Document:

EXHIBIT 4.1

 

 

Executive
service agreement – Mr Frank J Cicutto

 

 

PRIVATE & CONFIDENTIAL

 

23
October 2003

 

Mr F J Cicutto

Managing Director &Chief Executive Officer

National Australia Bank Limited

Floor 35, 500 Bourke St

Melbourne   VIC   3000

 

Dear Frank,

 

Offer of new terms and conditions of appointment and
employment

 

1              On
behalf of the Board of National Australia Bank Limited, I am pleased to offer
you continuing employment in the position of Managing Director of National
Australia Bank Limited (“your Position”), on the terms and conditions set out
in this letter and the Attachment. 
Subject to clause A.3.3A of the Attachment, your Position will continue
to be located in Melbourne, and you are entitled to continue to use the title
“Chief Executive Officer” in conjunction with the title “Managing Director”.

 

Employer

 

2              Your
contract of employment will continue to be with the National Australia Bank
Limited.  As our employee, you may be
required to provide services to any Related Body Corporate of the National
Australia Bank Limited as well as to us.

 

Period of Employment

 

3              The
terms and conditions set out in this letter and the Attachment, if accepted,
will apply to your employment with us from the Commencement Date, which is 23
October 2003.

 

4              Your
employment and this Agreement is for a fixed period of three years from the
Commencement Date (“the Employment Period”) and will cease by reason of
effluxion of time on 23 October 2006 (“the End Date”).   The Agreement may be terminated by you or
by us as set out in this letter and the Attachment.

 

5              No
later than six months before the End Date, we will review with you the
possibility of extending your employment and this Agreement for a period of one
year from the End Date (that is, to an extended End Date which is no later than
23 October 2007).  If the Agreement
is so extended, then we may, but are not obliged to, offer further annual
extensions on terms and conditions to be determined, with effect on or after 23
October 2007.

 

Position and Duties

 

6              In
your Position, you will report to the Board and as required from time to time
to the Chairman on behalf of the Board.

 

1

 

7              The
duties and responsibilities in your Position are set out in Section A of
the Attachment.  They may be varied from
time to time, and your Position title may also be altered from time to
time.  Other specific duties are set out
in Section F of the attachment.

 

8              Despite
any changes to your title or duties and responsibilities, these terms and
conditions will continue to apply.

 

National Australia Bank Group Policies

 

9              You
will be required to comply with all our policies and procedures generally, as
established and varied from time to time. 
By accepting this offer, you acknowledge your awareness of our policies
and procedures which are currently in operational effect.  You will also be required to establish,
review and require compliance with policies and procedures with the objective
of ensuring that the National complies with all relevant laws and regulations
concerning the legal structure and operation of the National.

 

Remuneration 

 

10            Your
Total Employment Compensation (“TEC”) is $2,082,000.  Your TEC is comprised of your Total Remuneration Package (“TRP”)
and your Superannuation component (set out below).  

 

11            Your
TEC is provided in accordance with the terms of the Management Remuneration
Package Guidelines as may be issued and as varied by us in our discretion from
time to time.  The amount of your TEC
will not be reviewed, and will not change, for the duration of the Employment
Period.

 

12            Your
TRP is comprised of a Salary and Benefit component.  The Salary component of your TRP is 1,138,800.  The Benefit component of your TRP is
$759,200.  Your TRP is therefore
$1,898,000 (“annual TRP”). 

 

13            You
may salary package benefits of up to 40% of your annual TRP in each year.  This proportion may be provided as cash or
non-cash benefits or a combination of both. 
It includes any Fringe Benefits Tax (“FBT”) payable by us in connection with
the provision of non-cash benefits.  

 

14            Your
Salary and any other cash benefit component of your annual TRP will be paid
fortnightly in arrears.

 

Superannuation

 

15            You
will remain a member of the National Australia Bank Group Superannuation Fund
(“the Fund”).  As such, you must comply
with the applicable Trust Deed and Rules.

 

16            We
will pay into your Fund account an amount equal to 9.7% of your annual
TRP.  We may alter the amount of this
contribution from time to time, subject to any applicable legislation.  Any amount above the Maximum Earnings Base
for Superannuation Guarantee contribution purposes will be paid as a cash
allowance. 

 

17            This
employer contribution is in addition to any employee superannuation
contributions you may make to the Fund, either in the form of additional
employee contributions, or by deductions from your TRP.

 

2

 

Short Term Incentive Performance-Based Plan

 

18            General
provisions

 

18.1         During
your employment, you are entitled to participate in a Short Term ‘At Risk’
Incentive Performance-Based Plan (“STI Plan”).   The Board may in its discretion change the terms of the STI Plan
at any time.

 

18.2         Under
the STI Plan as it is in operation from time to time, you will be considered
for an annual Short Term ‘At Risk’ Incentive Reward (“STI Reward”).  

 

18.3         Your
target STI Reward for the first year of the Employment Period (the period
ending 30 September 2004) is 110% of your TEC.  For each subsequent year of the Employment
Period, your target STI Reward will be reviewed annually by the Board by
reference to factors determined by it in its discretion, including (but not
limited to) economic conditions and market movements.  The target STI Reward as determined by the Board in respect of a
year will not be less than the target STI Reward for the immediately preceding
year.

 

18.4         You will
be informed about the details of your annual target STI Reward, annual goals
and payments for various percentage achievement of those goals each year in
writing.

 

18.5         The STI
Rewards will be governed by the Group’s Economic Value Added (“EVA”) Incentive
Program, as amended from time to time.

 

18.6         Whether
the STI Reward for a particular year will be provided to you, and, if so, its
quantum relative to the target, will be subject to:

 

(a)            the
extent to which you achieve the performance targets referred to in clause A.4.2
of the Attachment as determined by the Board; 

 

(b)           an
assessment by the Board of the contribution you have made to the overall
development of the Group; and

 

(c)            the
extent to which you achieve an annual EVA target as set by the Board.

 

18.7         The
Board will take into account reasonable and relevant factors in exercising its
discretion in determining the quantum of your STI Reward.  The Board, in its discretion, may choose to
award a reasonable and appropriate STI Reward in excess of the target STI
Reward for exceptional performance in any year.  

 

19            Provision
of STI Reward

 

19.1         In order
to continue your current demonstrated support for the National and its
shareholders, and to link your performance to the future performance of the
National, at least 50% of your annual STI Reward, if any, will be provided in
shares in National Australia Bank Limited (“National shares”).

 

19.2         The
National shares will be held on trust for you under the National Australia Bank
Staff Share Ownership Plan.  

 

19.3         Before
the date  nominated by the National for
the relevant year, you must nominate a preference in writing to the Chairman as
to the percentage (50% or more) of any STI

 

3

 

Reward you
wish the National to provide in National shares for the coming STI Plan year
should you become eligible for the STI Reward. 

 

20            Achievement
of an STI Reward

 

20.1         In any
year in which you are eligible to receive an STI Reward, the Board will, as
soon as reasonably practicable:

 

(a)            arrange
for provision to you of the proportion of that STI Reward which is not being
placed in National shares; and 

 

(b)           arrange
for you to be provided with National shares for the remaining proportion of the
STI Reward, to be held on trust as Deferred Issued Shares (see
paragraph 21).

 

21            Deferred
Issued Shares

 

21.1         The
National shares that are provided as part of your annual STI Reward (“the
Deferred Issued Shares”) will be held on trust for you under the National
Australia Bank Staff Share Ownership Plan. 

 

21.2         While
the Deferred Issued Shares are held on trust, you will be entitled to receive
dividend payments and exercise voting rights through the Trustee.  

 

21.3         Subject
to the provisions below concerning the forfeiture of Deferred Issued Shares
upon termination of your employment, the terms of the Deferred Issued Shares
will be substantially the same as those currently provided under the National’s
“At Risk” program, save that the relevant restriction period for each provision
of National shares will be 10 years from issue.

 

22            Matching
Grant Shares

 

22.1         At no
cost to you, subject to paragraphs 37 and 38 of this letter, the National
will grant you one share to match each share provided to you using the first
50% of your annual STI Reward (“the Matching Grant Shares”).  

 

22.2         All
Matching Grant Shares will be: 

 

(a)            held
on trust for you under the National Australia Bank Staff Share Ownership Plan;
and 

 

(b)           subject
to paragraphs 37 and 38 of this letter, treated in the same manner as the
Deferred Issued Shares and, except in relation to dividends, on the same
conditions.

 

22.3         All
pre-tax dividends may at the discretion of the National be required to be
applied by you in acquiring further shares to be held under the National Staff
Share Ownership Plan.  These shares are
to be acquired at a nominal discount of 1c per share to the weighted average of
the prices at which shares were traded on the stock market during the one week
period up to and including the date of allocation of the shares.

