Document:

EXHIBIT
4.20

 

Deed of settlement and release
– Mr Ian F Scholes

 

 

This deed of settlement and release

 

is made on 2nd  August 2004 between the following parties:

 

1.            Ian
Scholes

C/- Nathan Kuperholz, Level 2, 280 Queen Street,
Melbourne, Victoria, 3000

(Scholes)

 

2.            National
Australia Bank Limited

ABN 12 004 044 937

of 500 Bourke Street, Melbourne, Victoria, 3000

(the  National)

 

Recitals

 

A.           Scholes
was employed as Executive General Manager, Corporate & Institutional
Banking of the National pursuant to terms and conditions of appointment and
employment contained in a letter and attachments dated 8 March 2002.

 

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

 

C.            Scholes’ employment as
Executive General Manager, Corporate & Institutional Banking of the
National was terminated on 12 March 2004.

 

D.            On about 12 March 2004,
a PricewaterhouseCoopers report was released entitled “Investigation into
foreign exchange losses at the National Australia Bank” (the PwC
Report). On about 23 March 2004 a report was released by the
Australian Prudential Regulation Authority entitled “APRA Report into Irregular
Currency Options Trading at the National Australia Bank” (the APRA
Report).

 

E.            The parties have agreed to
settle the terms of Scholes’ termination, and any claims arising from any
publication by the National of or concerning the PwC Report or the APRA Report,
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             Payment

 

1.1          The National must pay to Scholes within 14 days of the date
of execution of this deed by Scholes the sum of $2,242,700.00 (Settlement
Sum), less appropriate
taxation deductions as required by law for payment of all contractual and
statutory amounts in respect of the termination of Scholes’ employment with the
National which are identified in Attachment 1.

 

The Settlement Sum is in respect of the
following components as set out in Attachment 1:

 

 

(a)           TRP for the period 13 March 2004 to 25 March 2005;

 

(b)           Target incentive payment for the period 13 March 2004 to 25 March 2005;
and

 

(c)           Deferred incentive payment.

 

1.2          Accrued
entitlements

 

The National has already paid the net amount
of $492.96 to Scholes on 15 March 2004. This payment is in satisfaction of
TRP to 12 March 2004 and includes all of Scholes’ accrued annual leave and
annual leave loading entitlements.

 

1.3          Retention
of shares, share options and performance rights

 

The National acknowledges that Scholes will
retain the following shares, share options and performance rights on the same
terms and conditions on which they were granted:

 

(a)           71 “EVA” shares;

 

(b)           Share options granted on 25 March 2002 (250,000 @ $36.14);

 

(c)           Share options granted on 20 March 2003 (125,000 @ $30.46); and

 

(d)           Performance rights granted on 20 March 2003 (31,250).

 

1.4          Reasonable
legal expenses

 

The National will reimburse Scholes’
reasonable legal expenses (of Nathan Kuperholz, his associate firm Kliger
Partners and Mark Dreyfus QC) in the sum of $22,721.93, incurred since the
termination of his employment and which relate to legal advice solely in
relation to the termination of his employment and the negotiation and
conclusion of the settlement as reflected in this deed. Reimbursement of such
reasonable legal expenses will be made within 14 days of the date of execution
of this deed by Scholes.

 

2             Scholes’ acknowledgments, release and
undertaking to the National

 

2.1          Acknowledgments

 

Scholes acknowledges that:

 

(a)           The National pays the Settlement Sum under clause 1.1, the accrued
entitlements under clause 1.2 and allows retention of the shares, share options
and performance rights under clause 1.3 in full settlement of any claims
against the National:

 

(i)            arising from Scholes’ employment with the National, or its
termination; or

 

(ii)           in respect of any publication of or concerning the PwC Report or the
APRA Report,

 

 

that Scholes has now or may have had in the
future if the parties had not executed this deed; and

 

(b)           this deed must not be interpreted as an admission by the National of
liability to Scholes for any matter.

 

2.2          Release

 

Scholes releases absolutely and discharges
the National 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):

 

(a)           arising in any way concerning or in the course of Scholes’
employment or directorships with the National or their termination (but
excluding any claim for personal injury arising under the Accident Compensation
Act 1985 (Vic) or any third party claim, action, suit, cause of action, demand,
liability, damages and costs against Scholes for which he would, in the normal
and usual course, have been indemnified by the National);

 

(b)           for reimbursement of reasonable work related expenses which remain
outstanding as at the date of this deed (including any reasonable amounts owing
on the company credit card as of 12 March 2004); or

 

(c)           in respect of any publication of or concerning the PwC Report or the
APRA Report,

 

that Scholes has now or may have had in the
future if the parties had not executed this deed.

