

 

(m)                               Tax Balance
Date:  Each Group Company that is a New Zealand
resident taxpayer has an accounting year for New Zealand income tax purposes
ending on 31 December of each year.

 

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

 

7.4                                 Tax Warranties – Relevant Transactions

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

 

(a)                                  Assumed Taxation
Consequence:  The Relevant Transactions have:

 

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

 

(aa)                            described in approval papers
prepared by NBNZ Group employees for the purposes of obtaining corporate
authorisations for the Relevant Transactions; and

 

(bb)                          specified in taxation rulings or
opinions referred to in the approval papers and obtained for each Relevant
Transaction; and

 

47

 

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

 

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

 

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

 

7.5                                 Indemnity

Subject in all respects to the other clauses
in this Section 7, the Vendor
covenants to
keep the Purchaser indemnified
from and against, and to pay to the Purchaser (by way of adjustment to the
Purchase Price) an amount equal to, any amount of taxation for which any Group
Company is or becomes liable to pay:

 

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

 

(i)                                     any income derived or received by
a Group Company on or before
the day before the Closing Date or in respect of any period ending on or before the day before
the Closing Date and howsoever that liability for taxation arises, including
without limitation where the taxation liability arises because of the denial of
any relief expected
to be available to any person (whether directly or through a loss offset election or subvention
payment arrangement); or

 

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

 

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

 

(iv)                              any
breach of a tax warranty in clause 7.3,

 

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

 

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

 

48

 

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

 

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

 

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

 

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

 

(dd)                          the application of the interest
apportionment rule in section FG8 or Sub-Part FH of the ITA that
occurs because a Group Company was a member of the NBNZ Group in the current
income year; or

 

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

 

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

 

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

 

7.6                                 Claims

It is agreed by the Parties that:

 

(a)                                  all claims by the Purchaser
against the Vendor for a Purchase Price adjustment in respect of taxation
liabilities of the NBNZ Group must be made only under this Section 7;

 

(b)                                 clause 10.1
shall apply to
claims under clause 7.5;

 

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

 

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

 

49

 

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

 

(d)                                 the Vendor will not have any
liability under clause 7.5 unless
the Purchaser notifies the Vendor in writing of the relevant claim for a
Purchase Price adjustment by 31 December 2009, except:

 

(i)                                     subject to paragraph (ii), where the relevant
claim arises from a taxation return made by a Group Company before the Closing
Date being fraudulent or wilfully misleading or omitting all mention of income
which is of a particular nature or derived from a particular source; or

 

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

 

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

 

7.7                                 Right to require deferral of taxation

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

 

7.8                                 Payment

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

 

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

 

50

 

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

 

provided that if any date so determined
precedes the Closing Date then (subject to clause
7.7) payment shall be made 2 Business Days after the date on which
the Purchaser notifies the Vendor of the relevant taxation claim.

 

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

 

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

 

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

 

(bb)                          that return is assessed without
adjustment with reference to such application; and

 

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

 

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

 

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

Where relevant:

 

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

 

(b)                                 clause 6.14 shall
apply mutatis mutandis to a Purchase Price price adjustment payable pursuant to
this Section 7.

 

Furthermore, the Vendor and the
Purchaser record their intention that:

 

51

 

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

 

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

 

7.10                           Recoveries

If the Purchaser or a Group Company recovers
from a third party an amount on account of taxation which is on the same
account or referable to the same matter or transaction or event as any payment
made by the Vendor to the Purchaser under clause
7.5 then, without limiting clauses 7.9
and 7.16(j), the Purchaser shall promptly pay or procure the prompt
payment of the amount so recovered (net of costs of recovery and net of tax) to
the Vendor.

 

7.11                           Taxation
Claims Procedures

The following provisions will apply to taxation claims:

 

(a)                                  without limiting the following
paragraphs:

 

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

 

(ii)                                  the
Purchaser shall procure
that the relevant Group Company promptly takes such action, and gives such
information and assistance in connection with the affairs of the relevant Group
Company, as the Vendor
may reasonably and promptly by written notice request to avoid, resist,
appeal or compromise the taxation claim;

 

(b)                                 in the event of the issue of a
notice of proposed adjustment (Tax Notice) by
the Commissioner of
Inland Revenue in respect of the taxation affairs of a Group Company which
could result in the Vendor being required to make an indemnification payment by
way of adjustment of the Purchase Price under clause
7.5,  the Purchaser
shall within 7 Business Days of receipt of the Tax Notice give written notice
to the Vendor of such Tax Notice, and:

 

52

 

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

 

(ii)                                  the
Purchaser shall (and, if
required by the Vendor, the Purchaser will procure that the relevant Group Company shall) consult with the
Vendor and with professional advisors nominated by the Vendor in relation to that Tax
Notice.  If after such consultation the Vendor
shall so request, the Purchaser will procure that the relevant Group Company rejects the
proposed adjustment by filing a notice of response (Response Notice) as required under the TAA  advising the Commissioner of Inland
Revenue of such rejection;

 

(iii)                               following the filing
of the Response Notice, the Purchaser shall procure that the relevant Group Company
complies in all relevant and material respects with the dispute resolution
procedures in the TAA, including, without limitation:

 

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

 

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

 

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

 

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

 

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

 

(iv)                              if the rejection is not accepted
in whole or in part by the Commissioner of Inland
Revenue, the Purchaser
will give notice of that non-acceptance to the Vendor within
7 Business Days of receipt by the Purchaser or the relevant Group Company of such
non-acceptance;

 

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

 

53

 

New
Zealand then the Purchaser will, at the written request of the Vendor, procure
that the Purchaser or the relevant Group Company (at the cost of the Vendor) refers the matter to
a counsel experienced in taxation matters, who has not previously been involved
in advising upon the specific disputed issue or transaction, and who is chosen
by the Vendor after consultation with the Purchaser for an opinion as to the likelihood of
such a challenge being successful.  If
the opinion of such counsel is that there is a reasonable likelihood of the
challenge being successful the Purchaser will, at the written request and cost of
the Vendor, take, or procure that the relevant Group Company takes, such further
action as such counsel may recommend to challenge the relevant decisions,
unless the Purchaser elects to discontinue the taxation dispute and to that
extent release the Vendor from its indemnity obligation;

 

(vi)                              if the challenge is heard by the
Taxation Review Authority or the High Court of New Zealand and is decided against the
relevant Group Company, the Purchaser will give notice to the Vendor of that
decision as soon as it
receives notice of the decision. 
If requested
to do so in writing by the Vendor (and subject to a recommendation by the
counsel referred to above) the Purchaser will procure that the relevant Group
Company (at the cost of the Vendor) appeals the decision to the High Court or
the Court of Appeal, as the case may be, unless the Purchaser elects to
discontinue the taxation dispute and to that extent release the Vendor from its
indemnity obligation.  A
similar requirement shall apply, but with reference to the Privy Council or the
Supreme Court of New Zealand (as applicable), with respect to decisions decided
against the relevant Group Company in the Court of Appeal;

 

(vii)                           if the challenge procedures set
out in TAA are amended in any way, the
Purchaser will procure that the relevant Group Company takes such steps within
the amended legislation as the Vendor may reasonably require and, subject to a
favourable counsel’s opinion as mentioned above, cause the challenge or appeal
(as the case may be) to be prosecuted to the extent reasonably requested
by the Vendor;

 

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

 

54

 

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

 

(e)                                  upon
the Purchaser or a Group Company receiving formal notice from any taxation
authority of the commencement of a tax audit or similar review or investigation
into the affairs of a Group Company which may result in a taxation claim that
may give rise to a claim for indemnification by way of adjustment of the
Purchase Price under clause 7.5,
the Purchaser shall:

 

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

 

(ii)                                  procure
that the relevant Group Company promptly takes such action and gives such
information and assistance in connection with its affairs as the Vendor may
reasonably by written notice request to manage the process of the audit or
similar review or investigation to minimise the risk of such a taxation claim;
and

 

(iii)                               procure
that the relevant Group Company does not make any admission of liability in
respect of such a taxation claim or take any other steps (other than the
payment of tax to the extent required by law) which is likely to prejudice the
management of the audit or similar review or investigation.