 

The shares are
to be held on the same terms as the Matching Grant Shares save and except that
the relevant restriction period ends on the earlier of:

 

4

 

(i)             cessation
of your employment; and

 

(ii)            10
years from the issue of the first Matching Grant Shares issued to you.

 

23            Approval
by Shareholders

 

23.1         Any
issue of shares as part of the STI Reward or as Matching Grant Shares, under
the National Australia Bank Staff Share Ownership Plan, are subject to approval
by shareholders if required under the rules of any stock exchange on which the
National is listed or law.

 

Other benefits

 

24            In
addition to the benefits provided to you as part of your TRP, and subject to
the approval of shareholders where required by law, by the Constitution, the
Corporations Act 2001, or the Listing Rules:

 

(a)            you
will be considered for participation in other Staff Share schemes as the Board
may determine; 

 

(b)           you
are encouraged to undertake an annual medical assessment at our expense; and 

 

(c)            you
are entitled to participate in other benefits which are normally provided to
executives employed by us.

 

Long Term Incentive Performance-Based Plan

 

25            At
the first Annual General Meeting after the date of acceptance of this offer, at
which it is lawful to do so, the National will seek the approval of
shareholders for the grant of executive share options and/or performance rights
to you under the National Australia Bank Executive Share Option Plan No. 2 and
the National Australia Bank Performance Rights Plan in respect of the years
ending on 30 September in 2003, 2004 and 2005 in numbers to be
determined by the Board.

 

Reimbursement of expenses

 

26            Subject
to substantiation and approval in accordance with our guidelines from time to
time, we will reimburse you for all expenses you properly incur in carrying out
your responsibilities and duties (including, but not limited to travelling,
accommodation, entertainment and telephone expenses).  Payment of any reimbursement is subject to the approval of the
Chairman.

 

No Director’s
Remuneration

 

27            Your
TEC is paid in respect of services provided by you to us under this Agreement,
including services in connection with holding office as a Director of the
National or of any Related Body Corporate. 
No separate amount is payable by us to you in respect of your services
as a Director of the National or of any Related Body Corporate.

 

5

 

Confidentiality and other Duties

 

28            Section B
of the Attachment sets out your obligations in respect of Confidential
Information and related matters.  Your
obligation not to disclose Confidential Information continues, even if your
employment with us ceases for any reason.

 

Restrictive Covenant

 

29            Section B
of the Attachment also includes a number of your obligations to us (including
non-solicitation and non-competition covenants), to provide effective
protection of our Confidential Information and our customer relationships,
during your employment by us and after your employment with us ceases.

 

Leave

 

30            Your
leave entitlements and obligations are set out in Section C of the
Attachment.

 

Termination of Employment

 

31            Detailed
conditions of termination of your employment are set out below.  Additional provisions concerning termination
are set out in Section D of the Attachment.

 

32            Summary
Termination

 

(a)            At
any time, we may terminate your employment by giving written notice to you
effective immediately, if:

 

(i)             you
become bankrupt or compound with your creditors (or any of them) or assign your
estate for the benefit of your creditors (or any of them);

 

(ii)            you
are precluded from taking part in the management of a corporation by the
provisions of the Corporations Act 2001;

 

(iii)           you
are convicted of any offence involving fraud or dishonesty or any other serious
offence (except for a traffic offence) which is punishable by imprisonment
(whether you are imprisoned or not);

 

(iv)          you
commit a serious or persistent breach or non-observance of this Agreement;

 

(v)           you
are guilty of misconduct of such a kind that it would be unreasonable to
require us to continue your employment during the notice period required under
this Agreement; or

 

(vi)          your
office as a Director becomes vacant or is vacated by force of the Corporations
Act 2001 or of the provisions of clause 10.14 or clause 10.28 of the
Constitution.

 

(b)           If:

 

(i)             we
consider that you are committing breaches, or non-observance, of this Agreement
which are or may become persistent; and

 

6

 

(ii)            those
breaches are, or that non-observance is, capable of being remedied;

 

then we will
give you notice requiring you to remedy those breaches or that non-observance
within seven days of the date of the notice, rather than giving notice of
termination in accordance with sub-paragraph (a)(iv) above.  However, if those breaches are, or that non-observance
is, not remedied, or if at any later time further persistent breaches or
non-observance of this Agreement occurs, we may give notice in accordance with
sub-paragraph (a)(iv).

 

33            Termination
by us by giving notice

 

(a)            At
any time we may terminate your employment by giving you six months’ notice in
writing, if:-

 

(i)             we
have determined that we no longer wish to retain your services; or 

 

(ii)            you
are removed from office as a Director of the National in accordance with the
relevant provisions of the Corporations Act or  the Constitution (subject to any applicable
provisions of the Corporations Act).

 

(b)           In our
discretion:

 

(i)             we
may:

 

(A)           require
you to work through all (or part only) of the notice period; 

 

(B)           direct
you to take special leave on full remuneration during some part or all of the
notice period; 

 

(C)           in
respect of a period for which payment in lieu is not made, direct you to work
for part and to take special leave for part; or

 

(ii)            we
will make payment in lieu of the whole notice period (or the balance of the
notice period if you have worked and/or been directed to take special leave for
part of the notice period).

 

(c)            If we
make payment in lieu of all or part of the notice period, it will be calculated
on the basis of your annual TRP.

 

(d)           Upon
termination of employment under this section, we will pay to you a termination
payment of an amount equal to 1.5 times your annual TRP.

 

34            Consequences
of cessation of office

 

You acknowledge that, by reason of the Constitution and the Corporations
Act, if you cease to hold office as a Director, you thereupon
automatically cease to hold office as Managing Director and Chief Executive
Officer.   The National may terminate
your employment in accordance with the provisions of this Agreement.

 

7

 

35            Termination
by us on account of extended absence

 

(a)            At any time we may terminate your employment by making a payment in
lieu of notice of an amount equal to one-half of your annual TRP if you are
unable, by reason of illness, accident or injury:

 

(i)             to duly perform the powers, duties and/or responsibilities of your
Position for periods aggregating more than 3 months in any 12 month period; or

 

(ii)            to resume the powers, duties and/or responsibilities of your
Position after a period of 3 months from the commencement of the incapacity.

 

(b)            Before
we are entitled to terminate your employment under this section:

 

(i)             you must have been afforded a reasonable opportunity to provide us
with any information from a medical practitioner or any other health service
provider of your choice, as to the nature and extent of your incapacity
including the expected duration of incapacity and your prognosis generally; and

 

(ii)            in order for us to make an informed decision as to whether you are
able to carry out the inherent requirements of your Position, we may require
you to undergo an examination by a medical practitioner or other health service
provider of our choice and you consent to a report, including the results of
such examination, being provided to us by that medical practitioner or other
health service provider.

 

(c)            If
your employment is terminated in accordance with this section:

 

(i)             we will pay to you a termination payment of an amount equal to 1.5
times your annual TRP; and 

 

(ii)            in addition to such termination payment, we may, in our absolute
discretion, determine to pay to you any additional benefits which may be
appropriate in the circumstances.  

 

36            Forfeiture
of Deferred Issued Shares upon termination of employment by the National in
certain circumstances

 

If:

 

(a)            your
employment is terminated by the National on, or by reason of, any of the
grounds listed in paragraph 32(a) under the heading “Summary Termination”
above; and 

 

(b)           that
ground (or grounds) included or involved a breach by you of, or failure to
comply with, your duties or obligations to, or otherwise directly involved, the
National, 

 

then all,
right, title or interest in all Deferred Issued Shares (whenever issued) will
be forfeited.

 

8

 

37            Forfeiture
of Matching Grant Shares upon termination of employment by you
(paragraph 40)

 

If your employment ceases by your resignation by you giving notice of
termination under paragraph 40, then:

 

(a)            all
right, title or interest in any Matching Grant Shares which have been issued to
you at any time will be forfeited; and

 

(b)           you
will have no entitlement to a grant of any Matching Grant Shares (not yet
issued as at date of termination) in respect of any period.

 

38            Forfeiture
of Matching Grant Shares upon termination of employment by the National in
certain circumstances

 

If your employment ceases upon termination by us of your employment as
a result of:

 

(a)            a
wilful failure by you to comply with your employment duties or directions given
by the Board, or the Chairman of the Board as appointed from time to time,
after 14 days’ notice in writing requiring immediate compliance; or

 

(b)           a
failure to rectify unsatisfactory work performance to a level reasonably
required by the Board within 60 days of receiving notice of such unsatisfactory
work performance (or such longer time as the Board in its absolute discretion
determines appropriate in the circumstances),

 

then: 

 

(c)            all
right, title or interest in any Matching Grant Shares which have been issued to
you in respect of the preceding grant year will be forfeited and you will have
no entitlement to be granted any Matching Grant Shares (not yet issued as at
the date of termination) in respect of the preceding grant year; and

 

(d)           you
will have no entitlement to a grant of any Matching Grant Shares in the year,
commencing 1 October, in which the date of termination of your employment
under this paragraph 38 occurs.

