Zero Cost Collar Facility Product Disclosure Statement

Transcription

1 Zero Cost Collar Facility Product Disclosure Statement MQ Structured ProductS TAiLOrED EquiTy SOLuTiONS 1 March 2004 Macquarie Bank Limited ABN AFSL

2 IMPORTANT NOTICE & DISCLAIMER This is a Product Disclosure Statement (PDS). The date of this PDS is 1 March Purpose Under this PDS Macquarie is inviting Applications for the Macquarie Zero Cost Collar Facility. Applications Applications under this PDS must be made on the Application Form attached to this PDS and may be made from 11 March To the extent permitted by law, Macquarie may withdraw invitations and offers made under this PDS in respect of a particular Zero Cost Collar Facility at any time at its absolute discretion. Potential investors should lodge their Application Form with their stockbroker or licensed financial adviser, or directly with Macquarie. Cooling off Rights No cooling off rights apply to the issue of the Macquarie Zero Cost Collar Facility. This means that, in most circumstances, you cannot withdraw a Transaction Request once it has been made. Foreign Jurisdictions The distribution of this PDS in jurisdictions outside Australia may be restricted by law and therefore persons into whose possession this PDS comes should seek advice on and observe any such restrictions. Failure to comply with relevant legislation may violate those laws. This PDS is not an offer or invitation in relation to the Macquarie Zero Cost Collar Facility in any place in which, or to any person to whom, it would not be lawful to make such an offer or invitation. The Zero Cost Collar Facility offered under this PDS has not been or will not be lodged or registered under the United States Securities Act of 1933, as amended and may not be offered or sold directly or indirectly in the United States. Changes to Information in PDS This PDS is current as at 1 March Information in this PDS is subject to change from time to time. Where information that is not materially adverse to Investors changes, Macquarie will update the information by posting a notice on its website at macquarie.com.au/zcc. Macquarie will provide upon request a paper copy of updated information to Investors. Investors may call Macquarie on to request such information. Representations References in this PDS to the Reference Shares are included solely for the purposes of identification of the securities to which the Zero Cost Collar Facility relates. Such references are not to be construed as any express or implied endorsement by the Listed Entity of the Reference Shares or other entity of this investment, nor does any such Listed Entity or other entity accept any responsibility for any statement in this PDS nor undertake any liability in respect of the Zero Cost Collar Facility. Own Advice The information provided in this PDS is not financial product advice, and has been prepared without taking into account your individual investment objectives or personal circumstances. You should read the whole of this PDS and consider all of the risks and other information relating to the Zero Cost Collar Facility before deciding to invest. If you have any questions, you should contact your stockbroker, accountant or other professional adviser before deciding to invest in the Zero Cost Collar Facility. Terminology Terms appearing in capital letters in this PDS have the meaning attributed to them in the Glossary extracted in Section 10 of this PDS unless the context otherwise requires. Privacy Act 1998 Collection Statement If you complete the Application Form attached to this PDS you will be supplying to Macquarie personal information. Macquarie will be bound by the Privacy Act 1998, as amended by the Privacy Amendment (Private Sector) Act 2000 ( the Privacy Act ), in relation to Macquarie s collection, holding, use, disclosure, management, access, correction and disposal of that information. You should be aware that: You can contact us by phone, fax or and request access to your information. In normal circumstances, we will give you full access to your information, however there may be some legal or administrative reason to deny you access, in which case we will tell you of our reason. Further, there may be some charge to give you full access where your request requires the compiling of information that has been archived or is significant in volume. Macquarie will use your personal information for the following purposes: assessing your Application. assessing the credit and other exposure that the Macquarie Bank Group has to you. marketing of products and services which are of a similar type. to determine future product and business strategies and to develop its services. to comply with all applicable regulatory or legal requirements (including the requirements of ASIC, ASX, ATO and AUSTRAC). to communicate with you in relation to your Zero Cost Collar and all transactions relating to your Zero Cost Collar. Your personal information may be disclosed to other entities in the Macquarie Bank Group in carrying out the above uses. It may also be disclosed to any financial institution nominated by you in the Application Form or in a Direct Debit Form and may be disclosed to your stockbroker or licensed financial adviser. While the information we ask you to supply in the Application Form is not required by law, Macquarie may not be able to assess your Application if the information is not supplied. You can obtain a copy of Macquarie s privacy statement on com.au or by requesting it from us. CHESS Explanation CHESS (Clearing House Electronic Subregister System) is a computer system which electronically transfers title between the buyers and sellers of securities on the Australian Stock Exchange (ASX). It is a paperless system where security ownership is recorded on an account in CHESS, rather than through the use of physical share certificates. CHESS also enables the electronic settlement of transactions between CHESS participants (i.e. stockbrokers and institutional investors). CHESS is operated by ASX Settlement and Transfer Corporation Pty Ltd, a wholly owned subsidiary of the ASX. All CHESS participants must abide by published rules known as the ASX Settlement Transfer Corporation Pty Limited (ASTC) Settlement Rules (ASTC Rules). Under these rules you are entitled to an explanation of the main points of the sponsorship arrangements under the Facility. This explanation appears below. Sponsorship on CHESS As it is impractical for individual investors to have direct electronic access to CHESS, you must be sponsored in order to hold shares through CHESS. To arrange sponsorship, you must sign a formal sponsorship agreement with a broker or non-broker participant who will act as your sponsor. This agreement stipulates the terms and conditions under which the sponsor will operate the CHESS holdings for you. Under the sponsorship terms contained in the General Conditions in Section 5, you agree to appoint Macquarie Equities (or any other person nominated from time to time by the Bank) to be your CHESS sponsor. You agree to this sponsorship when you sign the Application Form. Macquarie Equities is a broker-participant, and will provide transfer and settlement services as your agent in relation to all of the securities under the Facility. Any shares lodged with Macquarie Equities will be converted by Macquarie Equities into a CHESS holding in your name, unless they are ineligible. Macquarie Equities will open a share account in your name and control it on your behalf, acting on your instructions in relation to all CHESS Holdings comprising the Secured Property under the Facility. CHESS will allocate you a new Holder Identification Number, or HIN, pertaining to the share portfolio lodged with your sponsor. The HIN identifies you and is analogous to an account number for a bank account, and will be shown on your CHESS Holding Statement. CHESS will notify you and your sponsor in writing of the new HIN, together with the new name and address details they will be associated with. Macquarie Equities will operate your CHESS account in accordance with the sponsorship terms in the General Conditions in Section 5 and will abide by the ASTC Rules. Statements detailing any change to a CHESS shareholding in your name will be sent to you each month by ASX Settlement and Transfer Corporation Pty Ltd. If there is no change to your CHESS shareholding you will receive an annual statement. If your sponsor is suspended from participating in CHESS under the ASTC Rules, you have a right to request the ASTC to remove the holding from the CHESS subregister or from the control of your sponsor, subject to the rights of Macquarie Bank Limited under the Facility. You only appoint Macquarie Equities to sponsor securities that are included in the portfolio, so you may have more than one sponsor if you wish. Any other sponsors you appoint will not be able to sponsor the securities held as Secured Property. All shares held under this sponsorship are mortgaged to Macquarie Bank Limited as security for your obligations under the Facility. This means, for example, that you may not change the sponsor of these shares or otherwise deal with these shares without the consent of Macquarie Bank and these shares may be sold in the event of a default under the terms of the Facility. As your sponsor, Macquarie Equities has a legal responsibility to explain CHESS sponsorship to you. When you sign the Application Form, you are acknowledging that this explanation has been given to you and that you understand the explanation. Please contact your adviser or call Macquarie on if you have any questions regarding CHESS sponsorship. Consents Blake Dawson Waldron has given and not withdrawn its consent to be named in this PDS in the form and context in which they are named, and to the inclusion of the Taxation Report in Section 4 of this PDS. Further Information If you have any questions concerning the information contained in this PDS, please contact us on (02) or equitysolutions@macquarie.com

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5 At a Glance Issuer Macquarie Bank Limited (ABN ) No. 1 Martin Place Sydney NSW 2000 Australia Phone: equitysolutions@macquarie.com.au Reference Share The Zero Cost Collar is available over any ASX listed share, subject to approval by Macquarie. Minimum Transaction Request Investors must have shareholdings or exercisable employee options over shares with a Market Value at the Transaction Request Date of at least $100,000. Investment Term Nominated by the Investor and may be up to 5 years. Option Collar Allows the Investor to gain protection at Maturity at the Protection Price and cap the level of gain to the Cap Price of the Reference Share at Maturity. Loan Facility Available for Investors to draw down at a minimum of $50,000 up to a maximum of the protected value of their shares. Placement Fee At Maturity Macquarie may pay an upfront fee up to 0.10% of the aggregate amount protected to your stockbroker or adviser. A yearly fee of up to 0.50% of the Loan Amount may also be paid to advisers during the investment term. Fees, charges and commissions exclude GST where applicable, unless otherwise specified. An Investor has a number of options available at Maturity including: rolling the investment into a new Option Collar; retaining all the shares and repaying any loan and Variable Premium; disposing of the Reference Shares and receiving the proceeds after repaying any loan and Variable Premium. 1

6 Contents Section 1. Investment Overview...3 Section 2. Details of the Facility...9 Section 3. Risks You Should Consider...18 Section 4. Taxation Considerations...23 Section 5. General Conditions...28 Section 6. Equity Option Agreement...45 Section 7. Section 8. Loan Agreement...48 Description of the Underlying Shares...50 Section 9. About the Issuer...51 Section 10. Glossary of Terms...52 Section 11. Application and other Forms...60 Instructions for completing the Application Form...62 Application Form...63 CHESS Instruction Form...67 Employee Option Exercise Notice...69 Employee Option Exercise Declaration...71 Physical Settlement Request...73 Cash Settlement Request

7 SECTION 1 Investment Overview This Section contains a brief summary only of certain material features relating to the Zero Cost Collar Facility. Detailed information relating to the offer to subscribe for the Zero Cost Collar Facility can be found in the following sections of this PDS. Potential investors should read this PDS in its entirety before making any investment decision. The Zero Cost Collar Facility provides a costeffective method of protecting an existing share investment. By using an Option Collar you can ensure that, at Maturity, the value of your shareholding will be within a certain range, regardless of where the share price finishes. The Facility also has a voluntary feature that enables you to borrow against your protected investment to free up some cash if required. Who is the issuer of the PDS and who offers the Zero Cost Collar Facility? This PDS is issued by Macquarie Bank Limited. What is the Zero Cost Collar Facility? The Zero Cost Collar facility allows investors who have existing shareholdings or exercisable and vested employee options over shares with a Market Value on the Transaction Request Date of $100,000 or more to protect their holding at Maturity. The Facility is split into two parts: 1. the Option Collar; and 2. the Loan Facility. You may choose to take out only the Option Collar or both the Option Collar and the Loan Facility. You can choose both the Protection Price and the Cap Price of the Reference Shares and depending on where these are set the Option Collar may be zero cost. The Maturity Date is nominated by the Investor and may be for up to five years. The Zero Cost Collar Facility product is offered by Macquarie Bank Limited. Macquarie Bank Limited s Australian Financial Services Licence Number is AFSL Refer to Section 9: About the Issuer for further information about Macquarie Bank. 3

8 SECTION 1 Investment Overview continued What Are The Key Features And Benefits Of Investing In the Zero Cost Collar Facility? The Option Collar protects the Reference Shares against share price falls below the Protection Price at Maturity. Option Collar effectively caps the level of the gain on the Reference Shares to the Cap Price at Maturity. Depending on the levels of the Protection Price and Cap Price, the Option Collar may be provided to you at zero cost. You have the ability to either select the standard Protection Price and Cap Price Percentages as published on a current Rate Sheet or choose your own Protection Price Percentage (the Cap Price Percentage will then be calculated by Macquarie Bank to enable the Option Collar to be provided at zero cost or at a Fixed Premium). Where you choose your own Protection Price Percentage and Cap Price Percentage a payment may be required from you for the Option Collar. There is a choice of different terms to Maturity you may nominate any Term up to five years. The shares remain in your name so you receive all ordinary cash dividend income and franking credits. No capital gains tax event is triggered on the Reference Shares unless they are sold at Maturity. There is an optional multiple draw down Loan Facility available against your shares at competitive interest rates. The funding provided under this Facility may be used for the exercise of employee options. What Are The Risks of Investing in the Zero Cost Collar Facility? As with any investment decision, you need to consider an investment in the Zero Cost Collar Facility carefully and in light of your individual circumstances. Potential risks of investing in the Zero Cost Collar may include: foregoing potential profits on the Reference Shares where the Closing Price on Maturity is greater than the Cap Price; where the Protection Price is below the current value of the Reference Shares, you will be exposed to the extent of any difference; you may be required to make a cash payment if the Closing Price is greater than the Cap Price at Maturity and you want to retain all your existing shares; the occurrence of a Market Disruption Event or a Material Adverse Change which may accelerate the Repayment Date of any Loan and the Maturity Date of the Option Collar; any early repayment of the Loan may require the Investor to pay Acceleration Interest which may be a significant amount; any early termination of an Option Collar may require the Investor to pay substantial Option Break Costs; and Macquarie Bank not performing its duties under the facility. You should refer to Section 3 Risks You Should Consider on page 18 of this PDS for more detailed information about the risks of investing in the Zero Cost Collar Facility. There is a potential for tax deductions on Interest paid. The Facility is available in respect of existing share or option holdings with a Market Value of at least $100,000. 4

9 How Does The Zero Cost Collar Facility Work? Timing What happens Example When you first apply for the Facility During the life of the Facility On the Maturity Date Lodge Application Form with Macquarie. You (together with your adviser) determine the Protection Level and Cap Level of the Reference Shares together with the Maturity Date. Macquarie will advise whether the selected Option Collar is zero cost or whether a premium is payable. You elect whether to use the Loan Facility. The Reference Shares are transferred to an account with Macquarie Equities and a mortgage is granted to Macquarie Bank. You receive all ordinary cash dividends and franking credits attached to the Reference Shares. You can choose to: Roll over your investment into a new Facility; Retain the Reference Shares and depending on the Closing Price of the Reference Shares, you may be required to make or entitled to receive a cash payment; or Dispose of the Reference Shares and receive the proceeds subject to any adjustment for the Option Collar and repayment of the Loan. Jack owns 10,000 XYZ shares he purchased a few years ago at $5.00 and wishes to protect his gains now that XYZ is trading at $ Jack is happy to take some risk on the downside and protect his shares at around 87.5% of the current share price or approximately $ Macquarie advises that for a two- year Option Collar at zero cost the Cap Price is set at $ Jack is happy to proceed with the Facility on this basis. Jack receives all ordinary cash dividends and franking credits on his 10,000 XYZ shares over the two years. The Closing Price of XYZ Shares on the Maturity Date was $14.00 (ie between the Protection and Cap Prices) and Jack decides to retain his 10,000 XYZ Shares. He lodges a Cash Settlement Request form. You should refer to Section 2.1 of this PDS for further details. Who Do They Suit? The Zero Cost Collar facility may be appropriate for: 1. shareholders whose shares have appreciated significantly in value and who wish to protect their holding at certain levels; 2. asset rich / cash poor shareholders who want to release cash from their shareholding without a forced sale of shares and who want the peace of mind of having protection on the downside; 3. employees with vested and currently exercisable company options looking to finance the exercise price and retain ownership of the shares issued on exercise of those options; and 4. shareholders who want cash for other investment opportunities without selling their shares. 5

10 SECTION 1 Investment Overview continued How Do I Apply for the Zero Cost Collar Facility? Applications for the Zero Cost Collar Facility may only be made on the Application Form attached to this PDS. It is essential that Investors fully understand the terms and conditions of their investment. Investors should read this document fully and seek the advice of their financial investment professional. Applications may be made by individual, trustee and corporate Investors who are Australian residents. Individual Investors must be at least 18 years of age. Once an Application is accepted, the Investor may then enter into an Option Collar with or without a Loan under the Loan Facility by contacting Macquarie Bank directly with a Transaction Request. The Option Collar must be in respect of an existing share or option holding with a Market Value of at least $100,000 on the Transaction Request Date. You should send your Application to: Equity Markets Support - Retail Macquarie Bank Limited GPO Box 3423 Sydney NSW 2001 Refer to Section 11: Application and Other Forms. How Much Does The Zero Cost Collar Facility Cost? Payment on Application Option Collar Whether a payment is required to be made on application for the Facility is dependent on the Protection Price and Cap Price selected for the Reference Shares. An Investor may select either the standard Protection Price and Cap Price Percentage at Zero Cost or tailor their own Option Collar which may involve a payment being made. Such payment is not fixed and will vary depending on a number of factors including: The selected Reference Share; The selected Protection Price and Cap Price Percentages; The volatility of that Reference Share price; The future expected dividends of the Reference Share; The time remaining to Maturity; and Prevailing interest rates. Section of this PDS contains a worked example of how the Option Collar works, including how the payment upon application of the Facility can be calculated. Payment on Application Loan Facility Investors who borrow money from Macquarie are required to prepay Interest annually in advance throughout the term of the Loan. An Investor may prepay Interest from their own funds or alternatively, subject to the Loan Conditions, capitalise it into the Loan Amount. The amount of Interest payable is dependent on the Loan Amount and the Interest Rate at the time of the Commencement Date of the Loan. Current Interest Rates can be obtained by contacting Macquarie. Section of this PDS contains a worked example of how the Loan Facility works. 6

11 Payment at Maturity Option Collar Whether an amount is payable by an Investor at Maturity is dependent on a number of factors including the Closing Price of the Reference Share and whether a Cash Settlement or Physical Settlement Request has been made. If the Closing Price of the Reference Share is above the Cap Price, the Investor will be required to pay the Variable Premium (calculated for each Option as the difference between the Closing Price and the Cap Price). If Cash Settlement is selected the Investor must pay the Variable Premium to retain all their Reference Shares. If Physical Settlement is selected the Variable Premium will be deducted from the sale proceeds paid to the Investor. Section of this PDS contains a worked example of how the Option Collar works, including examples of how to calculate what you may need to pay at Maturity. Payment at Maturity Loan Facility Investors are required to repay all amounts borrowed under the Loan Facility on the Maturity Date. Section of this PDS contains a worked example of how the Loan Facility works. Commission, Fees and Expenses Your stockbroker or adviser may receive an upfront or trail commission during the Term of your investment. This commission is payable by Macquarie Bank and will be up to 0.10% of the protected amount, being the sum of the Protection Price multiplied by the number of Reference Shares and up to 0.50% pa of the Loan Amount drawn down. Your stockbroker or adviser must disclose all benefits and commission it receives from Macquarie Bank to you. Where you have entered into an Option Collar requiring the payment of a Fixed Premium, this must be paid in advance. In addition, where you have entered into a Loan Facility you are required to prepay interest annually in advance. As stated above, the amount of Interest payable is dependent on the Loan Amount and the Interest Rate at the time of the Commencement Date of the Loan. Current Interest Rates can be obtained by contacting Macquarie. Fees, charges and commissions exclude GST where applicable, unless otherwise specified. What Happens At Maturity? When the Maturity Date occurs there are several options available to you. You can either: 1. roll your investment into a new Option Collar; 2. retain all your shares by giving a Cash Settlement Request, repaying the Loan (if any) and paying the Variable Premium where the Closing Price is greater than the Cap Price; or 3. dispose of the Reference Shares, repay the Loan (if any) and Variable Premium where the Closing Price is greater than the Cap Price and receive the remaining proceeds. You should refer to Sections and of this PDS for further details. What Are The Tax Implications of Investing in the Zero Cost Collar Facility? An Investor who holds the Reference Shares on capital account may derive a capital gain or incur a capital loss at Maturity of the Option Collar depending upon: 1. the Investor s cost base in the Reference Shares; 2. the Closing Price of the Reference Shares; 3. the Investor s Protection Price and Cap Price; 4. whether or not the Option is exercised by the Investor; and 5. whether a Cash Settlement Request is lodged. An Investor who is an individual or trust may be entitled to a discount CGT treatment for any such capital gain. Investors will be required to include in their assessable income the amount of any dividends paid on the Reference Shares. Investors who are qualified persons will be required to gross up the amount of such dividends to include the amount of any franking credits, but will be entitled to an equivalent franking credit tax offset. 7

12 SECTION 1 Investment Overview continued Investors who obtain a Loan may also be entitled to a deduction for interest incurred under the Loan Facility where the Loan funds are applied by the Investor for income-producing purposes. You should refer to Section 4 Taxation Considerations on page 22 of this PDS for more detailed information in relation to the tax implications of investing in the Zero Cost Collar Facility. Is There A Cooling-Off Period? No. There is no cooling-off period following acceptance of your application for the Zero Cost Collar Facility. Are There Any Labour Standards Or Social, Environmental Or Ethical Considerations I Should Be Aware Of? Macquarie will not take into account labour standards or social, environmental or ethical considerations for the purpose of selecting, retaining or realising the investment. An investment in the Zero Cost Collar Facility requires the selection of specific Reference Shares. Investors should make their own enquiries as to whether labour standards or social, environmental or ethical considerations are taken into account by the issuer of the Reference Shares by referring to the website of the relevant issuer or information disclosed by the relevant issuer pursuant to its continuous disclosure obligations. Enquiries And Complaints Macquarie has procedures in place to properly consider and deal with any enquires or complaints from investors in the Zero Cost Collar Facility. Macquarie will acknowledge receipt of a written complaint within five Business Days and provide a substantive response within 21 days. Where a complaint remains unresolved (eg where a remedy is not offered or not instigated or where a remedy offered is not accepted by the complainant), the complaint may fall within the terms of reference of the external complaints scheme, Financial Industry Complaints Scheme ( FICS ). To contact FICS, Holders should telephone or write to PO Box 579 Collins Street West, Melbourne VIC

