Definitions

Interpretation

2. AGREEMENT

Commonwealth to vest Portfolio Assets

Assumption of obligations by Bank

Payment of Subsidy

Bank to act in accordance with Subsidy Scheme

Provision of Subsidised Advances

Provision of Instalment Relief and effecting Transfer of Land Subsidy

Payment of deposits

Exclusive right of Bank to receipt of Subsidy

3. CONSIDERATION AND PAYMENT

Calculation of Consideration

Payment of Schedule

Manner of Payment

Delay in Proclamation of Amending Act

Notice of Face Value

Bank audit of Face Value

Resolution of dispute as to amount of Face Value

Vesting Date falling after Interest Commencement Date

Bank audit of Final Face Value

Resolution of Dispute as to Final Face Value

4. VESTING OF PORTFOLIO ASSETS AND PAYMENT OF SUMS DEPOSITED BY BORROWERS

Vesting

Bank bound by Portfolio Assets

Bank to perform the terms and conditions of Portfolio Assets

Nomination of Vesting Dates

Ministerial Determination of Vesting Dates

Earliest Dates to be specified

Existing Sums Deposited by Borrowers

5. TRANSITION PROVISIONS

Incomplete Applications for an Advance under the Act

Incomplete Applications for Benefits under the Act

Court orders

Instalments

Fees and Charges

Documentation provided by Commonwealth

Discount of Fees

6. AMENDING ACT

Amending Act being passed by Parliament

Amendments to draft Bill

Effect of Amendments

No Notice by Bank

Form of draft Bill

Effect of Termination

Agreement approved by Amending Act

Amending Act Provisions

Date of Proclamation after 30 June 1989

7. APPLICATION/REVIEW—GENERAL

Applications

Certificate of Entitlement

Obligations of Bank upon receipt of Certificate of Entitlement

Nominated Payee

Application of Lending Criteria

Alteration of Lending Criteria

Failure to meeting Lending Criteria

Factors to be excluded by Bank

Reasons for Bank’s decision

Commonwealth determination

Non-discrimination

Treatment of Arrears

Review of Commonwealth determination

8. ADVANCES/INSTALMENT RELIEF/TRANSFER OF LAND AND SUBSIDY

Repayment of Subsidised Advance

Initial Advances—description

Security

Instalment Relief

Transfer of land and Subsidy

Fees

Failure to meet lending criteria

Further loans/instalment relief

9. EXCESS CREDITS

Provision of Excess Credit Arrangement

Form of Excess Credit Arrangement

Election by Borrower

Loan Interest Offset Arrangement

Banking Account

Obligations of Bank

Prepayments

Effect of prepayment

Prepayment on a loan

10. PROVISION OF INFORMATION

Obligations of Bank to notify the Commonwealth

Variation of Bank’s Obligations under Sub-clause 10.1

Action taken by Bank to enforce security

Form of Notification

Schedule D Information

Provision of report by Bank’s External Auditor

Discussion of audit procedures between External Auditors

Bank to provide External Auditors Report with Subsidy Invoice

Bank to supply information to enable verification

Documentation to be provided by the Bank

Charge to Commonwealth by Bank

11. SUBSIDY SCHEME

Agreement to pay Subsidy

Commencement of obligation to pay Subsidy

Subsidy payable monthly

Subsidy Invoice

Verification and Payment of Subsidy

Manner of Payment of Subsidy

Dispute as to Subsidy Claim

Adjustment of Subsidy Invoice

Calculation of Subsidy

Calculation of Benchmark Rate

Bank Providers of Housing Finance

Fall in Benchmark Rate

Deduction from Subsidy Payments

Where Benchmark rate falls below 6.85 per centum

Termination/Suspension of Subsidy Payments and Recovery of Subsidy from Borrower

Notice of termination of Subsidy payments to Bank

Entitlement of Bank to charge applicable interest rate

12. DEFAULT PROVISION

Persistent Failure by Bank to provide Subsidised Advances

Failure by Bank to comply with any other term of the Agreement

Commonwealth Remedies

Employees actions resulting in Subsidy overpayment

Recovery of Subsidy

Default in payment of Consideration

Breach of this Agreement—Interest payable

Exercise of Remedies

Termination

Appointment of Receiver/Receiver and Manager/ Liquidation/Official Management of the Bank

13. GRANT OF FRANCHISE

Exclusive Right

Notification of Bank’s Exclusive Right

14. PROVISION FOR REFUND OF PART OF ONE HUNDRED MILLION DOLLARS REFERRED TO IN SUB-CLAUSE 3.1.1(a)

15. WARRANTIES

Bank

Commonwealth

16. INDEMNITIES

Obligations of Bank

Obligations of Commonwealth

Obligation of Commonwealth

17. DEALINGS WITH SOUTH AFRICA AND NAMIBIA

18. NON-MERGING ON SETTLEMENT AND SEVERABILITY

19. STAMP DUTY ADMINISTRATIVE ARRANGEMENTS AND STATE/TERRITORY GOVERNMENT FEES

Stamp Duty

Assessment

Commonwealth to facilitate Transfer

Fees or charges necessary to give effect to the transfer of Portfolio Assets shall be borne by the Commonwealth

20. LEGAL AND ACCOUNTING COSTS

21. APPLICABLE LAW

22. NOTICES

23. WAIVER

24. ENTIRE AGREEMENT

25. AMENDMENTS OR VARIATION

26. ARBITRATION

Notice of dispute, question or difference

Submitting a dispute to Arbitration

27. ASSIGNMENT

28. DISPOSAL BY BANK

29. CONFIDENTIALITY

Bank’s acknowledgement of material

Commonwealth’s acknowledgement of material

30. PERFORMANCE OF OBLIGATIONS BY CORPORATION SCHEDULES

1. Schedule A—Documentation to be provided by Commonwealth in respect of Sub-clause 5.1 applications

2. Schedule B—Documentation to be provided by Commonwealth in respect of Sub-clause 5.2 applications

3. Schedule C—Lending Criteria

4. Schedule D—Information to be provided by Bank on a monthly basis

5. Schedule E—Withdrawal of Amounts under Excess Credit Arrangements.

An AGREEMENT made the 9 day of November 1988

BETWEEN

the COMMONWEALTH OF AUSTRALIA

(hereinafter referred to as “the Commonwealth”) of the one part

and

WESTPAC BANKING CORPORATION

of 60 Martin Place, Sydney in the State of New South Wales

(hereinafter referred to as “the Bank”) of the other part

WHEREAS:

A. The Commonwealth by the Defence Service Homes Act 1918 (the Act) has established a body corporate known as the Defence Service Homes Corporation (the Corporation).

B. Pursuant to the Act the Corporation currently provides assistance to members of the Australian Defence Force and certain other persons, to acquire homes.

Such assistance is provided in the form of, but not limited to, advances secured by mortgages in favour of the Corporation, contracts for the sale of land on terms, as well as assistance in the form of benefits such as those now set out in Sections 18A, 29, 29AA, 29AB, 31, 33 and 35 of the Act.

C. In the course of providing such assistance the Corporation has acquired interests as mortgagee in respect of mortgages over land and interests as vendor of land under contracts of sale on terms. The Corporation also is a party to other agreements which are supplementary to its lending activities under the Act.

D. The Bank wishes to acquire such of the Corporation’s interests as are described herein and for the consideration set out herein the Commonwealth is willing to pass legislation vesting such interests in the Bank.

E. The Commonwealth is willing to provide the Bank with the exclusive right to provide advances and benefits to all persons who satisfy the tests of eligibility and entitlement under the Act current as at the date of this Agreement, other than those members of the Defence Force who enlisted after 14 May 1985.