 

7.12                           Existing
Taxation Claims

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

 

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

 

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

 

7.13                           Procedure for small taxation claim amounts

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

 

55

 

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

 

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

 

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

 

7.14                           Expenses

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

 

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

 

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

 

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

 

(c)                                  In the event the Vendor fails to
make a payment required under this clause to the Purchaser within 30 days of
request for payment, then the Purchaser may serve notice on the Vendor
specifying that the Purchaser may conduct the relevant dispute without being
bound by the procedures contemplated by clauses
7.11 and 7.12.  If the Vendor fails to make the required
payment within 30 days of the service of that notice, then the provisions of clause 7.11 or clause 7.12 shall not apply to that dispute and the
Purchaser and the relevant Group Company may act as they think fit in relation
to that dispute.

 

7.15                           Taxation
Returns

The following provisions shall apply in
relation to taxation returns:

 

(a)                                  the
Vendor shall arrange for each Group Company to prepare sign and file tax
returns and tax computations for all relevant taxation periods ended prior to the Closing
Date (Returns prior to the Closing Date), to the
extent

 

56

 

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

 

(b)                                 the
Vendor shall be
entitled to conduct whatever negotiations are necessary with the IRD or any
other relevant taxation authority in order to agree the Returns prior to the
Closing Date;  the Purchaser may
nominate a person to attend those negotiations as an observer;  and the Purchaser shall procure that each
Group Company shall, if so required in writing by the Vendor, give the Vendor or its
agents all such assistance as may be reasonably required to agree the Returns
prior to the Closing Date with the appropriate taxation authorities;

 

(c)                                  the Purchaser shall procure that
each Group Company shall, in relation to tax returns (other than Returns prior
to the Closing Date) required by law for the period current at the Closing Date
and for any period ending before the Closing Date (including the Returns for
the 2003 and 2004 income years), disclose to the Vendor and use its best
endeavours to agree with the Vendor any variations in the information in those
tax returns that would give rise to any change in the taxation liability
in relation to the Closing Accounts as if those financial statements
represented the year end financial statements. 
Where there is any disagreement between the Purchaser and the Vendor as
to the content of the tax returns and the determination of the
content by the Purchaser
may give rise to a claim under clause 7.5, the tax returns and the content
thereof will be as determined by the Purchaser;  however,  the
Purchaser will procure that the relevant Group Company will file a Notice of Proposed Adjustment (NOPA) as defined in
section 3(1) of
the TAA and that that NOPA will adopt the approach advocated by the Vendor on
the relevant taxation issue (or will take any analogous or such other steps
applicable for the purposes of any other relevant jurisdiction or taxation
authority other than New Zealand and the IRD and also adopt the approach
advocated by the Vendor on the relevant taxation issue).  In the event that the Commissioner of Inland
Revenue rejects the NOPA the Purchaser shall ensure that the
Taxation Claims Procedures
in clause 7.11, as modified
for the fact that the dispute has been triggered by a taxpayer
initiated NOPA (or other steps described in the preceding sentence), are then
followed; and

 

(d)                                 where
necessary to give effect to assumptions or matters explicit or implicit in the
Closing Accounts, the Purchaser shall also procure the Group Companies, in
consultation with the Vendor or its agents, to prepare adequate part year
accounts (consistent with the Closing Accounts) for the purpose of the ITA and
for furnishing to the Commissioner of Inland Revenue, including, without
limitation for carrying forward losses to the

 

57

 

day before
the Closing Date and/or for the purposes of allowing companies to undertake
loss offset transaction arrangements, and to agree those accounts with the
Vendor or its agents.

 

7.16                           Limitations on Purchase Price adjustment

The Vendor’s covenant given in clause 7.5 to adjust the Purchase Price in
respect of certain taxation liabilities of Group Companies shall
not cover any taxation liability of a Group Company:

 

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

 

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

 

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

 

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

 

is available to that Group
Company to relieve that taxation liability; or

 

(c)                                  subject
to clause 7.18(a), to the extent
that that taxation liability would not have arisen, or would have been
reduced or eliminated, but for an act or omission of or on the part of a Group
Company on or after the Closing Date, including without limitation a failure or
an act or omission on
the part of a Group
Company on or after the Closing Date:

 

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

 

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

 

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

 

(i)                                     the agreement to sell or the sale
of the Shares; or

 

58

 

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

 

excluding a taxation liability indemnified
pursuant to clause 7.5(b)(i)(dd)
and (ee) but including without
limitation a taxation liability that arises by reason of the application of the
interest apportionment rule in section FG 8 of the ITA that occurs
solely because of the circumstances described above; or

 

(e)                                  without limiting clause 7.16(d) to the extent that the
taxation liability arises as a direct consequence of the inability of any Group
Company to carry forward tax credits or net losses because of the sale of the Shares under this
Agreement; or

 

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

 

(g)                                 in the case of the Vendor’s
covenant in clause 7.5(a)
but not in clause 7.5(b), in
relation to any taxation on income or services or other items of property
attributable to, or to transactions performed in, a period after the day before
the Closing Date irrespective of and whether such liability arises as a result
of a contract or agreement entered into by a Group Company on or before the day
before the Closing Date; or

 

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

 

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

 

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

 

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

 

59

 

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

 

(k)                                  to the extent that:

 

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

 

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

 

(bb)                          the reason that taxation ruling
never bound or ceased to bind the IRD was a direct consequence of an act or
omission of a person other than a Group Company; and

 

(ii)                                  the taxation liability:

 

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

 

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

 

7.17                           Purchaser
Obligations

The Purchaser and the Guarantor will procure that:

 

(a)                                  no Group Company will:

 

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

 

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

 

60

 

(b)                                 the relevant Group Company will
provide to the Vendor and Lloyds TSB such information and documentation (all of
which shall be held by the Vendor or Lloyds TSB, as the case might be, on a
confidential basis) held by it as may reasonably be required to assist the
Vendor or Lloyds TSB (as the case may be) to obtain any relief, credit or other
benefit to which it is lawfully entitled under United Kingdom taxation law with
respect to dividends paid by that Group Company in the six years before the
Closing Date.

 

7.18                           Certain
Confirmations

For the avoidance of doubt:

 

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

 

(i)                                     where the right or obligation
exists in the transaction document in the form the transaction document was in
immediately prior to Closing (including voting to exercise a put option in
relation to any Transaction Four Transaction); or

 

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

 

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

 

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

 

shall limit the indemnity
in clause 7.5; and

 

(b)                                 nothing prevents the Purchaser
from making a demand under clause 7.5(a)
and clause 7.5(b) in respect
of any single taxation claim and whether at the same time or at different
times.

 

7.19                           Transaction
Two

(a)                                  The parties agree that:

 

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

 

(ii)                                  for this purpose:

 

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

 

61

 

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

 

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

 

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

 

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

 

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

 

(i)                                     the Unwind; and

 

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

 

7.20                           Transaction
Three Swaps

(a)                                  The parties agree that the Transaction Three Swaps will be unwound
on their respective transaction maturity dates (unless the Purchaser determines
to extend either transaction beyond its current maturity, in which case this
clause shall not apply).

 

(b)                                 For this purpose:

 

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

 

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

 

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

 

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

 

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

 

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

 

62

 

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

 

7.21                           Transaction
Four Transactions

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

 

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

 

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

 

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

 

63

 

8                                         NON-COMPETITION
COVENANT

 

8.1                                 Definitions

For the purposes of this Section 8:

 

Acquired Company means a
company or other legal or business entity domiciled inside or outside
New Zealand that either itself or through a subsidiary or other entity
controlled by it engages in any Restricted Activity.