13 SECTION 2 Details of the Facility This Section is a summary of the important features of the Zero Cost Collar Facility. The contractual terms are contained in the General Conditions (Section 5), Equity Option Agreement (Section 6) and the Loan Agreement (Section 7), as applicable. Investors should read and understand the contractual terms before investing in the Zero Cost Collar Facility. Investors should obtain professional advice which takes into account their particular investment needs, objectives and financial circumstances. 2.1 How does the Zero Cost Collar Facility work? The Zero Cost Collar Facility offered under this PDS allows investors to protect their share investment. A floor is set which is the Protection Price and a cap is also set which fixes the level of the upside. Together a floor and a cap are known as a collar. Depending on where the floor and cap levels are set there may be no cash outlay required. In this instance the strategy is referred to as a zero cost collar. The Zero Cost Collar Facility also allows investors to release cash from their investment to fund option exercises or other investment opportunities. The Zero Cost Collar comprises two main features: 1. the Option Collar; 2. the Loan Facility Option Collar The Option Collar is an option-based strategy that allows Investors to lock in a range of known values at Maturity for the Reference Shares at potentially zero cost. To effect the Option Collar, the Investor: 1. buys a number of Options (representing the number of Reference Shares held) to protect the Reference Shares against share price falls below the Protection Price at Maturity. The Options are over-the-counter put options sold by Macquarie Bank under the provisions of the Equity Option Agreement (see Section 6). The Variable Premium payable for the Options effectively caps the potential profits available from share price rises in the Reference Shares above the Cap Price at Maturity; and 2. places their shareholding in an account set up in their name sponsored by Macquarie Equities; and 3. mortgages that shareholding to Macquarie Bank under the provisions of the General Conditions (see Section 5) to secure the Investor s obligations under the Option Collar. The Options are European which means that they are only capable of being exercised by the Investor at Maturity. Further, an Investor may only exercise all (but not some) of the Options in an Option Collar. The Commercial Terms of the Option Collar, specifically the Protection Price and the Cap Price of the Options, are flexible. An Investor may select either standard Protection Price and Cap Price Percentages (from which the Protection Price and Cap Price are calculated on the basis of the Initial Share Price for the relevant Reference Share) or tailor their own Option Collar. The standard Protection and Cap Price Percentages are derived from the then current Rate Sheet published periodically by Macquarie Bank (see Section 2.3 below). To tailor their own Option Collar, Investors may formulate with Macquarie Bank the specific Protection Price and Cap Prices (again, expressed as a percentage of the Initial Share Price) which Macquarie Bank is prepared to offer and which suit the Investors needs. When tailoring an Option Collar that is zero cost, Investors select a suitable Protection Price Percentage and Macquarie Bank will calculate the Cap Price Percentage based on the Investor s selection. So, if an Investor selects a Protection Price Percentage of, for example, 85% of the Initial Share Price, Macquarie Bank will offer the Option Collar on the basis of a Cap Price Percentage, calculated by them to obtain an initial fixed option premium of zero of, say, 115% of the Initial Share Price. The relationship between the Protection Price and the Cap Price is not always linear and is determined on a stock by stock basis by reference to, amongst other things, expected dividends for, and share price volatility of, the Reference Shares, the nominated Term of the Option Collar and general market interest rates. 9

14 SECTION 2 Details of the Facility continued Where an Option Collar is tailored so that the Protection Price and Cap Price chosen does not result in a zero cost, a Fixed Premium will be payable by the Investor for that Option Collar. The Fixed Premium will be payable by the Investor on each Fixed Premium Payment Date. At Maturity, the Options that are exercised are cash settled unless the Investor has previously provided Macquarie Bank with an effective Physical Settlement Request, in which case the Options will be physically settled if exercised. A Physical Settlement Request also constitutes an Irrevocable Sell Instruction by the Investor to Macquarie Equities to sell for the Investor the Reference Shares at the Closing Price on the Valuation Day where the Options lapse unexercised. Cash Settlement means that the Investor retains the Reference Shares at Maturity regardless of the level of the Closing Price: if Closing Price is less than Protection Price: the Options may be exercised by the Investor to receive from Macquarie Bank the Cash Settlement Amount (calculated as the difference between the Protection Price and the Closing Price) for each Option exercised. If the Options are not exercised, the Investor will receive only the Assessed Value Payment for each Option held, being 95% of the Cash Settlement Amount that would have been paid had the Option been exercised. if Closing Price is between Protection Price and Cap Price: the Options finish out-of-themoney from the Investor s perspective and, with the Options lapsing unexercised, there will be no payments to be made either way. The Investor simply retains the Reference Shares. if Closing Price is above Cap Price: the Options finish out-of-the-money but the Investor will be required to pay the Variable Premium (calculated for each Option as the difference between the Closing Price and the Cap Price). The Reference Shares shall continue to be mortgaged to Macquarie Bank until the Variable Premium is paid for each Option. If the Investor s intention is to dispose of the Reference Shares at Maturity, the Investor should give both Macquarie Bank and Macquarie Equities a Physical Settlement Request. This request must be provided in writing at any time up until two Business Days before the Maturity Date. The consequences of giving an effective Physical Settlement Request are set out below: if Closing Price is less than Protection Price: the Options will be exercised by the Investor so that the Investor effectively sells all the Reference Shares to Macquarie Bank for the Settlement Price (calculated as the product of the Protection Price and the Number of Shares to be Delivered) and Macquarie Bank will pay the sale proceeds to the Investor less any applicable charges. if Closing Price is in between Protection Price and Cap Price: the Options finish out-of the-money from the Investor s perspective and, with the Options lapsing unexercised, there will be no payments to be made either way in relation to those Options. Macquarie Equities will act under the Irrevocable Sell Instruction given with the Physical Settlement Request and sell all the Reference Shares at the Closing Price on the Valuation Day and Macquarie Equities will then pay the sale proceeds to the Investor less any applicable charges. if Closing Price is above Cap Price: the Options finish out-of the-money but the Investor will be required to pay the Variable Premium for every Option held (calculated as the difference between the Closing Price and the Cap Price). Macquarie Equities will act on the Irrevocable Sell Instructions to sell the Reference Shares at the Closing Price on the Valuation Day and pay the sale proceeds to the Investor less the Variable Premium for every Option held and any applicable charges. There are no additional fees charged for the Physical Settlement of the Options when exercised. 10

15 Investors may waive, in the Application Form, the entitlement to elect Physical Settlement. This ensures that every Option Collar under the Facility only be cash settled unless a contrary direction is made in the Transaction Request for the specific Option Collar. This means that an Investor who applied for a Facility with a waiver of Physical Settlement in the Application Form, will not be Example This Section provides hypothetical examples of how the Zero Cost Collar Facility may operate. The Protection and Cap Prices used are provided for illustrative purposes only and should not be taken as an indication or commitment by Macquarie Bank as to the level of prices that will actually apply under the Facility. Jack owns 10,000 XYZ shares purchased a few years ago at $5.00. He wishes to protect his gains now that XYZ is trading at all time highs of around $ He would like some protection below entitled to make a Physical Settlement Request in respect of any Option Collar subsequently entered into, unless at the time of the applicable Transaction Request, the Investor specifically directed that the waiver would not apply with respect to that Option Collar. Investors should seek their own advice about the effects of such waiver. current prices to ensure his gains are not completely lost and is happy to sell his stock at higher levels. Jack is happy to take some risk on the downside and protect his shares at around 87.5% of the current share price or approximately $10.50 this is where he wants the Protection Price to be set. To make the Option Collar zero cost Macquarie has calculated the following Cap Price Percentages over various terms: Jack decides to take out a two-year Option Collar with a Protection Price* of $10.50 and a Cap Price* set at $14.25 as he is happy to forego gains in the stock above a further 18.75% after two years. During the Term, Jack receives all ordinary cash dividends and franking credits attaching to the 10,000 XYZ shares. At Maturity, the payout Jack receives will depend on the Closing Price of XYZ and whether Physical Settlement has been requested. * The Protection Price and Cap Price are based on an Initial Share Price of $12.00 multiplied by the applicable Protection Price Percentage or Cap Price Percentage. Profit Term Protection Protection Cap Price % Cap Price* Initial Fixed Price % Price* Option Premium 1 year 87.5% $ % $13.65 $ years 87.5% $ % $14.25 $ years 87.5% $ % $15.00 $0.00 $14.25 cap price $10.50 protection price $12.00 current price Share price 11

16 SECTION 2 Details of the Facility continued Scenario** Physical Settlement Requested Cash Settlement Closing Price = $9.00 Closing Price = $13.75 Closing Price = $15.00 Jack exercises the Options and thereby sells 10,000 XYZ shares to Macquarie Bank. Jack receives $105,000 (10,000 shares x $10.50) as the Settlement Price. Macquarie Equities sells 10,000 XYZ Shares at the Closing Price on the Valuation Day. Jack receives sale proceeds of $137,500 (less any applicable charges). Macquarie Equities sells 10,000 XYZ Shares at the Closing Price on the Valuation Day. Jack receives sale proceeds of $150,000 less applicable charges and less the Variable Premium for all Options of $7,500 ([$ $14.25] x 10,000). Total receipt is $142,500, less charges. Jack exercises the Options and receives from Macquarie Bank the Cash Settlement Amount for all Options of $15,000 ([$ $9.00] x 10,000). Jack retains 10,000 XYZ shares (currently worth $90,000) and, with the $15,000 Cash Settlement Amount, has a current total Investment value of $105,000. Jack retains 10,000 XYZ shares (currently worth $137,500). Jack retains 10,000 XYZ shares (currently worth $150,000). Jack pays Variable Premium of $7,500. Total investment value for Jack is approximately $142,500. ** These scenarios assume that there is no Market Disruption Event on the Maturity Date. If there is, under the terms of the Equity Option Agreement, the valuation of the Option and the execution of any market transaction as discussed above will be delayed until the Valuation Day. 12

17 Acceptance of Application - Option Collar Once an Investor s Application Form for the Facility has been Accepted, the Investor then simply has to follow these steps to enter into an Option Collar: Step 1: Ensure that the share or option holding has a Market Value, on the Transaction Request Date, of at least $100,000. Step 2: Ascertain the standard Commercial Terms of the Option Collar from the Rate Sheet or, if the Investor wishes to formulate their own Option Collar, select a suitable Protection Price Percentage. Step 3: Contact Macquarie Bank to make a Transaction Request on (02) Step 4: Provide instructions to Macquarie Equities to transfer the Reference Shares into an account sponsored by Macquarie Equities in accordance with the terms set out in the General Conditions (see Section 5). A copy of the CHESS Instruction Form to effect this transfer is provided in Section 11 or may be otherwise obtained by contacting Macquarie Equities on (02) Step 5: Pay any required Fixed Premium to Macquarie Bank. Any Fixed Premium can be paid out of and be included in, the Loan Amount, through the Loan Facility. Upon Acceptance of a Transaction Request for an Option Collar, Macquarie Bank will send to the Investor a Confirmation outlining the terms of the Option Collar Loan Facility An Investor with an Option Collar has the opportunity - but not the obligation - to borrow money from Macquarie Bank at fixed interest rates determined on the date of each draw down. If an Investor does choose to borrow money, the Investor may make a number of draw downs under the Loan Facility which is linked to the Option Collar provided that the Investor satisfies the Loan Conditions as set out in the Loan Agreement. The Loan Conditions include: Condition 1. The Loan Amount drawn down is greater than or equal to the Minimum Loan Amount (currently $50,000) and less than or equal to the then Available Loan Balance for the linked Option Collar (see below); Condition 2. The Investor has declared in the Application Form that every Loan Amount under the Facility will be used wholly or predominantly for business or investment purposes; and Condition 3. The Repayment Date of each Loan Amount is no later than the Maturity Date of the linked Option Collar. At any point in time, the Available Loan Balance for a Loan Facility linked to an Option Collar is calculated as: Available Loan Balance = Protection Price x Number of Options less aggregate of previous Loan Amounts drawn down and not repaid Each Loan will be governed by the terms of the Loan Agreement (see Section 7) and subject to the mortgage granted to Macquarie Bank under the provisions of the General Conditions (see Section 5). As a consequence, if an Investor failed to repay a Loan Amount on the applicable Repayment Date, Macquarie Bank will be entitled to terminate the Loan as well as the Option Collar and enforce the mortgage over the Reference Shares as security for all amounts payable on termination. In this regard, Investors are specifically referred to Section 3.5 and 3.6 described in Section 3: Risks You Should Consider. 13

18 SECTION 2 Details of the Facility continued The Interest Rate that applies for each Loan Amount, as drawn down by an Investor, will only be ascertainable just prior to the Commencement Date of that Loan. Interest Rates for standard Terms and Commencement Dates will be published periodically in the Rate Sheet (see Section 2.3 below). Otherwise, Investors may obtain the Interest Rate when making the Transaction Request. Interest must be pre-paid annually in advance throughout the applicable Term and may, subject to the Loan Conditions, be capitalised into the Loan Amount so that no additional payment is required from the Investor. Alternatively, the Investor may pre-pay Interest directly from the Investor s own funds. Acceptance of Application - Loan Facility Subject to there being sufficient Available Loan Balance to make a draw down of a Loan Amount, an Investor simply has to: Step 1 - Ensure that: a) the Loan Amount to be drawn down is greater than or equal to the Minimum Loan Amount (currently $50,000) and less than or equal to the then Available Loan Balance for the Option Collar to which the relevant Loan Facility is linked; b) the Loan Amount is to be used wholly or predominantly for business or investment purposes; and c) the proposed Repayment Date for the Loan Amount is no later than the Maturity Date of the Option Collar to which the relevant Loan Facility is linked. Step 2 - Ascertain the Interest Rate that will apply for the Loan Amount to be borrowed. Step 3 - Contact Macquarie Bank by telephone and make an effective Transaction Request specifying the Option Collar to which the Loan Amount shall be linked, the Loan Amount, the Interest Rate and the Term of the Loan. You will need to do this before noon on a Business Day for the Transaction Request to be processed on that day, subject to acceptance by the Bank and any other outstanding matters being addressed. Step 4 - Provide such other documents and information as Macquarie Bank may reasonably require. Step 5 - Prepay the Interest for the first Interest Period (or direct, in the Transaction Request, that the Interest be paid out of, and included in, the Loan Amount). Upon Acceptance of a Transaction Request for a Loan, Macquarie Bank will send to the Investor a Confirmation outlining the terms of the Loan. 14

19 Example (continued) This Section provides hypothetical examples of how the Zero Cost Collar Facility may operate. The Protection and Cap Prices and the Interest Rate used are provided for illustrative purposes only and should not be taken as an indication or commitment by Macquarie Bank as to the level of prices or rates that will actually apply under the Facility. Six months into the Term, Jack decides that he would also like to draw down funds against the Option Collar for the remaining 1 1 /2 years to the Maturity Date so as to diversify his share portfolio. Under the Loan Facility, Macquarie Bank is willing to lend up to $10.50 per Reference Share. In other words the Available Loan Balance is $105,000. Jack wishes to borrow this amount. Macquarie Bank advises that the Interest Rate will be 7.45% per annum (approximately $0.782 per annum per share) and Jack makes a Transaction Request which specifies that rate as well as the amount to be borrowed and the Repayment Date (being the Maturity Date of the Option Collar). The first year s Interest required to be pre-paid is $7, Jack provides the direction in the Transaction Request for the first year s Interest on the Loan to be included in the Loan Amount. Macquarie Bank pays the balance of $97, ($105,000 - $7,822.50) to Jack the next day. After the first year, Jack will be required to prepay the remaining half year s Interest of $3, As the Loan is fully drawn down (i.e. there is no Available Loan Balance) this interest amount would need to be paid from Jack s own funds. At Maturity of the Option Collar (which coincides with the Repayment Date of the Loan), the payout Jack receives will depend on the Closing Price of XYZ and whether Physical Settlement has been requested. Scenario** Physical Settlement Requested Cash Settlement Closing Price = $9.00 Closing Price = $13.75 Closing Price = $15.00 Jack exercises the Options and thereby sells 10,000 XYZ shares to Macquarie Bank for $105,000 as the Settlement Price. This receipt is set off against Jack s obligation to repay the $105,000 Loan Amount. No payment is made to Jack. Macquarie Equities sells 10,000 XYZ shares at the Closing Price on the Valuation Day. Jack receives approximately $32,500, being the sale proceeds of $137,500 less any applicable charges less the Loan Amount to be repaid of $105,000. Macquarie Equities sells 10,000 XYZ Shares at the Closing Price on the Valuation Day. Jack receives approximately $37,500, being the sale proceeds of $150,000 less: Any applicable charges; the Variable Premium for all Options of $7,500 ([$ $14.25] x 10,000); and the Loan Amount to be repaid of $105,000. Jack receives the Cash Settlement Amount for all Options of $15,000 ([$ $9.00] x 10,000) from Macquarie Bank and this amount is set off against the Loan Amount so that Jack need only make a further Loan repayment of $90,000. Jack retains 10,000 XYZ shares (currently worth $90,000 in total). Jack repays $105,000 Loan Amount. Jack retains 10,000 XYZ shares (currently worth $137,500 in total). Jack repays $105,000 Loan Amount. Jack must also pay to Macquarie Bank the Variable Premium for all $7,500 ([$ $14.25] x 10,000). Jack retains 10,000 XYZ shares (currently worth $150,000 in total). ** These scenarios assume that there is no Market Disruption Event on the Maturity Date. If there is, under the terms of the Equity Option Agreement, the valuation of the option and the execution of any transaction as discussed above will be delayed until the Valuation Day. 15

20 SECTION 2 Details of the Facility continued 2.2 Employee Options and ZCC The Loan Facility described in Section may be used to finance the exercise price of vested and exercisable employee options. Macquarie can in most cases manage the employee option exercise process for the Investor. All an Investor need do is provide the required forms to Macquarie and then Macquarie will arrange directly with the company to fund the exercise of the Options and delivery of the resulting shares to your account at Macquarie Equities. If an Investor has readily exercisable and vested employee options which, on issue, will be an Eligible Security for the purposes of this Facility, Macquarie Bank will enable Investors to draw down a Loan Amount provided that: Condition 1. The Reference Shares to be issued on exercise of the employee options have a Market Value of at least $100,000 on the Transaction Request Date; Condition 2. The Investor has made a Transaction Request for an Option Collar in relation to those Reference Shares; Condition 3. The Loan Amount is less than or equal to the Available Loan Balance (the requirement that the Loan Amount be greater than or equal to the Minimum Loan Amount may be waived by Macquarie Bank); Condition 4. The Investor provides to Macquarie Bank the Employee Option Exercise Notice and Employee Option Exercise Declaration provided by the company secretary of the applicable Listed Entity (copies of which are contained in Section 11) together with such other documents or instructions as Macquarie Bank may reasonably require relating to the issue of the Reference Shares on exercise of the employee options and the transfer of those shares to an account sponsored by Macquarie Equities; and Condition 5. The Investor prepays the first year s Interest and any applicable Fixed Premium (or requests that the Interest and Fixed Premium be paid out of the Loan Amount). Example (continued) This Section provides a hypothetical example of how the Zero Cost Collar Facility may operate to finance the exercise of employee options. The Protection and Cap Prices and the Interest Rate used are provided for illustrative purposes only and should not be taken as an indication or commitment by Macquarie Bank as to the level of prices that will actually apply under the Facility. Continuing with our example, we now assume that Jack, as an employee of XYZ, has 10,000 options over XYZ shares with a strike price of $5.00, rather than 10,000 actual shares. The XYZ shares that would be issued to Jack on exercise of the employee options have a current value of $120,000 (or $12.00 per share as before), but in this scenario he has to pay $50,000 to exercise them. Jack is willing to commit to the same Option Collar as before; that is a two-year Option Collar with a Protection Price of $10.50 and a Cap Price set at $ Jack makes a Transaction Request to that effect and, at the same time, requests a Loan Amount of $53,725 to fund the exercise of the employee options and prepay interest of $3,725. $50,000 of that Loan Amount is paid directly to XYZ by Macquarie Bank to exercise the options and, as a consequence, the 10,000 XYZ shares are issued to Jack and held in an account sponsored by Macquarie Equities under the terms of this Facility. The Option Collar will then follow the same payoff profile as in the previous examples. Jack also has the opportunity to draw down a further $51,225 as another Loan, being the remaining Available Loan Balance left after the first draw down ($105,000 less $53,775 drawn down). 16

21 2.3 Commercial Terms of ZCC Macquarie Bank may periodically publish a Rate Sheet which will contain the following information: the period of time during which that Rate Sheet will remain current; the Eligible Securities available for the Facility; the standard Protection Price Percentages and Cap Price Percentages available for these Eligible Securities for specified Terms; the Interest Rates available for Loan Amounts for the specified Terms. You may obtain a Rate Sheet in the following ways: contact Macquarie Bank directly to request a Rate Sheet on (02) ; or equitysolutions@macquarie.com. If Macquarie Bank publishes a Rate Sheet by any other means, such as on our website, we will continue to publish all Rate Sheets in that manner. Macquarie Bank will also provide, on request, nonstandard Protection Price Percentages, Cap Price Percentages and Interest Rates which will remain available for the same period of time that the then current Rate Sheet remains valid. Once the Commercial Terms have been obtained, Investors are required to specify the relevant details in the Transaction Request. 2.5 Maturity Date The Maturity Date for the Zero Cost Collar Facility may be brought forward by Macquarie upon the occurrence of any of the following: a Market Disruption Event in relation to the Reference Shares; a Material Adverse Change in relation to an Investor; any event or circumstance beyond the control of Macquarie which would be expected to have a material adverse effect on its ability to perform or hedge its obligations under the Facility; any change in law which makes it unlawful for Macquarie to give effect to any of the provisions of the Facility. The Maturity Date may also be brought forward at the request of an Investor. Where the Maturity Date is brought forward this will accelerate the Repayment Date of any Loan and also accelerate the Maturity Date of the Option Collar. This may result in the Investor being required to pay Acceleration Interest and Option Break Costs which may be a substantial amount. Any amount of Interest pre-paid for a Loan Amount may also be forfeited. Please refer to Sections 3.4, 3.5, 3.6 of Section 3: Risks You Should Consider for further details and examples. 2.4 Payment of Dividends and Corporate Actions Investors in the Zero Cost Collar Facility will continue to receive all ordinary cash dividend payments directly from the Listed Entity together with any franking credits. Special Dividends declared by a Listed Entity will be dealt with differently from that of ordinary dividends. Unlike ordinary dividends, which are paid directly to the Investor by the Listed Entity, the proceeds of a Special Dividend are used to acquire further Reference Shares which will become part of the Underlying Parcel. Refer to clause 13.3 of the General Conditions for further information on Special Dividends and other Corporate Actions. 17

22 SECTION 3 Risks You Should Consider In evaluating the merits and suitability of an investment in the Zero Cost Collar Facility, careful consideration should be given to the risks inherent in the Facility. This Section does not purport to be a comprehensive summary of all the risks associated with an investment in the Facility but highlights particular risks that Macquarie Bank wishes to encourage prospective investors to consider in detail and discuss with their professional advisers. 3.1 Obligations of Macquarie Bank The value of the Zero Cost Collar Facility depends on, among other things, the ability of Macquarie Bank to perform its obligations under the terms of this PDS and each of the Transaction Documents. Failure to comply with such obligations may result in the investment being worth less than it otherwise would be. Investors must make their own assessment of the ability of Macquarie Bank to meet its various obligations under the Transaction Documents. A description of Macquarie Bank is set out in Section 9 to assist Investors in making this assessment. 3.2 Foregoing potential profits By committing to pay the Variable Premium, Investors effectively cap their return on the Reference Shares at the applicable Cap Price. As with any shareholder who caps upside on a stock position, Investors forego any gains on the Underlying Parcel above the Cap Price that the Investors would have otherwise enjoyed. 3.3 Potential Share Price Exposure The Option Collar provides protection to the Investor against falls in the price of the Reference Shares. Where the Protection Price of an Option in an Option Collar is below that of the current share price on any day, the Investor will be exposed to the extent of the difference. Further, the Investor is only protected at the Protection Price on the original Maturity Date and not beforehand. Early termination of the Option Collar may trigger costs to the Investor in the form of Option Break Costs (refer to Risk Factor 3.6 for further details of the Option Break Costs). 3.4 Early Termination Under the Transaction Documents, the occurrence of a Market Disruption Event or a Material Adverse Change gives Macquarie Bank the right to do any or all of the following: a) accelerate the Repayment Date of any Loan; b) accelerate the Maturity Date of the Option Collar; or c) terminate the Option Collar. In these circumstances, the investment under the Facility may be closed out and Acceleration Interest and Option Break Costs may be payable. Any amount of Interest pre-paid for a Loan Amount may also be forfeited. Generally, Macquarie Bank has the right to terminate any Loan or the Option Collar or both upon the occurrence of an Event of Default with these same consequences. An Event of Default includes a failure to pay amounts when due or the Investor becoming insolvent. 3.5 Early Repayment of the Loan Amount The draw down of a Loan Amount is a FIXED TERM borrowing. If the Investor wishes to repay any of the Loan Amount before the Repayment Date while leaving the Option Collar in place, the Investor must send a Loan Prepayment Notice and pay any Acceleration Interest as notified by Macquarie Bank for closing out the fixed term Loan. Acceleration Interest may only be calculated at the time the fixed term Loan is unwound and will be based on the cost to unwind the interest rate commitment that Macquarie Bank entered into in providing the Loan. As such, the Acceleration Interest may be significant. In addition, any pre-paid Interest may be deemed to be forfeited and may not be repaid to the Investor. 18