F. The Commonwealth is willing to pay to the Bank a Subsidy in respect of Specified Portfolio Assets, Subsidised Advances and certain other agreements.

G. The Commonwealth and the Bank acknowledge that this Agreement is dependent upon the passage of legislation governing same, by the Parliament of the Commonwealth of Australia.

NOW THEREFORE IT IS AGREED AS FOLLOWS:

1. DEFINITIONS AND INTERPRETATIONS

In this Agreement except where the context otherwise requires:

Definitions

Interpretation

Words importing one gender shall include the other gender.

Words importing the singular shall include the plural and vice-versa.

A reference to a Clause shall be a reference to all of its Sub-clauses, and a reference to a Sub-clause shall be a reference to all its Sub-Sub-clauses unless the context otherwise admits.

The Clause headings in this Agreement are for reference only and have no effect on the construction, interpretation or meaning of the Clauses.

The Schedules referred to herein form part of and are subject to the terms of this Agreement.

Where in this Agreement any period of time dating from a given day, act, or event, is prescribed or allowed for any purpose, the time shall, unless the contrary intention appears, be reckoned inclusive of such day or of the day of such act or event.

Where the last day of any period prescribed or allowed by this Agreement for the doing of anything falls on a Saturday, on a Sunday or on a day which is a public holiday or a bank holiday in the place in which the thing is to be or may be done, the thing may be done on the first day following which is not a Saturday, a Sunday or a public holiday or bank holiday in that place.

Where in this Agreement any reference to time occurs, such time shall, unless it is otherwise specifically stated, be deemed in each State or part of the Commonwealth to mean the standard or legal time in that State or part of the Commonwealth.

A reference to a Clause shall be a reference to a Clause in this Agreement.

A reference to the parties shall be a reference to the parties to this Agreement.

All sums of money and all payments made under this Agreement shall be in Australian dollars.

2. AGREEMENT

Commonwealth to vest Portfolio Assets

Subject to Clause 4, all of the Corporation’s interests, rights, title and

obligations in the Portfolio Assets will vest in the Bank pursuant to the

Amending Act for the Consideration referred to in Clause 3.

Assumption of obligations by Bank

Subject to Clause 4, the Bank agrees as and from the relevant Vesting Date to assume the burden of the obligations of the Corporation under the Portfolio Assets.

Payment of Subsidy

Pursuant to Clause 11, the Commonwealth further agrees to pay to the Bank a Subsidy with respect to Specified Portfolio Assets and Subsidised Advances.

Bank to act in accordance with Subsidy Scheme

The Bank further agrees to be bound by and act at all times in accordance with the Subsidy Scheme.

Provision of Subsidised Advances

The Bank further agrees to provide Subsidised Advances in accordance with Clause 7.

Provision of Instalment Relief and effecting Transfer of Land and Subsidy

The Bank further agrees to provide Instalment Relief in accordance with

Clause 8 and to give effect to the Commonwealth’s consent to Transfer of Land and Subsidy in accordance with Clause 8.

Payment of deposits

Pursuant to Sub-clause 4.7, the Commonwealth agrees to pay to the Bank certain sums deposited with the Corporation by Borrowers.

Exclusive right of Bank to receipt of Subsidy

Pursuant to Clause 13, the Commonwealth agrees to grant to the Bank the exclusive right to receipt of Subsidy in respect of the advances and other benefits as described herein.

3. CONSIDERATION AND PAYMENT

Calculation of Consideration

The Bank hereby agrees to pay to the Commonwealth the Consideration at the times and in the manner referred to in this Clause.

The Consideration referred to in Sub-clause 3.1 is the sum of:

For the purposes of this Clause, the words:

Payment Schedule

The Consideration, subject always to Sub-clause 3.4, shall be payable by instalments as follows:

The sum of one hundred million dollars ($100,000,000) referred to in Sub-clause 3.1.1(a) shall be due and payable by the Bank to the Commonwealth as follows:

The Face Value referred to in Sub-clause 3.1.1(b) shall be a debt due by the Bank to the Commonwealth as at the relevant Vesting Date(s) or as at the Interest Commencement Date, whichever is the earlier, and the Total Face Value shall be paid in instalments by the Bank as set out in Sub-clauses 3.2.3, 3.2.4 and 3.2.5.

The first instalment of the Total Face Value in the sum of four hundred million dollars ($400,000,000) shall be paid by the Bank on 15 March 1989.

Subject to Sub-clause 3.2.6, the second instalment of the Total Face Value in the sum of five hundred million dollars ($500,000,000) and interest thereon shall be paid by the Bank at its election on a date between 1 July 1989 and 7 July 1989, of which date approximately seven (7) days prior notice shall be given to the Commonwealth in writing.

Subject to Sub-clause 3.2.6, the balance of the Total Face Value and interest thereon shall be paid by the Bank at its election on a date between 8 July 1989 and 14 July 1989, of which date approximately seven (7) days prior notice shall be given to the Commonwealth in writing.

The Commonwealth may elect to receive the whole or any part of the instalment of five hundred million dollars ($500,000,000) referred to in Sub-clause 3.2.4 and interest thereon prior to 1 July 1989, provided that the Commonwealth notifies the Bank in writing on or prior to 24 May 1989 or such later date as may be agreed between the parties of the Commonwealth’s election to receive the whole or any part of the instalment of five hundred million dollars ($500,000,000) and interest thereon prior to 1 July 1989.

Manner of Payment

The instalments of the Consideration referred to in Sub-clause 3.2 shall be paid by 11.00 a.m. on the due dates by depositing the relevant amounts to the credit of the Commonwealth Public Account No. 002 21030-0 with the Reserve Bank of Australia, Sydney, or as may be otherwise decided by the Commonwealth and notified to the Bank.

Delay in Proclamation of Amending Act

The Commonwealth and the Bank agree that, in the event that the Date of Proclamation is a date between 1 January 1989 and 30 June 1989, then:

Notice of Face Value

The Corporation shall calculate the Face Value and shall notify the Bank of the Face Value within seven (7) days of the relevant Vesting Date or the Interest Commencement Date, whichever is the earlier.

Bank audit of Face Value

The Bank and the Commonwealth agree that the Bank may audit the Face Value. Such audits are to be carried out at the Bank’s own expense, in the following way;

The Corporation shall provide the Bank access to the documentation and information necessary to enable the Bank to conduct such audits.

Resolution of dispute as to amount of Face Value

In the event that the Bank disagrees with or disputes that the Face Value notified by the Corporation is the correct Face Value, it shall notify the Commonwealth in writing no later than thirty (30) days after:

Within fourteen (14) days of notice being given pursuant to Sub-clause 3.7.1 the parties shall meet with a view to agreeing on the correct sum for the Face Value.

In the event that the parties are unable to agree within twenty-eight (28) days of first meeting, the parties will appoint an independent registered company auditor to conduct an audit of and determine the correct Face Value. In the event that the parties are unable to agree on the appointment of an independent auditor an auditor will be selected by the President of the Institute of Chartered Accountants in Australia. The determination of Face Value by an independent auditor pursuant to this Clause shall be conclusive and binding on both parties. The fees and expenses of the auditor shall be borne equally by the parties.