 

2.3          Resignation
from appointments

 

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

 

3             Release of Scholes

 

(a)           Subject to clause 3(b), the National releases and discharges Scholes
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) the National has or may have against Scholes in respect of Scholes’
employment with the National.

 

(b)           The National does not release or discharge Scholes 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 Scholes in the course of his employment with the National.

 

 

4             Confidentiality

 

(a)           Neither party may disclose any information in respect of the terms
of this deed, other than:

 

(1)           for the purpose of enforcing this deed;

 

(2)           with the express authority of the other party; or

 

(3)           as required by any:

 

(A)          applicable law;

 

(B)          order of a court of competent jurisdiction;

 

(C)          rule of a recognised stock exchange; or

 

(D)          government department or agency.

 

(b)           Notwithstanding clause 4(a), the National may disclose information
in respect of the terms of this deed in the course of its compliance with
regulatory disclosure obligations and communication with shareholders.

 

5             Future co-operation

 

(a)           To ensure a smooth transition, Scholes agrees to co-operate fully
with any requests made by the National for the provision of information and
other assistance concerning the business, affairs or customers of the National.

 

(b)           Scholes agrees that he will, if requested by the National or any
subsidiary of the National, provide such assistance (including by giving
statements and evidence) as the National or the subsidiary may reasonably
require in respect of any court proceedings or any investigation or enquiry by
any relevant regulator in relation to the National or the subsidiary.

 

(c)           Subject to satisfactory substantiation, the National agrees to
reimburse Scholes for all reasonable time spent and/or reasonable expenses
incurred by him in providing assistance in accordance with clause 5(b).

 

6             Plea in bar

 

(a)           The National may plead this deed in bar to any claim or proceeding
by Scholes in respect of the subject matter of the release in clause 2.

 

(b)           Scholes may plead this deed in bar to any claim or proceeding by the
National in respect of the subject matter of the release in clause 3.

 

7             Costs and expenses

 

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

 

 

8             Scholes’ warranties

 

Scholes warrants that:

 

(a)           Scholes has entered into this deed voluntarily and without any
duress from the National;

 

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

 

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

 

(d)           Scholes is aware that the National is relying on this warranty in
executing this deed.

 

9             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.

 

10           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.

 

11           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.

 

12           Time of the essence

 

Time is of the essence of this deed.

 

 

13           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.

 

14           Letter from John Stewart

 

Within seven days of settlement, the National
will provide to Scholes the original of the letter from John Stewart on behalf
of the National to Mr Scholes in the terms of Attachment 2.

 

Executed as a deed:

 

 

	
  By Peter McKinnon as the validly authorised

  	
   

  
	
  attorney of
  the National Australia Bank Limited

  	
   

  
	
  under power
  of attorney dated 29 February 1991

  	
   

  
	
  (as amended)
  in the presence of:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attorney

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Witness

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name of
  witness (please print)

  
	
   

  	
   

  
	
  Signed
  sealed and delivered by 

  	
  [Original
  signed]

  	
   

  
	
  Ian
  Scholes

  	
   

  
	
  in the
  presence of:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Original signed]

  	
   

  
	
   

  	
  Witness

  
	
   

  	
   

  
	
   

  	
  NATHAN
  KUPERHOLZ

  	
   

  
	
   

  	
  C/- 280
  Queen Street, Melbourne 3000

  	
   

  
	
   

  	
  A natural
  person who is a current

  	
   

  
	
   

  	
  Practitioners
  within the meaning of

  	
   

  
	
   

  	
  The Legal
  Practice Act 1996

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name (please
  print)

  

 

 

Attachment 1 – Components of
Settlement Sum

 

	
  Description

  	
   

  	
  Amount(1)

  	
   

  
	
  1

  	
   

  	
  TRP from 13 March 2004 to 25 March 2005
  (i.e. 55 weeks to expiry of contract period)

  @ $597,811.09 per annum x 150%.

  	
   

  	
  $

  	
  948,450.00

  	
   

  
	
  2

  	
   

  	
  Target incentive payment from 13 March 2004
  to 25 March 2005 @ $650,000 per annum x 150%

  (ie. 55 weeks TEC x 150%).