 

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

 

Term means the period
commencing at Closing and ending on the seventh  anniversary of the Closing Date.

 

8.2                                 No Competition

Unless the prior written
consent of the Guarantor is given and subject always to clauses 8.3 and 8.4, Lloyds TSB will not, and will procure that each other
member of the Lloyds TSB Group does not, during the Term directly or indirectly
carry on or be engaged or involved in (whether by itself or through another
person), or manage any company or another legal entity which carries on or is
engaged in, any Restricted Activity.

 

8.3                                 Exceptions to Restricted Activities

The following activities shall
not be in breach of clause 8.2:

 

(a)                                  Lloyds TSB or any other member of the Lloyds TSB Group holding up to
5% (or if it is an asset management company acting in the ordinary course its
business, a higher percentage) of the issued share capital of any company or
corporation which directly or indirectly carries on or is engaged in any
Restricted Activity;

 

(b)                                 Lloyds TSB or another member of the Lloyds TSB Group, in the
ordinary course of business, subscribing for, purchasing, holding or otherwise
dealing in, or conducting transactions in respect of, debt securities issued by
any entity which directly or indirectly carries on or is engaged in any
Restricted Activity;

 

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

 

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

 

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

 

64

 

reasons other than the
Restricted Activity or the Acquired Company divests the business involved in
the Restricted Activity within one year from the date of the relevant
acquisition;

 

(d)                                 access to the banking, funds management or other businesses
conducted by Lloyds TSB or another member of the Lloyds TSB Group outside New
Zealand being available to persons located in New Zealand by virtue of physical
mailing or by virtue of the internet or other electronic or telecommunications
technology so long as the relevant services and products are not established
for the purposes of conducting a business in New Zealand and are not
specifically targeted at persons resident in New Zealand;

 

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

 

(f)                                    the participation by a member of the Lloyds TSB Group domiciled
outside New Zealand as a member (including as manager or agent) of a consortium
or syndicate providing loan finance or other financial accommodation to, or providing
paying agency services or other financial agency services to, a New Zealand
entity or to the foreign affiliate of a New Zealand entity, or in respect of a
project or other activity in New Zealand, where that participation arises in
the ordinary course of the international financing activities of the Lloyds TSB
Group;

 

(g)                                 the investment by a member of the Lloyds TSB Group in any company or
other legal entity which carries on or is engaged in a Restricted Activity if
such investment does not give the Lloyds TSB Group member a controlling
interest, and is in connection only with an employee superannuation and/or
benefit plan, fund or scheme operated and/or managed by that member, whether on
its own account or on behalf of another member of the Lloyds TSB Group or a
third party;

 

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

 

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

 

8.4                                 Cessation
of Restraint

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

 

65

 

8.5                                 Restraint
Reasonable

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

 

8.6                                 Modification

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

 

8.7                                 Assessment
of Purchase Price

The Parties acknowledge that
the Purchase Price was assessed and accepted by the Purchaser being dependent
upon Lloyds TSB giving the covenant described in clause 8.2 and that the
provisions contained in clause 8.2 are solely for the
protection of the Purchaser.

 

66

 

9                                         GUARANTEES

 

9.1                                 Definitions

In this Section 9:

 

Beneficiary means:

 

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

 

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

 

Guaranteed
Party means:

 

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

 

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

 

Guarantor means:

 

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

 

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

 

and Guarantee
shall be construed accordingly.

 

9.2                                 Guarantees

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

 

(a)                                  Lloyds TSB unconditionally and
irrevocably guarantees to the Purchaser the due and punctual observance and
performance by the Vendor of all of the covenants and obligations, whether expressed or
implied, that the Vendor is required to observe or perform under this Agreement
and the due and punctual discharge of any liability of the Vendor which may
arise under this Agreement and covenants with the Purchaser that if the Vendor
shall fail to duly and punctually observe or perform any such covenant or
obligation or to discharge any such liability then Lloyds TSB shall forthwith
observe or perform that covenant or obligation or discharge that
liability.  For the avoidance of doubt
the aggregate liability of Lloyds TSB under or arising out of this clause 9.2(a) shall not exceed the
applicable amount under clause 10.1 (Vendor
Liability Cap); and

 

(b)                                 Australia and New Zealand Banking
Group Limited unconditionally and irrevocably guarantees to the Vendor the due and punctual observance and performance
by the Purchaser of all of the covenants and obligations, whether
expressed or implied,
that the Purchaser is required to observe or

 

67

 

perform
under this Agreement and the due and punctual discharge of any liability of the
Purchaser which may
arise under this Agreement and covenants with the Vendor that if the Purchaser shall fail to duly and
punctually observe or perform any such covenant or obligation or to discharge any
such liability then Australia
and New Zealand Banking Group Limited shall forthwith observe or perform
that covenant or obligation or discharge that liability.

 

9.3                                 Non-Prejudice
of Guarantee

The liability of the Guarantor under its
Guarantee shall not
be abrogated, prejudiced or affected by any of the following:

 

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

 

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

 

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

 

(d)                                 any
other dealing, matter or thing which, but for this clause 9.3, might operate to abrogate, prejudice or affect
that Guarantee.

 

9.4                                 Guarantor
a Principal Obligor

Although as between the Guaranteed Party and
the Guarantor the latter may only be a surety yet as between the Guarantor and
the Beneficiary the Guarantor shall be deemed a principal obligor and its
liability shall not be affected or diminished by any of the matters mentioned
in clause 9.3.

 

9.5                                 Exercise of
Rights

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

 

9.6                                 Waiver
of Subrogation Rights

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

 

68

 

9.7                                 No
Competition

Without limiting clause 9.6, in the event of the liquidation or statutory
management of the Guaranteed Party or the Guaranteed Party entering into a
composition with creditors or like scheme of management or arrangement, the
Guarantor will not prove in such liquidation, statutory management, composition
or scheme in competition with the Beneficiary in relation to moneys due and
owing to the Beneficiary under this Agreement and the Guarantor hereby
authorises the Beneficiary to prove for all moneys owing to the Beneficiary and
which have not been paid to the Beneficiary by the Guaranteed Party and to
retain and to carry to a suspense account and appropriate at the discretion of
the Beneficiary any amount received until the Beneficiary shall have received
100 cents in the dollar in respect of all moneys due and owing to the
Beneficiary.  If the Guarantor shall
receive any money contrary to the intent of clause
9.6 or this clause 9.7
then such money shall be held in trust for the Beneficiary.

 

9.8                                 Reinstatement

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

 

69

 

10                                  MISCELLANEOUS

 

10.1                           Vendor
Liability Cap

It is agreed that:

 

(a)                                  subject to clause 10.1(b),
the maximum aggregate amount for which Lloyds TSB and the Vendor collectively
shall be liable (for the avoidance of doubt, with respect to all incidents (in
the aggregate) giving rise (or which would give rise, in the absence of this clause 10.1(a)) to liability) to the
Purchaser and the Guarantor collectively under or by virtue of this Agreement
on any account whatsoever (other than clause
7.5) (whether under or by virtue of the Vendor Warranties, Section 7, in tort or otherwise
whatsoever) shall not exceed NZ$2,500,000,000 (two billion and five hundred
million New Zealand dollars); and

 

(b)                                 the maximum aggregate amount for which Lloyds TSB and the Vendor
collectively shall be liable (for the avoidance of doubt, with respect to all
incidents (in the aggregate) giving rise (or which would give rise, in the
absence of this clause 10.1(b))
to liability) at any point in time to the Purchaser and the Guarantor
collectively in respect of any new claim under or by virtue of:

 

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

 

(ii)                                  clause 7.5 (Tax Indemnity),

 

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

 

10.2                           Announcements

Except where disclosure is
permitted under clause 10.3,
no Party shall make or authorise any media release or other public announcement
relating or referring to the matters dealt with in this Agreement without the
prior agreement of the other Parties, such agreement not to be unreasonably
withheld.  However, if a Party is
required to make an announcement of the existence of this Agreement then it may
do so provided that it has first consulted with the other Parties in a timely
fashion as to the content of such announcement.