If an auditor appointed pursuant to Sub-clause 3.7.3 makes a determination prior to the date for payment fixed pursuant to Sub-clause 3.2.5 or, if applicable, Sub-clause 3.4(b)(ii) then the balance payable pursuant to the applicable Sub-clause shall be adjusted, if necessary, by reference to the determination. In the event that the procedures set out in Sub-clauses 3.6, 3.7.1, 3.7.2 and 3.7.3 are not completed prior to such date then the Bank shall pay to the Commonwealth the Total Face Value notified by the Corporation pursuant to Sub-clause 3.5, together with interest, in the manner set out in Sub-clause 3.2.5 or, if applicable, Sub-clause 3.4(b)(ii). In the event that the auditor’s determination requires an adjustment to the sum paid pursuant to Sub-clause 3.2.5 or, if applicable, Sub-clause 3.4(b)(ii) the amount payable by either party as a result of the audit shall be paid, together with interest calculated at the Interest Rate, to the other party forthwith.

Vesting Date falling after Interest Commencement Date

In the event that one or more of the Vesting Dates falls after the Interest Commencement Date the Corporation shall calculate the Final Face Value and shall notify the Bank of such Final Face Value within seven (7) days of the relevant Vesting Date.

If amounts are notified pursuant to Sub-clause 3.8 prior to payment of the balance of the Total Face Value pursuant to Sub-clause 3.2.5 or, if applicable, Sub-clause 3.4(b)(ii) then the sum payable by the Bank pursuant to the applicable Sub-clause shall be reduced by the sum of any amount by which the Total Face Value exceeds the Total Final Face Value and interest on such difference calculated at the Interest Rate from the date of notification until payment of the balance.

If an amount is notified pursuant to Sub-clause 3.8 after the payment of the balance of the Total Face Value pursuant to Sub-clause 3.2.5 or, if applicable, Sub-clause 3.4(b)(ii) then the Commonwealth shall pay to the Bank without interest any amount by which the Total Face Value exceeds the Total Final Face Value.

Bank audit of Final Face Value

The Bank and the Commonwealth agree that the Bank may audit the Final Face Value. Such audits are to be carried out at the Bank’s own expense, in the following way:

The Corporation shall provide the Bank access to the documentation and information necessary to enable the Bank to conduct such audits.

Resolution of Dispute as to Final Face Value

In the event that the Bank disagrees with or disputes that the Final Face Value notified by the Corporation is the correct Final Face Value, it shall notify the Commonwealth in writing no later than thirty (30) days after:

Within fourteen (14) days of notice being given pursuant to Sub-clause 3.10.1 the parties shall meet with a view to agreeing on the correct sum for the Final Face Value.

In the event that the parties are unable to agree within twenty-eight (28) days of first meeting, the parties will appoint an independent registered company auditor to conduct an audit of and determine the correct Final Face Value. In the event that the parties are unable to agree on the appointment of an independent auditor an auditor will be selected by the President of the Institute of Chartered Accountants in Australia. The determination of Final Face Value by an independent auditor pursuant to this Clause shall be conclusive and binding on both parties. The fees and expenses of the auditor shall be borne equally by the parties.

If an auditor appointed pursuant to Sub-clause 3.10.3 makes a determination prior to the date for payment fixed pursuant to Sub-clauses 3.2.5 or, if applicable, Sub-clause 3.4(b)(ii) then the balance payable pursuant to the applicable Sub-clause shall be adjusted, if necessary, by reference to the determination. In the event that the procedures set out in Sub-clauses 3.9, 3.10.1, 3.10.2 and 3.10.3 are not completed prior to such date then any adjustment required by Sub-clause 3.8.1 or payment required by Sub-clause 3.8.2 shall be based on the amount notified pursuant to Sub-clause 3.8. In the event that the auditor’s determination requires a further adjustment, the amount payable by either party as a result of the audit shall be paid, together with interest calculated at the Interest Rate, to the other party forthwith.

4. VESTING OF PORTFOLIO ASSETS AND PAYMENT OF SUMS DEPOSITED BY BORROWERS

Vesting

On the Vesting Dates the Corporation’s interests, title, rights and obligations in the Portfolio Assets shall progressively vest in the Bank by operation of the amending Act in the manner provided for under the Agreement and it is a condition of this Agreement that the Amending Act shall be effective to so transfer those interests, title, rights and obligations from the Corporation to the Bank.

Bank bound by Portfolio Assets

The Bank hereby acknowledges and agrees that the Amending Act should bind it, as and from the Vesting Dates, to comply with the terms and conditions of the Portfolio Assets.

Bank to perform the terms and conditions of Portfolio Assets

The Bank hereby acknowledges and agrees that the Amending Act should bind it, as and from the relevant Vesting Dates, to abide by and duly perform the terms and conditions and obligations of the Corporation under the Portfolio Assets.

Nomination of Vesting Dates

The Bank shall be entitled to give written notices to the Commonwealth and the Corporation nominating a date for the vesting of the Portfolio Assets in one or more of the States and Territories provided that;

Ministerial Determination of Vesting Dates

Subject to Sub-clause 4.5.1 the Minister shall determine the Vesting Date in relation to the Portfolio Assets in each State or Territory. The Vesting Date so determined shall not differ by more than three (3) days from the date for vesting in relation to a State or Territory previously notified by the Bank pursuant to Sub-clause 4.4.

In the event that the Bank is in default under this Agreement in payment of part or all of the Consideration referred to in Sub-clause 3.1;

the Minister may refuse to determine a Vesting Date or may revoke any determination which has been made, up to the Vesting Date so determined.

Where the Bank has remedied its default in payment of part or all of the Consideration, it may give a further written notice to the Commonwealth and the Corporation pursuant to Sub-clause 4.4 and the Minister shall thereupon determine the Vesting Date in accordance with Sub-clause 4.5.

Earliest Dates to be specified

The date to be specified in the Bank’s notice under Sub-clause 4.4 shall not be earlier than the date identified below in respect of each State and Territory.

Existing Sums Deposited by Borrowers

The Commonwealth further agrees to pay to the Bank and the Bank further agrees to treat as Excess Credits under Clause 9 the sums deposited with the Corporation by Borrowers to the credit of Borrowers’ accounts pursuant to Section 29 of the Act, by paying all such sums on a State by State basis in the manner provided in this Clause for the vesting of Portfolio Assets so that all such sums deposited by Borrowers in each State shall be paid to the Bank on the relevant Vesting Date.

5. TRANSITION PROVISIONS

5.1. Incomplete Applications for an Advance under the Act

On 1 December 1988 or on the Date of Proclamation whichever is the later, those applications for a Corporation Advance by a person who has not previously received assistance under the Act or by a person who has previously received assistance under the Act and has obtained or sought the Minister’s approval for assistance pursuant to Section 20A of the Act, which are in the possession of the Corporation as at such date but for which a mortgage has not been executed by both the Corporation and the Entitled Applicant (or has not been executed by the Entitled Applicant in such cases where the mortgage is required to be executed only by the Entitled Applicant) and are identified below, shall be dealt with by the parties as follows.

The Corporation shall treat any such application as an application for a Certificate of Entitlement in accordance with Clause 7.

No later than when the Corporation delivers a Certificate of Entitlement to the Bank, the Corporation shall also deliver to the Bank a copy of any such application and the Bank shall treat that copy of such application in the same way as an application for a Subsidised Advance is to be treated under Clauses 7 and 8.

Where the Corporation has approved a Corporation Advance in respect of any such application, on receipt of the Certificate of Entitlement and a copy of the loan approval letter, the Bank shall be bound to make a Subsidised Advance on the same terms and conditions as those approved by the Corporation and shown in Part A of the Certificate of Entitlement.

The Bank shall accept any documentation and results of investigations carried out by the Corporation in respect of any such application and treat them as though the Bank had prepared the documentation or carried out the investigations. These investigations shall include but not be limited to Certificate of Title searches, property surveys, valuations and decisions as to creditworthiness.