 

For the purposes of this paragraph 38, “the preceding grant year”
means the period from 1 October to 30 September which
immediately precedes the date upon which termination of your employment under
this paragraph 38 occurs.

 

39            Termination
by you because of material change of circumstances

 

(a)            You may terminate this Agreement in the case of a material change of
circumstances by giving us six months’ notice in writing.

 

(b)           A change in the powers, duties and responsibilities of your
Position, or appointment to another Position, that is not authorised by clause
A.2 or clause A.3 is a “material change of circumstances” if, and only if,
without your agreement:

 

(i)             we purport to reduce your TEC;

 

9

 

(ii)            we purport to substantially reduce the powers or responsibilities of
your Position;

 

(iii)           we purport to substantially diminish the scope of your duties in
your Position;

 

(iv)          we
purport to unilaterally appoint you to another position;

 

(v)           there is any other change by us in relation to your employment,
which, under generally applicable principles of law, would amount to conduct by
us entitling you to accept that conduct as constituting a termination of this
Agreement; or

 

(vi)          you cease to report to the board of the ultimate parent or holding
company of the National. 

 

(c)            In
our discretion:

 

(i)             we may require you to work through all (or part only) of the notice
period; or

 

(ii)            we will make payment in lieu of the whole notice period (or the
balance of the notice period if you have worked for part of the notice period).

 

(d)           If we make a payment in lieu of all or part of the notice period, it
will be calculated on the basis of your annual TRP.

 

(e)            Upon termination of employment on this basis, we will pay to you a
termination payment of an amount equal to 1.5 times your annual TRP.

 

(f)            If you terminate this Agreement, as a result (wholly or in part) of
an event under sub-paragraph (b)(i) above, then any payment we make under this
section will be calculated on the basis of your TRP before the purported
reduction of your TEC.

 

40            Other
termination by you

 

(a)            You may terminate this Agreement at any time by giving us six
months’ written notice or such other period of notice as we may agree with you
in writing.

 

(b)           We may either:

 

(i)             retain you in our service for all or part of the notice period, in
which case we may either require you to undertake your normal duties or require
you to take special leave during this period; or

 

(ii)            we will make payment in lieu of the whole of the notice period (or
the balance of the notice period if you have worked or taken special leave for
part of the notice period). 

 

(c)            If we make a payment in lieu of all or part of the notice period, it
will be calculated on the basis of your TRP.

 

10

 

41            Your
entitlements upon termination

 

Subject to any reductions in the amount of your termination payment in
accordance with this Agreement (see below), in addition to any other
entitlement under this Agreement, on any termination of this Agreement you are
entitled to receive:

 

(a)            your
Salary and other benefits under this Agreement until date of termination; 

 

(b)           TRP in
lieu of any accrued but untaken annual leave;

 

(c)            TRP
in lieu of any accrued but untaken long service leave;

 

(d)           any other benefits due to you pursuant to any share plan or other
relevant plan; and

 

(e)            reimbursement of any other expenses properly incurred by  you in accordance with this Agreement,

 

up to
and including the date of termination.

 

42            Any
amount payable to you in accordance with this Agreement upon termination of
your employment is limited in accordance with clause D.1.1 of the Attachment.

 

43            Reduction
in amount of termination payment

 

If your employment has been extended beyond the End Date in accordance
with this Agreement, and your employment is terminated:

 

(a)            by us
with notice;

 

(b)           by us
on account of extended absence; or

 

(c)            by
you on notice because of a material change of circumstance,

 

and the notice
is given (or, in the case of extended absence, the termination occurs) on a
date which is after the End Date but before the Extended End Date (or any
subsequent agreed end date), no termination payment will be made as otherwise
would be required by this Agreement.

 

44            In
place of any termination payment which would be payable but for this clause, an
alternative termination payment will be paid by us to you, calculated in
accordance with the following formula:

 

 

where -

 

A             is the alternative termination payment;

 

B              is the termination payment which would be payable but for this
clause;

 

11

 

C             is the number of days from the date of termination until the
Extended End Date (or any subsequent agreed end date)

 

D             is 548 (being the number of days in eighteen months)

 

New Agreement

 

45            Our
agreement with you, arising from your acceptance of this offer as set out in
this letter and the Attachment, replaces any present employment agreement you
have with us including, in particular, the Agreement between you and us dated
29th November 1999.  If you
accept this offer, any other agreements, understandings or negotiations in
respect of your employment with us cease to have any effect from the
Commencement Date.  Further details on
this matter are set out in Section E.8 of the Attachment.

 

Applicable law and Other General Conditions

 

46            Your
contract of employment arising from acceptance of this offer will be governed
by the law of the State of Victoria. 
Other general conditions of the offer of employment are set out in
Section E of the Attachment.

 

Definitions

 

47            Definitions
of the terms used in this letter of offer and the Attachment are set out in
Section G of the Attachment.

 

The Attachment

 

48            The
Attachment to this letter forms part of the terms and conditions of this offer
of a contract of employment with us.

 

Relationship between Letter of Offer and Attachment

 

49            This
letter sets out the principal terms and conditions of our offer of continuing
employment.  These terms and conditions
are supplemented by the terms and conditions set out in the Attachment.  If you accept this offer, the terms and
conditions set out in both this letter and the Attachment will constitute your
contract of employment with us.  If
there is any inconsistency between this letter and the Attachment, then this
letter prevails.

 

Continued employment as Chief Executive Officer

 

50            Your
acceptance of this offer will confirm your continued employment as Chief
Executive Officer with effect on and from the Commencement Date, pursuant to
the Constitution and the Resolution of the Board on 16 October 2003.

 

Acceptance

 

51            To
accept this offer as set out in this letter and the Attachment, please sign and
return the attached copy of the letter and the Attachment.

 

12

 

Yours
sincerely

 

[ORIGINAL SIGNED]

 

 

Chairman

 

Enclosure:

Attachment

 

I acknowledge having read this letter and the
Attachment, and I accept the offer of continuing employment with National
Australia Bank Limited on the terms set out in this letter and the Attachment.

 

 

	
  Signed:

  	
   

  	
  [ORIGINAL SIGNED]

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  23
  October 2003

  
	
   

  	
   

  	
   

  
	
  Witnessed
  By:

  	
   

  	
  [ORIGINAL SIGNED]

  
	
   

  	
   

  	
   

  
	
  Full Name of
  Witness

  	
   

  	
  [Peter
  Alexander McKinnon]

  
	
  (Please
  Print)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address of
  Witness

  	
   

  	
  5 Grandview
  Avenue, Ringwood East, Vic

  

 

13

 

ATTACHMENT

 

Contents

 

 

Section:

 

 

A:            Position
and Work

B:             Confidential
Information and Related Matters

C:             Leave

D:            Termination
of Employment

E:             General
Conditions

F:             Duties
in respect of Occupational Health and Safety

G:             Definition
of Terms

 

1

 

SECTION A: POSITION AND WORK

 

This Section sets out your Position and
associated duties and obligations including those in relation to performance of
the powers, responsibilities and duties of your Position.

 

A.1          Your
Position

 

As set out in your letter of offer of
continuing employment, your Position is Managing Director and Chief Executive
Officer of the National Australia Bank Limited.  You are entitled to use the title “Chief Executive Officer”.

 

In your Position you are responsible for
the leadership and overall management of the affairs of the Group.  Your principal objective is to drive the
soundly based and sustained creation of economic value, and thus of shareholder
wealth, at a rate which places the Group amongst the leaders of the financial
services sector.

 

In achieving this objective you will lead
the Group in developing, agreeing with the Board and implementing strategies
and processes which provide appropriate growth and financial outcomes based
upon:

 

(a)            clear
definitions of the markets and customers we serve;

 

(b)           products and services to properly satisfy the needs of our
customers;

 

(c)            sustainable competitive advantage through the development of key
capabilities in each of our products and markets;

 

(d)           a working environment and development opportunities to ensure both
challenging and satisfying career paths for our staff and the human resource
base to ensure our success;

 

(e)            standards of conduct which ensure that the Group and its entities
are regarded as good corporate citizen(s) in all the communities in which we
operate;

 

(f)            maintenance of the risk management environment, credit culture,
balance sheet discipline to ensure the continued financial strength and
stability of the Group; and

 

(g)           a culture throughout the Group based on openness, team work and
achievement and driven by detailed, objective analysis, planning and
measurement.

 

You will be required to communicate the
agreed strategies clearly and broadly throughout the Group and to implement
systems and structures to link performance to the successful fulfilment of
these strategies.