 

70

 

10.3                           Confidentiality

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

 

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

 

(b)                                 pursuant to clause 10.2;
or

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

71

 

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

 

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

 

10.4                           No Action

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

 

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

 

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

 

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

 

10.5                           No Assignment

No Party shall transfer or
assign its interest in, or any of its rights and obligations under, this
Agreement.

 

10.6                           Notices

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

 

72

 

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

 

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

 

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

 

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

 

10.7                           Designated
Addresses

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

 

Vendor and
Lloyds TSB

Lloyds TSB Bank plc

25 Gresham Street

London EC2V 7HN

England

Attention:  Director, Group Corporate
Development

Facsimile No:  +44 207489 3484

 

Purchaser

ANZ
Banking Group (New Zealand) Limited

Level 15 

ANZ Tower

215-229 Lambton Quay

Wellington

New Zealand

Attention:  General Counsel/Company
Secretary

Facsimile No. +64 4 496 8872

 

Guarantor

Australia
and New Zealand Banking Group Limited

Level 6

100 Queen Street

Melbourne

Australia

Attention:  General Counsel

Facsimile No. +61 3 9273 0552.

 

73

 

10.8                           Giving
of Notices and Consents

For the purposes of this Agreement:

 

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

 

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

 

10.9                           No
Cancellation

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

 

10.10                     Waiver

It is agreed that:

 

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

 

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

 

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

 

10.11                     Expenses

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

 

74

 

10.12                     Contracts
(Privity) Act

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

 

10.13                     Governing Law

This Agreement shall be
construed and take effect in accordance with the laws of New Zealand and any
dispute between any two or more of the Parties touching or concerning the
construction, meaning or effect of this Agreement or the rights or liabilities
of the Parties hereunder shall be governed by the laws of New Zealand.

 

10.14                     Submission
to Jurisdiction

The Parties agree that any
legal action, suit or proceedings (each a Proceeding)
in connection with this Agreement or the transactions contemplated hereby may
be brought in the New Zealand courts, which shall have non-exclusive
jurisdiction to settle any disputes arising out of or in connection with this
Agreement.  Each Party hereby
irrevocably and unconditionally consents to submit to the non-exclusive
jurisdiction of the courts of New Zealand for any Proceeding arising out of or
relating to this Agreement and the transactions contemplated hereby.  Each Party further irrevocably and
unconditionally waives any objection to the laying of venue of any Proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby, in the courts of New Zealand, and hereby further irrevocably and
unconditionally waives the right and agrees not to plead or claim to any such
court that such Proceeding is brought in an inconvenient forum.  Each Party further irrevocably and
unconditionally agrees that a judgment in any Proceeding may be enforced in the
courts of any other jurisdiction.  The
foregoing submission to the jurisdiction of the courts of New Zealand shall not
limit the right of a Party to bring a Proceeding against another Party in any
other court of competent jurisdiction, nor shall the taking of a Proceeding in
one or more jurisdictions preclude the taking of a Proceeding in any other
jurisdiction whether concurrently or not.

 

10.15                     Process Agent

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

 

75

 

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

 

10.16                     Severability

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

 

10.17                     No Merger

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

 

10.18                     Further
Assurances

The Parties shall execute and
deliver any documents, including transfers of title, and do all things as may
reasonably be required to enable the Parties to obtain the full benefit of this
Agreement according to its true intent.

 

10.19                     Entire
Agreement

This Agreement and the
Confidentiality Deed constitute the entire agreement between the Parties with
respect to the matters dealt with herein and there are
no oral or written understandings, representations or commitments of any
kind, express or implied, not expressly set out in this Agreement or the Confidentiality Deed.

 

10.20                     Amendments

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

 

10.21                     Execution
and Delivery

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

 

10.22                     Counterparts

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

 

76

 

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

 

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

 

77

 

 

FIRST SCHEDULE - SUBSIDIARIES

(Clause 1.1)

 

Part 1 – Wholly Owned Operating Subsidiaries

 

	
  No.

  	
   

  	
  Name

  	
   

  	
  Country
  of Incorporation

  	
   

  	
  Registered
  No.

  	
   

  	
  Directors

  
	
  1

  	
   

  	
  Airlie Investments Limited

  	
   

  	
  New Zealand

  	
   

  	
  AK 1211493

  	
   

  	
  SM Fyfe, JK Greenslade, MS Nyein

  
	
  2

  	
   

  	
  Alos Holdings Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 344800

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  3

  	
   

  	
  Arawata Investments Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 16446

  	
   

  	
  JA Anderson, MS Nyein, SM Fyfe (alternate for
  JA Anderson)

  
	
  4

  	
   

  	
  Argitis Holdings Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 372458

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  5

  	
   

  	
  Black Horse Finance Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 37835

  	
   

  	
  JA Anderson, SM Fyfe, JK Greenslade (alternate for JA
  Anderson)

  
	
  6

  	
   

  	
  Black Horse Holdings Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 275068

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  7

  	
   

  	
  Black Horse Investments Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 273474

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  8

  	
   

  	
  Black Horse Properties Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 469435

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  9

  	
   

  	
  Black Horse Securities Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 273475

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  10

  	
   

  	
  Burnley Investments Limited

  	
   

  	
  New Zealand

  	
   

  	
  AK 1219154

  	
   

  	
  SM Fyfe, JK Greenslade, MS Nyein

  
	
  11

  	
   

  	
  CBC Finance Limited

  	
   

  	
  British Virgin Islands

  	
   

  	
  N/A

  	
   

  	
  A Directors: RM Richards (alternate = SP Harvey), TL Slattery
  (alternate = KE Moss)

  

  B Director: CM Wiscarson (alternate = AM Basing)

  

  C Director: SM Fyfe (alternate = JK Greenslade)

  
	
  12

  	
   

  	
  Control Nominees Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 40482

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  13

  	
   

  	
  Cortland Finance Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 10614137

  	
   

  	
  SM Fyfe, JK Greenslade

  
	
  14

  	
   

  	
  Countrywide Funds Management Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 373203

  	
   

  	
  JA Anderson, PK Lockery

  
	
  15

  	
   

  	
  Countrywide Superannuation Services Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 556330

  	
   

  	
  JA Anderson, PK Lockery

  
	
  16

  	
   

  	
  Culver Finance Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 1134375

  	
   

  	
  SM Fyfe, JK Greenslade, MS Nyein (alternate for SM Fyfe)

  
	
  17

  	
   

  	
  Elf Productions Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 889172

  	
   

  	
  SM Fyfe, JK Greenslade, MS Nyein

  
	
  18

  	
   

  	
  Eventide Holdings Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 615158

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  

 

78

 

	
  No.

  	
   

  	
  Name

  	
   

  	
  Country
  of Incorporation

  	
   

  	
  Registered
  No.