The Bank agrees that where any such application would have been due for settlement by the Corporation in the ordinary course of events in the period of four (4) weeks from 1 December 1988 or the Date of Proclamation whichever is the later, and the Bank notifies the Corporation that the Bank is unable to effect settlement and make the Subsidised Advance then the Corporation may proceed to make the Corporation Advance and the mortgage taken by the Corporation to secure the Corporation Advance will be included in the Portfolio Assets to be vested in the Bank in accordance with Clause 4.

Incomplete Applications for Benefits under the Act

On the relevant Vesting Date for any Portfolio Asset any application or request by a Borrower or other person relating to a Portfolio Asset for an additional advance pursuant to Section 20 of the Act or for relief pursuant to Sections 29AA or 29AB of the Act or for an exercise of the Corporation’s powers under Sections 31, 33 or 35 of the Act which are in the possession of the Corporation at such relevant Vesting Date shall be dealt with by the parties as follows.

The Commonwealth shall treat any such application or request as an application for Certificate of Entitlement in accordance with Clause 7. No later than when the Commonwealth delivers a Certificate of Entitlement to the Bank the Commonwealth shall also deliver to the Bank a copy of any such application or request and the Bank shall treat that application or request in the same way as an application for a Subsidised Advance, Instalment Relief or Transfer of Land and Subsidy, whichever is appropriate, is to be treated under Clauses 7 or 8.

Where the Corporation has approved a Corporation Advance in respect of any such application or request, or approved any such application or request, on receipt of the Certificate of Entitlement and a copy of the loan approval letter, the Bank shall be bound to make a Subsidised Advance or provide Instalment Relief or give effect to the Transfer of Land and Subsidy on the terms and conditions as set out in Part A of the Certificate of Entitlement.

The Bank shall accept any documentation and results of investigations carried out by the Corporation in respect of any such application and treat them as though the Bank had prepared the documentation or carried out the investigations. These investigations shall include but not be limited to Certificate of Title searches, property surveys, valuations and decisions as to creditworthiness.

Court Orders

In respect of any Court order affecting or relating to any Portfolio Asset as at the Vesting Date for such Portfolio Asset and in respect of any Court order affecting or relating to any application for a Corporation Advance pursuant to the Act as detailed in Sub-clause 5.1, the Bank agrees that upon being notified by the Commonwealth of the contents of such Court order it shall observe the requirements of the Court order. The Corporation shall advise the Bank of any such Court order on or prior to the relevant Vesting Date.

Instalments

Upon receipt by the Commonwealth of any instalment payment in respect of any Portfolio Asset subsequent to the vesting of the Portfolio Asset in the Bank in accordance with Clause 4, the Commonwealth shall within seven (7) days of such receipt forward the said instalment payment to the Bank.

Fees and Charges

The Bank hereby agrees that it will not impose on an applicant, an Entitled Applicant or a Borrower any fees or charges whatsoever relating to the Bank’s administration, preparation, lodging, registration or otherwise dealing with any application referred to in Sub-clauses 5.1 and 5.2 or the security or charge in respect of such an application where such a fee or charge has already been paid by the applicant, Entitled Applicant or Borrower to the Corporation. Where such a fee or charge paid to the Corporation has not been fully expended by the Corporation the unexpended amount shall be transferred to the Bank by the Corporation at the time that applications are transferred in accordance with Sub-clauses 5.1.1 and 5.2.1.

Documentation provided by the Commonwealth

For the purposes of this Clause the Commonwealth shall provide to the Bank such documents as are necessary for the Bank to continue with an application for a Corporation Advance, Instalment Relief and/or Transfer of Land and Subsidy in accordance with Clauses 7 and 8 and in particular:

5.6.1 after the Date of Proclamation or 1 December 1988, whichever is the later, the Commonwealth shall promptly provide to the Bank documentation in accordance with Schedule “A” in respect of the applications for Corporation Advances referred to in Sub-clause 5.1; and

5.6.2 after the relevant Vesting Date, the Commonwealth shall provide to the Bank within the period specified in Schedule “B” such documentation in respect of the Portfolio Assets transferred on the relevant Vesting Date or the applications referred to in Clause 5.2 which have been agreed to between the parties and identified in Schedule “B”.

Discount of Fees

The Bank agrees that the Establishment Fee charged with respect to all applications lodged in the twelve (12) month period following the Date of Proclamation shall be subject to a fifteen (15) per cent discount as against the Establishment Fees charged to its Housing Loan Customers.

6. AMENDING ACT

Amending Act being passed by Parliament

This Agreement is binding on the parties but, except for this Clause, is subject to and conditional upon the Amending Act being passed by Parliament in the form of the draft Bill initialled on behalf of the parties at the time of execution of this Agreement with such amendments only as:

Amendments to draft Bill

In the event that the Amending Act passed by Parliament should contain any amendments from the draft Bill referred to in Sub-clause 6.1, the Commonwealth shall within two (2) days of the passage of the Amending Act give notice to the Bank of the amendments together with such information relating to those amendments as it wishes to provide.

Effect of Amendments

If in the opinion of the Bank, such amendments:

and are unacceptable to the Bank, the Bank shall notify the Commonwealth of such opinion within seven (7) days of receipt of the notice under Sub-clause 6.2, or such further period as may be agreed upon by the parties, and upon receipt of such notice the Agreement shall terminate.

No Notice by Bank

In the event that the Bank does not give notice under Sub-Clause 6.3, it shall be taken to have agreed to such amendments for the purposes of Sub-clause 6.1.

Form of draft Bill

The Commonwealth agrees that the draft Bill to be submitted to Parliament shall be the draft Bill referred to in Sub-clause 6.1 with only such amendments thereto as may be agreed in writing between the parties.

Effect of Termination

In the event that the Amending Act is not passed in the form of the draft Bill referred to in Sub-clause 6.1 and, as a result, the condition contained in Sub-clause 6.1 is not met and the Agreement is terminated or has no force or effect, neither the Bank nor the Commonwealth will have any right to claim compensation, losses, expenses, costs or damages arising or resulting from this Agreement against the other.

Agreement approved by Amending Act

The parties hereby agree that a copy of this Agreement shall be annexed to and approved by the Amending Act.

Amending Act provisions

The Amending Act shall provide that the Corporation’s interests, rights, title and obligations in the Portfolio Assets shall vest in the Bank progressively on the Vesting Dates determined in accordance with Clause 4.

Date of Proclamation after 30 June 1989

In the event that the Date of Proclamation is a date after 30 June 1989 then this Agreement shall be of no force or effect and neither the Bank nor the Commonwealth will have any right to claim for compensation, losses, expenses, costs or damages arising or resulting from this Agreement against the other.

7. APPLICATION/REVIEW—GENERAL

Applications

In the event of an applicant approaching the Bank for

the Bank shall provide the applicant with an application for a Certificate of Entitlement which application shall be completed by the applicant.

The Bank agrees that nothing in this Agreement prohibits an applicant for a Certificate of Entitlement from applying initially directly to the Commonwealth for the purpose of obtaining such Certificate except that in the case of an application for a Certificate of Entitlement for Instalment Relief, such application can only be made through the Bank.

The Bank or the applicant shall forthwith on completion of an application for a Certificate of Entitlement forward that application to the Commonwealth.

On receipt by the Commonwealth of a completed application for a Certificate of Entitlement either from the Bank or an applicant, the Commonwealth shall proceed to determine whether the applicant is an Entitled applicant and, if so, shall issue to the applicant a Certificate of Entitlement.

On receipt by the Commonwealth of a completed application for a Certificate of Entitlement for Instalment Relief from the Bank, the Commonwealth shall proceed to determine whether the applicant is an Entitled applicant and, if so, shall issue a Certificate of Entitlement within seven (7) days of receipt of the said application by the Commonwealth.