  	
   

  	
  $

  	
  1,031,250.00

  	
   

  
	
  3

  	
   

  	
  Deferred incentive payment

  	
   

  	
  $

  	
  263,000.00

  	
   

  

 

(1)  Amounts expressed are gross, unless stated otherwise and
are subject to deduction of tax as required by law.

 

 

Attachment 2 – Letter from Mr
Stewart on behalf of the National to Mr Scholes

 

 

[To be
placed on National Australia Bank letterhead]

 

 

[insert date]

 

 

Mr Ian Scholes

24 The Avenue

Hampton 
Vic  3188

 

Dear Ian

 

I am pleased that the National and you have
been able to amicably resolve the terms of settlement applying to your
departure from the National Australia Bank. The terms of the settlement we have
reached are consistent with the advice the National has received regarding your
entitlements under your contract of employment.

 

I am disappointed that we did not have the
opportunity to work together on rebuilding the National, and share your regret
that the events which occurred leading up to your departure occurred ‘on your
watch’.

 

I would also like to acknowledge your
contribution over recent years as one of the senior managers of the National
and wish you the best in the future.

 

Yours sincerely

 

 

John Stewart

Managing DirectorEXHIBIT
4.21

 

 

Director
appointment letter – Mr Ahmed Fahour

 

 

Office of the Chairman

 

 

500
Bourke Street

Melbourne

Victoria   3000

Australia

 

7 October 2004

 

 

Dear Mr Fahour

 

Letter of appointment

 

I am pleased to advise you that the Board of Directors
of National Australia Bank Limited (the “National”) has approved your
appointment as an Executive Director of the National and National Equities
Limited (the holding company for the major offshore assets) with effect on 7
October 2004, subject to the Australian Prudential Regulation Authority having
no objection to your appointment and receipt from you of a signed “Consent to
Act as a Director”. Enclosed is a “Consent to Act as a Director &
Disclosures on Appointment” form which I would ask you to complete and return
to the Company Secretary, Mr Garry Nolan, as soon as possible.  Garry’s fax number is 03 8641 4927.  Would you also return the original to Mr
Nolan.  In addition to expressing our
delight that you will be joining the Board of the National, this letter sets
out the terms of your appointment to the office of Executive Director of the
National and National Equities Limited. 
It should be read in conjunction with, and is subject to, the National’s
Constitution (a copy of which is attached to this letter), and the Charters and
policies approved from time to time by the Board, including the Board Charter
(a copy of which is attached to this letter). 
Charters and policies may be changed by the Board from time to time.

 

Upon
appointment as a Director, you will hold office until the next Annual General
Meeting of the National which will be held on 31 January 2005, at which time
you will be entitled to stand for election by the shareholders as a Director of
the National.

 

Please acknowledge that
you have read, understood and accept the contents of this letter by signing the
enclosed copy and returning it to the Company Secretary.

 

1                                          Board
members

 

The Chairman of the Board is Mr Graham Kraehe, a Non-Executive
Director.

 

The other Non-Executive Directors, at present, are:

 

•                                           Mr Peter Duncan;

•                                           Mr Robert Elstone

•                                           Mr Danny Gilbert;

•                                           Mr Paul Rizzo;

•                                           Ms Jillian Segal

•                                           Mr John Thorn;

•                                           Mr Geoff Tomlinson; and

•                                           Mr Malcolm Williamson.

 

 

The appointment of Mr Michael Chaney as a non-executive director in
December 2004 and as Chairman of the Board in September 2005 has been
announced.

 

Mr John Stewart is the Managing Director & Group Chief Executive,
the only executive director at this time. 
Mr Michael Ullmer is to join the Board as an executive director in October
2004.

 

The Company Secretary is Mr Garry Nolan.  Mr Nolan can be contacted on (03) 8641 3505.

 

Further details of Board members can be obtained from the Company
Secretary.

 

2                                          Terms of
appointment

 

2.1                                Qualifications

 

To qualify for the office of Director of the National, you must:

 

•                                           be under 70 years of age; [Article 10.9]

 

•                                           not be disqualified or suspended from managing corporations and must
otherwise be permitted by law to act as a director of a company; [s203B Corporations Act and Part 2D.6]

 

•                                           sign a Confidentiality Deed which prohibits you from disclosing any
matters, affairs or concerns of the National; [to comply
with Article 11.8 of the National’s Constitution] and

 

•                                           hold at least 2,000 fully paid shares in the National in your own
right within two months after your appointment. 
[Article 10.8] See 3.4 below for restrictions.