23 3.6 Option Break Costs on Early Termination of Option Collar The put option and Variable Premium components in an Option Collar represent firm commitments with Macquarie Bank for a FIXED TERM which are crystallised only on the Valuation Day. These components expose Macquarie Bank to market risk (that is, if the share price moves a certain way Macquarie Bank stands to gain or lose). Macquarie Bank hedges this market risk through various methods. If the Option Collar is terminated before the Maturity Date, the put option and Variable Premium components of the Option Collar need to be reversed by Macquarie Bank and its hedge needs to be unwound. This process may involve substantial Option Break Costs which the Investor is required to pay under the Equity Option Agreement. Factors which may affect the level of the Option Break Costs represented by this process include the unexpired Term, the current share price, level of interest rates, share price volatility, dividend estimates and any Fixed Premium outstanding. A change in one of these factors (other factors being equal) would be expected to affect the Option Break Costs in the following manner: Increase In Unexpired Term Share Price Volatility Option Break Costs costs increase costs increase costs increase Because these factors are unpredictable, it is not possible to determine the level of Option Break Costs that could apply to an Option Collar in advance of an early termination. Further, these Option Break Costs may represent a substantial proportion of Market Value of the Reference Shares. As a consequence, Investors should not consider entering into this Facility with an intention of triggering an early termination or otherwise withdrawing before the nominated Maturity Date. If Investors have any concerns or queries about this aspect of the Facility, they should seek advice from a professional financial adviser, preferably an ASX-accredited derivatives adviser. The following is an indicative example of an early termination of an Option Collar. This example has been provided on a purely indicative basis and on a number of broad assumptions including: a) interest rates have fallen 1.00% since start of transaction. b) volatility of the underlying share price has not changed. c) no commissions have been paid to advisers. There can be no guarantee that the level of Option Break Costs indicated in this example will apply to any actual Option Collar in which you invest. Interest Rates Dividend Estimates Fixed Premium outstanding costs increase costs decrease costs increase 19

24 SECTION 3 Risks You Should Consider continued Example Jack owns 10,000 shares in XYZ, which are currently trading at $ Jack decides to take out a twoyear Option Collar with a Protection Price of $10.50 and a Cap Price set at $14.25 for zero cost. Jack has not drawn down any Loan Amount. After six months, XYZ has risen to $ Since the Cap Price on the Option Collar is $14.25, Jack wishes to terminate the Option Collar early and sell the Reference Shares. The following calculations illustrate the Option Break Costs involved in terminating the Option Collar before Maturity: Value of Reference Shares sold: $15.00 x 10,000 = $150, (1) Receipt from close-out of put option component: $0.20 x 10,000 = $2, (2) Cost associated with close-out of Variable Premium component: $2.14 x 10,000 = ($21,400.00) (3) (includes 100% of amount payable between $15.00 and $14.25 upside cap = $7,500) Net payment to Jack: (1) + (2) + (3) $130, Therefore out of the maximum share value of $142,500 (being the Cap Price of $14.25 on 10,000 shares), Jack will receive $130,600 if the Option Collar is closed-out after six months into the twoyear Term based on the above example. Example (continued) Further to the example above, except we now assume that on the Commencement Date of the Option Collar Jack drew down a Loan Amount of $105,000 at an Interest Rate of 7.45% per annum. The first year s Interest required to be pre-paid is $7, Where there is also a Loan Amount linked to the Option Collar, Acceleration Interest must also be paid. Again, XYZ has risen to $15.00 after six months. With the Cap Price on the Option Collar at $14.25, Jack wishes to terminate the Option Collar early, sell the Reference Shares, repay the Loan and keep any surplus. The following calculations illustrate the Option Break Costs and Acceleration Interest involved in terminating the Option Collar and repaying the Loan before Maturity: Value of Reference Shares sold: $15.00 x 10,000 = $150, Repay Loan Amount: ($105,000.00) Gain on Reference Shares: $45, (1) Receipt from close-out of put option component: $0.20 x 10,000 = $2, (2) Cost associated with close-out of Variable Premium component: $2.14 x 10,000 = ($21,400.00) (3) (includes 100% of amount payable between $15.00 and $14.25 upside cap = $7,500) 1st year s pre-paid Interest*: $7, (4) Interest expense to date: 7.45% x $105,000 x 6/12 = ($3,911.25) (5) Acceleration Interest: ($1,575.00) (6) (1% for 1.5 years on $105,000) Net gain to Jack: (1) + (2) + (3) + (4) + (5) + (6) $ 27, *Please note that under clause 4.3(h) of the Loan Agreement, Macquarie Bank is not obliged to repay any component of the pre-paid Interest. In this case, Macquarie Bank has exercised its discretion to waive this provision in respect of the unaccrued Interest. 20

25 Jack has closed out his Option Collar and repaid the Loan Amount. Out of the maximum share gain of $37,500 (being $14.25 less $10.50 on 10,000 shares), Jack will receive $27, based on the above example. The shares have been sold and the $105,000 Loan is repaid. No further amounts, including the 2nd year s interest, will be payable by Jack. If Jack wished to simply pay out the Loan Amount and retain the Reference Shares then Jack would owe a total of $122, being the $105,000 Loan repayment together with Option Break Costs ((2) + (3)), and Acceleration Interest (6) less the pre-paid interest refund ((4) + (5)). Jack would then own shares worth $150,000 with no further amounts payable. 3.7 Market Disruption Events The occurrence of a Market Disruption Event (which may include a share suspension) on the Maturity Date of an Option Collar may have the effect of delaying either the valuation of the Cash Settlement Amount or, where Physical Settlement has been requested, the Physical Settlement of the applicable Options. Further, transactions pursuant to the Irrevocable Sell Instructions may also be delayed. Investors are specifically referred to the definitions of Settlement Date, Valuation Day (if applicable) and Market Disruption Event as set out in the Glossary of Terms in Section Market Disruption Event and Repayment of the Loan Amount Where an Investor is required to repay a Loan Amount on the Repayment Date, the Investor usually is entitled to set off against the Loan Amount the expected entitlement under the Option Collar or sale proceeds from the Irrevocable Sell Instructions (if given). Where there is a Market Disruption Event on the Maturity Date, the valuation of the Option Collar, the Repayment Date and the execution of any transaction under the Irrevocable Sell Instructions as discussed above will be delayed. 3.9 Corporate Actions Under the terms of the General Conditions (set out in Section 5), Macquarie Bank is vested with broad discretions to deal with corporate actions, such as bonus or rights issues, accruing to the Reference Shares. In accordance with these discretions, the value of such corporate actions is usually rolled into the Option Collar. Investors should familiarise themselves with the terms of clause 13 of the General Conditions Option Exercise If an Investor requires Physical Settlement of an Option the Investor must make sure an effective Physical Settlement Request is given to the Bank and Macquarie Equities at least two Business Days before the applicable Maturity Date. Otherwise Physical Settlement will not be available. Moreover, it is important to exercise the Options before the expiry of the Exercise Period as automatic exercise is not available for any Option and each Option will lapse unless affirmatively exercised. An Option may be exercised orally or in writing. 21

26 SECTION 3 Risks You Should Consider continued Where an Option was In-the-Money at the expiry of the Exercise Period but lapsed unexercised, the Investor will only be entitled to receive an Assessed Value Payment of 95% of what would have been the Cash Settlement Amount had the Option been exercised Exercise of discretion by Macquarie Investors should note that a number of provisions of the Transaction Documents confer discretions on Macquarie which could affect the value of an Option Collar. These include the powers to bring the Maturity Date and Repayment Date forward, to nominate a Market Disruption Event and action when making adjustments for corporate events (see condition 13.1 of the General Conditions). The exercise or non-exercise of these discretions could adversely affect the value of an Option Collar Potential Conflicts of Interest Companies in the Macquarie Group may buy and sell Reference Shares and other financial products relating to the Listed Entity s Reference Shares, either as a principal or agent. In addition, companies in the Macquarie Group may from time to time advise any of the Listed Entities in relation to activities unconnected with an Option Collar, including (but not limited to) general corporate advice, financing, funds management and property and other services. Investors do not have the power to direct Macquarie concerning the exercise of any discretion. 22

27 SECTION 4 Taxation Considerations ZERO COST COLLAR This letter has been prepared for the purposes of inclusion in the Product Disclosure Statement dated 1 March 2004 (the PDS) inviting participation in the Zero Cost Collar Facility (the Option Collar ). Our views set out in this letter are based on the terms of the Option Collar set out in the PDS, together with the terms of the Loan Agreement, the Equity Option Agreement and the General Conditions, which will be entered into by Macquarie Bank Limited (Macquarie) and an Investor. This letter summarises our conclusions in relation to the Goods and Services Tax (GST), stamp duty and Australian income tax implications for an Australian resident taxpayer who enters into the Option Collar otherwise than in the course of carrying on a business (Investor). This letter is of a general nature only and does not take into account the specific circumstances of any particular Investor. This advice is provided solely for the benefit of Macquarie and may not be relied on by any other person, and is based on the Australian income tax laws and practice applicable as at the date of this letter. Investors should seek their own independent advice in relation to the taxation implications of entering into the Option Collar. All references to legislative provisions are to provisions of the Income Tax Assessment Act 1936 or Income Tax Assessment Act 1997 (together the Act ) unless otherwise specified. Terms not defined in this letter have the meaning given to them in the PDS. 23

28 SECTION 4 Taxation Considerations continued SUMMARY OF CONCLUSIONS Based on the description of the Option Collar outlined in the PDS, we have formed the following conclusions: 1. Deductibility of Interest 1.1 Interest incurred on the Loan should be wholly deductible to the Investor under section 8-1 of the Act where the Loan Amount is applied by the Investor for the purpose of producing assessable income. 1.2 The deductibility of Interest should not be adversely affected by the Federal Government s proposals for capital protected products if they are enacted in the terms announced. This is because the Loan is not a limited recourse loan and the Option premium will be set at market prices. An Investor should note the following: a) In our view, no part of the Interest could be said to be attributable to any capital protection element. This is because the capital protection element of the Option Collar is provided by the Option and not the terms of the Loan Agreement - the premium payable under the Option is the only capital protection fee payable by the Investor under the Option Collar and we understand the total premium to be paid under the Option will be equal to an arm s length price for the grant of the Option on these terms. b) Therefore, if the current proposals and methodology are enacted, we do not consider the current methodology of apportioning part of the interest to a capital protection fee could be applicable to the Interest. c) Nevertheless, Investors should monitor developments in relation to those proposals as their precise scope and effect is presently uncertain and it is possible that any legislation enacting those proposals will apply to Investors in the Zero Cost Collar. 1.3 Where part of the Loan Amount is used to pay Interest and the balance of the Loan Amount is applied for the purpose of producing assessable income, that Interest paid, and any further Interest thereafter payable on the total Loan Amount, should be deductible. 1.4 To the extent the Interest is deductible, the time that the deduction would be allowed should be as follows: a) Simplified Tax System Investors and individual Investors, who incur the Interest other than in the course of carrying on a business, will be entitled to deduct the annual prepaid Interest expense in the year in which is it incurred where the Interest is in respect of an Interest Period of 12 months or less ending on or before the last day of the income year after the one in which payment is made and: i) the Loan Amount is used to acquire listed shares, widely held units or real property and the only assessable income the Investor will earn from the arrangement is dividends, trust income or rent; or ii) where the Loan Amount is used for other purposes, the Investor s assessable income from the use of the Loan Amount in the year of income exceeds his deductions; or b) All other Investors will only be entitled to a deduction for the Interest on a straight line basis over the relevant Interest Period. 1.5 Acceleration Interest should be deductible under section 8-1 where the Loan Amount is applied by the Investor for the purpose of producing assessable income, as in this case such Acceleration Interest would be paid in order to rid the Investor of the recurring obligation to pay Interest, which would otherwise be deductible. 24

29 2. Employee Share Options 2.1 The fact that an exercise of employee options is funded by the Option Collar and Loan Facility should have no impact on the taxation treatment of the exercise of those options. 3. Grant of Security 3.1 The grant by the Investor of a mortgage over the Secured Property will not result in a disposal of that property by the Investor for CGT purposes. 4. Option 4.1 The Option is an irrevocable offer on behalf of Macquarie to either pay the Cash Settlement Amount or to purchase the Reference Shares and should be characterised as an option for tax purposes. In our view, the Option should not be characterised as a security for the purposes of Division 16E or the traditional security provisions in sections 26BB and 70B. 4.2 The acquisition of the Option will not result in a disposal of the Reference Shares by the Investor for tax purposes. 4.3 The Option will be a CGT asset, acquired on commencement of the Option Collar. The cost base of the Option will include the Fixed Premium (if any) payable on the Fixed Premium Payment Dates, the Variable Premium (if any) payable at Maturity and any Option Break Costs payable on early termination. 5. Maturity 5.1 Where the Reference Shares and Options are held on capital account by the Investor, any resulting gain or loss on expiry of the Option or disposal of the Reference Shares should be treated as a capital gain or loss. 5.2 The amount of the capital gain or loss will depend upon the Closing Price of the Reference Shares and how they are disposed of: a) (Option lapses) If the Closing Price of the Reference Shares at Maturity exceeds the Protection Price, the Option will expire. This will give rise to a capital loss equal to the Investor s reduced cost base in the Option (which will include any Fixed Premium and the Variable Premium if the Closing Price exceeds the Cap Price, refer 4.3 above). This capital loss will arise at the time of expiry of the Option. If the Investor has provided a Physical Settlement Request, the Reference Shares will be sold under the Irrevocable Sell Instruction. This will give rise to a capital gain or loss for the Investor equal to the sale proceeds less the Investor s cost base or reduced cost base in the Reference Shares and incidental costs of sale. Any capital gain or loss will arise on the trade date of sale. b) (Option not exercised) If the Closing Price of the Reference Shares at Maturity is less than the Protection Price but the Option is not exercised, the Option will expire and Macquarie will pay the Assessed Value Payment to the Investor. This expiry will give rise to a capital gain or loss equal to the difference between the Assessed Value Payment and the Investor s cost base or reduced cost base in the Option. Any capital gain or loss will arise at the time of expiry of the Option. c) (Option Physically Settled) Exercise of the Option and sale of the Reference Shares to Macquarie for the Protection Price (Physical Settlement) will give rise to a capital gain or loss equal to the Protection Price less incidental costs of exercise of the Option less the cost base or reduced cost base of the Reference Shares (which will include the cost base of the Option, refer 4.3 above). Any capital gain or loss will arise on the date of exercise of the Option. d) (Option Cash Settled) Exercise and Cash Settlement of the Option will give rise to a capital gain or loss equal to the difference between the Cash Settlement Amount and the Investor s cost base or reduced cost base in the Option (refer 4.3 above). Any capital gain or loss will arise at the time that cash settlement of the Option takes place. 25

30 SECTION 4 Taxation Considerations continued 6. Discount Capital Gains 6.1 Investors who are individuals or trusts will be entitled to a discount of 50% on any capital gain arising from a disposal of the Option or the Reference Shares where the date of disposal is at least 12 months after the acquisition date of that asset. Discount treatment is not available where an indexed cost base is used to determine the amount of any capital gain. 7. Dividends and franking credits 7.1 The Investor will be assessable on any dividends paid on the Reference Shares. 7.2 The availability of any franking credits in respect of any dividends paid on the Reference Shares will depend upon whether the Investor is a qualified person in relation to the dividends. 7.3 Where the delta of the position taken on acquisition of the Option is greater than 0.7, so that the net delta of the Reference Share plus Option position is greater than 0.3, and the Investor has not entered into any other positions in relation to the Reference Shares, the period during which the Investor participates in the Option Collar should not be excluded for the purposes of determining whether the Investor is a qualified person under the 45 day rule. 7.4 An Investor who is an individual will automatically be a qualified person in relation to a dividend where the total of their franking tax offsets in any tax year does not exceed $5,000, provided that the Investor or their associates are not under a related payment obligation in relation to the dividend. This applies irrespective of whether the 45 day rule would be satisfied in respect of the dividend. 8. Anti Avoidance Provisions 8.1 The question of the applicability of Part IVA is something which can only be conclusively determined on a case-by-case basis in light of the relevant facts and circumstances arising for a particular taxpayer. Nevertheless, the general description of the arrangements set out in the PDS enable us to form an indicative, but not conclusive, view on the potential for the application of Part IVA to the Investor. 8.2 For the purposes of forming our views on section 177EA, we have assumed that: The difference between the Protection Price and Cap Price will be commercially significant in the circumstances of an Investor, in the sense that the Investor will remain exposed to risks of loss and opportunities for profit from movements in the value of the Reference Shares which are potentially of a magnitude that would outweigh any franking credit benefits that may be received by the Investor, to the extent that such franking credit benefits would be of an incidental nature only to the Investor; and The Investor will satisfy the requirements of the 45 day rule, which are referred to in paragraph 7 above. 8.3 Whilst we are unable to form a conclusive view, based on the general description of the Option Collar set out in the PDS, our indicative view is that entry into the Option Collar should not be considered to involve a scheme in which either: a) any person has a more than incidental purpose of enabling the Investor to obtain a franking credit benefit for the purposes of section 177EA; or b) any person has a dominant purpose of enabling the Investor to obtain a tax benefit for the purpose of the general anti-avoidance provisions of Part IVA. 26

31 9. GST GST will not be payable in respect of the Loan, the sale of the Reference Shares or the acquisition or exercise of the Option. However, GST will be payable in respect of certain brokerage, fees for advice, commissions and trade clearance fees. Generally an Investor will not be entitled to input tax credits in respect of this GST. Where an Investor is registered for GST and its investment activities are part of the carrying on of an enterprise by the Investor, the Investor may be entitled to a reduced input tax credit (currently 75%) in respect of some of this GST. 10. Stamp Duty Stamp duty should not be payable on the sale of the Reference Shares or on exercise of the Option provided that the Reference Shares are quoted on the ASX. Stamp duty may be payable by the Investor in relation to any mortgage granted by the Investor in favour of Macquarie. Yours sincerely BLAKE DAWSON WALDRON 27

32 SECTION 5 General Conditions MACQUARIE BANK, MACQUARIE EQUITIES AND THE INVESTOR AGREE: 1. DEFINITION AND INTERPRETATION 1.1 Definitions The definitions contained in the Glossary of Terms set out in Section 10 of the PDS apply to these General Conditions unless the context otherwise requires. 1.2 Interpretation The parties agree and confirm that, for the purposes of interpreting each of the Transaction Documents, the following rules of interpretation shall apply unless the context otherwise requires: a) a reference to an agreement or to any deed, agreement, document or instrument includes, respectively, that agreement or that deed, agreement, document or instrument as amended, novated, supplemented, varied or replaced from time to time; b) a reference to any statute, ordinance, code or other law, or to any sections or provisions thereof includes any statutory modification or reenactment or any statutory provision substituted therefore and all ordinances, by-laws, regulations and other statutory documents issued thereunder; c) the singular includes the plural and vice versa; d) the word person includes a firm, a body corporate, an unincorporated association and a statutory authority; e) a reference to any party includes a reference to that party s executors, administrators, successors, substitutes and permitted assigns and any person taking by way of novation; f) a reference to any thing (including, without limitation, any amount) is a reference to the whole or any part of it and a reference to a group of persons is a reference to any one or more of them; h) where any word or phrase is given a defined meaning any other part of speech or other grammatical form in respect of such word or phrase has a corresponding meaning; and i) headings are inserted for convenience only and do not affect the interpretation of this Agreement. 1.3 Rules Any term used in a Transaction Document which is defined in the ASX Rules or the ASTC Rules has the meaning given to that term in the ASX Rules or ASTC Rules (as the case may be). 1.4 Confirmations In the event of any inconsistency between a Confirmation and a Transaction Document, the Confirmation will prevail to the extent of the inconsistency. 1.5 Discretion Where in a Transaction Document or the PDS, either the Bank, Macquarie Equities or a Nominee is vested with a discretion to require or determine a certain thing, consent to a certain matter or otherwise act in a certain way, that discretion is unfettered and absolute and may be exercised without obligation and notwithstanding any previous waiver of it, and in addition to any other rights or remedies conferred by the Transaction Document or by law. 1.6 Business Day Convention If the day on or by which a party must do something under a Transaction Document is not a Business Day, the parties agree and confirm that: a) if the act involves a payment that is due on demand, the party must do it on or by the next Business Day; and b) in any other case, the party must do it on or by the previous Business Day. g) examples of a thing and references to matters that are included in that thing are not exhaustive of that thing; 28