 

1

 

A.2          Duties

 

A.2.1       Your
powers, responsibilities and duties

 

You may exercise the powers and
discretions, hold the responsibilities and perform the duties and tasks which:

 

(a)            we
determine are appropriate to your Position; and

 

(b)           are delegated to you by the Board from time to time, in accordance
with clause 12.30 of the Constitution,

 

(collectively “the powers, duties and
responsibilities of your Position”).

 

A.2.2       Compliance with directions

 

You must comply with all lawful directions
of the Board.

 

A.3          Changes
in your Position and Work

 

A.3.1       Changes in your Position

 

During your employment by us we may alter,
add to or reduce the powers, duties and/or responsibilities of your Position
either:

 

(a)            with your agreement; or

 

(b)           by a direction from us in accordance with the powers conferred on
the Board by the Constitution.

 

For the purposes of this Agreement,
independently of our rights under the Constitution, we may give you a direction
which alters, adds to or reduces the powers, duties and/or responsibilities of
your Position, provided that the direction is reasonable.

 

A.3.2       Appointment to another Position

 

During your employment by us, with your
agreement in writing, we may appoint you to another Position.

 

A.3.3A    Relocation

 

As the Head Office for the operations of
the Group may vary from time to time, the geographical location of your Position
may be varied by us to any place at which the Head Office of the Group is
located from time to time.  You will be
consulted in relation to any proposal for geographical relocation of your
Position.  Any relocation would occur on
appropriate conditions reasonably determined between the National and you,
taking into account our relocation policies and procedures in relation to
senior executive staff.

 

A.3.3       Continuation of the Agreement

 

The terms of this Agreement will continue
to apply even though:

 

(a)            the powers, duties and responsibilities of your Position are varied;

 

2

 

(b)           you are appointed to another Position; or

 

(c)            the location of your Position is changed

 

in accordance with this Agreement.

 

A.3.4       No material change of circumstances

 

A reasonable variation to the powers,
duties and/or responsibilities of your Position, or appointment to another
Position, or a relocation of your Position in accordance with this Agreement
does not constitute a “material change of circumstances” for the purpose of
this Agreement.

 

A.3.5       Tenure as a Director of the National

 

You acknowledge that the Constitution
provides that if for any reason you cease to be an employee of the National,
your office as Director of the National thereupon becomes vacant, but you
remain eligible for reappointment or re-election as a Director of the National.

 

A.3.6       Tenure as a Director or Officer of a Related Body Corporate

 

As at the date of the letter of offer of
continuing employment, you hold office as director of certain Related Bodies
Corporate of the National and you may, from time to time, hold office as a
director of other Related Bodies Corporate of the National.  If you cease to be an employee of the
National and thereby the office of Managing Director and Chief Executive
Officer of the National held by you becomes vacant, you agree to resign with
immediate effect from each office held by you in each Related Body Corporate.

 

A.3.7       Power of attorney

 

(a)            For the purposes of clause A.3.6 above, you irrevocably appoint the
Chairman of the National, as appointed from time to time, to be your attorney
and in your name and on your behalf to execute any document or do anything
necessary to comply with your obligations under the provisions of clause A.3.6.

 

(b)           The power of attorney granted to the Chairman under this clause
A.3.7 shall remain in force both during this Agreement and after it ceases.

 

A.3.8       Period of contract

 

As set out in your letter of offer of
continuing employment, unless terminated earlier, this Agreement will terminate
by reason of effluxion of time on 23 October 2006 (“the End Date”) or the
Extended End Date (no later than 23 October 2007).  The Agreement may be further extended as set
out in the letter of offer (paragraph 5). 
Other than payment as set out in the letter of offer, upon termination
of this Agreement pursuant to this clause, no termination payment will be made
by us to you.

 

3

 

A.3.9       Reasonableness of direction

 

In considering whether a direction is
reasonable for the purposes of clause A.3, account must be taken of:

 

(a)            the National’s commercial and other circumstances and its
requirements, from time to time, on the one hand; and

 

(b)           the powers, duties and responsibilities which would, but for the
direction, attach to your Position on the other hand.  

 

It is the mutual intention of us with you
that the National may act to satisfy its changing commercial and other
circumstances and requirements, but, in doing so, it may not act in a manner
which adversely affects your Position unreasonably, given those circumstances
and requirements, without giving rise to circumstances entitling you to
terminate your contract of employment with us in accordance with this Agreement.

 

A.3.10    Review of contract period and terms

 

As noted in the attached letter of offer of
continuing employment, in addition to any other review under the terms of this
Agreement or any other review which may be conducted by us from time to time, we
will review with you by no later than March 2006 the possible extension of
the operation and terms of this Agreement beyond the End Date.  That review will take into account our
future requirements and any other relevant considerations.  Any such extension of the period of
operation of this Agreement must be until no later than 23
October 2007.  Further extensions
may be made in accordance with paragraph 5 of the letter of offer.  Any such extensions will have effect as an
amendment to clause A.3.8 of this Agreement if made in accordance with
clause E.3.

 

A.4          Performance

 

A.4.1       Performance of duties

 

You will exercise your powers and perform
your duties and responsibilities in a proper and efficient manner.  Unless you are absent by reason of ill
health or approved leave, you will devote the whole of your time, attention and
abilities, during our normal business hours and otherwise as is reasonably
necessary, to exercising your powers and carrying out your duties and
responsibilities, including achievement of the objectives of your Position as
set out in clause A.1.

 

A.4.2       Performance measures and performance review

 

(a)            No later than the last month of each financial year of the National,
you and the Board (or a person or persons nominated by the Board) will discuss
appropriate performance measures and targets for the forthcoming financial year
of the National, with a view to reaching agreement on the measures of
performance and the targets in respect of those measures which will be used by
the Board in the assessment of your performance in your Position.  In default of agreement, the Board may
provide a determination within three months of the commencement of a financial
year of the National, in writing of reasonable performance measures and targets
for that financial year.

 

(b)           As soon as practicable after the end of each financial year, the
Board will review your performance by reference to the agreed or determined
measures and targets.

 

4

 

The
Board (or a person or persons nominated by the Board) will thereafter discuss
its assessment of your performance with you.

 

A.4.3       Other employment and activities

 

(a)            During
your employment by us, you must not:

 

(i)             be or become an employee
or agent of any other person;

 

(ii)            undertake any other
business or profession; or

 

(iii)           assist or have any interest
in any other business or profession.

 

(b)           However,
despite sub-clause A.4.3(a):

 

(i)             subject to the
Constitution, we may agree to you doing any of those things, and we will not
unreasonably refuse to so agree;

 

(ii)            our agreement is binding
only if provided in writing pursuant to a resolution of the Board;

 

(iii)           you may hold or acquire as
a bona fide investment shares or other securities of any publicly listed
company, including any company listed for quotation on the Australian Stock
Exchange Ltd, except if to do so would be forbidden by law or if the standards
of corporate governance determined by the Board makes it improper or
inappropriate.

 

(c)            You may be required to disclose to us any information relevant to
any matter referred to in this clause.

 

A.4.4       Promotion of our interests

 

In addition to your responsibilities under
clause A.1, you must use your best endeavours to promote and enhance the
National’s interests, welfare, business, profitability, growth and
reputation.  You must not intentionally
recklessly or negligently do, or omit to do, anything which is or may be
harmful to those things.

 

A.4.5       Compliance with our policies

 

In addition to each of your other duties
and responsibilities, you must comply with our policies and procedures, as
determined by us from time to time including, in particular, the following
policies and procedures:

 

(a)            Equity
in Employment: We’re Committed;

 

(b)           Sexual
Harassment: Off Limits;

 

(c)            Code
of Conduct: Our Behavioural Guidelines;

 

(d)           Privacy
Policy.

 

You acknowledge that you have been provided
with a copy of, and have read and understood, each of these policies and
procedures prior to signing this Agreement.

 

5

 

A.4.6       Propriety of conduct

 

You understand and are aware of the duties
you owe to us under both the Corporations Act 2001 and the common law as
an office holder and an employee of the National.

 

While this Agreement is in force you will
ensure that you comply strictly with these duties at all times.  In particular, you will ensure that you do
not act or omit to act in a manner which would or may place you in a position
of conflict of interest with your duties to us, or which may create a
reasonable apprehension of improper or inappropriate conduct by you.

 

A.4.7       Duties owed

 

In addition to the duties owed to us as
your employer, including but not restricted to clauses A.4.3 and A4.4 and
Section B, you also owe duties in respect of each Related Body Corporate
of the National in respect of the holding of office as a Director of a Related
Body Corporate and in respect of any duties performed in relation to a Related
Body Corporate in your capacity as our employee.  It is a condition of this Agreement that you comply with those
duties.

 

A.5          Management
Information

 

A.5.1       Reporting requirements

 

You
must promptly report to the Board, or any other person authorised by the Board,
any information which relates to our business, the exercise of your powers, or
the performance of your duties and responsibilities.  A report must be made in response to a request by the Chairman of
the Board and may be made on your own initiative.