  	
   

  	
  Directors

  
	
  19

  	
   

  	
  Goblin Productions Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 1145975

  	
   

  	
  SM Fyfe, JK Greenslade, MS Nyein

  
	
  20

  	
   

  	
  Harcourt Corporation Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 275714

  	
   

  	
  SM Fyfe, JK Greenslade, MS Nyein

  
	
  21

  	
   

  	
  Harcourt Investments Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 1152283

  	
   

  	
  SM Fyfe, JK Greenslade, MS Nyein

  
	
  22

  	
   

  	
  Moginie Holdings Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 36923

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  23

  	
   

  	
  National Bank of New Zealand Custodians Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 5874

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  24

  	
   

  	
  Nationwide Home Loans Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 704812

  	
   

  	
  JA Anderson, PK Lockery

  
	
  25

  	
   

  	
  NBNZ Finance Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 344792

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  26

  	
   

  	
  NBNZ International Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 328154

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  27

  	
   

  	
  NBNZ Life Insurance Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 428369

  	
   

  	
  RA Ford, SM Fyfe, KY Wales

  
	
  28

  	
   

  	
  Repton Group Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 615161

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  29

  	
   

  	
  Salient Holdings

  	
   

  	
  New Zealand

  	
   

  	
  WN 949448

  	
   

  	
  SM Fyfe, JK Greenslade

  
	
  30

  	
   

  	
  Salient Holdings (No. 2)

  	
   

  	
  New Zealand

  	
   

  	
  WN 966073

  	
   

  	
  SM Fyfe, JK Greenslade

  
	
  31

  	
   

  	
  Sefton Finance Limited

  	
   

  	
  New Zealand

  	
   

  	
  AK 1272956

  	
   

  	
  SM Fyfe, JK Greenslade, MS Nyein

  
	
  32

  	
   

  	
  Ship Finance Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 261053

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  33

  	
   

  	
  South Pacific Merchant Finance Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 26351

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  34

  	
   

  	
  Southpac Corporation Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 40594

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  35

  	
   

  	
  Southpac Securities Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 40593

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  36

  	
   

  	
  The National Bank of New Zealand Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 276922

  	
   

  	
  JA Anderson, BMJ Dineen, SM Fyfe, NMT Geary,
  JW Gilks, DP Pritchard, DT Spring, SC Targett,
  WJ Whineray, CM Wiscarson

  
	
  37

  	
   

  	
  Trillium Holdings Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 949251

  	
   

  	
  SM Fyfe, JK Greenslade

  
	
  38

  	
   

  	
  Urchin Productions Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 27280

  	
   

  	
  SM Fyfe, JK Greenslade, MS Nyein

  

 

Part 2 – Wholly Owned
Non-Operating Subsidiaries

 

	
  1

  	
   

  	
  Abbey Life Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 21087

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  2

  	
   

  	
  Corvine Investments Limited

  	
   

  	
  New Zealand

  	
   

  	
  AK 1074900

  	
   

  	
  SM Fyfe, JK Greenslade, MS Nyein

  
	
  3

  	
   

  	
  Karapiro Investments Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 876248

  	
   

  	
  JK Greenslade, MS Nyein

  

 

79

 

	
  4

  	
   

  	
  Lloyds NZA Pty Limited

  	
   

  	
  Australia

  	
   

  	
  ACN 077769594

  	
   

  	
  JA Anderson, SM Fyfe, GC Harris

  
	
  5

  	
   

  	
  NBNZ Holdings (Hong Kong) Limited

  	
   

  	
  Hong Kong

  	
   

  	
  236261

  	
   

  	
  SNR Evans, KL Lee (known as Clemence), MS Nyein

  
	
  6

  	
   

  	
  NBNZ Holdings (Australia) Pty Limited

  	
   

  	
  Australia

  	
   

  	
  ACN 067055921

  	
   

  	
  JA Anderson, SM Fyfe, MJ Kunstler, GC Harris

  
	
  6

  	
   

  	
  Nationwide Mortgage Brokers Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 919988

  	
   

  	
  DR O’Callaghan

  
	
  7

  	
   

  	
  Philodendron Investments Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 32453

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  8

  	
   

  	
  Receivables Warehouse Limited

  	
   

  	
  New Zealand

  	
   

  	
  AK 965276

  	
   

  	
  AG Blackie

  
	
  9

  	
   

  	
  Ronaldo Enterprises Limited

  	
   

  	
  New Zealand

  	
   

  	
  AK 899010

  	
   

  	
  JK Greenslade, AG Blackie

  
	
  10

  	
   

  	
  South Pacific Merchant Finance (Australia) Pty Limited

  	
   

  	
  Australia

  	
   

  	
  ACN 077769512

  	
   

  	
  JA Anderson, SM Fyfe, GC Harris

  
	
  11

  	
   

  	
  Southpac Corporation (Australia) Pty Limited

  	
   

  	
  Australia

  	
   

  	
  ACN 077332864

  	
   

  	
  JA Anderson, SM Fyfe, GC Harris

  
	
  12

  	
   

  	
  Southpac Holdings Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 40592

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  13

  	
   

  	
  Southpac Investment Management (Australia) Pty Limited

  	
   

  	
  Australia

  	
   

  	
  ACN 077332800

  	
   

  	
  JA Anderson, SM Fyfe, GC Harris

  
	
  14

  	
   

  	
  Southpac Trusts Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 40472

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  15

  	
   

  	
  VPM Investments Limited

  	
   

  	
  New Zealand

  	
   

  	
  WN 573530

  	
   

  	
  JA Anderson, PK Lockery

  

 

Part 3 – Partly Owned
Subsidiaries

 

	
  No.

  	
   

  	
  Name
  and Ownership

  Percentage

  	
   

  	
  Country
  of Incorporation

  	
   

  	
  Registered

  No.

  	
   

  	
  Directors

  
	
  1

  	
   

  	
  Amberley Investments (50%)

  	
   

  	
  New Zealand

  	
   

  	
  AK 1278452

  	
   

  	
  GM Baldes, RD Beran, SM Fyfe, JK Greenslade,
  MS Nyein

  
	
  2

  	
   

  	
  Gold Liquid Investments Limited (25%)

  	
   

  	
  Cayman Islands

  	
   

  	
  N/A

  	
   

  	
  D Brealey, RR Seggins, NC Edmonds, BW du Pon, AJ Senior

  
	
  3

  	
   

  	
  Maplestead Corporation (65%)

  	
   

  	
  United States of America

  	
   

  	
  N/A

  	
   

  	
  SH Sitver, DL Poling, KM Furlong

  
	
  4

  	
   

  	
  Nerine Finance No 2 (65%)

  	
   

  	
  New Zealand

  	
   

  	
  AK 1210175

  	
   

  	
  JJ Cassano, DL Poling

  
	
  5

  	
   

  	
  Northpac Holdings Limited (53%)

  	
   

  	
  New Zealand

  	
   

  	
  WN 33669

  	
   

  	
  JA Anderson, SM Fyfe, MS Nyein

  
	
  6

  	
   

  	
  Three Starz Corporation (65%)

  	
   

  	
  United States of America

  	
   

  	
  N/A

  	
   

  	
  A Barkle, A Geczy, MP Humes, WH Wolf

  
	
  7

  	
   

  	
  Whitelaw Investments (99.9%)

  	
   

  	
  New Zealand

  	
   

  	
  AK 1219683

  	
   

  	
  PL Reddy, AR Meehan, MD Lang

  

 

80

 

Part
4 – Other Companies In Which Shares Beneficially Held By NBNZ Group Members

 

	
  No.

  	
   

  	
  Name
  and Ownership

  Percentage

  	
   

  	
  Country
  of Incorporation

  	
   

  	
  Registered
  No.

  	
   

  	
  Shares
  Held

  
	
  1

  	
   

  	
  Electronic Transaction Services Limited (25%)

  	
   

  	
  New Zealand

  	
   

  	
  WN 438574

  	
   

  	
  22,500 ordinary

  
	
  2

  	
   

  	
  ILSC Limited (11.63%)

  	
   

  	
  New Zealand

  	
   

  	
  WN 816575

  	
   

  	
  100,000 ordinary

  
	
  3

  	
   

  	
  Interchange and Settlement Limited (12.66%)

  	
   

  	
  New Zealand

  	
   

  	
  WN 642067

  	
   

  	
  1,732 ordinary

  
	
  4

  	
   

  	
  Mondex New Zealand Limited (20%)

  	
   

  	
  New Zealand

  	
   

  	
  WN 806135

  	
   

  	
  12 ordinary

  
	
  5

  	
   

  	
  Pukete Industrial Holdings Limited (0.01%)

  	
   

  	
  New Zealand

  	
   

  	
  WN 343179

  	
   

  	
  10,000 ordinary

  
	
  6

  	
   

  	
  Visa New Zealand Limited (20%)

  	
   

  	
  New Zealand

  	
   

  	
  AK 1228250

  	
   

  	
  1 Principal Share and 1 Plus Share

  

 

Part 5 – Other Entities In Which
Interests Beneficially Held By NBNZ Group Members

 

	
  No.