7.2. Certificate of Entitlements

A Certificate of Entitlement shall comprise two (2) parts, part A of which shall be limited to the following information:

Part B of a Certificate of Entitlement may include any terms a breach of which would permit the Commonwealth to terminate or suspend Subsidy under Sub-clause 11.15.

The Certificate of Entitlement issued by the Commonwealth pursuant to Sub-clause 7.1.4 shall lapse after the expiration of three (3) months from its date of issuance unless in that period the Bank has approved in accordance with the terms of the Certificate a Subsidised Advance, Instalment Relief or has agreed to give effect to the Commonwealth consent to a Transfer of Land and Subsidy to the person to whom that Certificate was issued.

Obligations of Bank upon receipt of Certificate of Entitlement

As and from 1 December 1988 or the Date of Proclamation whichever is the later, the Bank agrees that it shall, as soon as it receives a Certificate of Entitlement, consider and assess an Entitled Applicant’s application to the Bank, in accordance with the lending criteria set out in Schedule “C”, and advise the Entitled Applicant of the outcome of the same within fifteen (15) Business Days of receipt of such application or Certificate of Entitlement, whichever is the later. Where the application is successful the Bank agrees that it will make the Subsidised Advance, grant the Instalment Relief and/or give effect to the Commonwealth’s consent to the Transfer of Land and Subsidy for or on behalf of the Entitled Applicant, in accordance with Part A of the Certificate of Entitlement issued by the Commonwealth, on the date requested by the Entitled Applicant, subject to the completion by the Entitled Applicant and the Bank of first mortgage requirements and documentation where necessary.

Nominated Payee

The Bank agrees that where it is specified in the Certificate of Entitlement that payment is to be made to a nominated payee, the Bank shall draw a bank cheque in favour of that nominated payee and make available same to the Borrower.

Application of Lending Criteria

The Bank is not obliged to make a Subsidised Advance or grant Instalment Relief or give effect to the Commonwealth’s consent to the Transfer of Land and Subsidy unless the lending criteria specified in Schedule “C” are satisfied.

Alteration of Lending Criteria

The Bank and the Commonwealth agree that the lending criteria set out in Schedule “C” will be subject to alteration from time to time to reflect changes in prevailing market conditions and lending norms as evidenced by the lending criteria then applied by the five (5) largest bank providers of housing finance determined in accordance with Sub-clause 11.10. Where the Bank considers that circumstances in the market justify such an alteration, it shall advise the Commonwealth at least thirty (30) days prior to the intended date of effect of the proposed alteration in the lending criteria. The Bank will continue to treat Entitled Applicants and Borrowers no less favourably in comparison with its other Housing Loan Customers in future than is the case as at the date of signing this Agreement, including in particular the special factors referred to in Sub-clause 7.8 which the Bank is expressly required by this Agreement not to take into account in applying its lending criteria to Entitled Applicants in future.

Failure to meeting Lending Criteria

The Bank further agrees that the failure by an Entitled Applicant to meet the lending criteria set out in Schedule “C” will be the sole basis for a refusal in whole or in part by the Bank to make the Subsidised Advance or grant the Instalment Relief or give effect to the Commonwealth’s consent to the Transfer of Land and Subsidy sought by the Entitled Applicant.

Factors to be excluded by Bank

The Bank further agrees that the following factors will not be taken into account when considering whether an Entitled Applicant has met the lending criteria set out in Schedule “C”:

Reasons for Bank’s decision

The Bank further agrees that, if requested, the Bank’s advice to the Entitled Applicant will, in the case of rejection in whole or in part of the application, include reasons in writing for the Bank’s decision that the Entitled Applicant failed to meet the lending criteria.

Commonwealth determination

Should the Commonwealth determine that an applicant is not an Entitled Applicant then any advance or instalment relief or benefit made or given by the Bank to the applicant shall not be a Subsidised Advance or Instalment Relief pursuant to this Agreement.

Non-discrimination

The Bank agrees that it will not discriminate against or differentiate other than as provided in this Agreement between an Entitled Applicant and its other Housing Loan Customers where the Entitled Applicant seeks only a Subsidised Advance, or Instalment Relief and/or a consent to Transfer of Land and Subsidy and does not seek or apply for a further loan from the Bank.

Treatment of Arrears

The Bank agrees that in the treatment of Arrears, it will treat Borrowers no less favourably than its owner-occupied Housing Loan Customers. In particular, the Bank agrees that it will not impose any penalty interest, fine or other charge on the Borrower.

Review of Commonwealth determination

An applicant may seek to have the Commonwealth’s determination reviewed in accordance with the review mechanism provided under the Amended Act, and should such review result in the Commonwealth’s determination being amended, the Commonwealth shall advise the Bank and the applicant of the result of the review by issuing a further Certificate of Entitlement and the Bank shall, subject to Sub-clause 7.5, provide a Subsidised Advance and/or Instalment Relief and/or give effect to the Commonwealth’s consent to a transfer of Land and Subsidy in accordance with that Certificate.

8. SUBSIDISED ADVANCES/INSTALMENT RELIEF/TRANSFER OF LAND AND SUBSIDY

Repayment of Subsidised Advance

The Bank agrees that a Subsidised Advance shall be repayable in equal monthly instalments comprising principal and interest with the interest being calculated each month on the outstanding principal at the end of each preceding month.

Initial Advances—Description

The Bank agrees that the initial advance made by the Bank to an Entitled Applicant who has not previously been a Borrower shall be a Subsidised Advance up to a maximum amount of twenty five thousand dollars ($25,000) repayable over a term not exceeding twenty five (25) years or such other amount or term as may be agreed upon between the parties.

Security

The Bank agrees that all Subsidised Advances shall be secured by way of a first mortgage over the Entitled Applicant’s holding as defined in the Act, except that:

Instalment Relief

The parties agree that where the Bank provides Instalment Relief, such relief will be granted by:

Transfer of Land and Subsidy

In the event that the Certificate of Entitlement states that the Commonwealth consents to a Transfer of Land and Subsidy and the Bank consents to such transfer after application of the lending criteria set out in Schedule “C” then the Commonwealth shall continue to pay Subsidy in accordance with the terms of this Agreement.

Fees

The Bank agrees that an Entitled Applicant and/or Borrower will pay no other fees and no more in fees with respect to all applications for Subsidised Advances, Instalment Relief and consents to Transfer of Land and Subsidy to the Bank than its other Housing Loan Customers. Nothing herein prevents the Bank from charging an Entitled Applicant less than the fees paid by its other Housing Loan Customers.

Failure to meet lending criteria

In the event that a Certificate of Entitlement indicates that:

and the Entitled Applicant fails to meet the lending criteria set out in Schedule “C”, the Bank agrees:

Further Loans/Instalment Relief

Nothing hereunder shall operate in any way to restrict the ability of a Borrower to approach the Bank for such further loans and/or instalment relief as the Borrower may in his discretion require, in which event the Bank hereby undertakes to treat such loan and/or instalment relief applications in their ordinary and usual course of banking business and treat the Borrower as it would treat a Housing Loan Customer seeking a single loan. In particular, the Bank agrees that where a Borrower applies for another loan at the same time as applying for a Subsidised Advance it will charge the Borrower one set of Establishment Fees covering both the Subsidised Advance and the further loan and secure both advances under the same first mortgage.

9. EXCESS CREDITS

Provision of Excess Credit Arrangement

Where a Borrower pays to the Bank an amount of Excess Credits then the Bank agrees to provide to the Borrower an Excess Credit arrangement.