33 2. SET-OFF The Bank may (in addition to any general or banker s lien, right of set-off, right to combine accounts or any other right to which it may be entitled), without notice to the Investor or any other person, set-off and apply any credit balance (or any part thereof in such amounts as the Bank may elect) in any account, (whether such account is subject to notice or not and whether matured or not) of the Investor with the Bank and any other money owing by the Bank to the Investor towards satisfaction of the Obligations. 3. MORTGAGE OVER SECURITIES 3.1 Mortgaged Property Upon Acceptance of a Transaction Request the Investor as legal and beneficial owner of the Secured Property mortgages to the Bank all of its present and future right, title and interest in and to the Secured Property as security for the due and punctual payment and satisfaction of the Secured Money in relation to the Option Collar or Loan or both as specified in the Transaction Request. 3.2 Obligations of Investor The Investor must: a) pay all calls, instalments or other money which are payable in respect of the Secured Property; and b) acquire or dispose of Rights upon the request of the Bank if failure to take up or dispose of such Rights (as the case may be) would, in the Bank s reasonable opinion, result in this Agreement or the Secured Property being materially lessened in value. 3.3 Rights of Investor Until an Event of Default occurs and the Bank gives written notice to the Investor of the occurrence of that Event of Default: a) the Investor may retain and apply for its own use any ordinary cash dividend payable in respect of the Secured Property; and b) the Investor may, subject to clauses 3.4 and 3.7, exercise the right to vote in respect of the Secured Property and subject to clause 13 exercise the right to acquire further shares in the Listed Entity. 3.4 Rights of Investor Cease Immediately after the Investor receives written notice from the Bank of an occurrence of an Event of Default: a) all the rights of the Investor in relation to the Secured Property, including the rights referred to in clause 3.3 cease; b) the Bank may exercise alone or refrain from exercising any of the rights of the Investor in relation to the Secured Property; c) the Bank may receive and retain all Rights in relation to the Secured Property; d) the Investor must, at its own expense, promptly execute such proxies and other instruments as the Bank may reasonably require and (if the Bank exercises any power of sale or disposal in relation to the Secured Property) do everything reasonably requested by the Bank which is in the Investor s power to enable the sale or disposal of the Secured Property to ensure that the Secured Property is registered in the name of the Bank or its Nominee; and e) if the Investor receives any cash dividend or any other property which forms part of the Secured Property after receipt of any such notice, the Investor must promptly pay the amount of any such cash dividend and deliver any such other property received by it to the Bank and the Bank may retain and apply any such amount or other property received by it in reduction of the Secured Money. 3.5 Miscellaneous Powers of Bank Without limiting any rights, powers or remedies conferred upon the Bank by a Transaction Document or by law, at any time, whether before or after the occurrence of an Event of Default, the Bank may: a) register this mortgage pursuant to section 263 of the Corporations Act at the Investor s expense; b) insert the name of the Bank or its nominee (or, but only after an Event of Default has occurred, the name of any purchaser pursuant to a power of sale conferred by law or the power of sale referred to in Clause 5) in all or any transfer document (and other relevant documents, if any) relating to the Secured Property; 29

34 SECTION 5 General Conditions continued c) convert the mortgage hereby granted to the Bank to a legal mortgage; and d) do, sign and execute and deliver all deeds, documents, instruments and acts reasonably required of it by notice from the Bank to carry out and give full effect to the conversion of the mortgage to a legal mortgage, including inserting the name of the Bank or its nominee (or the name of any purchaser pursuant to a power of sale) in all or any documents relating to the Secured Property. 3.6 Continuing Security This clause is a continuing security and shall remain in full force and effect until the whole of the Secured Money have been paid or satisfied in full. 3.7 Dealing with Secured Property For the purpose of better securing the rights of the Bank under this mortgage, the Investor agrees to deal with (including, without limitation, by way of acquisition or disposal) the Secured Property, or any part of the Secured Property, as the Bank shall reasonably specify. 4. UNDERTAKINGS The Investor must: a) not create, agree or attempt to create or allow to exist, any other Security Interest over or in respect of any of the Secured Property; b) not sell, redeem, dispose of, or otherwise deal with, any of the Secured Property or any interest therein (including as part of a takeover offer in relation to the applicable Listed Entity) other than as directed by the Bank; c) notify the Bank of any breach of any representation or warranty made by the Investor under the Transaction Documents; and d) do everything necessary to ensure that no Event of Default occurs. 5. EVENTS OF DEFAULT 5.1 Bank s Rights on Default If an Event of Default occurs, the Bank may, without being obliged to do so and notwithstanding any waiver of any previous default, and in addition to any other rights or remedies conferred by a Transaction Document or by law, do all acts and things and exercise all rights, powers and remedies that the Investor could do or exercise in relation to the Secured Property including, without limitation and without any notice to the Investor to: a) take possession and assume control of the Secured Property; b) receive all dividends or other distributions (whether monetary or otherwise) made or to be made in respect of the Secured Property; c) sell or agree to sell or redeem the Secured Property (whether or not the Bank has taken possession) on such terms as the Bank thinks fit in its absolute discretion; d) employ solicitors, agents, accountants, auctioneers and consultants on such terms as the Bank thinks fit; e) carry out and enforce, or refrain from carrying out or enforcing, rights and obligations of the Investor which may arise in connection with the Secured Property or obtained or incurred in the exercise of the rights, powers and remedies of the Bank; f) institute, conduct, defend, settle, arrange, compromise and submit to arbitration any claims, questions or disputes whatsoever which may arise in connection with the Secured Property or in any way relating to the Agreement, and to execute any associated releases or other discharges; and g) execute documents on behalf of the Investor under seal or under hand. 30

35 5.2 Secured Money Any money which the Bank pays or becomes liable to pay by reason of enforcing any of the rights specified in clause 5.1 or at common law, shall form part of the Secured Money which the Investor must immediately pay to the Bank. 6. APPOINTMENT OF A RECEIVER 6.1 Appointment Immediately upon or at any time after the occurrence of an Event of Default, the Bank may appoint in writing any person to be a receiver or receiver and manager (the Receiver ) of the Secured Property and: a) the Receiver may be appointed by the Bank on such terms as the Bank thinks fit; b) the Bank may remove a Receiver and may appoint another in its place; c) the Bank may from time to time determine the remuneration of the Receiver; and d) if two or more persons are appointed as Receiver they may be appointed jointly or severally or both and may be appointed in respect of different parts of the Secured Property. 6.2 Receiver to act as Agent of Investor Unless and until the Bank by notice in writing to the Investor requires that the Receiver act as agent of the Bank, or until an order is made or resolution is passed for the winding up of the Investor, the Receiver shall be the agent of the Investor, and the Investor alone shall be responsible for the acts and defaults of the Receiver, but in exercising any powers of the Bank, the Receiver shall have the authority of both the Investor and the Bank. 6.3 Receiver s Powers Subject to any specific limitations placed upon him by the terms of his appointment, the Receiver may, in addition to any right, power or remedy conferred upon him by law, do any act, matter or thing and exercise any right, power or remedy that may be done or exercised by the Bank in relation to the Secured Property including, but not limited to: a) do everything necessary to obtain registration of the Secured Property in the name of the Bank and to enable the Bank to receive any Rights; and b) obtain the benefit of any agreement entered into by the Investor in connection with the Secured Property. 7. PAYMENTS 7.1 Bank Certificate A certificate signed by the Bank stating any amount or rate for the purpose of the Transaction Documents shall be prima facie binding in the absence of manifest error on the Investor. 7.2 Application of Money The Bank may apply any money received or recovered towards satisfaction of the Secured Money in the manner and order it sees fit. 7.3 Deduction of Taxes If a law requires the Investor to withhold or deduct Taxes from a payment so that the Bank would not actually receive for its own benefit on the due date the full amount provided under a Transaction Document, then: a) the amount payable is increased so that, after making that deduction and deductions applicable to additional amounts payable under this clause, the Bank is entitled to receive the amount it would have received if no deduction had been required; b) the Investor must make the deduction; and c) the Investor must pay the full amount deducted to the relevant authority by the due date in accordance with applicable law and deliver to the Bank a copy of any receipt of payment from the relevant authority (or other reasonable evidence of payment if no such receipt is provided). 31

36 SECTION 5 General Conditions continued 8. PRIORITY AMOUNT For the purpose only of fixing priorities in accordance with section 282 of the Corporations Act between this mortgage and any other mortgage given by the Investor and without affecting any obligation of the Investor under a Transaction Document, the prospective liabilities secured by these General Conditions include the prospective liabilities of the nature specified below up to the maximum amount of $5,000,000. Nature of liabilities: The obligations of the Investor to: a) repay all advances which are made to it under a Transaction Document; b) pay interest on those advances and other amounts payable under a Transaction Document; c) pay or reimburse the Bank for all costs, charges and expenses incurred in connection with a Transaction Document. 9. ASSIGNMENT 9.1 No assignment by Investor The Investor must not create or allow to exist a Security Interest over or an interest in any of the Transaction Documents or assign or otherwise transfer the benefit of any of the Transaction Documents or any of their respective rights, remedies, powers, duties or obligations under any of the Transaction Documents without the prior written consent of the Bank. 9.2 Bank may assign The Bank may assign, transfer and otherwise grant participations or sub-participations in all or any part of the benefit of this assignment or in any of the Transaction Documents and any of its rights, remedies, powers, duties and obligations under in any of the Transaction Documents. 9.3 Bank disclosure The Bank may disclose to a potential assignee, transferee, participant or sub-participant such information about the Investor, and in any of the Transaction Documents. 10. APPOINTMENT OF SPONSORS 10.1 Appointment a) The Investor hereby appoints Macquarie Equities (or any other person that may be nominated from time to time by the Bank) as the Sponsor to provide, and the Sponsor agrees to provide, transfer and settlement services as agent of the Investor in relation to all of the Reference Shares under the Transaction Documents. b) The Investor must not provide any direction to the Sponsor which is inconsistent with the provisions of the Transaction Documents and must not terminate the appointment of the Sponsor while any of the Obligations are still owing without the prior written consent of the Bank Express authorisation The Investor: a) expressly authorises and directs the Sponsor to take whatever action is reasonably required by the Bank in accordance with the Rules to give effect to the Bank s rights under the Transaction Documents including: i) to transfer or convert any of the Reference Shares which is a certificated holding to a CHESS Holding; and ii) to transfer or convert any of the Reference Shares which is in an Issuer Sponsored Holding to a Participant Sponsored Holding with the Sponsor acting as Participant for these Holdings pursuant to these General Conditions; and b) expressly authorises and directs the Sponsor to act in accordance with any direction or instruction which it receives from the Bank in respect of the Reference Shares, including in relation to the utilisation of the HIN under which the Reference Shares are registered Sponsor to notify the Bank The Sponsor must, as soon as practicable, notify the Bank as soon as it becomes aware of any action taken by the Investor to limit, suspend or terminate either the terms of this clause or the Sponsor s appointment. 32

37 10.4 Indemnification a) The Sponsor indemnifies the Bank for all liability, loss, costs, charges and expenses arising from or incurred by the Bank as a result of the breach by the Sponsor of any of its obligations under the Transaction Documents. b) The Investor indemnifies the Bank for all liability, loss, costs, charges and expenses arising from or incurred by the Bank as a result of the taking of action or the giving of a direction or instruction in accordance with this clause Other sponsor Notwithstanding any other term of the Transaction Documents, the Bank may (in its absolute discretion) agree with the Investor that any of the Reference Shares that are CHESS Holdings may be sponsored by a Participant other than the Sponsor on such terms and conditions as the Bank may agree with the Participant and the Investor, but (for the avoidance of doubt) the Bank is under no obligation to do so Termination a) Subject to these General Conditions and the Rules, the appointment of the Sponsor under this clause shall apply until the Bank has notified the Investor and the Sponsor that it no longer relies on the mortgage over the Secured Property created by clause 3 of these General Conditions. b) After the date of notification of release under paragraph a), any party may terminate this appointment by giving written notice to each other party. Such termination shall not affect any rights or obligations of the parties which accrued before the date of termination. c) Subject to the ASTC Rules and the rights of the Bank under the Transaction Documents, these Terms of Sponsorship will be terminated upon the occurrence of any of the following events: i) by notice in writing from either the Investor or the Sponsor to the other party to these Terms of Sponsorship (which notice must only be given with the consent of the Bank); iii) upon the termination or suspension of the Sponsor; or iv) upon the giving of Withdrawal Instructions by the Investor to a Controlling Participant in accordance with ASTC Rule (c). d) Termination under clause 10.6(c)(i) will be effective upon receipt of Notice by the other party to these Terms of Sponsorship, subject to the right of the Bank under the Transaction Documents Nominee a) The Investor agrees that, at the direction of the Bank, the Investor will transfer either the whole or any part of the Secured Property into the name of a Nominee of the Bank and that Secured Property will be held by the Nominee as registered owner and as nominee for the Investor. b) Subject to the rights of the Bank under the Transaction Documents, the Investor is entitled to instruct and direct the Nominee about any matter concerning the applicable Secured Property, including voting rights. The Nominee must comply with such instructions. The participation of any Secured Property in any rights issue, dividend or other matter referred to in clause 13 shall be at the discretion of the Bank. c) The Nominee is authorised to act in accordance with any direction which it receives from the Bank about the Secured Property for any purpose under the Transaction Documents. 11. TERMS OF SPONSORSHIP 11.1 Reference Shares registered under HINs The Bank or the Sponsor will inform the Investor of the HIN for the Participant Sponsored Holdings. All of the Reference Shares will be registered and blocked under this HIN. ii) upon an Insolvency Event occurring in relation to the Sponsor; 33

38 SECTION 5 General Conditions continued 11.2 Mandatory provisions a) Where the Investor authorises the Sponsor to buy financial products, the Investor will pay for those financial products within three (3) Business Days, or other period of time specified by the Rules from time to time, of the date of purchase. b) The Sponsor is not obliged to transfer financial products into the Participant Sponsored Holding, where payment for those financial products has not been received, until payment is received. c) Where a contract for the purchase of financial products remains unpaid, after the Sponsor has made a demand of the Investor to pay for the financial products, the Sponsor may sell those financial products that are the subject of that contract at the Investor s risk and expense and that expense will include brokerage. d) Where the Sponsor claims that an amount lawfully owed to it has not been paid by the Investor the Sponsor has the right to refuse to comply with the Investor s Withdrawal Instructions, but only to the extent necessary to retain financial products of the minimum value held in a Participant Sponsored Holding (where the minimum value is equal to 120% of the current market value of the amount claimed). e) Subject to clauses 11.2(b) and 11.2(c) and the prior receipt of the Bank s consent in writing, the Sponsor will initiate any Transfer, Conversion or other action necessary to give effect to Withdrawal Instructions within two (2) Business Days of the date of receipt of the Withdrawal Instructions. f) The Sponsor will not initiate any Transfer or Conversion into or out of the Participant Sponsored Holding without the express authority of the Bank or the Investor. g) The Investor must not give the Sponsor any withdrawal instructions in respect of the Secured Property without the prior written consent of the Bank. h) The regulatory regime which applies to the Sponsor includes the Corporations Act and the Rules. The Investor can obtain information as to the status of the Sponsor from regulatory authorities including the Australian Securities and Investments Commission, ASX, ACH and ASTC. i) The Investor may lodge a complaint against the Sponsor or any claim for compensation with the Australian Securities and Investments Commission, FICS, ASX, ACH and ASTC. j) Nothing in these Terms of Sponsorship operates to override any interest of ACH in the financial products Information The Investor shall supply all information and supporting documentation which is reasonably required to permit the Sponsor to comply with the registration requirements, as are in force from time to time, under the Rules. The Sponsor is authorised to provide such information to the Bank upon the Bank s request Brokerage The Investor shall pay all brokerage fees and associated transactional costs within the period prescribed by the Sponsor Notifications a) Except as referred to in clause 11.5(c), no compensation arrangements apply to the Investor in relation to these Terms of Sponsorship. b) If the Sponsor breaches a provision of the Transaction Documents and the Investor makes a claim for compensation pursuant to that breach, the ability of the Sponsor to satisfy that claim will depend on the financial circumstances of the Sponsor. c) If a breach by a Sponsor of a provision of the Transaction Documents falls within the circumstances specified under Part 7.5, Division 4 of the Corporations Regulations 2001 (Cth), the Investor may make a claim on the National Guarantee Fund for compensation. d) In the event the Sponsor breaches any of the provisions of the Transaction Documents, the Investor may refer that breach to any regulatory authority, including ASTC. 34

39 11.6 Suspension of Sponsor Subject to the rights of the Bank under the Transaction Documents, if the Sponsor is suspended from CHESS participation by the liquidator, receiver, administrator or trustee of the Sponsor: a) the Investor has the right, within twenty (20) Business Days of ASTC giving notice of suspension, to give notice to ASTC requesting that any Participant Sponsored Holdings of the Investor be removed either: i) from the CHESS Sub-register; or ii) from the control of the suspended Sponsor to the control of another Sponsor within whom they have concluded a valid sponsorship agreement pursuant to Rule and the Transaction Documents; or b) where the Investor does not give notice under clause 11.6(a) and the Bank does not give notice under clause 9, ASTC may effect a change of Controlling Participant under Rule and the Investor will be deemed to have entered into a new Sponsorship Agreement with that Sponsor, on the same terms as these Terms of Sponsorship. Where the Investor is deemed to have entered into these Terms of Sponsorship in accordance with this clause 11.6(b), the Sponsor must enter into a Sponsorship Agreement with the Investor within ten (10) Business Days of the change of Controlling Participant; and c) the Investor must not give a notice under clause 11.6(a)(i) without the prior written consent of the Bank. b) in the event of death of the Investor, the Transaction Documents are deemed to remain in operation, in respect of the legally appointed representative authorised to administer the Investor s estate, subject to the consent of the legally appointed representative, for a period of up to three calendar months after the removal of Investor Record Lock applied pursuant to paragraph 11.7(a); c) in the event of the death of one of the Investors (in the case of a joint holding), the Sponsor will transfer all Holdings under the joint Holder Record into new Holdings under a new Holder Record in the name of the surviving Investor(s), and these Terms of Sponsorship will remain valid for the new Holdings under the new Holder Record; d) in the event of the bankruptcy of one of the Investors (in the case of a joint holding) the Sponsor will: i) unless the legally appointed representative of the bankrupt Investor elects to remove the Participant Sponsored Holdings from the CHESS Sub-register, establish a new Holder Record in the name of the bankrupt Investor, transfer the interest of the bankrupt Investor into new Holdings under the new Holder Record and request that ASTC apply a Holder Record Lock to all Holdings under that Holder Record; and ii) establish a new Holder Record in the name(s) of the remaining Investor(s) and Transfer the interest of the remaining Investor(s) into new Holdings under the new Holder Record; 11.7 Other acknowledgments of Investor The Investor acknowledges that, subject to the rights of the Bank under the Transaction Documents: a) in the event of death or bankruptcy of the Investor, an Investor Record Lock will be applied to all Participant Sponsored Holdings in accordance with the Rules, unless the Investor legally appoints a representative or trust to remove the Participant Sponsored Holding from the CHESS Sub-register; 35

40 SECTION 5 General Conditions continued e) if a Transfer is taken to be effected by the Sponsor under Section 9 of the ASTC Rules and the Source Holding for the Transfer is a Participant Sponsored Holding under these Terms of Sponsorship, then: i) the Investor may not assert or claim against ASTC or the relevant Issuer that the Transfer was not effected by the Sponsor or that the Sponsor was not authorised by the Investor to effect the Transfer; and ii) unless the Transfer is also taken to have been effected by a Market Participant of ASX or a Clearing Participant of ACH, the Investor has no claim arising out of the Transfer against the National Guarantee Fund under Part 7.5, Division 4 of the Corporations Regulations 2001 (Cth); and f) before the Investor executed the General Conditions, the Sponsor provided the Investor with an explanation of the effect of these Terms of Sponsorship and that the Investor understood the effect of these Terms of Sponsorship Change of Controlling Participant The following provisions apply subject to the rights of the Bank under the Transaction Documents: a) If the Investor receives a Participant Change Notice from the Sponsor and the Participant Change Notice was received at least twenty (20) Business Days prior to the date proposed in the Participant Change Notice for the change of Controlling Participant, the Investor is under no obligation to agree to the change of Controlling Participant, and may choose to do any of the things set out in clauses 11.8(b) or 11.8(c). b) The Investor may choose to terminate these Terms of Sponsorship by giving Withdrawal Instructions under the ASTC Rules to the Sponsor, indicating whether the Investor wishes to: i) transfer its Participant Sponsored Holding to another Controlling Participant; or ii) transfer its Participant Sponsored Holding to one or more Issuer Sponsored Holdings. c) If the Investor does not take any action to terminate these Terms of Sponsorship in accordance with clause 10.6(c), and does not give any other instructions to the Sponsor which would indicate that the Investor does not agree to the change of Controlling Participant then, on the Effective Date, these Terms of Sponsorship will have been taken to be novated to the New Controlling Participant and will be binding on all parties as if, on the Effective Date: i) the New Controlling Participant is a party to these Terms of Sponsorship in substitution for the Sponsor; ii) any rights of the Sponsor are transferred to the new Controlling Participant; and iii) the Sponsor is released by the Investor from any obligations arising on or after the Effective Date. d) The novation in clause 11.8(c) will not take effect until the Investor has received notice from the New Controlling Participant confirming that the New Controlling Participant consents to acting as the Controlling Participant for the Investor. The Effective Date may as a result be later than the date set out in the Participant Change Notice. e) The Investor will be taken to have consented to the events referred to in clause 11.8(d) by the doing of any act which is consistent with the novation of these Terms of Sponsorship to the New Controlling Participant (for example by giving an instruction to the New Controlling Participant), on or after the Effective Date, and such consent will be taken to be given as of the Effective Date. f) These Terms of Sponsorship continue for the benefit of the Sponsor in respect of any rights and obligations accruing before the Effective Date and, to the extent that any law or provision of any agreement makes the novation in clause 11.8(c) not binding or effective on the Effective Date, then these Terms of Sponsorship will continue for the benefit of the Sponsor until such time as the novation is effective, and the Sponsor will hold the benefit of these Terms of Sponsorship on trust for the New Controlling Participant. 36

41 g) Nothing in this clause 11.8 will prevent the completion of CHESS transactions by the Sponsor where the obligation to complete those transactions arises before the Effective Date and these Terms of Sponsorship will continue to apply to the completion of those transactions, notwithstanding the novation of these Terms of Sponsorship to the New Controlling Participant under this clause Inconsistency with Rules Should any of the provisions of the Transaction Documents be inconsistent with the provisions of the Business Rules, the Sponsor shall, by giving the Investor not fewer than seven (7) Business Days written notice, vary the Transaction Documents to the extent to which the Sponsor s reasonable opinion is necessary to remove any inconsistency. 12. REPRESENTATIONS The Investor represents and warrants for the benefit of the Bank that on the Commencement Date and on each day until the Maturity Date: a) if a body corporate: i) it is duly incorporated and validly existing under the laws of its jurisdiction of incorporation; ii) it has the power to execute and deliver the Application Form and to perform all its obligations under the Transaction Documents; b) if it enters into a Transaction Document as trustee of a trust (the Trust ): i) it enters into all Transaction Documents in the same capacity; ii) it is the sole trustee of the Trust, it does not propose to retire as trustee of the Trust and to its knowledge no action has been taken or proposed to remove it as sole trustee or appoint another trustee; iii) the Trust has been validly created and continues to exist, no event has occurred which means the assets of the Trust are to be vested in one or more beneficiaries (other than in accordance with the Trust Deed) and no property of the Trust has been re-settled; iv) it has power under the Trust Deed to perform its obligations under each of the Transaction Documents; v) it is not materially in breach of trust and its performance of obligations under each Transaction Document are for the benefit of the beneficiaries of the Trust and do not constitute or involve a breach of trust; and vi) it is entitled to be fully indemnified out of the assets of the Trust for all its loss or liabilities under each Transaction Document, with the Trust having sufficient net assets to satisfy this right of indemnity; c) in every case: i) unless stated in the Application Form, the Investor is not acting as a trustee of a trust; ii) iii) no Event of Default continues unremedied and no breach of any law or obligation exists which is likely to lead to a Material Adverse Change in respect of that Investor; the performance of each of the Transaction Documents does not violate any existing law or regulation or any document or agreement to which it is a party or which is binding on it or any of its assets; iv) all authorisations required in order for it to conduct its business and relevant to the performance, validity or enforceability of each of the Transaction Documents have been obtained or effected and are in full force and effect; v) there are no actions or claims pending the adverse determination of which might have a material adverse affect on the ability of the Investor to perform its obligations under each of the Transaction Documents, or on the rights granted to the Bank; vi) it is not entitled to claim for itself or any of its assets or revenues any right of general immunity or exemption on the grounds of sovereignty or otherwise from suit, execution, attachment or other legal process in respect of its obligations under any of the Transaction Documents; 37