  	
   

  	
  Name

  	
   

  	
  Ownership
  Percentage

  
	
  1

  	
   

  	
  Countrywide Endeavour Building Society

  	
   

  	
  100%

  
	
  2

  	
   

  	
  Salient Trust

  	
   

  	
  100%

  
	
  3

  	
   

  	
  Salient Trust II

  	
   

  	
  100%

  
	
  4

  	
   

  	
  Starz Trust

  	
   

  	
  65%

  
	
  5

  	
   

  	
  The Fellowship Syndicate Partnership

  	
   

  	
  25%

  
	
  6

  	
   

  	
  The King Returns Syndicate Partnership

  	
   

  	
  40%

  
	
  7

  	
   

  	
  The Towers Syndicate Partnership

  	
   

  	
  30%

  
	
  8

  	
   

  	
  Southpac Property Trust No. 3

  	
   

  	
  Unknown

  
	
  9

  	
   

  	
  Southpac Global Trust

  	
   

  	
  Unknown

  
	
  10

  	
   

  	
  Southpac Global Fixed Interest Trust

  	
   

  	
  Unknown

  
	
  11

  	
   

  	
  Southpac NZ Fixed Interest Trust

  	
   

  	
  Unknown

  

 

81

 

SECOND  SCHEDULE - CLOSING ACCOUNTS

 

(Clause 3.5)

 

1                                          ACCOUNTING POLICIES

 

1.1                                 The Closing Accounts will be prepared:

 

(a)                                  in accordance with NZ GAAP applied in a manner which is consistent
with the manner in which it was applied for the purposes of the
June Accounts, subject to paragraphs
1.1(b) and 1.1(c);

 

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

 

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

 

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

 

(a)                                  Properties:  Land and buildings with a written
down book value of more than $1 million as at 30  September 2003
will be included in the Closing Accounts at their market values as determined
on an ongoing use basis by reference to independent valuations conducted  during the Interim Period by CB Richard
Ellis or such other valuer as may be agreed between Lloyds TSB and the
Purchaser such valuations to be undertaken in a manner consistent with New
Zealand Property Institute Valuation
Standard 3 – Valuations for Financial Statements.  The valuations are to assume notional leases
over owner occupied properties, on market terms and conditions reflecting a
similar tenant profile and of a similar type and location.  The valuation reports shall set out the
basic terms of the assumed lease including the notional lease term, market
rental, responsibility for outgoings, the basis and frequency of rental reviews
and any other terms and conditions applicable to a typical lease of like nature
in the market at the date of the valuation;

 

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

 

(i)                                     there will not be any general provision;

 

82

 

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

 

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

 

(c)                                  Bonuses:  It is agreed that:

 

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

 

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

 

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

 

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

 

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

 

83

 

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

 

(g)                                 Equity Accounting:  Subject
to satisfying the materiality criteria, investments in associated companies
shall be equity accounted as required by law.

 

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

 

1.3                                 If:

 

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

 

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

 

2                                          PREPARATION
OF CLOSING ACCOUNTS

 

2.1                                 Preparation of
Accounts:  As soon as is practicable after the Closing
Date the Purchaser will arrange for NBNZ Holdings to prepare (in accordance
with the Accounting Policies):

 

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

 

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

 

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

 

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

 

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

 

84

 

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

 

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

 

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

 

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

 

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

 

(a)                                  provide or ensure the provision of
all information and assistance (including, without limitation, access to all
relevant books and records) which may reasonably be required by
PricewaterhouseCoopers in connection with the preparation and audit of the
Closing Accounts; and

 

(b)                                 co-operate fully with each other
and PricewaterhouseCoopers in relation to the expeditious preparation, delivery
and audit of the Closing Accounts including, without limitation, complying with
any reasonable direction of PricewaterhouseCoopers concerning the preparation
or audit of the Closing Accounts.

 

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

 

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

 

(b)                                 unless, within 10 Business Days
after the delivery to Lloyds TSB and the Purchaser of a draft of the financial
statements pursuant to

 

85

 

paragraph 2.6(a), Lloyds TSB or the Purchaser notifies the other of them in writing
that there is a manifest error in such financial statements which means that
they do not give a true and fair view of the financial position of the NBNZ
Group as at the day before the Closing Date and/or its financial performance
for the Accounting Period and/or that they do not comply with the Accounting
Policies (and provides details of any such error) then at the end of that
period of 10 Business Days those financial statements will become, and be
deemed to be designated, the Closing Accounts.

 

2.7                                 Agreed
Correction:  If:

 

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

 

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

 

then Lloyds TSB and the Purchaser will
arrange for PricewaterhouseCoopers to make the necessary correction to those
draft financial statements whereupon PricewaterhouseCoopers will sign their
audit report and deliver it with the final corrected financial statements to
Lloyds TSB and the Purchaser.  As soon
as those documents are so delivered then those financial statements (as so
corrected) will become, and be deemed to be designated, the Closing Accounts.

 

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

 

3                                         DETERMINATION OF DISPUTES

 

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

 

(a)                                  the matter in dispute shall be
referred by either Lloyds TSB or the Purchaser to an independent
internationally recognised firm of chartered accountants
agreed by Lloyds TSB and the Purchaser or, in default of such agreement,
appointed by the President for the time being of the Institute of Chartered
Accountants of New Zealand;

 

86

 

(b)                                 that firm will review all relevant
documents and information and it  will state in a signed decision its opinion
regarding the disputed item or items and what correction (if any) is necessary
to the financial statements prepared pursuant to paragraph 2.1 to correct any relevant manifest error
and upon delivery of that decision to Lloyds TSB and the Purchaser those
financial statements as so adjusted will become, and be designated as, the
Closing Accounts;

 

(c)                                  such determination shall be:

 

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

 

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

 

(iii)                               be final and binding on the
Parties; and

 

(d)                                 the Parties shall co-operate with
each other to provide and the Purchaser will ensure that the NBNZ Group
provides, the relevant firm with all information
reasonably required by it to complete its determination.

 

2                                          FEES AND DISBURSEMENTS OF ACCOUNTING FIRMS

 

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

 

87

 

THIRD SCHEDULE - VENDOR WARRANTIES

 

(Clause 6.1)

 

1                                          LLOYDS
TSB CORPORATE AUTHORITY

 

1.1                                 Power and
Authority:  Each of the Vendor and Lloyds TSB has full power, authority and legal right to enter
into those of this Agreement and the Trade Mark Licence to which it is a party
and to observe and perform its respective obligations hereunder and thereunder
and has taken all necessary corporate and other action, and obtained all
consents, necessary to authorise its execution, delivery and performance of
those of this Agreement and the Trade Mark Licence to which it is a party.

 

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

 

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

 

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

 

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

 

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

 

(a)                                  not
insolvent; and

 

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

 

88

 

2                                          THE SHARES

 

2.1                                 Title: 
The Vendor has
legal and beneficial
title to the Shares free
and clear of all encumbrances.

 

2.2                                 Power and
authority:  The Vendor has full right, power and
authority to sell the Shares to the Purchaser pursuant to this Agreement free
and clear of all encumbrances.

 

2.3                                 Fully Paid
Shares:  The Shares comprise all of the issued shares
in the capital of NBNZ Holdings and are fully paid and no other payments are due or payable to NBNZ Holdings or any other person
on or in respect of the Shares.

 

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

 

3                                          EQUITY CAPITAL AND OTHER INTERESTS

 

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

 

3.2                                 Rights attaching
to Shares:  All of the rights, powers,
privileges, entitlements, conditions and restrictions attaching to the shares in the capital of
each Group Company (other than Countrywide Endeavour Building Society) are
specified in its Constitution (or its equivalent constitutive document) or
specified in section 36 of the Companies Act (or in any
relevant statutory equivalent).