 

A.5.2       Explanations

 

You
must provide any explanations that the Board, or any other person authorised by
the Board, requests, where such explanation relates to our business, the
exercise of your powers, or the performance of your duties and
responsibilities.

 

A.5.3       Corporations Act 2001 and common law

 

The
obligations set out in this clause are in addition to and not in derogation of
duties you owe as an officer of the National in accordance with the provisions
of the Corporations
Act 2001 and your duties as our employee in accordance with the
common law.

 

6

 

SECTION B: CONFIDENTIAL INFORMATION

 

 

This Section includes provisions concerning your
obligations in respect of information (including Confidential Information) and
certain obligations both during employment and after your employment ceases,
including restrictions on competitive behaviour both before and after cessation
of employment

 

B.1          Confidential
Information

 

B.1.1       Acknowledgment 

 

You acknowledge that:

 

(a)            the Confidential Information is solely and exclusively our property;

 

(b)           you are subject to obligations in relation to Confidential
Information by reason of this Agreement;

 

(c)            you are subject to obligations in relation to Confidential
Information under the common law; and 

 

(d)           the Corporations Act 2001 creates certain obligations in respect
of use or disclosure of information.

 

B.1.2       Confidentiality

 

Unless:

 

(a)            you
are required by us, or our auditors, or by law; or

 

(b)           we
agree in writing,

 

you must not:

 

(a)            use any Confidential Information; or 

 

(b)           disclose any Confidential Information to any person,

 

other than for the purpose of carrying out
your powers, duties and responsibilities under this Agreement.

 

B.1.3       Use

 

You must not use any Confidential
Information for the benefit of any person other than us.

 

B.1.4       Confidential Information in the public domain

 

To the extent that Confidential Information
is in the public domain (other than by reason of a breach by you of your
obligations with respect to Confidential Information), subject to clause B.1.5
your obligations under clauses B.1.2 and B.1.3 cease.

 

7

 

B.1.5       Uncertainty

 

If it is uncertain whether:

 

(a)            any information is Confidential Information; or

 

(b)           any Confidential Information is within the public domain, unless we
inform you in writing to the contrary. 

 

such information is deemed to be
Confidential Information and deemed to be not within the public domain, unless
we inform you in writing to the contrary.

 

B.1.6       Security of Confidential Information

 

So far as is reasonably practicable, you
must:

 

(a)            maintain proper and secure custody of Confidential Information; and

 

(b)           use your best endeavours to prevent the disclosure of Confidential
Information to third parties or the use by them of Confidential Information.

 

B.1.7       Delivery

 

You must immediately deliver all
Confidential Information which is physically capable of delivery to us if:

 

(a)            this Agreement is terminated; or

 

(b)           you are so requested by the Board or a person authorised by us.

 

B.1.8       Confidential Information may be destroyed

 

If we request you to do so, instead of
delivering the Confidential Information according to clause B.1.7, you must
destroy the Confidential Information and certify in writing to us that the
Confidential Information has been destroyed.

 

In the case of computer software or other
computer data we have requested you to destroy, you must erase it from magnetic
or other media on which it is stored such that it cannot be recovered or in any
way reconstructed and certify in writing to us that the Confidential
Information has been so destroyed. 

 

B.1.9       Obligations to continue

 

Your obligations under this clause:

 

(a)            continue after termination of your employment by us;

 

(b)           are enforceable by us at any time by legal process; and

 

(c)            are for our continuing benefit.

 

8

 

B.1.10    Obligations under Corporations Act 

 

Your obligations under the Corporations
Act 2001 as an officer and as an employee are in addition to your
obligations under this Agreement.

 

B.1.11    Constitution 

 

You acknowledge having read and understood,
and you will comply with, clause 11.8 of the Constitution “Obligation of
Secrecy” and, without limiting the generality of your obligations as an
employee or as an officer of the National, you will not reveal or make known
any of the matters, affairs or concerns which may come to your knowledge as a
Director or officer of the National to any person or persons except in the
course or performance of your duties or under compulsion or obligation of law
when officially required to do so.

 

B.2          Non-Solicitation
Covenant

 

B.2.1       You
covenant that whether on your own account, or for any person, for a period of
12 months after your employment ceases, you will not solicit or entice (or
endeavour to solicit or entice) from us any of our officers or employees or any
contractors to us, whether or not that person would commit a breach of any
contract by reason of ceasing to serve or provide services and/or goods to us.

 

B.2.2       For
the purposes of clause B.2.1, any reference to our officers, employees, and
contractors is limited to those of our officers, employees, and contractors
directly or indirectly interested, engaged or employed by us in any business or
activity of a like or similar kind to that in which the Group was interested or
engaged during the period of three years prior to the cessation of your
employment with us.

 

B.3          Non-Competition
Covenant

 

B.3.1       Covenant

 

You covenant that if your employment
ceases, you will not, without our prior consent, from the date of cessation:

 

(a)

(i)             participate
in the business of providing financial services in competition with the Group;

 

(ii)            participate
in any business or activity of a like or similar kind to that in which the
Group was interested or engaged and in respect of which you, in our reasonable
opinion, had substantial knowledge, during the period of three years prior to
the termination of your employment with us, in respect of that business or
activity;

 

(iii)           solicit
or entice (or endeavour to solicit or entice) from us the custom of any person
who during the three years prior to the cessation of your employment has been a
significant customer of the National;

 

(b)           for a
period of 12 months;

 

(c)            (i)             in
any State or Territory of Australia;

 

9

 

(ii)            in
any State or Territory of Australia and any country in which we are, or a
Related Body Corporate is, directly interested or engaged in:

 

•               the business of
providing financial services;

 

•               any business or
activity of a like or similar kind to that in which the Group was interested or
engaged during the period of three years prior to the termination of your
employment with us, in respect of that business or activity.

 

B.3.2       Consideration

 

Subject to clause B.3.3, in
consideration for the restraint on your employment from the date of termination
of your employment with us, in respect of the whole period of restraint, we
will pay you a sum equal to 12 months of your TRP at the rate applicable at the
date of your termination of employment with us.

 

B.3.3       Consultancy Agreement

 

The
covenants set out in this Section B do not apply upon termination of your
employment with us and you have no entitlement to the consideration referred to
in clause B.3.2, if, on or before the date of cessation of your employment
under this Agreement:

 

(a)            you have entered into an agreement with us to provide consultancy
services as an employee to the National for reward (“the Consultancy
Agreement”); and

 

(b)           the Consultancy Agreement is for a three year period; and

 

(c)            the operation of the Consultancy Agreement in accordance with its
terms commences immediately upon the cessation of your employment under this
agreement; and

 

(d)           the Consultancy Agreement provides for covenants to like effect as
those referred to in this Section B to apply to you for the duration of
the operation of the Consultancy Agreement and is otherwise on terms
satisfactory to us.

 

B.3.4       Payment of consideration

 

The
payment provided for by clause B.3.2 will be paid to you as a lump sum on
termination of employment.

 

B.3.5       Construction of clause and severance

 

Clause
B.3.1 will be construed and have effect as if it were the number of separate
sub-clauses which results from combining the commencement of sub-clause B.3.1
with each sub-paragraph of paragraph (a) and combining each such combination
with paragraph (b) and combining each such combination with each sub-paragraph
of paragraph (c).   Each such resulting
sub-clause is severable from each other such resulting sub-clause.   If any of such separate resulting
sub-clauses is declared or determined to be illegal, invalid or unenforceable
for any reason by final determination of any court or tribunal of competent
jurisdiction, such illegality, invalidity or unenforceability will not
prejudice or in any way affect the validity or enforceability of any other such
resulting sub-clause.

 

10

 

B.3.6       Reasonableness 

 

You
agree that, in your Position and in your employment by us generally, you have
and will become aware of information which is confidential to us and
information concerning all aspects of our dealings with our customers.   You further acknowledge that in the light
of the consideration provided in respect of your obligations under clause B.3,
those obligations set out in this clause are reasonable in protecting our
Confidential Information under Section B of this Agreement and other
information and our customer connection.

 

B.3.7       Consent

 

The consent of the National referred to in
clause B.3.1 will not be unreasonably refused.

 

B.3.8       Interpretation

 

For the purposes of this clause:

 

“the business of providing financial services”
includes banking services, insurance services, and funds management services;

 

“participate in” means, whether directly or
indirectly, being:

 

(a)            interested,
engaged or employed in, or acting, at the senior executive or managerial level;

 

(b)           an
officer (including being the holder of any non-executive office);

 

(c)            a
senior executive or managerial employee or agent; or

 

(d)           an
advisor or consultant to the Board of Directors or senior executive or
managerial level,

 

of any person, firm or corporation.

 

11

 

SECTION C: LEAVE

 

 

This Section sets out your principal leave
benefits and obligations.   It does not
exclude any other leave to which you are entitled by operation of law.