Form of Excess Credit Arrangement

The Excess Credit arrangement to be made available by the Bank to Borrowers pursuant to Sub-clause 9.1 shall take the form of either:

Election by Borrower

The Bank agrees to provide to a Borrower a choice between the two types of Excess Credit arrangement referred to in Sub-clause 9.2. In the event that the Borrower fails to exercise such a choice before the Borrower’s first repayment is due to the Bank under the Portfolio Asset and/or Subsidised Advance, then the Bank shall provide a loan interest offset arrangement. The Bank further agrees that a Borrower may elect at any time to change between the two types of Excess Credit arrangements during the currency of the Portfolio Asset and/or Subsidised Advance.

Loan Interest Offset Arrangement

If the Bank provides a loan interest offset arrangement then:

9.4.1 the Bank will apply the Excess Credits to reduce the principal outstanding in the Borrower’s Subsidised Advance Loan Account without penalty to the Borrower;

9.4.2 where the principal outstanding attracts various interest rates the reduction shall be made on a proportionate basis in accordance with the relationship between the amount of principal which attracts a single interest rate and the total principal outstanding;

9.4.3 providing it remains secured by the first mortgage the Borrower may increase the principal outstanding by drawing from his Subsidised Advance Loan Account any amount by which the Limit exceeds the Balance;

9.4.4 the Bank will permit the Borrower to withdraw funds at any time by way of cheque; and

9.4.5 the Bank will permit four (4) free withdrawals or debits for each quarter of each Calendar Year.

Banking Account

If the Bank provides a banking account then:

Obligations of Bank

The Bank agrees to advise Borrowers of the purposes for which either a loan interest offset arrangement as described in Sub-clause 9.4 or a banking account as described in Sub-clause 9.5 can be used, (such purposes being described in Schedule E to this Agreement) and further agrees not to charge any fees (excluding statutory charges) to Borrowers in respect of withdrawals or debits made from these accounts which are directly attributable to the Portfolio Asset and/or Subsidised Advance instalment repayments.

Prepayments

In the event that the Borrower pays to the Bank an amount in excess of that required to meet the monthly instalment on the Specified Portfolio Asset and/or Subsidised Advance, and the Borrower specifically elects for that amount to be treated as a prepayment then the Bank shall treat that amount as a prepayment. Such prepayments are to be applied by the Bank at the direction of the Borrower to reducing the principal and interest outstanding under the Borrower’s Specified Portfolio Asset and/or Subsidised Advance without penalty to the Borrower.

Effect of prepayment

The Bank agrees that where a Borrower has made the election referred to in Sub-clause 9.7 the prepayment will not affect the monthly instalments payable by the Borrower, but shall reduce the term applicable to the Specified Portfolio Asset and/or Subsidised Advance.

Prepayment on a loan

In the event that the Borrower makes a prepayment on a loan account applicable to his Specified Portfolio Asset and/or Subsidised Advance which has more than one interest rate then the Bank shall credit that prepayment on a proportionate basis in accordance with the relationship between the amount of principal which attracts a single interest rate and the total principal outstanding.

10. PROVISION OF INFORMATION

Obligations of Bank to notify the Commonwealth

The Bank shall notify the Comonwealth when the Bank Manager responsible for a Borrower’s account becomes aware of or receives in the ordinary course of banking business any of the following concerning or regarding an Entitled Applicant or Borrower, such notification to be forwarded to the Commonwealth not more than seven (7) days after the Bank Manager becomes aware of or receives same:

Variation of Bank’s Obligations under Sub-clause 10.1

The parties agree that the circumstances referred to in Sub-clause 10.1 may be added to or varied from time to time by agreement.

Action taken by Bank to enforce security

Except where the Bank’s security is in jeopardy the Bank shall not take any action to:

under any Portfolio Mortgage, Portfolio Contract of Sale or other security securing the Portfolio Asset or Subsidised Advance without giving the Commonwealth fourteen (14) days notice prior to the Bank taking any such action. In those cases where the Bank’s security is in jeopardy and the Bank has taken any such action then the Bank agrees to give notice to the Commonwealth of the taking of such action within five (5) days.

Form of Notification

All notifications referred to in this Clause shall be made to the Commonwealth in writing.

Schedule “D” Information

The Bank agrees to provide the information referred to in Schedule “D” on a monthly basis, or at such other time as may be agreed upon by the parties. Information supplied monthly is to be submitted to the Commonwealth with the Bank’s Subsidy invoice referred to in Sub-clause 11.4 and to be accompanied by a certification by an appropriate officer of the Bank that the information provided is in accordance with the Bank’s records and is true and correct.

Provision of report by Bank’s External Auditor

The Bank agrees to provide to the Commonwealth within two (2) months of the end of each Financial Year in which Subsidy is paid under this Agreement a report by the Bank’s external auditors advising as to the extent to which, in their opinion, the Bank’s systems for maintaining data concerning Subsidised Advances can be relied upon to provide accurate information for the purpose of the calculation of Subsidy payable to the Bank under the Agreement.

Discussion of audit procedures between External Auditors

If at any time the Commonwealth considers this to be desirable, the Bank will arrange with its external auditors for the Commonwealth to discuss with the external auditors the audit procedures applied.

Bank to provide External Auditor’s Report with Subsidy Invoice

The Bank further agrees to provide a report by its external auditors in the terms of Sub-clause 10.6 prior to or concurrently with its first Subsidy invoice.

Bank to supply information to enable verification

In the event that the Commonwealth is unable to verify the details contained in the Subsidy invoice provided pursuant to Sub-clause 11.4 from information supplied pursuant to this Clause, the Bank shall supply such further information as is necessary to enable the Commonwealth to verify the details.

Documentation to be provided by the Bank

In respect of any claim, dispute or legal proceeding now existing or at any time hereafter existing or being made against the Commonwealth/Corporation by any applicant, Entitled Applicant, Borrower or by some other person in respect of a Portfolio Asset or Subsidised Advance or any other associated matter the Bank agrees that it will, except to the extent that the Bank is prohibited by law, at the request of the Commonwealth make available and provide to the Commonwealth all documents, information, material and computer data in the possession or under the control of the Bank, in relation to a Portfolio Asset or Subsidised Advance or any other associated matter which may be required by the Commonwealth in respect of and in order to defend or prosecute such a claim, dispute or legal proceeding and the Bank agrees that it will give to the Commonwealth, its employees, servants, officers or agents all such reasonable assistance as shall be necessary for such purpose. The Bank may only charge the Commonwealth its minimum standard production fee in respect of any such documents or assistance provided to the Commonwealth pursuant to this Sub-clause.

Charge to Commonwealth by Bank

Subject to Sub-clause 10.10, the Bank shall not be entitled to charge the Commonwealth a fee in relation to the provision by it to the Commonwealth of any information pursuant to this Clause.

11. SUBSIDY SCHEME

Agreement to pay Subsidy

In accordance with the terms of this Agreement, the Commonwealth hereby agrees to pay to the Bank subsidy in respect of:

Commencement of obligation to pay Subsidy

The obligation of the Commonwealth to pay Subsidy to the Bank as prescribed in Sub-clause 11.1 is to commence:

Subsidy payable monthly

Subsidy is payable monthly and is calculated by reference to the Balance in the Subsidised Advance Loan Account of each Borrower on the relevant Rest Day or such later day as the amount of interest payable on that Rest Day is debited to the Subsidised Advance Loan Account.

Subsidy Invoice

The Bank hereby agrees to provide the Commonwealth with a written invoice detailing its claim for Subsidy together with the information referred to in Sub-clause 10.5 not more than three (3) Business Days after the Rest Day for Subsidised Advances.