 

3.3                                 Dividends and
distributions:  No Distribution (whether of, or on
account of, the profits, retained earnings or
capital of a Group Company or otherwise) has been declared, made or paid by a
Group Company during the period since 30 June 2003, except for (i) the
Permitted Dividends and (ii) dividends paid from one Group Company to another.

 

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

 

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

 

89

 

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

 

3.7                                 Partly-Owned
Subsidiaries and Associated entities:  The NBNZ Group beneficially owns
the shares referred to in Part 3
and Part 4 of the First Schedule.

 

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

 

4                                          NBNZ
GROUP CORPORATE EXISTENCE

 

4.1                                 Form of
Constitution:  The form of Constitution or equivalent
constitutive document of each relevant Group Company filed with the Registrar of Companies as at
30 September 2003 is the current and complete Constitution of that Group
Company.

 

4.2                                 No Breach of Constitution:  Neither the execution of this Agreement, nor
the transfer of the Shares to the Purchaser pursuant to this Agreement, will
cause a breach of the Constitution of any Group Company.

 

4.3                                 Corporate
Existence:  Each Group Company has the corporate power
to own its own assets and to carry on the business being carried on by
it as at the Execution Date.

 

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

 

4.5                                 Non Operating
Companies:  No Group Company named in Part
2 of the First Schedule is presently carrying on business.

 

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

 

5                                          PROPERTY INTERESTS

 

5.1                                 Complete
List:  As at the Execution Date the Property
Interests comprise all the interests of the NBNZ Group in land and buildings
owned by, or leased to, any Group Company.

 

5.2                                 Title:  Each Group Company has marketable title to
each of the freehold Property Interests of that Group Company, free from any
encumbrance or tenancy (other 

 

90

 

than Permitted Encumbrances), and is entitled to vacant
possession of the relevant properties, save for certain leases of retail space granted by
a Group Company, information
on which leases has been provided to the Purchaser in the Disclosure
Information.

 

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

 

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

 

6                                          LITIGATION

 

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

 

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

 

(b)                                 debt collection matters involving
the collection of not more than NZ$5,000,000 in the aggregate in the ordinary
course of business,

 

and, so
far as the Vendor is aware, there are no proceedings
pending or threatened as at the Execution Date.

 

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

 

91

 

7                                          LEGAL COMPLIANCE

 

7.1                                 Company holds all
consents:  Each Group Company holds those statutory and
regulatory consents the absence of which would materially adversely affect the
business of the NBNZ Group but neither this paragraph 7.1
nor paragraph 7.2 applies
to the National Bank’s banking licence which is dealt with in paragraph 7.3.

 

7.2                                 No withdrawal or
revocation of consents:  No Group Company has done or
omitted to do any act or thing which will cause any of those statutory and
regulatory consents to be revoked or withdrawn.

 

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

 

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

 

8                                          FINANCIAL
STATEMENTS

 

8.1                                 Latest Annual Accounts:  The Latest Annual Accounts of
the NBNZ Group:

 

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

 

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

 

8.2                                 June Accounts:  The June Accounts:

 

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

 

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

 

8.3                                 Closing Accounts:  The Closing Accounts will give a true and
fair view of the financial position of NBNZ and the NBNZ Group as at the day
before the Closing

 

92

 

Date and their financial performance
for the Accounting Period, if the Purchaser has ensured that the Closing
Accounts (which will be prepared after Closing) are prepared in accordance with
the Accounting Policies.

 

9                                          ASSETS

 

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

 

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

 

9.3                                 No
encumbrances:  No Group Company will have created
or agreed to create  any encumbrance
over any assets it is shown to own in the Closing Accounts, except for
Permitted Encumbrances.

 

10                                    MATERIAL CONTRACTS

 

10.1                           Disclosure:  All Material Contracts have been disclosed
as part of the Disclosure Information.

 

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

 

10.3                           Disputes and
Termination:  As at the Execution Date:

 

(a)                                  there are no unresolved disputes
under a Material Contract between that Group Company and another party to that
contract; and

 

(b)                                 so far as the Vendor is aware, no
Group Company has received notice of the termination of a Material Contract
(other than termination by the effluxion of time).

 

93

 

11                                    EMPLOYEES AND SUPERANNUATION

 

11.1                           Senior
Executives:  The details about the employment
package of the senior executives of the National Bank disclosed to the
Purchaser in the Schedule of Senior Executive Remuneration Details being
one of the Black Box Documents forming part of the Disclosure Information (Item
17.1 in the Data Room Index) are true and correct as at the Execution Date.

 

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

 

11.3                           Company
obligation to contribute to superannuation schemes:  No
Group Company is under any present or future obligation to make any
contribution to, or other payment on account of, any superannuation, pension, retirement or similar scheme or
arrangement, other than contributions to the Staff Superannuation Fund.

 

11.4                           Change to terms
of employment:  Since 30 June 2003 no Group
Company has made, or agreed to make, any additions or alterations in the
remuneration or conditions of employment of any employee other than (i) routine
wage or salary increases or other routine adjustments made in accordance with
the National Bank Group’s customary review policies and procedures (including
the annual review of the remuneration of the National Bank’s managerial
personnel as at 1 October 2003) which were notified to the Guarantor
prior to the Execution Date, and (ii) pursuant to any other commitment made by
a Group Company before the Execution Date and disclosed in writing to the Guarantor
before the Execution Date.

 

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

 

11.6                           No commission
arrangements:  Other than (i) the National Bank’s usual
performance related remuneration scheme (which were disclosed in the Disclosure
Information) and (ii) its mobile mortgage manager commission arrangements (in
each case as disclosed in the Disclosure Information), there are no schemes in
operation in relation to the business of any Group Company under which any
employee of that Group Company or any 

 

94

 

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

 

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

 

11.8                           ACC Rating: 
The National Bank’s experience rating under the Accident Rehabilitation
and Compensation Insurance (Experience Rating) Regulations 1993 has not led to
its basic ACC employer premium being increased or loaded in the current premium
liability year.

 

12                                    BOOKS
AND RECORDS

 

12.1                           Maintenance of
books:  Each Group Company has properly kept and
maintained in all material respects and has in its possession all necessary
books of account (reflecting, in accordance with the Accounting Policies, all
transactions effected by that Group Company or to which it has been a party), minute books, records, its share register and other
statutory registers and books.  All
financial transactions of the NBNZ Group have been accurately recorded in all
material respects in such books and records.

 

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

 

13                                    TRADE
MARKS

 

13.1                           Ownership:  Lloyds TSB is the sole beneficial owner of
the Lloyds TSB Trade Marks (except for the DEPOSITPOINT trade mark registration
299365 (which is proposed to be transferred from the National Bank to Lloyds
TSB)) and the National Bank is the sole beneficial owner of the NBNZ Trade
Marks.

 

13.2                           Registration:  Each of the Lloyds TSB Trade Marks and the
NBNZ Trade Marks which is a registered trade mark is validly registered in New
Zealand under the Trade Marks Act 2003.

 

13.3                           Disputes: 
As at the Execution Date none of the Lloyds
TSB Trade Marks or the NBNZ Trade Marks is:

 

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

 

95

 

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

 

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

 

13.5                           Infringement:  As at the Execution Date none of the Lloyds
TSB Trade Marks or the NBNZ Trade Marks is being infringed by any person, so
far as the Vendor is aware.

 

14                                    OTHER INTELLECTUAL PROPERTY

 

14.1                           Ownership:  A Group Company is:

 

(a)                                  the sole beneficial owner of those domain names of which it is the
registered proprietor; and

 

(b)                                 owns, or is entitled to use, those copyrights in promotional and
advertising materials reasonably required for its publicity and promotional
strategies.

 

14.2                           No Infringements:  So far as the Vendor is
aware as at the Execution Date, none of the intellectual property assets
referred to in paragraph 14.1
infringes the rights of any other person.