 

C.1          Annual
Leave

 

(a)            You are entitled to 4 weeks’ paid leave for each period of 12
months’ service during your employment or a proportionate amount of leave for
any period of service of less than 12 months.

 

(b)           This leave is in addition to any declared public and Bank holidays
which are normally observed by us.

 

(c)            Our understanding with you is that, so far as possible, leave should
be given and taken within 12 months of it falling due, at times agreed by you
and us.

 

(d)           Any accrued but unused portion of annual leave will be paid upon
termination of employment.  Payment will
be calculated on your annual TRP at the date of termination, or in accordance
with the payment basis which we apply to other senior executives of the
National at the time the payment to you is due.    Accrued but untaken annual leave will calculated from the date
of commencement of employment with us (that is, from 27 November 1967).

 

C.2          Long
Service Leave

 

C.2.1       You are entitled to long service leave in accordance with:

 

(a)            the National Australia Bank Group Award 2002 as replaced and
varied from time to time, as it applies to the National; or

 

(b)           our retiring allowance/National extended leave scheme as varied from
time to time,

 

whichever provides the greater period of
leave.

 

C.2.2       Any
accrued but unused portion of long service leave will be paid on termination of
your employment.   Payment will be
calculated on your annual TRP at the date of termination, or in accordance with
the payment basis which we apply to other senior executives of the National at
the time the payment to you is due.  
Accrued but untaken annual leave will be calculated from date of
commencement of employment with us (that is, from 27 November 1967).

 

C.3          Sick
Leave

 

If you:

 

(a)            are unable to duly perform the powers, duties and/or
responsibilities of your Position by reason of illness, accident or injury; and

 

12

 

(b)           if so required by us, furnish evidence satisfactory to us of your
incapacity,

 

we will provide you with paid sick leave at
the rate of your annual TRP up to your accrued entitlement under this Agreement
(or, in our discretion, a payment in lieu of sick leave if your employment is
terminated in accordance with paragraph 35 of your letter of offer) less any
amount paid to you under any insurance which we may effect for your benefit.

 

13

 

SECTION D: TERMINATION OF EMPLOYMENT

 

 

This Section sets out the circumstances in which
you may terminate your employment with us, and in which we may terminate your
employment with us.  It also deals with
payments due to you upon termination, subject to the requirements of the Corporations
Act 2001.

 

D.1          Termination
payments

 

D.1.1       Limitation
on termination payments

 

Any
amount payable to you in accordance with this Agreement upon termination of
employment is conditional upon the payment complying with, and being permitted
by, the provisions of the Corporations Act 2001.

 

In
particular, no payment made under this Agreement may exceed that which is
permitted by:

 

(a)            Section 200G(2)
of the Corporations
Act  2001 and

 

(b)           Chapter
2E of the Corporations
Act 2001.

 

Accordingly,
if the payment upon termination of employment required under this Agreement
(“the payment”) would exceed that which is permitted by the Corporations
Act 2001, then, despite any other provisions of this Agreement, you
will only be entitled to, and we will only pay to you, that part of the amount
of the payment as is permitted by the provisions of the Corporations Act 2001.

 

D.2          Reasonableness
of provisions and satisfaction of obligations

 

D.2.1       Acknowledgment 

 

You
acknowledge:

 

(a)            that the terms and conditions of this Agreement in respect of
termination of employment (“the terms”) are fair and reasonable, recognising
that the extent and nature of benefits due to you upon termination differ
appropriately accordingly to the reason for termination;

 

(b)           that the terms are not harsh, unjust or unconscionable.

 

If we
give notice (or pay in lieu of notice) and make payment of entitlements which
arise under this Agreement upon termination of employment on a particular basis
we are doing so, and you receive them, in satisfaction of each of your
entitlements under this Agreement, the Award and/or the Enterprise Agreement,
in respect of a termination of employment upon that basis. 

 

D.2.2       No compensation

 

(a)            If your employment is terminated in accordance with the express
terms of this Agreement you are not entitled to claim any compensation or
damages from us in respect of termination.

 

14

 

(b)           Benefits payable under the terms of this Agreement upon termination
of employment are taken by you and by us as representing reasonable and full
satisfaction of any legal or other obligation we might have to you, whether
under this Agreement or otherwise.

 

D.3          Return
of our Property

 

Upon
termination of this Agreement you will return each item of our property
(including but not limited to keys, access cards, each vehicle owned or leased
by us, computers, and disks) in your possession or control.

 

15

 

SECTION E: GENERAL CONDITIONS

 

 

E.1           Governing
law

 

This
Agreement is governed by and will be interpreted in accordance with the laws of
Victoria.

 

E.2           Relevance
of Award and Industrial Agreement

 

(a)            You and we acknowledge that, by reason of the Workplace Relations Act 1996
(“the Act”), the Award and the Enterprise Agreement may apply to your
employment.

 

(b)           We agree with you that:

 

(i)             no provision of the Award or the Enterprise Agreement will be
binding on us in connection with your employment except in accordance with the
Act;

 

(ii)            no provision of the Award or the Enterprise Agreement will be, or be
implied to be, a term of your contract of employment with us,

 

unless we otherwise agree with you in writing.

 

E.3           Amendment

 

This
Agreement may only be varied or replaced by a document signed by us and you,
except that your Total Remuneration Package, Superannuation, Incentive Rewards
and other benefits may be varied from time to time in accordance with this
Agreement without such changes being required to be dealt with in accordance
with this clause.

 

E.4           Waiver
and Exercise of rights

 

(a)            A single or partial exercise or waiver of a right relating to this
Agreement will not prevent any other exercise of that right or the exercise of
any other right.

 

(b)           A party will not be liable for any loss, cost or expense of any
other party caused or contributed to by the waiver, exercise, attempted
exercise, failure to exercise or delay in the exercise of a right.

 

E.6           Dispute
resolution

 

(a)            Any dispute in respect of the application of this Agreement or
concerning its interpretation (“dispute”), other than a dispute giving rise
to a claim for equitable relief, will be resolved in accordance with the
following steps:

 

(i)             when
either party notifies a dispute in writing to the other, the dispute will be
discussed between you and the Chairman with a view to resolution;

 

(ii)            if
that discussion fails to resolve the dispute within 14 days of the notice, the
dispute is to be dealt with as set out in the following paragraphs of this

 

16

 

clause, unless
within a further 3 days, you and the National agree in writing that the
dispute:

 

(1)            will be considered and determined by the Board; and

 

(2)            the decision of the Board shall be in writing and shall be final and
binding on both parties.

 

(b)           Subject
to completion of the process set out in clause E.6(a), a dispute between us and
you (other than a claim for equitable relief) as to:

 

(i)             the interpretation of this Agreement; or

 

(ii)            the rights or obligations of each party arising from your employment
relationship with us,

 

must be
submitted to a single arbitrator in accordance with and subject to the Commercial
Arbitration Act 1984 (Victoria).

 

(c)            For the purposes of an arbitration under this clause, if we do not
agree with you on the appointment of an arbitrator within 14 days of the
notification of dispute by either party to the other, the President or Acting
President of the Law Institute of Victoria will appoint an arbitrator on
application by either you or us.

 

E.7           Rights
Cumulative

 

Subject
to any express provision in this Agreement to the contrary, the rights of a
party under this Agreement are cumulative and are in addition to any other
rights of that party.

 

E.8           Entire Understanding

 

E.8.1       This
Agreement constitutes the entire agreement of the parties about its subject
matter.   Any previous agreements,
understandings and negotiations on that matter cease to have any effect.

 

E.8.2       For the
avoidance of doubt, for the purpose of this Agreement the subject matter of
this Agreement is the terms and conditions of your employment by us and,
subject to the Corporations Act 2001 and the Constitution, the holding of any
office with us or a Related Body Corporate. 
Subject to the express terms of this Agreement, this clause is not
intended to remove, limit, extend or otherwise vary:

 

(a)            any duty imposed upon you or us which arises by operation of law or
by force of legislation; or

 

(b)           any term of the agreement or obligation which would, in the absence
of express provision in the agreement, be implied by law.

 

E.8.3       No oral explanation or information provided by either party to the
other will:

 

(a)            affect
the meaning or interpretation of this Agreement; or 

 

(b)           constitute any collateral agreement, warranty or understanding
between us and you.

 

17

 

E.9           Severance

 

(a)            You and we consider that covenants, obligations and restrictions
contained in this Agreement (“the covenants”) are reasonable in all the
circumstances of your employment.

 

(b)           Each and every part of the covenants is a severable and independent
covenant.   You agree with us that our
joint intention is that if the covenants, taken together, go beyond what is
reasonable in all the circumstances but would be reasonable with any one or
more of the covenants (or any one or more parts of the covenants) deleted, the
covenants will apply as if those unreasonable covenants (or parts of covenants)
were deleted.