42 SECTION 5 General Conditions continued vii) all information contained in the Application Form are complete and accurate; viii) the Reference Shares and all sums deposited with Macquarie Bank are not subject to any Security Interest and are beneficially owned by the Investor; ix) the Reference Shares are and will be at all times held by the Investor in the same right and capacity with respect to Macquarie Bank as the Obligations; and x) it will use any Loan Amount drawn down under the Loan Agreement wholly or predominantly for business or investment purposes (or for both purposes). 13. VARIATION OF SHARES 13.1 Automatic Variation Where an event specified in this clause 13 occurs in respect of the Reference Shares, then the Reference Shares and the Commercial Terms of the Option Collar will be automatically and immediately varied in accordance with this clause 13, and shall, for the purposes of the Transaction Documents and the security interest over the Secured Property under clause 3 of these General Conditions, be deemed to have been so varied from the Commencement Date Reconstruction of Capital If the Reference Shares are divided into a greater number of securities or consolidated into a lesser number of securities or are subject to a similar reconstruction: a) the description of the Reference Shares becomes that of the securities issued in substitution by reason of the reconstruction; and b) the Underlying Parcel becomes the number of the new securities into which the Reference Shares (previously comprising the Underlying Parcel) are converted by the reconstruction Cash Return of Capital or Special Dividend If there is a pro-rata cash distribution in respect of the Reference Shares by way of a return of capital or special dividend which: a) does not involve the cancellation or repurchase of any Reference Shares, then: i) the Investor will, if required by the Bank, transfer the Reference Shares to a Nominee; ii) the Bank may direct the Nominee to use the cash distribution amount to acquire an additional number of shares (ex-distribution) to constitute part of the Reference Shares and the adjusted Underlying Parcel in accordance with the formula set out in part 1 of the Schedule; b) does involve the cancellation or repurchase of Reference Shares: i) the Investor will, if required by the Bank, transfer the Reference Shares to a Nominee; and ii) the Bank may direct the Nominee to use the cash distribution amount to acquire an additional number of shares (ex-distribution) to constitute part of the Reference Shares and the adjusted Underlying Parcel in accordance with the formula set out in part 2 of the Schedule Bonus Issues If there is a pro-rata issue or distribution of securities to holders of shares of the same class as the Reference Shares at no cost to those holders by way of a bonus issue, capitalisation of any account, in satisfaction of any dividend (except pursuant to a scheme of the Listed Entity allowing holders of shares of the same class as the Reference Shares to elect to receive an issue or distribution of securities instead of payment of dividends) or by way of any other distribution in specie and: 38

43 a) the securities so issued or distributed are identical to the Reference Shares then the property constituting the Underlying Parcel becomes the aggregate of the number of Reference Shares constituting the Underlying Parcel before the bonus issue and the number of securities the subject of the issue calculated in accordance with the formula set out in part 3 of the Schedule; b) the securities so issued or distributed are not identical to the Reference Shares then: i) the Investor will, if required by the Bank, transfer the Reference Shares to a Nominee; ii) the Bank may direct the Nominee to dispose of the bonus issue shares and use the cash proceeds to acquire an additional number of shares which are identical to the Reference Shares in accordance with the formula set out in part 4 of the Schedule and the aggregate of the additional number of shares so purchased will form part of the Underlying Parcel for the purposes of the Transaction Documents; iii) the property constituting the Underlying Parcel becomes the aggregate of the number of Reference Shares constituting the Underlying Parcel before the bonus issue and the number of Reference Shares calculated in accordance with the formula set out in part 4 of the Schedule Rights Issue If the Investors of Reference Shares are given in that capacity a pro-rata right to acquire securities and: a) the right is renounceable: i) the Investor will, if required by the Bank, transfer the Reference Shares to a Nominee; ii) the Bank may direct the Nominee to dispose of the rights and use the cash proceeds to acquire an additional number of ex-rights shares on the ex-rights date which are identical to the Reference Shares in accordance with the formula set out in part 5 of the Schedule and the aggregate of the additional number of shares so purchased will form part of the Underlying Parcel for the purposes of the Transaction Documents; and iii) the property constituting the Underlying Parcel becomes the aggregate of the number of Reference Shares constituting the Underlying Parcel before the rights issue and the number of Reference Shares calculated in accordance with the formula set out in part 5 of the Schedule; b) the right is non-renounceable: i) the Investor will, if required by the Bank, transfer the Reference Shares to a Nominee; and ii) the Bank may, at its discretion, direct the Nominee to dispose of a number of the Reference Shares in accordance with the formula set out in part 6 of the Schedule and use the cash proceeds to accept the rights offer. iii) the property constituting the Underlying Parcel becomes the number calculated in accordance with part 6 of the Schedule Takeover Offers Where a Takeover Offer is made in respect of the Reference Shares, the Bank in its sole discretion may: a) accelerate the Maturity Date and the Repayment Date; b) replace the Underlying Parcel with the new securities issued in substitution for the Reference Shares that constituted the Underlying Parcel before the Takeover Offer; c) require the Investor to transfer the Reference Shares to a Nominee, on which transfer the Bank may direct the Nominee to either accept or reject the Takeover Offer; and d) make any other alterations to the Transaction Documents that it considers appropriate On-market and off-market buy backs Unless the Bank exercises its rights under clause 13.9 to the contrary, the occurrence of a share buyback, whether on-market or off-market, under the Corporations Act shall not warrant an adjustment under this clause. 39

44 SECTION 5 General Conditions continued 13.8 Treatment of different kinds of property Where, following the application of this clause 13, the Reference Shares constituting an Underlying Parcel comprise property of different kinds (including, without limitation, securities of different classes or of different entities) each of those kinds of property is to be treated as the Reference Shares as if it were an Underlying Parcel in its own right, and each adjustment required by this clause 13 is to be made to each kind of property separately Discretion of the Bank Where the Bank determines that any of the provisions of this clause 13 is not appropriate in any particular situation, or any event which is not dealt with in this clause 13 should have been dealt with, it may make any alterations to the effect of this clause (including adding new clauses) that it considers to be appropriate. The Bank may, following any adjustments under this clause 13, amend the Available Loan Amount as it considers appropriate. 14. WRITTEN NOTICES The parties agree that every notice or other communication of any nature whatsoever that is required to be given, served or made in writing under a Transaction Document: a) must be in writing in order to be valid; b) (where the party is a corporation) must be executed on behalf of the party giving, serving or making the same by any attorney, director, secretary or solicitor of that party; c) will be deemed to have been duly given, served or made in relation to a party if it is delivered to the address of that party set out in the Information Memorandum (in the case of Macquarie Bank) or the Application Form (in the case of the Investor) or sent by facsimile to the number notified in writing by that party to the other party from time to time; and d) will be deemed to be given, served or made: i) (in the case of facsimile) on receipt of a transmission report confirming successful transmission at the conclusion of the transmission; and ii) (in the case of delivery by hand) on delivery, provided that if any notice is given, served or made outside of normal business hours it will not be deemed to be given, served or made until the commencement of business on the next Business Day. 15. INDEMNITY 15.1 Indemnity The Investor indemnifies the Bank, the Sponsor and any Nominee from and against all actions, suits, claims, demands, losses, liabilities, damages, costs and expenses which may be made or brought against or suffered or incurred by the Bank, the Sponsor or any Nominee arising out of or in connection with: a) any Event of Default; b) the exercise or non-exercise of any right, power or remedy contained, referred to or implied in the Transaction Documents; c) any prepayment of a Loan Amount; d) the Bank or the Sponsor acting in good faith on instructions which purport to have been provided by the Investor, or any authorised representative, via facsimile, telephone or electronic means; and e) a proposed drawing not being made available in accordance with the request for any reason except the default of the Bank, including any loss or expense incurred in respect of: i) the liquidation or redeployment of funds acquired from third parties to make or maintain the Loan Amount; or 40

45 ii) the termination or reversal of any arrangements entered into in connection with the Option Collar or funding of the Loan Amount; or iii) any loss of profits that the Bank or the Sponsor may suffer by reason of the early liquidation or redeployment of such funds or the termination or reversal of such arrangements Disclaimer Neither the Bank nor the Sponsor shall be responsible for any losses of any kind whatsoever (including, without limitation, the negligence, default of dishonesty of any servant, agent or auctioneer employed by the Bank or the Sponsor, any attorney of the Bank or the Sponsor) which may occur in or about the exercise, attempted exercise or nonexercise of any of the rights, powers or remedies of the Bank or the Sponsor under the Transaction Documents. 16. GOVERNING LAW AND SUBMISSION TO JURISDICTION 16.1 Governing law Each of the Transaction Documents will be governed by and construed in accordance with the laws of New South Wales Jurisdiction Each party irrevocably submits to and accepts, generally and unconditionally, the non-exclusive jurisdiction of the courts and appellate courts of New South Wales with respect to any legal action or proceedings which may be brought at any time relating in any way to any of the Transaction Documents. Each party irrevocably waives any objection it may now or in the future have to the venue of any such action or proceedings and any claim it may now or in the future have that any such action or proceeding has been brought in an inconvenient forum. 17. MISCELLANEOUS 17.1 Severability Any part of a Transaction Document which is illegal, void or unenforceable will be ineffective to the extent only of that illegality, voidness or unenforceability, without invalidating the remaining parts of that Transaction Document Waiver A failure to exercise or enforce or a delay in exercising or enforcing or the partial exercise or enforcement of any right, remedy, power or privilege under any of the Transaction Documents by the Bank shall not in any way preclude or operate as a waiver of any further exercise or enforcement thereof or the exercise or enforcement of any other right, remedy, power or privilege under that Transaction Document of any of the other Transaction Documents or provided by law Time of essence Time is of the essence in respect of the obligations of the Investor under any of the Transaction Documents Conditional settlement Any settlement or discharge between the Bank and the Investor will be conditional upon any security or payment given or made to the Bank by the Investor or by any other person in relation to the obligations of the Investor under any of the Transaction Documents in consideration for or in connection with that settlement or discharge, not being avoided, repaid or reduced by any Insolvency Event. If the relevant security or payment is avoided, repaid or reduced the Bank will be entitled subsequently to recover the value or amount of that security or payment from the Investor, as if that settlement or discharge had not occurred Continuing indemnities Any indemnities contained in any of the Transaction Documents are continuing obligations of the Investor, separate and independent from their other obligations and shall survive the termination of the applicable Transaction Document. 41

46 SECTION 5 General Conditions continued 17.6 No merger The Bank s rights under any of the Transaction Documents are additional to and do not merge with or affect and are not affected by any mortgage, charge or other encumbrance held by the Bank or any other obligation of the Investor to the Bank, despite any rule of law or equity or any statutory provision to the contrary Default Interest If the Investor fails to pay when due any amount payable under any of the Transaction Documents, the Investor must pay interest on such money, calculated on daily balances, from and including the due date to the date of actual payment (after, as well as before, judgment) at the rate of interest per annum determined by the Bank to be the aggregate of 4% per annum and the interest rate quoted by the Bank on unsecured overdraft accommodation in excess of $100,000 for that daily balance Stamp Duty The Investor must pay and account for any transfer or similar duties or taxes, and any loan security or other stamp duties, (if any) chargeable in connection with any transaction effected pursuant to or contemplated by this Agreement, and shall indemnify and keep indemnified the Bank and the Broker against any liability arising as a result of the Investor s failure to do so Consent to telephone recording The Investor consents to the recording of any of its conversations with the Bank, Macquarie Equities and the Sponsor in relation to this Facility Security lending If requested by the Bank, the Investor shall enter into an agreement with the Bank, under which the Investor agrees to lend the Reference Shares to the Bank under a complying securities lending agreement for the purposes of section 26BC(3) of the Income Tax Assessment Act GST a) Consideration for a supply under or in connection with or contemplated by the PDS or this Facility is exclusive of GST unless expressly stated to be inclusive of GST. b) Where GST is payable by Macquarie Bank Limited or any members of its group of companies on any supply under or in connection with or contemplated by the PDS or this Facility, in addition to providing any consideration for that supply (which is exclusive of GST), the Investor must: i) pay to Macquarie Bank Limited or the relevant member of its group of companies (as the case may be) an amount equal to the GST payable on the supply, without deduction or set-off of any other amount; and ii) make that payment as and when the consideration or part of it must be paid or provided, except that the Investor need not pay unless the Investor has received a tax invoice (or adjustment note) for that supply. c) Words defined in A New Tax System (Goods and Services Tax) Act 1999 (Cth) have the same meaning in this clause Investor to supply information The Investor shall supply to the Bank when requested to do so such financial or other information relating to the Investor and the Investor as the Bank may from time to time reasonably request. 42

47 SECTION 5 Schedule to the General Conditions PART 1 (clause 13.3(a)) - Cash Return of Capital - no cancellation of Shares A = where: B x C Q A = the additional number of Reference Shares constituting part of the Underlying Parcel after the Return of Capital. B = the number of Reference Shares constituting the Underlying Parcel immediately before the Return of Capital. C = the amount of cash distribution per original Reference Share. Q = the weighted average price (inclusive of reasonable costs to the Bank) at which the exdistribution Reference Shares were acquired by the Nominee on the ex-distribution date. PART 2 (clause 13.3(b)) - Cash Return of Capital - cancellation of Shares A = where: (B - U) + B x C Q A = the number of Reference Shares constituting the Underlying Parcel after the Return of Capital. B = the number of Reference Shares constituting the Underlying Parcel immediately before the return of Capital. C = the amount of cash distributed per Reference Share. Q = the weighted average price (inclusive of reasonable costs to the Bank) at which the exdistribution Reference Shares were acquired by the Nominee on the ex-distribution date. U = the number of Reference Shares repurchased or cancelled per Underlying Parcel by the Listed Entity. PART 3 (clause 13.4(a)) - Bonus Issues - securities identical to the Reference Shares A = where: B x N D A = the additional number of Reference Shares constituting part of the Underlying Parcel after the bonus issue. B = the number of Reference Shares constituting the Underlying Parcel before the bonus issue. N = the Issue Numerator of the bonus issue. D = the Issue Denominator of the bonus issue. Issue Ratio means, for a bonus issue, the general ratio used by the person making the issue to determine the entitlement of persons to participate in the issue; Issue Numerator means, for a bonus issue, the component of the Issue Ratio which refers to the property the subject of the issue; and Issue Denominator means, for a bonus issue, the component of the Issue Ratio which refers to the shares held by Investors to whom the issue is made. PART 4 (clause 13.4(b)) - Bonus Issues - securities not identical to the Reference Shares A = where: F x V Q A = the additional number of Reference Shares constituting part of the Underlying Parcel after the Bonus Issue F = the number of bonus issue shares of a different class per Underlying Parcel V = the weighted average price at which the Nominee sells the bonus issue shares on the ex-bonus date Q = the weighted average price at which the Nominee purchases the ex-bonus Reference Shares on the ex-bonus date. 43

48 SECTION 5 Schedule to th General Conditions continued PART 5 (clause 13.5(a)) - Rights Issues - renounceable PART 6 (clause 13.5(b)) - Rights Issues - non-renounceable A = where: B x R x V Q A = S = B - S + T R x E V A = the additional number of Reference Shares constituting part of the Underlying Parcel after the rights issue B = the number of Reference Shares constituting the Underlying Parcel before the rights issue R = number of Rights per the number of Reference Shares constituting the Underlying Parcel before the rights issue, or calculated as N divided by D. V = the weighted average price at which the Nominee sells rights on the ex-rights date. Q = the weighted average price at which the Nominee purchases ex-rights Reference Shares on the ex-rights date. N = the Issue Numerator of the rights issue. D = the Issue Denominator of the rights issue. Issue Ratio means, for a bonus issue, the general ratio used by the person making the issue to determine the entitlement of persons to participate in the issue; Issue Numerator means, for a bonus issue, the component of the Issue Ratio which refers to the property the subject of the issue; and T = B x R PROVIDED THAT E< V (as estimated by Macquarie Bank) where: S = the number of Reference Shares per Underlying Parcel required to be sold on the ex-rights date. A = the number of Reference Shares constituting the Underlying Parcel after the rights issue. B = the number of Reference Shares constituting the Underlying Parcel before the rights issue. R = number of Rights per the number of Reference Shares constituting the Underlying Parcel before the rights issue. E= the rights issue purchase price. V = the weighted average price at which the Nominee sells ex-rights Reference Shares on the ex-rights date. T = the number of Reference Shares per Underlying Parcel acquired through the rights issue. Issue Denominator means, for a bonus issue, the component of the Issue Ratio which refers to the shares held by Investors to whom the issue is made. 44

49 SECTION 6 Equity Option Agreement MACQUARIE BANK, MACQUARIE EQUITIES AND THE INVESTOR AGREE: 1. DEFINITION AND GENERAL CONDITIONS 1.1 Definitions The definitions contained in the Glossary set out in Section 10 of the PDS apply to this Agreement unless the context otherwise requires. 1.2 General Conditions The General Conditions apply to this Agreement. To the extent that there is any inconsistency between the provisions of this Agreement and the General Conditions, this Agreement shall prevail. 2. OPTIONS 2.1 Offer Upon Acceptance by the Bank of a Transaction Request for an Option Collar and in consideration of the promise by the Investor to pay to the Bank the Fixed Premium (if any), the Variable Premium (if any) and Option Break Costs (if any), the Bank agrees to grant to the Investor on the Commencement Date the Options for that Option Collar. Each Option constitutes an irrevocable offer made by the Bank to the Investor to do, upon effective exercise of that Option during the Exercise Period, either of the following on the applicable Settlement Date: a) unless paragraph (b) applies, to pay to the Investor the Cash Settlement Amount; or b) where the Investor has given the Bank and Macquarie Equities a Physical Settlement Request in accordance with clause 4, to buy the number of Reference Shares comprising the Underlying Parcel for the Protection Price. 2.2 Option Confirmation As soon as practicable after the grant of an Option under clause 2.1, the Bank shall send to the Investor a Confirmation for that Option. 2.3 Lapse of Option Any offer made in respect of an Option expires at the expiry of the Exercise Period and may not be accepted thereafter. 2.4 Assessed Value Payment In respect of an Option which lapsed by operation of clause 2.3 but which was In-the-Money at the expiry of the Exercise Period, the Bank shall pay to the Investor the Assessed Value Payment on the Settlement Date. 3. PREMIUM 3.1 Fixed Premium The Investor must pay to the Bank the Fixed Premium (if any) for each Option on each Fixed Premium Payment Date. 3.2 Variable Premium The Investor must pay to the Bank the Variable Premium (if any) for each Option on the Variable Premium Payment Date. 4. PHYSICAL SETTLEMENT 4.1 Physical Settlement The Investor may request that all (but not some) of the Options in relation to an Option Collar be physically settled by giving a Physical Settlement Request to the Bank and Macquarie Equities. On exercise of an Option for which an effective Physical Settlement Request has been given, the Bank will pay to the Investor the Settlement Price and the Investor will deliver to the Bank the Number of Shares to be Delivered on the Settlement Date on a delivery versus payment basis through CHESS or, if such a settlement is not possible on the Settlement Date, otherwise in a manner and on a Business Day as determined by the Bank. 45

50 SECTION 6 Equity Option Agreement continued 4.2 Effective Physical Settlement Request A Physical Settlement Request only becomes effective if: a) it relates to all Options in an Option Collar held by the Investor; and b) it is received by the Bank and Macquarie Equities at least two Business Days before the applicable Maturity Date. 4.3 Notice to Exercise and Irrevocable Sell Instruction In addition to clause 4.1, a Physical Settlement Request constitutes: a) where the Option is In-the-Money on the Valuation Day - a notice to Macquarie Bank under clause 5 to exercise each Option to which the request relates; and b) where an Option lapses without being exercised - an Irrevocable Sell Instruction by the Investor to Macquarie Equities to sell all the Reference Shares constituting the Underlying Parcel at the Closing Price on the Valuation Day. 4.4 Investor Acknowledgments: For the purposes of the Irrevocable Sell Instruction, the Investor acknowledges and agrees that: a) Macquarie Equities is entitled to deduct from the sale proceeds of the Irrevocable Sell Instruction (and pay to the entity or instrumentality entitled thereto) the following: i) all applicable brokerage, costs, taxes and other charges associated with the execution of the Irrevocable Sell Instruction; iv) any Option Break Costs and other costs or amounts owing by the Investor to the Bank or any third party arising under, or by reason of the performance of anything contemplated by, the Transaction Documents, with the surplus being paid to the Investor at its direction. b) Macquarie Equities and its Prescribed Persons may deal in securities on the ASX as principal; c) in certain circumstances permitted under the Corporations Act and the ASX Rules, each of Macquarie Equities and its Prescribed Persons may (either acting for another client or on its own account) enter into the opposite position in a securities transaction with the Investor, as principal; d) Macquarie Equities may submit orders arising from the Investor s Irrevocable Sell Instruction on the ASX with orders of other Investors, general clients, Macquarie Equities and Prescribed Persons; and e) the executions resulting from the combination of orders as authorised by paragraph (d) will be allocated amongst the affected parties either: i) proportionately to the relative size of the individual orders; or ii) on a one-for-one basis until the orders are filled, as Macquarie Equities deems appropriate in the circumstances (taking into account all relevant factors including the size of the orders and liquidity of the market). ii) the Variable Premium payable to Macquarie Bank under clause 3; iii) the Loan Amount and any Acceleration Interest for any Loan linked to the applicable Option Collar, being payable to Macquarie Bank under the Loan Agreement; 46