 

2.2                                Term

 

Following your appointment by the Board, you hold office as an
Executive Director until the first Annual General Meeting of the National after
the date of your appointment.  You are
then eligible for election to the position of Director by resolution of the
shareholders of the National at that Annual General Meeting.  [Articles 10.12 and 10.13]

 

Once you have been elected to the office of Director by resolution of
the shareholders of the National in General Meeting, you will be subject to the
rotation of Directors provided for in Articles 10.3 to 10.7 of the National’s
Constitution.  Broadly, these Articles
provide that at each Annual General Meeting one-third of the Directors for the
time being and any other Director not in such one-third who has held office for
three years or more must retire from the office and is eligible for
re-election. The National may remove a Director from office as a Director at
any time by a resolution passed at a General Meeting.  [Articles 10.3-10.7 and
10.14]

 

 

2.3                                Vacation
of office

 

Your office as a Director becomes vacant if any of the circumstances
prescribed under the Corporations Act 2001
(Cth) or the National’s Constitution arise, including the following:

 

•                                           you are disqualified from managing corporations; [s203B Corporations Act and Part 2D.6]

 

•                                           you resign from office or refuse to act; [Article
10.28(b)]

 

•                                           you are removed from office by resolution passed at a General
Meeting of the National; [Article 10.28(d)]

 

•                                           you accept or hold any office in another bank without the consent of
the Board.  [Article
10.28(f)]

 

•                                           you cease to be an employee of the National. (Article
10.11 – see 2.5 below)

 

Article 10.28 of the National’s Constitution contains a list of
circumstances that, in addition to those prescribed by the Corporations Act,
will result in the office of a Director becoming vacant.

 

Among other matters, clause 2.5 of this letter of appointment contains
additional provisions in respect of your employment with the National if you
cease to hold office as a Director.

 

2.4                                Relationship
with the National

 

Once appointed, you hold office as a Director of the National.  As you are also an employee of the National,
you are an Executive Director within the meaning of the National’s
Constitution.

 

2.5                                Holding
office as a Director and your employment

 

(a)                                   Cessation
as an employee

 

As you are an employee of the National, the Constitution of the
National provides in Article 10.11 that your office as a Director becomes
vacant upon you ceasing to be an employee of the National.

 

(b)                                  Variations
to your employment agreement

 

In consideration of your appointment as an officer of the National, you
agree to a variation of the terms and conditions of your employment with the
National (as set out in the letter to you from the Managing Director and Chief
Executive Officer of the National dated 10 August 2004 (“your employment
agreement”)) as follows:

 

(i)                                      in addition to all other
powers of the National under your employment agreement, the National may
terminate your employment effective immediately by giving written notice to you
if your office as a Director becomes vacant or is vacated by force of the
Corporations Act or of the provisions of Article 10.14 or Article 10.28 of the
Constitution;

 

 

(ii)                                 in addition to all other
powers of the National under your employment agreement, the National may
terminate your employment in accordance with the provisions of sub-paragraph
21.5 to 21.7 (inclusive) of your employment agreement if:

 

(A)                                in accordance with the Constitution or the Corporations Act, you are
removed or dismissed from office as an Executive Director; or

 

(B)                                  you cease to hold office as a Director (other than by reason of your
office as an Executive Director or Director being vacated or becoming vacant).

 

(iii)                              Resignation from offices

 

You may, from time to time, hold office as a director of a subsidiary
of the National.  If you cease to be an
employee of the National and thereby the office of Executive Director of the
National held by you becomes vacant, you agree to resign with immediate effect
from each office held by you in the National and in each subsidiary of the
National.

 

(iv)                             For the purposes of
sub-clause 2.5(b)(iii), you irrevocably appoint the Chairman of the
National, as elected 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 sub-clause 2.5(b)(iii).  The power of attorney granted to the Chairman
under subclause 2.5(b)(iii) shall remain in force both during your
employment with the National and after it ceases.

 

(v)                                Extent of operation of certain
obligations

 

The provisions of your employment agreement as varied by this letter,
operate only to the extent permitted by:

 

(A)                                law, in particular, the Corporations Act; and

 

(B)                                  any other obligations with which the National must comply under the
Listing Rules.

 

(vi)                             If any provision or part of a
provision of your employment agreement as varied by this letter goes beyond
that which is permitted by law, or does not comply with the obligations
referred to in sub-clause 2.5(b)(v), 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.