Verification and Payment of Subsidy

The Commonwealth shall pay the Bank the amount of Subsidy which the Commonwealth has verified by 11 a.m. on the day which is fifteen (15) days after the relevant Rest Day or the day which is seven (7) Business Days after the receipt of the invoice and the information referred to in Sub-clause 10.5, whichever is the later.

Manner of Payment of Subsidy

Subsidy shall be paid by depositing the relevant amounts to BSB Account Number 032-936-05-0151 with the Retail Banking Division branch of the Bank, or to such other account as the Bank may from time to time advise.

Dispute as to Subsidy Claim

In the event of a dispute or disagreement arising between the Commonwealth and the Bank as to the amount of Subsidy payable to the Bank by the Commonwealth in accordance with this Agreement then the following provisions shall apply.

The Commonwealth shall pay to the Bank the amount of subsidy the Commonwealth has verified as being due.

Such dispute or disagreement is, so far as is possible, to be resolved as soon as practicable directly between the Commonwealth and the Bank.

In the event that any such dispute or disagreement cannot be resolved between the Commonwealth and the Bank within a period of seven (7) days after first occurring, the dispute or disagreement is to be referred to arbitration in accordance with the procedure outlined in Clause 26, except that the Commonwealth and the Bank agree that for the purpose of such dispute/disagreement the arbitrator shall be appointed by the President for the time being of the Australian Institute of Chartered Accountants.

Until the actual resolution of such dispute or disagreement, the Commonwealth shall not be under any obligation to pay to the Bank that part of the Subsidy invoice which is disputed or over which disagreement exists.

Upon resolution of such dispute or disagreement, the amount of Subsidy next payable to the Bank by the Commonwealth after such resolution takes place, or if insufficient time is available, the payment after the next payment, shall be adjusted to take into account the result of that resolution.

The Commonwealth and the Bank agree that the amount of such adjustment shall bear interest at the Benchmark rate fixed in accordance with Sub-clause 11.10.

Adjustment of Subsidy Invoice

The Commonwealth and the Bank further hereby agree that in the event that an invoice claiming Subsidy from the Commonwealth pursuant to Sub-clause 11.4 is found to be in error, the subject of an omission, or require variation, either by the Bank or the Commonwealth, then, subject to the dispute or disagreement resolution mechanism set out in Sub-clause 11.7, the Subsidy invoice next submitted by the Bank to the Commonwealth after the discovery of such error, omission and/or variation will be adjusted in favour of the Commonwealth or the Bank as is found to be necessary.

Calculation of Subsidy

The amount of Subsidy payable by the Commonwealth shall be calculated as set out in paragraph (a) and adjusted as set out in paragraph (b) hereunder:

where

X = the amount by which the Subsidy is to be reduced;

Y = the total Subsidy calculated in accordance with Sub-clause 11.9(a);

a = the amount by which Portfolio Arrears exceed 0.035 per cent of the aggregate of the Limits on all Subsidised Advance Loan Accounts; and

b = the aggregate of the Balances of all Subsidised Advance Loan Accounts.

Calculation of Benchmark Rate

The Benchmark rate, being the maximum notional rate of interest to which the Bank is entitled in respect of the outstanding principal under all Specified Portfolio Assets and/or Subsidised Advances for the purpose of calculating payments of Subsidy to the Bank by the Commonwealth, shall be calculated in the manner provided in Sub-clause 11.10.7 or, if applicable, Sub-clause 11.10.8, by reference to the unregulated standard annual rates of interest applied in each State and the Australian Capital Territory and the Northern Territory to the first $25,000 (or such other amount as may be agreed by the Commonwealth and the Bank) of owner-occupied housing loans provided by the five (5) largest banking group providers of housing finance in Australia.

For the purposes of Sub-clause 11.10, the unregulated standard annual rates of interest applied to owner-occupied housing loans shall be the rate which is applied to the largest number of owner-occupied housing loans outstanding in each State and the Australian Capital Territory and the Northern Territory to each of the banking groups concerned, as determined by reference to data compiled by the Reserve Bank of Australia or as the parties may otherwise agree.

The five (5) largest banking group providers of housing finance in Australia for the purposes of this Sub-clause shall be determined as at 1 July in each Financial Year that Subsidy is payable on the basis of data published by the Australian Bureau of Statistics or, if such information is not available, as may otherwise be agreed between the parties.

In the event that the parties are unable to agree on:

within fourteen (14) days of first notification by either party to the other of that disagreement, the matter in dispute shall be determined by an independent nominee of the President of the Institute of Chartered Accountants of Australia. Such determination shall be conclusive and binding on both parties. The fees and expenses of the nominee shall be borne equally by the parties.

Pending the resolution of any dispute or disagreement referred to in Sub-clause 11.10.3 in the manner provided for in that Sub-clause, the Benchmark rate used to calculate the Subsidy payable to the Bank by the Commonwealth in the immediately preceding month shall continue to apply.

Upon resolution of such dispute or disagreement, the amount of Subsidy next payable to the Bank by the Commonwealth after such resolution takes place, or if insufficient time is available, the payment after the next payment, shall be adjusted to take into account the result of that resolution.

The Commonwealth and the Bank agree that the amount of such adjustment shall bear interest at the Benchmark rate fixed in accordance with Sub-clause 11.10.

Subject to Sub-clause 11.10.8, the Benchmark rate to be used for Subsidy payment purposes in any month shall be calculated monthly in two stages as follows:

In the event that the Bank should, in future, for any reason, offer publicly to make loans for the purchase or construction of owner-occupied houses in any State or Territory on terms including that the first interest rate to be applied is lower than the Benchmark rate determined in accordance with Sub-clause 11.10.7, then the Subsidy payable to the Bank by the Commonwealth in respect of each Subsidised Advance provided by the Bank to an Entitled Applicant in the relevant State or Territory during the period in which such publicly announced loans are available, shall be determined by reference to that lower rate for a period equal to the period during which that lower rate applies to such publicly announced loans. Thereafter the normal Benchmark rate shall apply.

Bank Providers of Housing Finance

The Bank and the Commonwealth hereby agree that for the purposes of this Agreement until 1 July 1989 the five (5) largest banking group providers of housing finance in Australia shall be:

Fall in Benchmark Rate

In the event that the Benchmark rate of interest prescribed in Sub-clause 11.10 falls below the actual rate of interest payable by a Borrower in respect of a Specified Portfolio Asset and/or Subsidised Advance, the Bank agrees to pay to the Commonwealth, on a monthly basis, an amount to be calculated as follows:

Such amount shall be equal to the difference between the notional amount of interest payable in that month by a Borrower on the Balance outstanding on any Subsidised Advance Loan Account at the end of the preceding month, calculated by applying the Benchmark rate of interest to that Balance and the amount of interest payable in that same month by the Borrower calculated by applying to the same Balance the actual rate(s) of interest prescribed under the terms and conditions governing that Subsidised Advance Loan Account.

Deduction from Subsidy Payments

Any amount payable by the Bank pursuant to Sub-clause 11.12 shall be deducted from the Bank’s claim for Subsidy provided pursuant to Sub-clause 11.4. In the event that such deductions exceed the total sum of Subsidy calculated in accordance with Sub-clause 11.9 then any net sum payable by the Bank to the Commonwealth shall be paid fifteen (15) days after the relevant Rest Day.

Where Benchmark Rate falls below 6.85 per cent

In the event that the Benchmark rate of interest prescribed in Sub-clause 11.10 falls below 6.85 per cent or such other rate as may be specified in the Amended Act for inclusion in Certificates of Entitlement for initial advances and is likely in the opinion of either the Bank or the Commonwealth to continue below such rate in the future then the parties shall meet forthwith for the purpose of reviewing the situation.