51 5. EXERCISE 5.1 Exercise notice The Investor may exercise all (but not some) of the Options held by the Investor in an Option Collar at any time during the Exercise Period by giving to the Bank a notice (which will be oral telephonic notice, if practicable, and otherwise written notice): a) identifying the Options granted under this Agreement; and b) stating that the Options are exercised. 5.2 Event of Default If an Event of Default occurs in relation to an Investor, the Bank may, without prior notice to the Investor and in addition to any other rights or remedies conferred by a Transaction Document or by law, declare each Option in the Option Collar held by that Investor terminated whereupon the Bank s obligations under those Options shall cease and the Investor must pay Option Break Costs and other expenses associated with the termination of those Options. 5.3 Acceleration of Maturity Date The Bank may without prior notice to the Investor declare the Maturity Date for an Option Collar to be a date earlier than the date originally designated as the Maturity Date where any of the following events occurs: a) a Market Disruption Event in relation to the Reference Shares; b) a Material Adverse Change in relation to an Investor; c) any event, circumstance or cause beyond the control of the Bank that has or would be expected to have (as determined by the Bank in its absolute discretion) a material adverse effect on its ability to perform its obligations under, or hedge its positions with respect to, the Option Collar; d) any change in law or interpretation which makes it unlawful for the Bank to give effect to any provision of this Agreement or the Option Collar; or e) an Investor requests that the Maturity Date be accelerated to a specified earlier date; in which case: f) subject to paragraph (g), the earlier date so declared by the Bank shall become the Maturity Date for the purposes of this Agreement; and g) the Investor must pay the Bank the Option Break Costs in respect of the earlier Maturity Date. 47

52 SECTION 7 Loan Agreement MACQUARIE BANK AND THE INVESTOR AGREE: 1. DEFINITIONS AND GENERAL CONDITIONS 1.1 Definitions The definitions contained in the Glossary of Terms set out in Section 10 of the PDS apply to this Agreement unless the context otherwise requires. 1.2 General Conditions The General Conditions apply to this Agreement. To the extent that there is any inconsistency between the provisions of this Agreement and the General Conditions, this Agreement shall prevail. 2. LOAN 2.1 Agreement to Lend Upon Acceptance by the Bank of a Transaction Request for a Loan the Bank agrees to lend to the Investor the Loan Amount on the applicable Commencement Date subject to this Agreement. 2.2 Effective Request A Transaction Request for a Loan only becomes effective on a Business Day if: a) the Investor nominates the Option Collar to which the Loan Facility is linked; b) the Investor requests a Loan Amount which is greater than the Minimum Loan Amount and less than or equal to the then Available Loan Balance; c) the Investor nominates a Repayment Date that is no later than the Maturity Date for the Option Collar to which the Loan Amount is linked; g) in the case of an Investor acting in its capacity as a trustee of a trust, the Bank has received a solicitor s declaration in a form acceptable to the Bank; h) the Investor has not committed, or will not commit by entering into the Loan, an Event of Default; and i) the Investor has provided such other documents and information as, both in form and substance satisfactory to the Bank, the Bank may reasonably require. 2.3 Confirmation As soon as practicable after the Acceptance of an effective Transaction Request for a Loan under clause 2.2, the Bank shall advance the Loan Amount and send a Confirmation for that Loan to the Investor. The Confirmation will confirm the commercial terms of the Loan and the Repayment Date for the Loan Amount. 3. INTEREST The Investor must prepay to the Bank the Interest for each Interest Period on the applicable Interest Prepayment Date. Interest shall be calculated in advance for each Interest Period (or part thereof) at the Interest Rate on the Loan Amount using a simple interest formula and on the basis of the actual number of days elapsed (including both the first and last day of the Interest Period) and a 365 day year. 4. REPAYMENT 4.1 Repayment The Investor must repay the Loan Amount to the Bank on the Repayment Date. d) the Investor nominates the interest rate for the Loan Amount which is the Interest Rate applying to equivalent loans as determined by Macquarie Bank; e) the Investor has declared that the Loan Amount will be used wholly or predominantly for business or investment purposes; f) it is received by the Bank before noon on that Business Day; 48

53 4.2 Prepayment The Investor may prepay to the Bank the whole (but not a part) of the Loan Amount subject to the following: a) the Investor must give the Bank a written Loan Prepayment Notice of the Investor s intention to prepay the Loan Amount specifying the date of the intended prepayment; b) the Loan Prepayment Notice becomes effective only on the fifth Business Day after receipt by Macquarie Bank; c) the Interest referrable to any Loan Amount prepaid will not be refundable by Macquarie Bank to the Investor; and d) the Investor must pay to the Bank the Acceleration Interest, reasonably calculated by the Bank and notified to the Investor. 4.3 Acceleration of Repayment Date The Bank may without prior notice to the Investor declare the Repayment Date for any Loan Amount to be a date earlier than the date originally designated as the Repayment Date where any of the following events occurs: a) a Market Disruption Event in relation to the Reference Shares; b) a Material Adverse Change; in which case: f) subject to paragraph (g), the earlier date so declared by the Bank shall become the Repayment Date for the purposes of the applicable Loan Amount and in particular this clause 4; g) the Investor must pay the Bank the Acceleration Interest arising from the acceleration of the Repayment Date as if it were a prepayment of the Loan Amount under clause 4.2; and h) any interest paid under clause 3 shall not be repaid or reduced to the credit balance of the Investor. 5. EVENTS OF DEFAULT If the Investor commits an Event of Default, the Bank may, without being obliged to do so and notwithstanding any waiver of any previous default, and in addition to any other rights or remedies conferred by a Transaction Document or by law declare the Loan to be terminated, whereupon the Loan Amount, Interest and all other amounts payable (whether or not presently payable) under the Loan Agreement shall become immediately due and payable without further demand, notice or other legal formality of any kind and the Investor shall be liable for all Acceleration Interest and other expenses associated with the termination of the Loan. c) any event, circumstance or cause beyond the control of the Bank that has or would be expected to have (as determined by the Bank in its absolute discretion) a material adverse effect on its ability to perform its obligations under, or hedge its positions with respect to, the Loan Facility; d) any change in law or interpretation which makes it unlawful for the Bank to give effect to the Loan Facility; or e) a declaration is made under clause 5.3 of the Equity Option Agreement in relation to the Option Collar to which the Loan Facility is linked, 49

54 SECTION 8 Description of the Underlying Shares The Reference Shares are quoted on the ASX and the Listed Entities are subject to continuous disclosure obligations under the Corporations Act and the ASX Listing Rules. This means that the Listed Entities each have an obligation to disclose to ASX all information which a reasonable person would expect to have a material effect on the price or value of the Reference Shares as soon as they become aware of that information. This PDS has been, and each Rate Sheet will be, prepared by Macquarie Bank from publicly available information. None of the Listed Entities has been a party to the preparation or has furnished any information to Macquarie Bank for the purpose of the preparation of this PDS or any Rate Sheet. Similarly, any disclosure in this PDS concerning those Listed Entities has not been independently verified. Macquarie does not, therefore, accept any liability or responsibility for, and makes no representation or warranty, express or implied, as to the accuracy or completeness of such information. Investors should make their own enquiries. Investors may obtain historical information relating to the Listed Entities, including information about the volume of trading in the Reference Shares and the price of the Reference Shares, from numerous sources including the ASX, newspapers and stockbrokers or investment advisers. INVESTORS SHOULD NOT TAKE THE HISTORICAL PRICES OF ANY REFERENCE SHARES AS AN INDICATION OF FUTURE PERFORMANCE AND SHOULD UNDERSTAND THAT THERE CAN BE NO ASSURANCE THAT THE PRICE OF THE REFERENCE SHARES WILL PERFORM IN ACCORDANCE WITH THE INVESTMENT POSITION ADOPTED. Nothing in this PDS or a Rate Sheet may be relied upon as implying that the affairs of any Listed Entity have remained as they were at the date of this PDS or the date of the relevant Rate Sheet. No representation as to the future performance, assets, dividends or value of the Listed Entities or the Reference Shares is made. Investors should also be aware that companies in the Macquarie Bank group may issue other instruments whose value is linked to the Reference Shares. Such activities could present real or apparent conflicts of interest for Macquarie Bank with respect to its obligations under the Facility. In addition, companies in the Macquarie Bank group may buy and sell securities which may result in a change in the value of the Reference Shares. 50

55 SECTION 9 About the Issuer Macquarie Bank Limited Macquarie Bank Limited ( Macquarie ) is an authorised deposit taking institution under s9 of the Banking Act 1959 (Commonwealth). As at 30 September 2003 Macquarie had total assets of approximately A$36.8 billion and equity attributable to ordinary equity holders of Macquarie of approximately A$2.4 billion on a consolidated basis. For the half year ended 30 September 2003 Macquarie reported profit from ordinary activities after income tax attributable to ordinary equity holders of approximately A$242 million on a consolidated basis. Macquarie Bank s Australian Financial Services Licence Number is Rating Agencies Macquarie is rated by Standard & Poor s, Fitch Ratings and Moody s Investors Service. Current ratings are available from various sources including the ASX, brokers and Macquarie. The rating agencies do not independently verify information provided to them by Macquarie, and therefore, the rating agencies make no representation or warranty with respect to the accuracy of their ratings. The rating agencies have not been involved in the preparation, or authorised the issue of, this PDS. Investors should note that credit ratings assigned by the rating agencies address only credit risk, which is only one element of any investment decision and should not be construed as relating to the Macquarie Instalments the subject of this PDS. Ratings are not recommendations to buy, hold or sell the Zero Cost Collar Facility. By publishing a rating, the rating agencies are not inducing or advising investors to take any action with respect to the Zero Cost Collar Facility or any other security. Ratings and rating reports should not be construed as investment advice, personalised or other. Accordingly, each investor should conduct their own evaluation of the Zero Cost Collar Facility or consult with their investment adviser. Ratings are subject to change or withdrawal at any time, which change or withdrawal is within each rating agency s sole discretion. Disclosure Obligations Macquarie, as a company whose shares are quoted on the stock market of the ASX, is a disclosing entity under the Corporations Act and the ASX Listing Rules and has a continuous disclosure obligation. This means that, subject to certain exceptions, Macquarie must disclose to the ASX any information concerning it that a reasonable person would expect to have a material effect on the price or value of Macquarie s ordinary shares. Copies of the information disclosed to the ASX can be viewed on the public file of Macquarie at the ASX. Documents Available Macquarie will provide a copy, free of charge, of any of the following documents to any person who requests such copies in relation to the PDS, by contacting the Equity Markets Group, Macquarie Bank Limited, No. 1 Martin Place, Sydney, NSW Australia, telephone number: the latest available financial report and annual review of Macquarie; and the latest available interim results of Macquarie. Macquarie s latest available Annual Review, Financial Reports and interim results announcement are also able to be reviewed online via Macquarie s website at: macquarie.com.au/investorrelations. No circumstance has arisen or information has become available except as disclosed in this PDS or to ASX that would materially affect an investor s decision for the purpose of making an informed assessment of the capacity of Macquarie to fulfil its obligations under the Terms of Macquarie since the end of the financial half year ended 30 September

56 SECTION 10 Glossary of Terms Acceleration Interest means in relation to a Loan, all costs, expenses and losses incurred by the Bank associated with the acceleration of the Repayment Date or other early termination of the Loan, including any loss or expense incurred in respect of: a) the liquidation or redeployment of funds acquired from third parties to make or maintain the Loan Amount; b) the termination or reversal of any arrangements entered into in connection with the Loan Amount; and c) any loss of profits that the Bank may suffer by reason of the early liquidation or redeployment of funds or the termination or reversal of arrangements associated with the Loan. Acceptance means acceptance by the Bank in its entire discretion of: a) an Application Form; or b) a Transaction Request for an Option Collar, a Loan or both (as the case may be), which occurs upon notification of that acceptance to the Investor by the Bank. ACH means Australian Clearing House Pty Ltd (ABN ) or another clearing facility approved to clear derivatives transactions effected on a market operated by ASX. ACH Rules means the operating rules, procedures, directions, decisions, requirements, customs, usages and practices of ACH, as amended from time to time. Application Form means the Application Form attached to the PDS. Application means the irrevocable application addressed to Macquarie Bank for this Facility on the terms and conditions set out in the Application Form. Assessed Value Payment means in relation to an Option, 95% of the Cash Settlement Amount that would have been payable on that Option if it were exercised during the applicable Exercise Period. ASTC means ASX Settlement and Transfer Corporation Pty Limited (ABN ) or another settlement facility approved to clear securities and other financial product transactions effected on ASX. ASTC Rules means the operating rules, procedures, directions, decisions, requirements, customs, usages and practices of ASTC, as amended from time to time. ASX means Australian Stock Exchange Limited (ABN ). ASX Rules means the operating rules, procedures, directions, decisions, requirements, customs, usages and practices of ASX, as amended from time to time. ATO means the Australian Tax Office. Available Loan Balance means in relation to an Option Collar: a) the Protection Price multiplied by the Number of Options held by the Investor in that Option Collar; less b) the aggregate of all Loan Amounts previously drawn down by the Investor for that Option Collar. Australian dollars means the lawful currency of Australia. Business Day means a day on which banks and the ASX are open for business in Sydney. Cap Price Percentage means in relation to an Option Collar: a) unless paragraph b) applies, the Cap Price Percentage nominated by the Investor; or b) where the Investor has nominated either a Cap Price Percentage that is not available for the Protection Price Percentage for the proposed Option Collar or has not nominated any Cap Price Percentage - the Cap Price Percentage determined by Macquarie Bank. Cap Price means in relation to an Option Collar, the Cap Price Percentage multiplied by the Initial Share Price of the Reference Shares for that Option Collar, as adjusted in accordance with the General Conditions. Cash Settlement means in relation to an Option, settlement of the Option in accordance with clause 2.1(a) of the Equity Option Agreement. Cash Settlement Amount means in relation to an Option exercised under the Equity Option Agreement, the Protection Price Differential. 52

57 CHESS means the clearing house electronic subregister system to be operated by ASTC. CHESS Instruction Form means the authorisation by the Investor to Macquarie Equities to transfer Reference Shares for an Option Collar to a CHESS account sponsored by Macquarie Equities. Closing Price means in relation to an Option, the aggregate of the values of the Reference Shares (or fractions thereof) comprising the Underlying Parcel with the value for each Reference Share being: a) the official price or, if there is no official price, the mid-market price on the ASX at the Closing Time on the Valuation Day; or b) if the price under paragraph (a) cannot be determined, the price determined by the Bank as the good faith estimate of the price that would have prevailed as the official closing price on the ASX on the Valuation Day; or c) if the Bank determines in its discretion that neither sub-paragraph (a) or (b) or (d) shall apply then the Closing Price shall be the Volume Weighted Average Price over such number of days up to and including the Maturity Date as determined by the Bank but not more than 10 Trading Days; or d) if the Bank determines in its discretion that neither sub-paragraph (a), (b), or (c) shall apply, then the Closing Price shall be the Macquarie Average Facility Execution Price over such number of days up to and including the Maturity Date as determined by the Bank. Closing Time means in relation to a Reference Share on a Business Day, the close of trading on the ASX for that Reference Share on that Business Day. Commencement Date means in relation to: a) an Option Collar, the date specified by the Bank as the commencement of that Option Collar in the applicable Confirmation; or b) a Loan, the date specified by the Bank as the commencement of that Loan in the Confirmation. Commercial Terms means in relation to an Option Collar or any Loan linked to that Option Collar, the following: a) the Protection Price Percentage, Cap Price Percentage and Maturity Date applying to the Option Collar; or b) the Interest Rate and Repayment Date applying to the Loan. Confirmation means a document confirming an Option Collar or Loan or both entered into between the parties under this Facility. Corporations Act means the Corporations Act 2001 (Cth). Eligible Securities means the types of shares approved by the Bank from time to time as capable of being the subject of a Option Collar under this Facility. Employee Option Exercise Declaration means a declaration relating to the Employee Option Exercise Notice provided by the company secretary of the applicable Listed Entity to the Bank substantially in the form set out in Section 11. Employee Option Exercise Notice means a notice relating to the exercise of employee options using a Loan and an Option Collar under this Facility as provided by an Investor to the Bank substantially in the form set out in Section 11. Equity Option Agreement means the Equity Option Agreement governing the terms of each Option, as extracted in Section 6 of this PDS. Event of Default means in relation to an Investor, each of the following events: a) the Investor does not pay on time any amount due under an applicable Transaction Document; b) the Investor fails to duly and punctually perform or comply with any of their respective obligations (other than those covered by paragraph (a)) or otherwise breaches any of the terms or conditions of an applicable Transaction Document (other than those covered by paragraph (a)), and such default, if capable of being remedied, is not remedied within two Business Days after written notice from the Bank requiring the breach to be remedied; 53

58 SECTION 10 Glossary of Terms continued c) any representation or warranty made by the Investor, or is notified by the Investor, to have been incorrect or misleading when made; d) the Investor is subject to an Insolvency Event; e) in the case of an Investor who makes an Application in its capacity as a trustee of a trust: i) the Investor ceases to be the trustee of the trust or any step is taken to appoint another trustee of the trust, in either case without the Bank s consent; or ii) an application or order is sought or made in any court for: A) removal of the Investor as trustee of the trust; or B) property of the trust to be brought into court or administered by the court or under its control; or C) a notice is given or meeting summoned for the removal of the Investor as trustee of the trust or for the appointment of another person as trustee jointly with the Borrower. f) any government, governmental agency, department, commission, or other instrumentality seizes, confiscates, or compulsorily acquires (whether permanently or temporarily and whether with payment of compensation or not) any of the Reference Shares of an Option Collar held by that Investor; g) any litigation, administrative proceedings or other procedure for the resolution of disputes is commenced in which the title of the Investor to any of the Reference Shares of an Option Collar held by that Investor, will be or is reasonably likely to be impeached or the Investor s enjoyment, or the Bank s rights hereunder, to any of those Reference Shares will be or are reasonably likely to be restrained or otherwise hindered; h) the Bank receives any notice from a credit reporting agency or any other credit provider to the Investor which indicates that the Investor is in default under any other financial payment or performance obligation with any other party or that any of the events specified in the foregoing paragraphs of this clause have occurred; i) there occurs an event which is or may be a Material Adverse Change; and j) a Market Disruption Event occurs in relation to the Reference Shares of an Option Collar held by that Investor. Exercise Notice means in relation to an Option, a notice given under the Equity Option Agreement for the exercise of that Option. Exercise Period means in relation to an Option, the period commencing at 9.00 am on the Maturity Date and ending at 4.00 pm on the Maturity Date provided that if there is a Market Disruption Event in respect of the Reference Shares on the Maturity Date, the Exercise Period shall not expire until 4.00 pm on the first succeeding Business Day on which there is no Market Disruption Event, unless there is a Market Disruption Event on each of the five Business Days immediately following the Maturity Date, in which case the Exercise Period shall expire at 4.00 pm on the fifth Business Day. Fixed Premium means in relation to an Option Collar, the fixed premium payable by the Investor for that Option Collar in accordance with Clause 3.1 of the Equity Option Agreement as determined by Macquarie Bank. Fixed Premium Payment Date means in relation to an Option for which a Fixed Premium is payable, the first Fixed Premium Payment Date is the Commencement Date and then as set out in the Confirmation. Facility means the Zero Cost Collar Facility available under this PDS. General Conditions means the General Conditions of the Transaction Documents, as extracted in Section 5 of this PDS. GST means: a) the same as in the GST Law; b) any goods and services tax, or any tax applying in a similar way to transactions contemplated by the PDS; and c) any additional tax, penalty, tax, fine, interest or other charge under a law for such a tax GST Law means the same as GST law in the tax imposed by the A New Tax System (Goods and Services Tax) Act 1999 (Cth). 54

59 Initial Share Price means in relation to an Option Collar, the Market Price per Reference Share on the Commencement Date. Insolvency Event means in relation to a party: a) a petition is presented (and not struck out or dismissed within seven Business Days of it being presented) or an effective resolution is passed under the Corporations Act for the winding up of the party or any similar process in relation to the party; b) a receiver, receiver and manager, official manager, trustee, administrator or similar official is appointed under the relevant applicable legislation referred to in paragraph (a) above or by a court of competent jurisdiction, over all or any substantial part of the assets or undertaking of the party (unless the appointment is terminated within seven Business Days of it being made) or a liquidator is appointed to the party; c) the appointment of an administrator in respect of the party by the directors of the party immediately upon its appointment; d) otherwise, where the party is not taking steps to have the administrator removed, or that administrator is not removed within seven Business Days of its appointment; e) the party resolves to wind itself up, or otherwise dissolve itself, or gives notice of intention to do so, except to reconstruct or amalgamate while solvent, or is otherwise wound up or dissolved; f) the party commits an act of bankruptcy; g) the party states that it is insolvent or is presumed to be insolvent under any applicable law; h) as a result of the operation of the Corporations Act the party is taken to have failed to comply with a statutory demand; i) the entry by the party into a scheme of arrangement or composition with, or assignment for the benefit of, all or any class of its creditors, or a moratorium involving any of them; j) the party being or stating that it is unable to pay its debts when continued they fall due; k) an application being made by the party for an order, a resolution being passed or proposed by the party, a meeting being convened or any other action being taken by the party to cause any thing described above (in each case which is not withdrawn, revoked or set aside within seven Business Days); or l) anything analogous to or of a similar effect to anything described above occurring to any party under the Corporations Act or the law of any relevant jurisdiction. Interest means in respect of a Loan for an Interest Period, the interest pre-payable in respect of the Loan Amount for that Interest Period. Interest Period means in relation to a Loan, each of the following periods: a) the period starting on the Commencement Date for the Loan and ending on the last day before the anniversary of the Commencement Date; and b) each period starting on the day after the expiry of the previous Interest Period and ending on the earlier of the Repayment Date or the last day before the anniversary of that period, provided that where the period determined under paragraph (a) is fewer than 12 months there shall be only one Interest Period commencing on the Commencement Date and ending on the Repayment Date. Interest Prepayment Date means the date specified as such in the Transaction Notice relating to the Loan, and determined as: a) for the first Interest Period, the Commencement Date of the Loan; and b) for each subsequent Interest Period, the day that is the commencement of that Interest Period. Interest Rate means in relation to a Loan, the interest rate specified by the Bank at the time of the Transaction Request. In-the-Money means in relation to an Option, the Closing Price of the Underlying Parcel being below the Protection Price. Investor means in respect of an Option Collar and any Loan linked to that Option Collar, the party specified in the Application Form for that Option Collar. 55

60 SECTION 10 Glossary of Terms continued 56 Irrevocable Sell Instruction means irrevocable order to sell the Reference Shares on the Valuation Day, given by the Investor to Macquarie Equities under clause 4 of the Equity Option Agreement. Listed Entity means in relation to the Reference Share, the company that issued those shares. Loan means each advance of a Loan Amount under the terms of the Loan Agreement. Loan Agreement means the Loan Agreement governing the terms of each Loan, as extracted in Section 7 of this PDS. Loan Amount means in relation to a Loan, the amount requested by the Investor in the Transaction Request. Loan Conditions means the conditions precedent of a Transaction Request for a Loan as set out in clause 2.2 of the Loan Agreement. Loan Facility means the facility under which Loans are made available to an Investor under the Loan Agreement. Loan Prepayment Notice means in relation to a Loan, a notice under clause 4.2 of the Loan Agreement in relation to the Investor s intention to prepay the Loan Amount. Macquarie Average Facility Execution Price means the average execution price achieved by the Bank for purchases or sales of the relevant number of Reference Shares, as determined by the Bank. Macquarie Bank or Bank means Macquarie Bank Limited (ABN ). Market Disruption Event means in relation to both the Exercise Period and the Valuation Day for an Option and any Irrevocable Sell Instructions, the suspension, delisting or material limitation of trading in the Reference Shares on the ASX, the existence of which will be determined in good faith by the Bank. Macquarie Equities means Macquarie Equities (Australia) Limited (ABN ) or such other Trading Participant of the ASX as nominated by the Bank from time to time. Market Price means in relation to a Reference Share on a Business Day: a) the market price of the Reference Share as determined by the Bank at the Closing Time on that day; or b) if the Bank determines in its discretion that neither sub-paragraph (a) or (c) shall apply then the Market Price shall be the Volume Weighted Average Price of the Reference Shares over such number of days from the Commencement Date as determined by the Bank but not more than 10 Trading Days; or c) if the Bank determines in its discretion that neither sub-paragraph (a) or (b) shall apply, then the Market Price shall be the Macquarie Average Facility Execution Price over such number of days as determined by the Bank. Market Value means in relation to a parcel of shares or an option holding, the Market Price of each share in that parcel or each share to be issued pursuant to the exercise of each option, multiplied by the number of shares in that parcel or number of options held (as the case may be). Material Adverse Change means in relation to an Option Collar or a Loan, a change which, in the Bank s opinion, has a material adverse effect on the Investor s assets, revenue or financial condition, or its ability to perform its respective obligations under the applicable Transaction Documents. Maturity means in relation to an Option Collar the maturity of that Option Collar on the Valuation Day. Maturity Date means in respect of an Option Collar and subject to the Equity Option Agreement, the date specified as such in the Confirmation relating to that Option Collar. Minimum Loan Amount means $50,000, or any other amount determined by the Bank from time to time as the Minimum Loan Amount for the purposes of the Loan Facility available for an Investor. Nominee means the Nominee appointed in respect of any part of the Secured Property under clause 10.7 or clause 13 of the General Conditions. Number of Options means in relation to an Option Collar, the number of Options held by the Investor under that Option Collar. Number of Shares to be Delivered means in relation to an Option Collar for which the Options have been exercised under the Equity Option Agreement and for which an effective Physical Settlement Request has been given, the number of Reference Shares in the Underlying Parcel multiplied by the number of Options so exercised.