 

(c)                                   While
you are an Executive Director and an employee of the National, 50 per cent of
any “short-term incentive reward” allocated to you under the terms of the
National’s short-term incentive-based plan for executive employees (referred to
in your employment agreement), will be provided in National shares, generally
restricted for a minimum period of 12 months from the date of issue.  Any issue or allocation of shares to you as
an employee of the National, as part of your short-term incentive reward, will
be provided under the National Australia Bank Staff Share Ownership Plan, and
subject to the specific terms of issue or allocation applicable at the time and
will also be subject to approval by shareholders if required by law or under
any obligations with which the National must comply under the ASX Listing
Rules.

 

 

3                                          Expectation

 

3.1                                Overview

 

The National’s expectations of you as a Director are listed in this
section.  In many cases, you are obliged
to meet these expectations because of your legal duties to the National.  You are encouraged to seek independent legal
advice to assist you in the performance of these duties.

 

3.2                                Board
meetings

 

Whilst most Board and Board committee meetings are held in Melbourne,
the Board does visit and hold meetings at interstate and international venues
from time to time. Board meetings are scheduled ten times a year and normally
have a duration of two days, with the exception of the annual Board meeting in
the United Kingdom, which usually has a duration of five days.  A list of the Board Meeting dates for the
remainder of 2004 and for 2005 is attached. 
It is necessary from time to time to convene an unscheduled
meeting.  The National endeavours to keep
such meetings to a minimum, however, a Director may convene additional Board
meetings at any time.  [Article 12.2]

 

You are expected to:

 

•                                           attend Board meetings and ensure that you have fully read all papers
relating to agenda items;

 

•                                           apply your mind to the matters before you and bring your own special
skills and experience to your position;

 

•                                           raise questions and make enquiries when you need more information;

 

•                                           make sure that any of the Board’s delegates are qualified, reliable
and competent to carry out the duties given to them; and

 

•                                           make sure that you have been provided with accurate, relevant and
timely information to reach any decision that will affect the National.  You should not make a decision, and you may
refuse to consider any matter, until appropriate information has been provided
to you.

 

3.3                                Board
committees and subsidiaries

 

Currently there are four standing Board committees:  the Audit Committee, Risk Committee,
Compensation Committee and the Nomination Committee, and the Board may, from
time to time, convene other Board committees.

 

At present, all Directors are members of the Nomination Committee.

 

You may also be appointed as a director of a subsidiary, or
subsidiaries, of the National.

 

 

3.4                                Insider
trading policy and Code of Conduct

 

Directors are expected to comply with the corporate policies approved
from time to time by the Board, including the Corporate Governance Guide
entitled “Role, Duties, Responsibilities and Rights of the Directors of
Category A Company”.

 

A copy of the Guide is attached to this letter.

 

You are of course required also to comply with the National’s Code of
Conduct (which has been expressly referred to your employment agreement) and
the National’s insider trading policy.

 

The insider trading policy restricts dealings in National securities by
Directors as well as other officers and employees of the National.  Directors may only deal in such securities in
the eight-week periods immediately following either the release of the
half-year and full-year profit announcements (currently made in May and
November) or following the release of a qualifying prospectus.  However, even during such periods, Directors
may not deal in National securities if they are aware of any share price
sensitive information.  An example of
this may be any merger, acquisition or significant disposal activity occurring
during the window period.  Further, under
the insider trading policy, Directors must not deal in National securities for
short-term gain and, therefore, dealing in the same National securities within
a 12-month period is prohibited. 
Directors must also discuss their intention to deal in National
securities with the Chairman before undertaking any such dealings.

 

Given these restrictions, a new Director appointed to the Board, who
does not already meet the Director share qualification requirement set out in
the National’s Constitution and clause 2.1 of this letter, should acquire such
shares as soon as possible before s/he acquires any share price sensitive
information.

 

3.5                                Confidentiality

 

You are expected to maintain the confidentiality of all materials and
information you obtain in connection with your position as a Director.

 

You must comply with the Confidentiality Deed you execute in accordance
with Article 11.8 of the National’s Constitution.

 

These obligations are separate from and are in addition to obligations
of confidentiality you have accepted and agreed to as an employee of the
National.

 

4                                          Duties
and powers

 

4.1                                Duties

 

At the most general level, your role in
your capacity as a Director is to monitor the National’s business results and
to set goals and formulate strategy.  In
performing this role, you are subject to a number of legal duties to the
National.

 

A detailed explanation of your duties is
provided in the Corporate Governance Guide entitled “Role, Duties,
Responsibilities and Rights of the Directors of Category A Company” referred to
earlier and attached to this letter.