 

E.10        Extent of
Contractual Obligations

 

E.10.1     The provisions of this Agreement shall operate only to the extent
permitted by:

 

(a)            law,
in particular, the Corporations Act 2001; and 

 

(b)           any other obligations with which the National must comply as a
company listed on the Australian Stock Exchange (“the obligations”).

 

E.10.2     If any
provision or part of a provision of this Agreement goes beyond that which is
permitted by law, or does not comply with the obligations, that provision or
part of a provision shall be interpreted in such a way as to be permitted by
law or to comply with the obligations or, if such an interpretation is not
open, that provision or part of the provision must be severed.

 

E.10.3     This
clause does not apply so as to limit or affect the operation of any other
clause of this Agreement which governs the interpretation of this Agreement or
which provides for severance of any part of this Agreement.

 

18

 

SECTION F: DUTIES IN RESPECT OF OCCUPATIONAL
HEALTH AND SAFETY

 

 

This Section sets out your duties and
obligations in respect of occupational health and safety, including in relation
to illegal drugs and alcohol.

 

F.1           Illegal
Drugs and Alcohol

 

You must not:

 

(a)            use
or have in your possession any illegal drug during working hours;

 

(b)           attend to carry out the duties of your Position under the influence
of any alcoholic beverage or under the influence of any illegal drug;

 

(c)            drive any vehicle in the course of your employment:

 

(i)             with a blood alcohol content
exceeding that prescribed by the laws of the State in which the vehicle is
being driven; or

 

(ii)            under
the influence of any illegal drug.

 

For the purposes of this sub-clause:

 

“Illegal drug” means a substance the
possession or use of which is prohibited by law in the jurisdiction in which
you are carrying out your duties under this Agreement.

 

“Under the influence of any alcoholic
beverage” means that in the reasonable opinion of the Chairman of the Board,
you are affected by alcohol in such a way that you may not be able:

 

(i)             to
perform the duties of your position;

 

(ii)            to exercise the level of judgment and skill that the performance of
those duties requires; or

 

(iii)           to
take reasonable care for your own safety or the safety of others.

 

F.2           Occupational
Health and Safety

 

You will instil throughout the Group a
culture which recognises the paramount importance of providing a safe and
healthy working environment for all our employees and other persons to whom we
owe duties.  As a minimum, you must ensure
that occupational health and safety policies, practices and procedures are
developed, maintained and implemented so that the Group complies with relevant
occupational health and safety legislation and common law or other legal
duties.

 

As part of that responsibility, at a
personal level you must:

 

(a)            assist us in the implementation of any measures taken by us in
respect of occupational health and safety;

 

(b)           observe any occupational health and safety policy, procedure,
regulation or rule which applies to us;

 

19

 

(c)            use all equipment and appliances provided by us to ensure the health
and safety of you, our other employees, our customers and any other persons;

 

(d)           generally, comply with any obligation imposed on you under the laws
applicable to occupational health and safety.

 

F.3           Our
Obligations

 

We:

 

(a)            acknowledge our obligation to provide a safe workplace, under and in
terms of relevant occupational health and safety legislation and common law duties;

 

(b)           acknowledge our obligations under and in terms of relevant Federal
and State industrial and other legislation, applicable to us in our capacity as
your employer, including but not limited to the Workplace Relations Act 1996;
and

 

(c)            undertake to use our best endeavours to ensure that all information
provided to you by us, in relation to the terms and conditions of your
employment with us, and your rights and obligations under this Agreement, is
accurate.

 

20

 

SECTION G: DEFINITIONS OF TERMS

 

 

In this
Agreement, unless the context otherwise requires:

 

“Accrued but untaken” or “accrued but unused”, in relation to leave entitlements,
means leave to which you have become entitled upon termination of employment
pursuant to an Award.

 

“Award” means each
Award made by the Australian Industrial Relations Commission under the Workplace
Relations Act 1996 which is binding upon us, as varied or replaced
from time to time.

 

“Board” means the
Board of Directors of National Australia Bank Limited.

 

“Chief Executive Officer” means Managing Director and Chief Executive Officer.

 

“Commencement Date”
means 23 October 2003.

 

“Confidential Information” means any trade secret or other confidential information relating
to the business affairs, accounts, marketing plans, sales plans, prospects,
research, management, financing, products, inventions, designs, processes and
any data bases, data surveys, customer lists, records, reports, software or
other documents, material or other information in any form concerning the
National or any of its customers or suppliers to which you gain access, whether
before, during or after your employment.

 

“Constitution”
means the Constitution of the National Australia Bank Limited.

 

“Corporations Act”
means the Corporations
Act 2001 (Cth) as amended and in force from time to time.

 

“End Date” means 23
October 2006.

 

“Enterprise Agreement” means any industrial agreement binding upon us which provides,
amongst other matters, for terms and conditions of your employment which has
been approved or certified by the Australian Industrial Relations Commission
from time to time, pursuant to the provisions of the Workplace Relations Act 1996,
as varied or replaced from time to time.

 

“Group” or “National Australia
Bank Limited Group” means National Australia Bank Limited and each
Related Body Corporate.

 

“Listing Rules” means
the Listing Rules of the Australian Stock Exchange Ltd, as amended and in force
from time to time.

 

“National” means
National Australia Bank Limited and its Related Bodies Corporate.

 

“Position”
means:

 

(a)            your
position specified in Section A of this Attachment; or 

 

(b)           your
position as it is varied in accordance with this Agreement; or

 

(c)            any
other position to which you are appointed in accordance with this Agreement,

 

21

 

as the case
may be.

 

“Related Body
Corporate” means Related Body Corporate of the National and, in that
case, has the same meaning as in Section 50 of the Corporations Act.

 

“Total
Remuneration Package” or “TRP” means the amount specified as such in
the letter of offer of continuing employment as varied in accordance with this
Agreement.

 

“Us” (or
“us”) means National Australia Bank Limited.

 

“We” (or
“we”) means National Australia Bank Limited.

 

“You” (or
“you”) means Frank J Cicutto.

 

Any
reference in this Agreement to an act, omission or determination by the Board
means and includes a decision or determination by a member or the Board chosen
by the Board as its representative for the purposes of determining Remuneration
and Benefits.

 

22EXHIBIT 4.2

 

 

Deed of
settlement and release – Mr. Fank J Cicutto

 

 

This deed of settlement and release

 

is made
on 1st February 2004 between the following parties:

 

1.             Frank
J Cicutto

C/- National
Australia Bank, 500 Bourke Street, Melbourne, Victoria, 3000

(Cicutto)

 

2.             National
Australia Bank Limited

ABN 12 004 044
937

of 500 Bourke Street, Melbourne, Victoria, 3000

(NAB)

 

Recitals

 

A.            Cicutto was employed as Managing Director and Chief Executive
Officer of NAB pursuant to terms and conditions of appointment and employment
contained in a letter and attachments dated 23 October 2003.

 

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

 

C.            Cicutto has agreed to resign as Managing Director and Chief
Executive Officer of NAB.

 

D.            The parties have agreed to settle the terms of Cicutto’s resignation
in accordance with this deed.

 

This deed witnesses

 

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

 

1             Resignation

 

(a)           Cicutto resigns his employment with NAB effective from 5.00pm on 1
February 2004.

 

(b)           Cicutto agrees to immediately resign from his directorship of NAB
and to execute any documentation required to give effect to his resignation.

 

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

 

2             Payment

 

NAB  must
pay to Cicutto on or before Monday 16 February 2004 the sum of
$6,263,000.00 (Settlement Sum), less appropriate taxation deductions as
required by law for payment of all contractual and statutory amounts in respect
of the termination of Cicutto’s employment and directorships with NAB which are
identified in Attachment 1; in addition to an amount of $1,293,000 described in

 

1

 

Attachment 1
under heading “FY 03 Short Term Incentive (1 October, 2002 to 30 September,
2003)” (FY03
STI). The Settlement Sum has been calculated as of 20
January 2004 and will be adjusted to 1 February 2004 in order to
reflect accrual on a daily basis of the Statutory/Award entitlements.

 

3             Cicutto’s
acknowledgments, release and undertaking to NAB

 

3.1         Acknowledgments

 

Cicutto
acknowledges that:

 

(a)           NAB
pays the Settlement Sum and FY03 STI in full settlement of any claims by
Cicutto arising from Cicutto’s employment with NAB, or its termination, that
Cicutto has now or may have in the future if the parties had not executed this
deed; and

 

(b)           This
deed must not be interpreted as an admission by NAB of liability to Cicutto for
any matter.