61 Obligations means the totality of all the obligations and liabilities of the Investor to Macquarie Bank (whether liquidated or not and whether contingent, prospective or currently accrued due and whether relating to the payment of money or the performance or omission of any act or thing and including all claims for damages only and all obligations not currently owing but which might become owing in the future (whether or not of a type within the contemplation of the parties at the date of this Agreement)) arising in or by reason of any transaction, matter, thing or event in or by which Macquarie Bank may become in any manner whatsoever a creditor of the Investor under this Facility. Option means an option granted by the Bank to the Investor in accordance with the terms of the Equity Option Agreement. Option Break Costs means in relation to an Option Collar, all costs, expenses and losses incurred by the Bank associated with the acceleration of the Maturity Date or other early termination of all related Options and Variable Premium liability, including any loss or expense incurred in respect of: a) the termination or reversal of any arrangements or hedge position entered into in connection with the Options and Variable Premium liability; and b) any loss of profits that the Bank may suffer by reason of the early liquidation or redeployment of funds or the termination or reversal of arrangements associated with the Options and Variable Premium liability. Option Collar means the strategy under the Facility whereby the Investor buys a number of Options to lock in a range of known values at Maturity for the Reference Shares. Physical Settlement means in relation to an Option, settlement of the Option in accordance with clause 4.1 of the Equity Option Agreement. Physical Settlement Request means a Physical Settlement Request made by an Investor in accordance with clause 4.2 of the Equity Option Agreement. Prescribed Person has the meaning given to it by the ASX Rules. Product Disclosure Statement or PDS means this Product Disclosure Statement under which Applications are invited. Protection Price means in relation to an Option Collar, the Protection Price Percentage multiplied by the Initial Share Price of the Reference Shares for that Option Collar, as adjusted in accordance with the General Conditions. Protection Price Differential means in relation to an Option, an amount equal to the greater of: a) the Protection Price minus the Closing Price; b) zero. Protection Price Percentage means in relation to an Option Collar, the Protection Price Percentage nominated by the Investor. Rate Sheet means a rate sheet issued by the Bank in respect of this Facility. Reference Shares means in relation to an Option Collar, the shares in the Listed Entity which are the subject of that Option Collar and includes any additional or other shares that form part of the Underlying Parcel pursuant to clause 13 of the General Conditions. Repayment Date means in relation to a Loan, the date specified as the Repayment Date of that Loan by the Bank in the Confirmation. Where the Repayment Date is specified as being the Maturity Date of the Option Collar, and the Valuation Day is delayed to a Business Day later than the Maturity Date, the Repayment Date is the Valuation Day. Rights means all of the Investor s right, title and interest in and to all money, dividends, interest, distributions, bonus shares, rights, issues, options, warrants, notes, convertible instruments, securities and other instruments of any kind whatsoever, and all allotments, accretions, offers, benefits, privileges and advantages whatsoever, now or hereafter made, granted, issued or otherwise distributed in respect of, in substitution for, in addition to, or in exchange for, the Reference Shares and all rights of the Investor consequent on any conversion, redemption, cancellation, reclassification, forfeiture, consolidation, subdivision, reduction of capital, liquidation or scheme of arrangement or takeover in connection with the Reference Shares. 57

62 SECTION 10 Glossary of Terms continued Rules means the ASX Rules, the ACH Rules and the ASTC Rules (as applicable). Section means a numbered section of this PDS. Secured Money means in relation to an Option Collar and any Loan that is linked to that Option Collar, all money, obligations and liabilities of any nature whatsoever that may now be, or might at any time in the future become or remain, due, owing or payable, whether actually or contingently, by the Investor to the Bank on any account or for any reason whatsoever under the Option Collar and the Loan. Secured Property means such property to be agreed by the parties and, in relation to an Option Collar and any Loan linked to that Option Collar that is subsequently transacted, the Reference Shares (as adjusted from time to time) specified in the applicable Transaction Request, the Rights and each Option in respect of that Option Collar. Security Interest includes any mortgage, charge, bill of sale, pledge, deposit, lien, encumbrance, hypothecation, arrangement for the retention of title and any other right, interest, power or arrangement of any nature whatsoever having the purpose or effect of providing security for, or otherwise protecting against default in respect of, obligations of any person. Settlement Date means: a) in relation to an Option exercised under the Equity Option Agreement: i) unless sub-paragraph (ii) applies - the Valuation Day plus the number of Business Days in the Standard Settlement Time; ii) where the Investor has given an effective Physical Settlement Request - the first day on which settlement of a sale of the Reference Shares executed on the Maturity Date customarily would take place through CHESS. If delivery on this date is prevented by an event beyond the control of the parties, the Settlement Date will be determined at the discretion of Macquarie Bank; Settlement Price means in relation to an Option Collar for which the Options have been exercised under the Equity Option Agreement and for which a Physical Settlement Request has been given, an amount equal to the Protection Price multiplied by the number of Options exercised. Sponsor means Macquarie Equities or any other person as may be nominated by the Bank from time to time. Standard Settlement Time means three Business Days, or such lesser time in which transactions in Australia in listed securities are customarily required to be settled. Takeover Offer means an offer to acquire Shares made under the Corporations Act. Tax Act means the Income Tax Assessment Act 1936 and the Income Tax Assessment Act Taxes means taxes (including GST), levies, imposts, deductions, charges, withholding imposed by any authority together with any related interest, penalties, fines and expenses in connection with them, except if imposed on the overall net income of the Bank. Term means in relation to: a) an Option Collar, the period starting on the Commencement Date and ending on the Maturity Date; or b) a Loan, the period starting on the Commencement Date and ending on the Repayment Date. Trading Day means in relation to an Option Collar a Business Day in which there is no Market Disruption Event in the trading of the Reference Shares on the ASX. b) in relation to a payment of the Assessed Value Payment - the Valuation Day plus the number of Business Days in the Standard Settlement Time. 58

63 Transaction Documents means: a) the General Conditions; b) the Equity Option Agreement; and c) the Loan Agreement. Transaction Request means an oral request by an Investor to commence an Option Collar or a Loan or both in accordance with the Transaction Documents. Transaction Request Date means in relation to a Transaction Request, the date the Investor makes that request to Macquarie Bank. Underlying Parcel means in relation to an Option and subject to the Transaction Documents, one Reference Share per Option as adjusted in accordance with the General Conditions. Valuation Day means in relation to an Option or the Irrevocable Sell Instructions, the Maturity Date of the applicable Option unless there is a Market Disruption Event in respect of the Reference Share on that day, in which case: a) subject to paragraph (b) the Valuation Day shall be the next succeeding Business Day on which there is no Market Disruption Event; or b) where there is a Market Disruption Event on each of the five Business Days immediately following the Maturity Date, the fifth Business Day shall be deemed to be the Valuation Day. Variable Premium means for an Option, an amount equal to the greater of: a) the Closing Price minus the Cap Price; b) zero. Variable Premium Payment Date means in respect of an Option, the Valuation Day plus the number of Business Days in the Standard Settlement Time. Volume Weighted Average Price means for a number of Trading Days in the Reference Shares the volume weighted average price of all trades during normal trading hours on the ASX for those Trading Days, excluding: a) New Zealand Stock Exchange purchases or sales; b) option exercises under the ASX Rules; c) all special crossings except where Macquarie Equities participates in any of those special crossings as per ASX Rules; d) Trading Days in which there is a Market Disruption Event; and e) trades which in the opinion of the Bank, are not executed in the normal course of trading on the ASX. Zero Cost Collar means the Facility available under this PDS. 59

64 SECTION 11 Application and other Forms In this Section we provide the Application Form and pro-forma examples of other forms and notices for the Facility. Please read the instructions carefully. Macquarie Bank reserves the right to accept or scale back an Application in its discretion Application Form Please ensure you read this document carefully before signing the Application Form. You should complete your Application Form in accordance with the instructions set out on page 58 of this PDS and the table below. Please ensure that you sign the Application Form in the spaces provided. If you require any help whatsoever with the application process, or if you have any further queries or comments on the service and products we provide, please contact an Equity Markets Specialist on (02) or You can lodge your Application Form through your stockbroker, financial adviser or directly with Macquarie. Completed Application Forms, payment if applicable and other relevant documentation for the Zero Cost Collar Facility should be sent to: Equity Markets Support Zero Cost Collar Facility Macquarie Bank Limited GPO Box 3423 Sydney NSW 2001 Application Forms may be faxed to Macquarie on (02) and Macquarie will act on your instructions received by fax. Macquarie does however require that you send in your original Application Form. If you are investing as your application For example, like this and your account must be in the name of... description (if required) could be... An individual The full given name of the individual Mrs Yvette Catherine Brown None required Joint applicants The full given names of the individuals Mrs Yvette Catherine Brown + Mr Jack Michael Brown None required A company The company Jack Brown Pty Ltd None required A trust The trustees, rather that the name of the trust 1 Mrs Yvette Catherine Brown + Mr Jack Michael Brown Brown Family Trust A partnership The partners Mr Jack Michael Brown + Mr James David Smith Mr Jack Michael Brown + Mr James David Smith 1 Applications in the name of a trust, rather than the trustee, will not be accepted. 60

65 11.2 Instructions to make a Transaction Request To request an Option Collar or Loan or both after an Application has been Accepted, you are required to make a Transaction Request nominating: the Commercial Terms of the Option Collar; the Loan Amount (if applicable); the Interest Rate for the Loan (if applicable); and the Term of the Loan (if applicable). To make a Transaction Request please contact Macquarie Bank on (02) After you have made a Transaction Request you will be required to send to Macquarie Equities a CHESS Instruction Form to transfer the Reference Shares to a CHESS account sponsored by Macquarie Equities. A pro-forma CHESS Instruction Form is provided in this Section. The Transaction Request needs to be made before noon on a Business Day to be processed on that day, subject to Acceptance by the Bank and any other outstanding matters being addressed. Upon Acceptance of a Transaction Request and execution of the Option Collar or Loan or both (as the case may be), you will receive a Confirmation from which you will be able to identify the Commercial Terms of the Option Collar and, if applicable, the Loan Amount, the Interest Rate, the various Interest payments required and the Repayment Date Employee Option Exercise If Investors wish to use the Facility to fund the exercise of employee options, the Investors must ensure that the conditions set out in Section 2.2 (Details of the Facility) are satisfied and must provide to Macquarie Bank the following forms: 11.4 Option Exercise and Physical Settlement Request The Options in an Option Collar may be exercised orally or in writing. Either way, it is important to exercise the Options before the expiry of the Exercise Period as automatic exercise is not available for any Option. If an Option which was Inthe-Money at the expiry of the Exercise Period lapsed unexercised, the Investor will be entitled to receive an Assessed Value Payment of 95% of what would have been the Cash Settlement Amount. To exercise all the Options in an Option Collar that are In-the-Money at expiry of the Exercise Period and to request Physical Settlement of those Options, the Investor must make an effective Physical Settlement Request. As the Physical Settlement Request only becomes effective two Business Days after receipt by the Bank and Macquarie Equities, you must give it to those parties at least two Business Days before the Maturity Date. A pro-forma copy of a Physical Settlement Request is also provided in this Section. Investors should be aware that the Physical Settlement Request also constitutes the Irrevocable Sell Instruction in the event that the Options do not finish In-the-Money at the expiry of the Exercise Period and the Options lapse unexercised Option Exercise and Cash Settlement Request To exercise all the Options in an Option Collar without requesting Physical Settlement (i.e. to cash settle the Options), Investors must give either verbally or in writing an Exercise Notice. A pro-forma copy of a Cash Settlement Request which would constitute such an Exercise Notice is also provided in this section. An Employee Option Exercise Notice; and An Employee Option Exercise Declaration (signed by the company secretary of the applicable Listed Entity). Pro-forma copies of these forms are provided in this Section. Where the company requires their own pro-forma option exercise notices an investor will be required to provide these notices to Macquarie. 61

66 SECTION 11 Instructions for completing the Application Form Please complete all the relevant sections of the Application Form in accordance with the following instructions using BLOCK LETTERS. These instructions are cross referenced to each section of the Application Form. A Individual and Joint Applications Write the full name(s) that you wish to appear on your correspondence, Confirmations and Transaction Notices. Write the Tax File Number (TFN) of each Investor or the exemption category. Alternatively, each Investor can quote their Australian Business Number, where applicable. B IMPORTANT NOTICE: Collection of TFNs or ABNs is authorised by the taxation laws and is provided to Macquarie Bank Limited and Macquarie Equities (Australia) Limited. Quotation of TFNs or ABNs is not compulsory, however failure to provide a TFN or ABN may result in withholding tax being deducted from any dividends and any interest paid by Macquarie. Company Application If applying as a company officer, write the company name and the Australian Company Number (ACN). If applying as a company officer, only write the company s TFN, not your personal TFN. C Trust Account Description If you are applying as a trust, refer to the table on page 60 of this PDS. D Address Details You must specify a residential address and a mailing address if different from the residential address. The mailing address details will be used for all correspondence (you should particularly take note of this if you are opening a joint account). You must specify a previous residential address if you have not lived at your current address for more than three years. E Method of Payment Indicate your method of payment. If you are paying by BPAY, the reference number you should use is the Application Number (where known) without the letters. All cheques should be made payable to Macquarie Bank Limited Equity Structured Products and must be drawn down on an Australian bank in Australian currency. Payment will only be accepted from the Applicant and NOT from any other third party. F Direct Debit & Credit Authority Complete this section to authorise us to debit and/or credit your bank account for your Macquarie ZCC Application payments and receipts. You will also need to provide details of the bank account as indicated in Section G. G Bank Account Details Enter your bank account details here if you wish to have payments directly debited from or directly credited to your bank account. The bank account must be in the same name as the Applicant and NOT a third party. This instruction is only applicable for accounts held with banks, building societies and credit unions within Australia. H Income, Expenses and Asset Details These details ONLY need to be completed where there will be future outstanding payments due to Macquarie, i.e. all amounts are not being pre-paid upfront. Enter details of your annual income, expenses and net assets for the last financial year here. The purpose of this is for satisfying Macquarie Bank s credit criteria for making of loans. If you are an individual Investor, you should read the consent you give to Macquarie Bank in Section K1 to obtain, report and exchange your credit information. I Physical Settlement Waiver If you wish to waive your entitlement to request Physical Settlement in respect of each Option Collar you enter into under the Facility (unless you direct otherwise in a Transaction Request for a particular Option Collar), make the appropriate waiver here. J Trustee Applicants Only Solicitors Declaration Trustee Applicants must provide a signed Solicitor s declaration in this Section. If this is not practicable, Trustee Applicants may attach to the Application Form a letter from their solicitor to the same effect as this declaration. K Acknowledgements and Power of Attorney You should read carefully the Acknowledgments and Power of Attorney and ensure that you agree to them. L Signatory Section Individual Applicants must sign personally. All joint Investors must sign (and will be bound jointly and severally). Corporate Investors should execute through the signing by either two directors of the company, a director and company secretary of the company, or for a proprietary company that has a sole director who is also the sole company secretary by that director. Alternatively, a company may execute under the company s common seal provided the fixing of the seal is witnessed by two company officers (or in the case of a sole director - by that director). Execution by trusts, partnerships and deceased estates must be through the signing by the individual trustees, executors or principals (as the case may be). 62

67 Issued 1 March Zero Cost Collar Facility Application Form Complete this form using BLACK INK and print well within the boxes in CAPITAL LETTERS. Mark answer boxes with a cross (X). Start at the left of each answer space and leave a one box gap between words. Send to: Equity Markets Support Zero Cost Collar Facility, Macquarie Bank Limited, GPO Box 3423, Sydney NSW Fax: (02) A REGISTRATION DETAILS INDIVIDUAL AND JOINT APPLICATIONS If company application,go to Section B. Please specify the full personal details of Applicant A. Please specify the full personal details of Applicant B Mr Mrs Miss Ms Other Mr Mrs Miss Ms Other Given Name(s) Given Name(s) Surname Surname Occupation Occupation Tax File Number OR Reason for exemption Tax File Number OR Reason for exemption Are you an Australian resident? Yes No Are you an Australian resident? Yes No If NO, please specify If NO, please specify Are you a foreign resident for tax purposes? Yes No Are you a foreign resident for tax purposes? Yes No If YES, please specify country of residency for tax purpose? If YES, please specify country of residency for tax purpose? Home phone number Mobile phone number Home phone number Mobile phone number Work phone number Fax number Work phone number Fax number address address Date of Birth Gender Date of Birth Gender D D M M Y Y Y Y M F D D M M Y Y Y Y M F 63

68 B COMPANY APPLICATION Name of company, incorporated association, or incorporated body Previous Residential Address (if less than three years at current residential address) Street No. and Name ABN / ACN / ARBN if applicable Suburb Country State Postcode Tax File Number OR Reason for exemption Name of contact person and position in Company Mailing Address (if different from above, all correspondance will be sent to this address) Street No. and Name or PO Box Suburb State Postcode Is the Company incorporated in Australia or carrying on any business in Australia If NO please specify country where incorporated Work phone number address Fax number Yes No E METHOD OF PAYMENT Cheque payable to "Macquarie Bank Limited Equity Structured Products" PAY Direct Debit Receipt No: Biller Code: Your BPAY reference number is your Application Number without the letters Cross one box only: Direct Debit and Credit Direct Credit Only C D TRUST ACCOUNT DESCRIPTION Specify account description if required (Refer to page 60 of this PDS for details) < TFN/ABN (if applicable) Please also complete the Solicitor's Declaration in section J. ADDRESS DETAILS Residential Address (you must specify a residential address) Street No. and Name Suburb State Postcode a / c > F DIRECT DEBIT AND CREDIT AUTHORITY I/We understand and acknowledge that in providing the direct debit and credit instructions to Macquarie Bank that: Where direct debit is applicable, I/We authorise Macquarie Bank to make a debit from my/our nominated account for transactions in relation to structured products issued by Macquarie Bank. I/We understand that it is my/our responsibility to ensure that there are sufficient cleared funds in my/our nominated account to honour any direct debit instruction. I/We understand that the instruction will be automatically cancelled if the payment is dishonoured because of insufficient funds. Macquarie Bank will charge the cost of dishonoured direct debits against my/our account. I/We authorise and direct the crediting to my/our nominated account all amounts payable to me/us under the Zero Cost Collar. I/We acknowledge and agree that until the instructions are modified or deferred by me/us in accordance with these terms, Macquarie Bank may act on the instructions to discharge its obligations under the Terms. My/Our nominated financial institution may in its absolute discretion decide the order of priority of payment by it of any moneys pursuant to the request made pursuant to the direct debit instruction or any other authority or mandate. I/We can modify or defer our direct debit and credit instructions at any time by giving Macquarie Bank 14 days notice in writing. If at any time I/we feel that a direct debit against or credit to my/our nominated account is inappropriate or wrong it is my/our responsibility to notify Macquarie Bank as soon as possible. Direct debiting and crediting through the Bulk Electronic Clearing System ( BECS ) is not available on all accounts. I/We can check my/our account details against a regular statement or check with the financial institution as to whether I/We can request a direct debit from my/our account. Macquarie Bank will give me/us 14 days notice in writing if they intend to cancel my instructions. Macquarie Bank may need to pass on details of my/our direct debit instructions to their sponsor bank in BECS to assist with the checking of any incorrect or wrongful debits to my/our nominated account. 64

69 G BANK ACCOUNT DETAILS You must complete your Bank Account details below. For the purposes of the Instructions given in the Direct Debit and Credit Authority section, you should specify your bank account details here. The bank account should be in the same name as the Investor and NOT a third party. Investors should read the instructions associated with this Application Form. Name of bank or financial institution I PHYSICAL SETTLEMENT WAIVER I/We waive clause 4 of the Equity Option Agreement which would otherwise entitle me/us to make a Physical Settlement Request in respect of each Option Collar I/we enter into under this Facility unless I/we make a contrary direction for a specific Option Collar in the applicable Transaction Request (tick one box, if no box is selected you will be deemed to have not waived your rights). waive Physical Settlement do not waive my/our entitlement to request Physical Settlement* *This election does not constitute a Physical Settlement Request; refer to Section 11.4 of the PDS. Account name J TRUSTEE APPLICANTS ONLY SOLICITOR'S DECLARATION Branch address Branch number (BSB) Office use only H Account number INCOME, EXPENSES AND ASSET DETAILS These details ONLY need to be completed where there will be future outstanding payments due to Macquarie. The purpose of this is for satisfying Macquarie Bank s credit criteria for making of loans. If you are an individual Investor, you should read the consent you give to Macquarie Bank in Section K1 to obtain, report and exchange your credit information. I am a solicitor holding a current unrestricted practising certificate. I have examined the documents constituting the Trust ("the Trust Documents") purporting to establish, and relating to, the Trust. 1. The Trust appears to have been validly constituted and is subsisting at the date of this opinion. 2. The Trust Documents comprise all of the documents constituting the Trust and there has been no other amending of the document. 3. The Trustee appears to have been properly appointed as trustee and is the sole trustee of the Trust. 4. The Trustee is empowered and authorised by the terms of the Trust Documents examined by me to enter into and bind the Trust to the transactions contemplated by the Transaction Documents. 5. The terms of the Trust Documents examined by me do not restrict the right of the Trustee to be fully indemnified out of the assets of the Trust to satisfy any liability to Macquarie Bank Limited properly incurred by the Trustee as trustee of the Trust arising out of the transactions contemplated by the Transaction Documents. 6. There is no conflict of interest or duty of the Trustee, and if the Trustee is a company, of any of its directors, which would preclude the Trustee entering into the transactions contemplated by the Transaction Documents. Solicitor Investor's net assets: Solicitor firm Investor's annual gross income: LESS: Annual expected tax payable (after taking into account any potential annual deductions from this transaction) Address Street No. and Name Annual estimated general living expenses Suburb State Postcode Country Annual mortgage payments (monthly P&I payment x 12) Annual lease expenses Other annual debt payments or expenses Solicitor signature Annual payments for this transaction (if available) *A separate solicitor's letter to the same effect may be attached. 65