 

15                                    INFORMATION
TECHNOLOGY

 

15.1                           Access to Hardware and Software:  The NBNZ Group’s main
operating system hardware and main operating system software, and its other
material hardware and material software, are owned by, or otherwise available
to, the NBNZ Group.

 

15.2                           Access to Data:  The NBNZ holds, or has the requisite
contractual access to, that of its stored electronic data to which access by
the NBNZ Group is necessary for the operation of the NBNZ Group’s business.

 

16                                    MANAGED
FUNDS

 

16.1                           Scope: 
Those managed funds listed in the definition
of “Managed Funds” in this Agreement comprise all of the investment or
superannuation funds of which a Group Company is the issuer or the manager.

 

16.2                           Allotment:  No allotment of any security in relation to
any Managed Fund has been made except pursuant to a registered prospectus
(where such a prospectus is required by law).

 

16.3                           Unit Pricing:  As at the Execution Date, no claims have
been made or threatened and, so far as the Vendor is aware, are likely to be
made or threatened, arising out of the failure of a Group Company to calculate
properly

 

96

 

any distribution of money from a Managed Fund
or the amount payable to or by that Managed Fund on the issue or redemption of
securities in that Managed Fund.

 

16.4                           Financial Statements:  The Latest Annual Accounts
of each Managed Fund:

 

(a)                                  complied with generally accepted accounting practice in New Zealand
as at the date as at which they were prepared; and

 

(b)                                 gave, as at the end of its most recently completed financial year, a
true and fair view of the financial position of the relevant Managed Fund as at
the end of that financial year and its financial performance and cash flows for
that financial year.

 

16.5                           No Breach:  As at the Execution Date no Group Company
has received notice that a Group Company is in breach of its obligations under
any trust deed constituting a Managed Fund or a management agreement under
which a Group Company manages a Managed Fund.

 

16.6                           Trust Deed:  During the Interim Period each Group
Company that is the manager of a Managed Fund will comply in all material
respects with its obligations under the Trust Deed constituting that Managed
Fund.

 

16.7                           No Winding Up:  As at the Execution Date no steps have been
taken by a Group Company or the relevant Trustee to wind up a Managed Fund.

 

17                                    DISCLOSURE INFORMATION

 

So far as the Vendor is aware, as at the
Execution Date, the Disclosure Information (when taken as a whole so that all
relevant information is taken into account with respect to the particular
subject matter) does not:

 

(a)                        contain any untrue information which is material in the context of
that particular subject matter; or

 

(b)                       omit to state any information which is material in the context of
that particular subject matter.

 

97

 

FOURTH SCHEDULE - PURCHASER
WARRANTIES

 

(Clause 6.13)

 

1                                          LEGAL
AUTHORITY

 

1.1                                 Power and Authority:  Each
of the Purchaser and the Guarantor has full power, authority and legal right to
enter into this Agreement and to observe and perform its
obligations hereunder and has taken all necessary corporate and other action to
authorise its execution, delivery and performance of this Agreement.

 

1.2                                 Binding Obligations:  This Agreement constitutes the legal, valid
and binding obligations of the Purchaser and the Guarantor enforceable against
each of them in accordance with its terms, except as such enforceability may be
limited by equitable principles or by bankruptcy, moratorium, insolvency,
reorganisation, liquidation or other laws relating to or affecting creditors’
rights.

 

1.3                                 No Breach of
Violation:  The execution and delivery of this Agreement
by the Purchaser and the Guarantor and the performance by each of them of their
respective obligations under this Agreement do not and will not exceed any
power granted to either of them by, or constitute, or result in, a breach or
violation of any provisions
of:

 

(a)                                  any consent or any law or any rule
or directive of any court or governmental or regulatory agency or authority to
which the Purchaser or the Guarantor is subject; or

 

(b)                                 the Constitution or other
constitutive documents of the Purchaser or the Guarantor.

 

1.4                                 Solvency and Purpose: 
Each of the Purchaser and the Guarantor is:

 

(a)                                  not
insolvent; and

 

(b)                                 entering
into this Agreement in good faith and for a proper purpose and in its best
interests.

 

2                                          GENERAL

 

2.1                                 Consents:  All consents required to be obtained, made or effected by the Purchaser or the Guarantor under or by
virtue of the laws of New
Zealand or any other
country by which the Purchaser or the Guarantor is bound, in connection with,
or arising out of the execution and delivery by the Purchaser and the Guarantor
of, and the performance by the Purchaser and the Guarantor of their respective
obligations under, this Agreement or, where relevant, the transfer of the
Shares to the Purchaser have been duly obtained and are at the Execution Date,
and will be at the Closing Date, in full force and effect (subject to law) and

 

98

 

any condition
contained therein or otherwise applicable thereto has been, and as at the Closing Date will have been,
complied with or fulfilled.

 

2.2                                 No
Litigation:  Neither the Purchaser nor the
Guarantor is involved, whether as plaintiff or defendant or otherwise, in any legal action, proceeding or arbitration in connection with this Agreement or the
purchase of the Shares and no such legal action, proceeding or arbitration is
pending or threatened.

 

2.3                                 Vendor Warranties: 
As at the Execution Date, neither the Purchaser nor the Guarantor is
aware of any breach of any Vendor Warranty or of any warranty set out in clause 7.3 which may give rise to a
claim by either of them against the Vendor or Lloyds TSB under or arising out
of this Agreement.

 

2.4                                 Closing Accounts:  The Closing Accounts will
be prepared in accordance with the Accounting Policies.

 

99

 

	
  EXECUTED by

  Lloyds TSB Bank plc by

  being signed by its Attorney in the

  presence of:  

  	
   

  
	
   

  	
   

  
	
  /s/ Nicola Lawson

  	
   

  	
  /s/ GR Taylor

  	
   

  
	
   

  	
  Name: Graham Taylor

  
	
  Name: Nicola Lawson

  	
  Title: Deputy Director, Group Corporate
  Development

  
	
   

  	
   

  
	
  Occupation: Barrister

  	
   

  
	
   

  	
   

  
	
  Address: London

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  EXECUTED by

  Lloyds Bank Subsidiaries Limited
  by

  being signed by its Attorney in the

  presence of:  

  	
   

  
	
   

  	
   

  
	
  /s/ Nicola Lawson

  	
   

  	
  /s/ GR Taylor

  	
   

  
	
   

  	
  Name: Graham Taylor

  
	
  Name: Nicola Lawson

  	
  Title: Deputy Director, Group Corporate
  Development

  
	
   

  	
   

  
	
  Occupation: Barrister

  	
   

  
	
   

  	
   

  
	
  Address: London

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  EXECUTED by

  Australia and New Zealand Banking

  Group Limited by

  being signed by its Attorney in the presence of:

  	
   

  
	
   

  	
   

  
	
  /s/ G Davis

  	
   

  	
  /s/ DB Valentine

  	
   

  
	
   

  	
  Name: David Bruce Valentine

  
	
  Name: Garry Davis

  	
  Title: General, Manager, Mergers &
  Aquisitions

  
	
   

  	
   

  
	
  Occupation: Solicitor

  	
   

  
	
   

  	
   

  
	
  Address: Auckland

  	
   

  
					

 

100

 

	
  EXECUTED by

  ANZ Banking Group (New Zealand)

  Limited by being signed by its authorised

  signatories in the presence of:

  	
   

  
	
   

  	
   

  
	
  /s/ Peter Castle

  	
   

  	
  /s/ DB Valentine

  	
   

  
	
  Name: Peter Castle

  	
  Name: David Bruce Valentine

  
	
   

  	
  Title: General, Manager, Mergers &
  Aquisitions

  
	
  Occupation: Solicitor

  	
   

  
	
   

  	
   

  
	
  Address: Wellington

  	
  /s/ Peter Jones Stirling

  	
   

  
	
   

  	
  Name: Peter Jones Stirling

  
	
   

  	
  Title: Deputy General Counsel

  
				

 

101

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