 

 

4.2                                Disclosure
of conflicts and material personal interests

 

If a conflict of interest arises in
relation to a matter that will be considered by the Board, you must give the
other Directors notice of the conflict, and, if the conflict is a material
personal interest in the matter (as defined by section 191(2) of the
Corporations Act), you must not be present while the matter is being considered
at a Board meeting or vote on the matter.

 

Further guidance in relation to conflicts
and material personal interests is given in the Corporate Governance Guide
attached.

 

4.3                                Powers

 

The Board has the power to exercise all of the National’s powers, other
than the powers which the Constitution and the Corporations Act require to be
exercised by the National in General Meeting. 
[Article 11.1 and s198A(2) of Corporations Act]

 

Decisions of the Board are decided by a majority of votes of Directors
present and entitled to vote.  Each
Director has one vote.  [Articles 12.3 and 12.4]

 

4.4                                Appointment
of Alternate Director

 

Articles 12.6 - 12.14 of the National’s Constitution provides for a
Director to appoint an Alternate Director to act in his / her place, subject to
the approval of the majority of the other Directors.  However, it has not been the practice in the
National to appoint Alternate Directors.

 

5                                          Remuneration

 

5.1                                Remuneration

 

As you are an employee of the National, you are not provided with and
have no entitlement to any additional remuneration in respect of holding the
office of Director.

 

5.2                                Insurance
and indemnity

 

As a Director, you have the benefit of the indemnity provided to you in
the National’s Constitution.  This
indemnity is broad; however, it does not provide protection if the National is
prohibited from indemnifying you, for example, where liability is owed to the
National.  [Article
21.1 and s199A(2) of the Corporations Act]

 

You are invited to enter into a Deed of Access, Indemnity and Insurance
which mirrors the protection afforded to you under the National’s
Constitution.  That deed also includes an
undertaking by the National to effect and maintain an appropriate Directors’
and Officers’ Insurance Policy.  A copy
of that deed is attached.  Could you
please sign the deed and return it.

 

You may also be protected under the National’s Directors & Officers
Insurance Policy.  Details of the
insurance policy are provided in the brochure attached.

 

It is important that, if you become aware of any matter that may give
rise to an actual or potential claim, or of any circumstances that may lead to
such a claim, you contact Global Operational Risk, Insurance & Compliance
(Melbourne).

 

 

6                                          Training

 

The National is committed to providing its
Directors with opportunities to update and enhance their skills and knowledge.

 

In your capacity as a Director, you are
entitled to attend external seminars, workshops and other training programs
that are relevant to your directorship. 
The National will reimburse you for any reasonable costs of such
additional training.

 

7                                          Access to
information

 

7.1                                Access to
financial records and company books

 

Under the Corporations Act, a Director has
rights of access to the National’s financial records and, for the purposes of
legal proceedings to which the Director is a party, the National’s books, at
all reasonable times.  [Section 198F and section 290 of the Corporations Act]

 

The Deed of Access, Indemnity and Insurance
grants you access to Board papers and related material.

 

7.2                                Access to
the Company Secretary

 

The Company Secretary is responsible for
providing advice and support to the Board and for ensuring that Directors have
sufficient information to make decisions at meetings of the Board.  The Company Secretary also prepares minutes
of all Board meetings.

 

In your capacity as a Director, you have
access to, and are entitled to request additional assistance and information
from, the Company Secretary.

 

7.3                                Authority
to appoint independent professional advisers

 

In your capacity as a Director, you are entitled to seek independent
professional advice in relation to your duties and powers as a Director of the
National.  The National will reimburse
Directors for all reasonable expenses incurred in obtaining such advise,
provided that the expenses have been approved by the Chairman and, where
appropriate, a copy of the advice is made available to the Board.

 

 

8                                          Further
guidance and information

 

If you have any queries about your appointment, please contact the
Company Secretary.

 

My other Board colleagues and I are looking forward to working with you
in the future.

 

Yours
sincerely

 

	
  [Original signed]

  	
   

  

 

 

GRAHAM
J KRAEHE AO

CHAIRMAN

 

 

I
acknowledge that I have read and understood and I hereby accept the contents of
this letter.

 

 

	
  Signed:

  	
  [Original signed]

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  AHMED
  FAHOUR

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  26-10-2004

  	
   

  

 

 

When
you have signed the attached copy of this letter, please return the signed
copy, and signed copies of the other documents attached to this letter which
require your signature, to:

 

Mr GF Nolan

Company Secretary

National Australia Bank Limited

Level 24

500 Bourke Street

MELBOURNE   VIC   3000

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