70 K ACKNOWLEDGEMENTS AND POWER OF ATTORNEY K.1 Application for Credit The Investor understands that Section 18E(8) (c) of the Privacy Act allows Macquarie Bank to give a credit reporting agency certain personal information about the Investor which the Investor authorises Macquarie Bank to do so. The information which may be given to a credit reporting agency is covered by Section 18E (1) of the Act and includes: The fact that the Investor has applied for credit and the amount. The fact that Macquarie Bank is a credit provider to the Investor. Payments which become overdue more than 60 days. Advice that payments are no longer overdue. Cheques drawn by me/us for at least $100 which Macquarie Bank has dishonoured more than once. In specified circumstances, that in the opinion of Macquarie Bank, the Investor has committed a serious credit infringement. That the credit provided to the Investor by Macquarie Bank has been discharged. To enable Macquarie Bank to assess the Application for personal or commercial credit, the Investor authorises the Bank: To obtain from a credit reporting agency a credit report containing personal information about the Investor in relation to personal credit provided by Macquarie Bank. To obtain from a credit reporting agency a credit report containing personal credit information about the Investor in relation to commercial credit provided by Macquarie Bank. This is in accordance with Section 18K (1) (b) of the Privacy Act. To obtain a report containing information about the Investor s commercial activities or commercial credit worthiness from businesses which provide information about the commercial credit worthiness of a person in relation to personal credit provided by Macquarie Bank. This is in accordance with Section 18L(4) of the Privacy Act. To obtain a report from a credit reporting agency and other information in relation to the Investor s commercial credit activities. In accordance with Section 18N(1) (b) of the Privacy Act, the Investor authorises Macquarie Bank to give to and obtain from credit providers named in this credit application and credit providers that may be named in a credit report issued by a credit reporting agency information about the Investor s credit arrangements. The Investor understands this information may include any information about credit worthiness, credit standing, credit history or credit capacity that credit providers are allowed to give or receive from each other under the Privacy Act I/We understand the information may be used for the following purposes: To assess an application by the Investor for credit. To assist the Investor avoid defaulting on credit obligations. To notify other credit providers of a default. To assess the Investor s credit worthiness. K.2 General Investor Acknowledgement I/We acknowledge and agree that in making our Application: (a) If I/We enter into an Option or a Loan, I/we agree that that transaction will be governed by the Transaction Documents. (b) I/We have read and understood and agree to be bound by the Privacy Collection Statement contained at the back of this Information Memorandum. (c) I/We acknowledge that the Bank may accept, reject, or amend the Application of any Investor in its complete discretion. (d) I/We acknowledge that I/we are contractually obliged to make all of the annual Interest and Fixed Premium payments as per the terms of this Facility. e) I/We acknowledge that Macquarie Bank will not hold any application monies on trust prior to the issue of the Zero Cost Collar Facility to me/us. (f) I/We acknowledge that Macquarie Bank will not pay any interest on application monies received. By signing/sealing the Application Form I/We declare that: if signed by an attorney, the power of attorney authorises the signing of this Application Form and no notice of revocation has been received. I/we am/are not a minor(s) nor do I/we suffer from any other legal disability preventing me/us from making this Application; and if signed in a capacity other than a personal capacity, in addition to being bound in such a capacity, I/we agree to also be bound in a personal capacity K.3 POWER OF ATTORNEY 1. For valuable consideration I/we, by signing/sealing the Application Form, irrevocably appoint each director and secretary of Macquarie Bank or any employee of Macquarie Bank whose title includes the words director or manager severally as my/our attorney. 2. An attorney may, in my name: complete any blanks in the Application Form; do anything which I am/we are obliged to do under or in relation to any of the Transaction Documents or any other agreement or arrangement between me/us and Macquarie Bank relating to the Facility; register the mortgage under the Corporations Act and if required for this or any other purpose, execute any documents on behalf of the Investor substantially in the form of Transaction Documents; and 66 do anything incidental or necessary in relation to the above (including, but not limited to, completing any blanks in the attached Application Form(s) and appointing any person as sub-attorney to do any of the above). 3. I/We declare that anything done by the attorney pursuant to the powers given to the attorney will be binding on me/us as if those acts were done by me/us. I/We agree to idemnify the attorney against any loss or costs it suffers or incurs in exercising the powers specified above. The attorney may exercise the powers granted above even if it involves a conflict of duty or a conflict of interest. L SIGNATORY SECTION I/We declare that all of the credit to be provided to me/us by Macquarie Bank Limited in the Facility is to be applied wholly or predominantly for business or investment purposes (or for both purposes). IMPORTANT NOTE: YOU SHOULD NOT SIGN THIS APPLICATION FORM UNLESS ANY LOAN IS WHOLLY OR PREDOMINANTLY FOR BUSINESS OR INVESTMENT PURPOSES (OR FOR BOTH PURPOSES). BY SIGNING THIS APPLICATION FORM, YOU MAY LOSE YOUR PROTECTION UNDER THE CONSUMER CREDIT CODE. Authorisation of Applicant A or Company Officer Authorisation of Applicant B or Company Officer OFFICE USE ONLY Investor Number ADVISER USE ONLY Adviser Name Company Loan Commission (max 0.5% ex GST) Collar Commission (max 0.10% ex GST) Macquarie staff member Yes No % pa % pa Application Number Adviser Stamp

71 This form should be completed if you are lodging stock into your Zero Cost Collar Facility. Refer to Section 11.2 of this PDS. Macquarie Equities (Australia) Limited Zero Cost Collar Facilty CHESS Instruction Form Complete this form using BLACK INK and print well within the boxes in CAPITAL LETTERS. Mark answer boxes with a cross (X). Start at the left of each answer space and leave a one box gap between words. SEND TO: Equity Markets Support Zero Cost Collar Facility Macquarie Bank Limited GPO Box 3423 Sydney NSW 2001 Fax: (02) This form should be completed if you are lodging stock into your Zero Cost Collar Facility. You may lodge shares which are Issuer Sponsored or Broker Sponsored (either by Macquarie Equities Limited or another broker). This form should be completed by the Investor at the time of making their Transaction Request. Exact name of registered Holder of the securities Please note that the name of the registered holder must be the same name as the Investor/Borrower in the Zero Cost Collar Facility. If the registered owner of the securities to be transfered into the Facility is different to the name of the Investor/Borrower in the Facility, a tri-partite agreement between Macquarie Bank, the Securities Owner and the Investor/ Borrower will need to be executed. I/we* authorise my Sponsoring Broker (or relevant registrar of an issuer-sponsored sub-register) to deliver the quantity of Reference Shares in the companies as indicated below, to Macquarie Equities (Australia) Limited, PID 1572, in accordance with the terms of sponsorship. CHESS Sponsored Securities CHESS details for Macquarie Equities to take delivery of your existing shares if you are CHESS Sponsored. ASX Code Quantity Participant Name PID HIN A B C X Y Z B R O K E R X Issuer Sponsored Securities ASX Code Quantity SRN A B C I I I I I I X X X X X Authorisation of Security Owner or Company Officer Authorisation of Security Owner or Company Officer *Delete whichever is not applicable 67

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73 ARE YOU EXERCISING ANY OPTIONS USING THIS FACILITY? YES NO If YES please complete all sections below. Please also complete the CHESS Instruction Form. Refer to Section 11.3 of this PDS. NOTE: Please also attach any relevant Option Exercise Notices or other documents relating to your option holding. Macquarie Bank Limited (ABN ) Zero Cost Collar Facility Employee Option Exercise Notice Complete this form using BLACK INK and print well within the boxes in CAPITAL LETTERS. Mark answer boxes with a cross (X). Start at the left of each answer space and leave a one box gap between words. Exact name of the Holder of the Options: This notice relates to the Product Disclosure Statement for the Zero Cost Collar Facility, issued by Macquarie Bank Limited dated 1 March 2004 ("the PDS"). Terms defined in the PDS have the same meaning in this notice. Please note that the name of the registered holder must be the same name as the Investor/Borrower in the Zero Cost Collar Facility. If the owner of the Options to be transferred into the Facility is different to the name of the Investor/Borrower in the Facility, a tri-partite agreement between Macquarie Bank, the Secutities Owner and the Investor/Borrower will need to be executed. OPTION DETAILS I hereby exercise the Options held by me, relating to the following company below. I/we* authorise my Sponsoring Broker (or the relevant registrar of an issuer-sponsored sub-register) to deliver the quantity of Reference Shares in the Listed Entity as indicated in the Employee Option Exercise Notice to Macquarie Equities (Australia) Limited, PID The above shares should be transferred on the condition that they are accessible only by Macquarie Bank Limited. I confirm that I am presently entitled to exercise the Options referred to above, and that upon exercise of those Options I will be entitled to hold the shares free from all encumbrance and rights of others and I will be entitled to sell those shares if required. I hereby indemnify Macquarie Bank Limited for any loss which it might incur with respect to the option exercise, including without limitation, any loss which it might incur as a consequence of any failure to deliver shares in a timely manner for settlement. I/we* wish to use a Loan Amount under the Facility, to exercise employee Options that I/we* am/are* entitled to exercise in accordance with this Notice. I attach copies of all available option certificates, option notices, holding statements and other related forms and authorise Macquarie Bank Limited to use this information to process the exercise of my options and subsequent share transfer to Macquarie Equities (Australia) Ltd. Stock name: ("the Company ) Option Reference Number of Options to be Exercised Exercise Price per Option (dollars and cents) Total Payable on Exercise Expiry Date Please ensure that you have contacted the company to verify the procedures for exercise. Macquarie Bank can assist you with this process. You must complete the following details of who Macquarie Bank should contact to arrange the payment of the Option exercise proceeds and delivery of the shares. Contact name: Company/Broker name: Mobile phone number Home phone number Work phone number Fax number address Authorisation of Security Owner or Company Officer Authorisation of Security Owner or Company Officer 69

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75 To be completed by Listed Entity and provided by Investor at time of Transaction Request. Refer to Section 11.3 of this PDS. Macquarie Bank Limited Zero Cost Collar Facility Employee Option Exercise Declaration SEND TO: Equity Markets Support Zero Cost Collar Facility Macquarie Bank Limited GPO Box 3423 Sydney NSW 2001 Fax: (02) Dear Sir/Madam This notice relates to the Product Disclosure Statement for the Zero Cost Collar Facility issued by Macquarie Bank Limited dated 1 March 2004 ("the PDS"). Terms defined in the PDS have the same meaning in this notice. The Company acknowledges to Macquarie Bank Limited that: (i) [NAME OF EMPLOYEE] is the registered holder of the Options referred to in the Employee Option Exercise Notice and upon exercise of those Options will be entitled to [NUMBER] fully paid ordinary shares in the Company which will be, to the best of the Company's knowledge, free from all encumbrances and rights of the Company and others; and (ii) upon receipt of this notice signed by the employee and a cheque or electronic transfer from Macquarie Bank Limited for the total exercise payment, the Options will be duly exercised, the Reference Shares will be fully paid, issued in the name of the employee and delivered to Macquarie Equities (Australia) Limited, PID1572 as ordinary shares. Authorisation of Security Owner or Company Officer Contact Telephone Number address If you have any questions please call Macquarie Bank Limited Equity Markets Support on (02) or ems@macquarie.com 71

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77 To be completed by Investor at least 5 Business Days before Maturity Date of Option. This Form should only be completed if you want to Physically Settle your Faciltiy at Maturity. Refer to Section 11.4 of this PDS. Macquarie Bank Limited Zero Cost Collar Facility Physical Settlement Request SEND TO: Equity Markets Support Zero Cost Collar Facility Macquarie Bank Limited GPO Box 3423 Sydney NSW 2001 Fax: (02) Dear Sir/Madam This notice relates to the Product Disclosure Statement for the Zero Cost Collar Facility issued by Macquarie Bank Limited dated 1 March 2004 ("the PDS"). Terms defined in the PDS have the same meaning in this notice. This is to notify that, I/we*, being the Holder of the Option Collar specified below, hereby: (a) where the Options are In-the-Money on the Valuation Day give a notice under clause 5 of the Equity Option Agreement during the Exercise Period to exercise each Option to which that request relates and to physically settle those Options; and (b) where the Options are not In-the-Money on the Valuation Day give an Irrevocable Sell Instruction to effect the sale of all the Reference Shares. I/We* acknowledge that this notice will only become effective 2 business days after receipt by Macquarie Bank and Macquarie Equities. Name of Holder Facility Reference Number Contact Telephone Number Authorisation of Security Owner or Company Officer Authorisation of Security Owner or Company Officer *Delete whichever is not applicable. 73

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79 To be completed by the Investor and given to Macquarie Bank before the Maturity date of the Option Collar. Refer to Section 11.5 of this PDS. Macquarie Bank Limited Zero Cost Collar Facility Cash Settlement Request SEND TO: Equity Markets Support Zero Cost Collar Facility Macquarie Bank Limited GPO Box 3423 Sydney NSW 2001 Fax: (02) Dear Sir/Madam This notice relates to the Product Disclosure Statement issued by Macquarie Bank Limited dated 1 March 2004 ("the PDS"). Terms defined in the PDS have the same meaning in this notice. This is to notify that, I/we*, being the Holder of the Option Collar specified below, hereby give a notice under clause 5 of the Equity Option Agreement during the Exercise Period to exercise the Options in the Option Collar held by me/us*, and to Cash Settle those Options. Name of Holder Facility Reference Number Contact Telephone Number Authorisation of Security Owner or Company Officer Authorisation of Security Owner or Company Officer *Delete whichever is not applicable 75

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81 BELIKE FINANCIAL SERVICES GUIDE BELIKE A member of the Macquarie Group of Companies Belike Nominees Pty Ltd ABN AFS Licence March 2004 The matters covered by the FSG include: who we are and how we can be contacted; what services and types of products we are authorised to provide to you; how we (and any other relevant parties) are remunerated in relation to the services; details of any potential conflicts of interest; and details of our internal and external dispute resolution procedures and how you can access them. This Financial Services Guide ( FSG ) is an important document which we are required to give you as an Australian Financial Services Licensee. This FSG is intended to inform you of certain basic matters relating to our relationship, prior to providing you with a financial service. It is intended that this FSG should assist you in determining whether to use any of our services. If you choose to use any of our products and services you may also receive other documents relating to the services or products which you should read carefully. Product Disclosure Statement ( PDS ) This will be provided by a licensee when a recommendation to acquire a particular financial product (other than securities), or offer to issue, or arrange the issue of, a financial product, is made. A PDS contains significant information necessary for you to make an informed decision about that product. This will not be provided by Belike, but will generally be provided by other Macquarie Group entities. Information about Belike Nominees Pty Ltd Any financial services offered to you will be provided by representatives of Belike Nominees Pty Ltd ( Belike ). Belike is part of the Macquarie Group of Companies, and as such is associated with other Macquarie entities. Belike provides financial services to you in connection with financial products issued by other Macquarie Group entities. You can contact us by: calling us on (02) ; ing us using the contact directory on our website visiting our website at or writing to us at: PO Box 4294 SYDNEY NSW 1164 Fax: (02) Our financial services and financial products Belike Nominees Pty Ltd is authorised to offer the following financial services and financial products: dealing in: basic deposit products; non-basic deposit products; derivatives; foreign exchange contracts; government debentures, stocks or bonds; managed investment schemes; securities; and managed investment warrants; and holding a financial product or interests in a financial product for you directly or indirectly. Providing instructions to Belike Belike acts on instructions of other Macquarie Group entities. You will need to contact the relevant Macquarie Group entity you are dealing with to provide instructions in relation to your financial product or service. Further details are provided in the relevant PDS.

82 Payments to Belike for the services provided If you invest in a product in relation to which we provide our services, Belike will receive remuneration based on the value of your holdings. The remuneration we receive for the services we offer are set between 0 and 0.02% of the value of the assets held. Remuneration or other benefits received by Belike staff Our staff and directors receive salaries, bonuses and other benefits from us. Other companies in the Macquarie group will receive income from issue or provision of products to you. You should review the applicable PDS for more details. Personal information At Belike, the privacy of your personal information is important to us. Any personal information collected will be handled in accordance with our Privacy Policy, which details how we comply with the requirements of the Privacy Act in the handling of your personal information. A copy of that policy can be obtained by visiting the Macquarie website: Complaints Handling Belike is committed to offering a high standard of client service, and to maintaining our reputation for honesty and integrity. If our level of service or quality of products has failed to meet your expectations, we would like you to tell us about your concerns. Macquarie s complaint handling process is designed to ensure that your concerns are treated seriously, and that your complaint is addressed promptly and fairly. Your complaint may be lodged either verbally or in writing, and will be dealt with in strict confidence. If you have a complaint about the service provided to you, you should contact us. If your complaint is not satisfactorily resolved, contact: Risk Management Division Compliance Macquarie Bank Limited Level 4 No. 1 Martin Place SYDNEY NSW 2000 Fax: (02) If you are not satisfied with our handling of your complaint you may lodge a written complaint with the Banking and Financial Services Ombudsman: Banking and Financial Services Ombudsman GPO Box 3A Melbourne VIC 3001 Phone: Fax: (03)

83 Macquarie Capital Securities (Australia) Limited FINANCIAL SERVICES GUIDE Macquarie Capital Securities (Australia) Limited ABN AFS Licence November 2007 The matters covered by the FSG include: who we are and how we can be contacted; what services and types of products we are authorised to provide to you; how we (and any other relevant parties) are remunerated; details of any potential conflicts of interest; and details of our internal and external dispute resolution procedures and how you can access them. This Financial Services Guide ( FSG ) is an important document which we are required to give you as an Australian Financial Services Licensee. This FSG is intended to inform you of certain basic matters relating to our relationship, prior to providing you with a financial service. This has been prepared by Macquarie Capital Securities (Australia) Limited.* We may provide an execution-only securities dealing service or a custodial service to you in relation to financial products in connection with equity structured products issued by Macquarie Bank Ltd ( the Facility ).* It is intended that this FSG should assist you in determining whether to acquire the Facility, or use our execution-only securities dealing service or our custodial service. You should consider this FSG in conjunction with the relevant Product Disclosure Statement ( PDS ) for the Facility. Information about Macquarie Capital Securities (Australia) Limited Any financial services offered will be provided by representatives of Macquarie Capital Securities (Australia) Limited. Macquarie Capital Securities (Australia) Limited is part of the Macquarie Group of Companies, and as such is associated with other Macquarie entities. Macquarie Capital Securities (Australia) Limited is a participant member of the Australian Securities Exchange and its associated licensed clearing and settlement facilities. As the service we are providing is in relation to a product issued by another Macquarie Group entity, you should contact the relevant Macquarie Group entity you are dealing with if you have any questions. However, you can also contact us directly by: calling ; us using the Contact Directory in our website; visiting our website at or writing to us at: Level 2 1 Martin Place Sydney NSW 2000 Fax: (02) Our financial services and financial products Macquarie Capital Securities (Australia) Limited is authorised, amongst other things, to offer the following financial services and financial products: dealing in: Basic deposit products; Non-basic deposit products; Non-cash payment products; Derivatives; Foreign Exchange Contracts; Government debentures, stocks and bonds; Managed Investment Schemes (excluding investor directed portfolio services); Managed Investment Warrants; and Securities; and holding a financial product or interests in a financial product for you directly or indirectly.

84 Providing instructions to Macquarie Capital Securities (Australia) Limited Macquarie Capital Securities (Australia) Limited may act on instructions of other Macquarie Group entities as well as yourself. You may need to contact the relevant Macquarie Group entity you are dealing with to provide instructions in relation to your financial product or service. Further details are provided in the relevant PDS. Payments to Macquarie Capital Securities (Australia) Limited for the services provided Macquarie Capital Securities (Australia) Limited will not receive any direct remuneration from you for any services that it provides to you. However, Macquarie Capital Securities (Australia) Limited may receive remuneration from other Macquarie Group entities for providing these services to you, and where this is the case, a separate disclosure will be made to you by the other Macquarie Group entity. Remuneration or other benefits received by Macquarie Capital Securities (Australia) Limited staff Our employees and directors receive salaries, bonuses and other benefits from us. The PDS or prospectus for the particular product will disclose further details of remuneration received by Macquarie employees or paid to financial advisers. Remuneration or benefits paid to those who refer clients to us If we pay a fee or commission in relation to a referral, we will make a separate disclosure to you. Complaints Handling Macquarie is committed to providing a high standard of client service and to maintaining our reputation for honesty and integrity. If our level of service or quality of products has failed to meet your expectations, we would like you to tell us about your concerns. Macquarie s complaint handling process is designed to ensure that your concerns are treated seriously and that your complaint is addressed promptly and fairly. Your complaint may be lodged either verbally or in writing, and will be dealt with in strict confidence. If you have a complaint about the service provided to you, you should contact our Complaints Manager: The Complaints Manager Macquarie Capital Securities (Australia) Limited Level 2 1 Martin Place SYDNEY NSW 2000 Phone: Fax: (02) If you are not satisfied with our handling of your complaint you may lodge a written complaint with: Banking and Financial Services Ombudsman GPO Box 3A Melbourne VIC 3001 Phone: Fax: (03) Or Financial Industry Complaints Service PO Box 579 Collins St West Melbourne VIC Phone: Fax: (03) Personal information At Macquarie, the privacy of your personal information is important to us. Any personal information collected will be handled in accordance with our Privacy Policy, which details how we comply with the requirements of the Privacy Act in the handling of your personal information. A copy of that policy can be obtained by visiting the Macquarie website: * Other than Macquarie Bank Limited ABN (MBL), any Macquarie Group entity noted on this page is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). That entity s obligations do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of that entity, unless noted otherwise.

85 The Product Disclosure Statement was executed by Macquarie Bank Limited under power of attorney dated 28 October 2003 by each of Sasha Conoplia and Andrew Douglas Harding in their capacity as attorneys.

86 Directory Issuer Macquarie Bank Limited No.1 Martin Place Sydney NSW 2000 Australia Phone: (02) OFD /07