 

3.2         Release

 

Cicutto
releases absolutely and discharges NAB from any claim, action, suit, cause of
action, demand, liability, damages and costs (whether at common law, in equity
or, to the extent permitted, under any statute) arising in any way concerning
or in the course of Cicutto’s employment or directorships with NAB or their
termination (but excluding any claim for personal injury arising under the
Accident Compensation Act 1985 (Vic) or any claim for reimbursement of
reasonable work related expenses which remains outstanding as at the date of
this deed, including any reasonable amounts owing on the company credit card as
of 1 February 2004) that Cicutto has now or may have had in the future if
the parties had not executed this deed.

 

4             Release of Cicutto

 

(a)           NAB releases and discharges Cicutto from any claim, action, suit,
cause of action, demand, liability, damages and costs (whether at common law,
in equity or, to the extent permitted, under any statute) NAB (or any
subsidiary) has or may have against Cicutto in respect of Cicutto’s employment
or directorships with NAB (or any of its subsidiaries); except that

 

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

 

2

 

5             Confidentiality

 

(a)           Neither
party may disclose any information in respect of this deed, other than for the
purpose of enforcing this deed, or with the express authority of the other party
or as required by law; and

 

(b)           Notwithstanding
clause 5(a), NAB may disclose information in respect of this deed in the course
of its compliance with regulatory disclosure obligations and communication with
shareholders.

 

6             Plea in bar

 

(a)           NAB
may plead this deed in bar to any claim or proceeding by Cicutto in respect of
the subject matter of the release in clause 3.

 

(b)           Cicutto
may plead this deed in bar to any claim or proceeding by NAB in respect of the
subject matter of the release in clause 4.

 

7             Costs and expenses

 

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

 

8             Cicutto’s warranties

 

Cicutto
warrants that:

 

(a)           Cicutto
has entered into this deed voluntarily and without any duress from NAB;

 

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

 

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

 

(d)           Cicutto
is aware that NAB is relying on this warranty in executing this deed.

 

9             Indemnity

 

NAB will
indemnify Cicutto (and keep him indemnified) against any reasonable costs and
expenses incurred by him in responding to, or defending, any claim or any other
enquiry or investigation of any kind by ASIC, ASX, APRA, SEC or any other
regulatory body whether in Australia or elsewhere and against any reasonable
costs incurred in defending any proceedings and any liability arising in
proceedings against Cicutto and/or the NAB or any of its subsidiaries where
such proceedings relate to any matter which arises from conduct by or on behalf
of the NAB in the course of his employment or directorships with NAB or any of
its subsidiaries; provided that Cicutto cooperates fully with the NAB and any
and all

 

3

 

reasonable
requests it may make in connection with any such investigation or proceeding.

 

10           Governing law and
jurisdiction

 

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

 

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

 

11           Severability

 

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

 

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

 

12           Entire agreement

 

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

 

13           Time of the essence

 

Time is of the
essence of this deed.

 

14           Counterparts

 

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

 

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

 

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

 

Executed as a deed:

 

4

 

The common seal of

National Australia Bank

is fixed to
this document

in the
presence of:

 

	
  Signed

  	
   

  	
  Signed

  
	
  Secretary

  	
   

  	
  Director

  
	
   

  	
   

  	
   

  
	
  G F
  Nolan

  	
   

  	
  D C K
  Allen

  
	
  Name (please
  print)

  	
   

  	
  Name (please
  print)

  
	
   

  	
   

  	
   

  
	
  Signed sealed and delivered by

  	
   

  	
   

  
	
  Frank J Cicutto

  	
   

  	
  Signed

  
	
  in the
  presence of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signed

  
	
   

  	
   

  	
  Witness

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Christopher
  Francis Hartigan

  
	
   

  	
   

  	
  Name (please
  print)

  

 

5

 

Attachment 1

 

Schedule of Payments for Managing
Director/Chief Executive Officer

 

Contract / Statutory

 

	
  Item

  	
   

  	
  Resignation

  ($)

  	
   

  	
   

  	
  Disclosed

  (Yes/No)

  	
   

  
	
  Contract

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TEC

  	
   

  	
  Paid
  to date of

  separation

  	
   

  	
   

  	
  N/A

  	
   

  
	
  Notice (6 months TRP)

  	
   

  	
  949,000

  	
   

  	
   

  	
  Yes

  	
   

  
	
  Payment for all Outstanding Contract Related Matters

  	
   

  	
  2,321,000

  	
   

  	
   

  	
  Yes

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Agreed Payments Disclosed in Respect of Resignation

  	
   

  	
  3,270,000

  	
   

  	
   

  	
  (Eligible
  Termination

  Payment)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Statutory/Award(est.-actual TBC)(1)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Annual Leave (139 days)

  	
   

  	
  1,014,700

  	
   

  	
   

  	
  These
  payments do not need to be disclosed at the time of announcement but they
  will be disclosed in the Annual Report.

  	
   

  
	
  Long Service Leave + Bank Extended Leave (261 days)

  	
   

  	
  1,905,300

  	
   

  	
   

  	
   

  
	
  Retirement Allowance (10 days)

  	
   

  	
  73,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2,993,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6,263,000

  	
   

  	
   

  	
   

  

NOTE: TEC
= $2,082,000; TRP = $1,898,000

 

Options/Performance Rights

 

	
  Issued

  	
   

  	
  O/R

  	
   

  	
  Strike
  ($)

  	
   

  	
  Vested

  	
   

  	
  Quantity

  	
   

  	
  Expiry

  	
   

  	
  Hurdle

  	
   

  	
  Status

  	
   

  
	
  19.3.1999

  	
   

  	
  O

  	
   

  	
  28.23

  	
   

  	
  No

  	
   

  	
  400,000

  	
   

  	
  18.3.04

  	
   

  	
  $

  	
  36.00

  	
  (2)

  	
  Keep

  	
   

  
	
  23.3.2000

  	
   

  	
  O

  	
   

  	
  21.29

  	
   

  	
  Yes

  	
   

  	
  500,000

  	
   

  	
  22.3.08

  	
   

  	
  TSR

  	
   

  	
  Keep

  	
   

  
	
  23.3.2001

  	
   

  	
  O

  	
   

  	
  27.85

  	
   

  	
  No

  	
   

  	
  500,000

  	
   

  	
  22.3.09

  	
   

  	
  TSR

  	
   

  	
  Forfeit

  	
   

  
	
  21.3.2003

  	
   

  	
  O

  	
   

  	
  30.46

  	
   

  	
  No

  	
   

  	
  300,000
  

  	
   

  	
  20.3.11

  	
   

  	
  TSR

  	
   

  	
  Forfeit

  	
   

  
	
   

  	
   

  	
  R

  	
   

  	
  N/A

  	
   

  	
   

  	
   

  	
  100,000

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Forfeit

  	
   

  
																	

 

Superannuation

Currently
superannuation is valued at approximately $1,900,000.  The majority of this cannot be accessed until the CEO attains 55
years of age.

 

FY 03 Short Term Incentive (1 October, 2002 to 30 September, 2003)

The $1,293,000
earned as part of the FY’03 STI, and held for you as beneficiary, will be
returned to you in cash less the appropriate income tax.

 

Restrictive Covenant

NAB will not
seek your compliance with Section B2 or B3 of your Employment Contract,
and accordingly no consideration will be paid with regard thereto.

 

Options Issued 23/03/2000

You may have
until 22 March, 2006 to exercise your options issued on 23 March, 2000.

 

(1)  Estimated as at 20 January 2004

(2)  Estimate – to be confirmed in accordance
with the terms of the Plan

 

 

Other

 

Security

Reasonable
personal and residential security (home alarm etc) will be provided as part of
the exit arrangements given the particular circumstances surrounding the
separation.  It would be envisaged that
the personal security for you might be for a period of six months.

 

Family Assistance

We will pay
for reasonable family assistance including counselling and outplacement
services for not less than a 12 month period and otherwise in accordance with
Bank Policy.

 

Bank Property

We will allow
you to keep your mobile phone, home fax machine and a computer without payment
on terms to be agreed and without cost to you (including removal of bank
information from the computer).  You may
purchase your company car at its written down (lease) residual value.

 

Farewell Visit to Banks

We will pay
for airfares, hotels and reasonable travel expenses in order for you and your
wife to visit the Bank’s international and domestic businesses within six
months in order to farewell the staff, to a value not to exceed $75,000.  Visits to such businesses will be subject to
the prior consent of John Stewart.

 

Insurances

NAB will
retain D&O insurance cover for you on no less favourable terms than those
which currently apply in connection with any claims (or other costs or expenses
reasonably incurred as a consequence of any other ASIC, ASX, APRA, SEC or other
regulatory investigation) that may arise out of events occurring prior to you
ceasing employment, and until the running of all statutes of limitation in
respect of any such possible claims or until such other time that these claims
may be resolved.

 

 

	
  Initialled by DCK Allen

  	
   

  
	
  Initials

  
	
   

  
	
   

  
	
  Initialled by F J Cicutto

  	
   

  
	
  Initials

  

 

2

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