Termination/Suspension of Subsidy Payments and Recovery of Subsidy from Borrower

Notwithstanding the provisions of any other Clause in this Agreement, the Commonwealth may elect to recover from the Borrower in the manner provided for under the Amended Act or may terminate and/or suspend future Subsidy payments in respect of the following:

Notice of termination of Subsidy payments to Bank

Where the Commonwealth elects to terminate future Subsidy payments to the Bank in respect of a Specified Portfolio Asset pursuant to Sub-clause 11.15(a) then it shall give the Bank one month’s notice of its intention to do so. If prior to the completion of that one month period the Bank gives the Commonwealth notice that it intends to take action to enforce its security with respect to that Specified Portfolio Asset then the Commonwealth shall continue to pay Subsidy until the Bank has discharged its loan, or for three (3) months, whichever is the earlier. Any Subsidy paid to the Bank which is recoverable from the Borrower pursuant to the Amending Act shall be paid to the Commonwealth by the Bank as required by the Amending Act from any moneys due to the Borrower from the proceeds of any sale by the Bank of his land or land and dwelling house.

Entitlement of Bank to charge applicable interest rate

The Commonwealth acknowledges that it shall be a term of any Subsidised Advance made by the Bank to a Borrower that in the event that Subsidy is, for any reason whatsoever, terminated by the Commonwealth in respect of that advance, the Bank shall be entitled to charge the interest rate applicable to similar loans provided by the Bank to borrowers generally from the date of termination of Subsidy.

12. DEFAULT PROVISIONS

Persistent Failure by Bank to provide Subsidised Advances

Where it appears to the Commonwealth that there has been a persistent failure by the Bank to provide Subsidised Advances in accordance with this Agreement or to treat applicants for further loans in the manner required by Sub-clause 8.8, the Commonwealth may, by notice in writing served on the Bank, require the Bank within twenty-eight (28) days after service of that notice to rectify that failure.

Where following such notice the Bank fails to rectify such persistent failure then without prejudice to any other rights the Commonwealth may have:

Failure by Bank to comply with any other term of the Agreement

Where it appears to the Commonwealth that there has been a failure by the Bank to comply with any other term of this Agreement the Commonwealth may, by notice in writing served on the Bank, require the Bank within twenty-eight (28) days after service of that notice to rectify that failure.

Where following such notice the Bank fails to rectify such failure then without prejudice to any other rights the Commonwealth may have, the Commonwealth shall be entitled to defer part of or all future payments of Subsidy to the Bank with respect to any Portfolio Asset or Subsidised Advance which is affected by such a failure until such time as the failure has been so rectified, or for such lesser time which the Commonwealth in its discretion determines provided however that such deferral shall not exceed a period of six (6) months.

Commonwealth Remedies

Should the Commonwealth exercise its right pursuant to Sub-clauses 12.1.1 or 12.2.1 then the deferred Subsidy will be paid to the Bank at the completion of the period of the deferral but the Bank shall have no right to compensation or interest on the Subsidy deferred against the Commonwealth in respect thereto, and further the Bank agrees that it shall continue without reservation or modification to charge interest to Borrowers at the applicable rates of interest prescribed pursuant to those Borrowers’ respective Portfolio Assets and/or Subsidised Advances, and/or at the rates specified in the Amended Act for inclusion in Certificates of Entitlement in respect of such Advances, as at the date upon which the Commonwealth exercises such right.

Employee actions resulting in Subsidy over-payment

Where employees of the Bank knowingly:

and such action results in an over-payment of Subsidy then the Commonwealth shall be entitled to recover from the Bank immediately as a debt all Subsidy payments over-paid. The Bank shall notify the Commonwealth immediately it becomes aware of any such action.

Recovery of Subsidy

Where the Bank fails to notify the Commonwealth of the circumstances referred to in Sub-clauses 10.1 or 12.4 and such failure to notify results in payments of Subsidy which would not otherwise have occurred then the Commonwealth shall be entitled to recover from the Bank, the Borrower or the Entitled Applicant as it deems appropriate immediately as a debt all Subsidy payments that the Commonwealth has incurred and/or paid as a result of the Bank’s failure to so notify.

The Commonwealth shall be entitled to recover as from the last date that notification should have been given by the Bank.

Default in payment of Consideration

If the bank defaults in payment of the Consideration or any part thereof and the default continues for more than fourteen (14) days after notice in writing specifying the default has been served on the Bank then, notwithstanding anything contained herein and without prejudice to any other rights of the Commonwealth, the whole of the balance of the Consideration and other moneys due hereunder shall at the option of the Commonwealth become immediately due and payable.

Breach of this Agreement-Interest Payable

If the Commonwealth or the Bank commits a breach of this Agreement, including default in payment of Consideration, the party in default shall without prejudice to any other rights of the other party pay on demand interest on any moneys overdue during the period of default. Such interest shall be the weighted average yield set at the most recent weekly tender for the thirteen (13) week Treasury Note plus four (4) per cent.

Exercise of Remedies

Time shall be of the essence of this Agreement. However, without prejudice to the other provisions of this Clause, if either party defaults under this Agreement the other party shall not be entitled to exercise any of its rights arising out of the default, including its right to sue for moneys then owing until it has served the party in default with a written notice specifying the default and its intention to exercise its rights unless the default is remedied and the reasonable legal costs occasioned by the default and any moneys payable under Sub-clause 12.7 are all paid within fourteen (14) days of service of the notice and the party in default fails to comply with the notice.

Termination

Where:

then the other party shall be entitled by notice in writing to terminate this Agreement forthwith but without prejudice to any right of action or remedy which shall have accrued or which shall accrue thereafter in favour of either party.

Appointment of Receiver/Receiver and Manager/Liquidation/Official Management of the Bank

Where the Bank has a Receiver or Receiver and Manager appointed to all or substantially all of the Bank’s assets or enters into liquidation voluntarily or otherwise is placed under official management, the Commonwealth may terminate the Bank’s exclusive right to make future Subsidised Advances to Entitled Applicants under the Amended Act and grant that right together with the associated right to receipt of Subsidy in respect of such future Subsidised Advances to another person of the Commonwealth’s sole choosing.

13. GRANT OF FRANCHISE

Exclusive Right

The Commonwealth hereby grants to the Bank on the terms set out in this Agreement the exclusive right to provide the first twenty five thousand dollars ($25,000), or such other amount as may be agreed upon by the parties, of any Subsidised Advance and other benefits upon which Subsidy is payable to all persons who satisfy the test of eligibility and entitlement under the Act, other than those members of the Defence Force who enlisted after 14 May 1985.

Notification of Bank’s Exclusive Right

The Commonwealth agrees that all persons who seek Subsidised Advances or other benefits under the Amended Act shall be notified that the Bank has the exclusive right to make such Subsidised Advances and to provide such benefits.

14. PROVISION FOR REFUND OF PART OF $100 MILLION REFERRED TO IN SUB-CLAUSE 3.1.1(a)

The Commonwealth agrees that the Bank may be entitled to a refund of part of the Consideration pursuant to this Clause if, during the period of five (5) years commencing from the date of this Agreement, the Commonwealth should:

and such action causes the number of Entitled Applicants applying to the Bank for Subsidised Advances and Instalment Relief in any of the five (5) years following the date of this Agreement to fall below four thousand (4,000). If the Bank is of the opinion that the above facts have occurred or will occur it may give notice of that situation to the Commonwealth. On receipt of such notice, the Commonwealth and the Bank shall meet with a view to verifying the facts and then determining the extent, if any, to which part of the Consideration referred to in Sub-clause 3.1.1(a) paid by the Bank to the Commonwealth under this Agreement, and attributed by the Bank to its purchase of the exclusive right under this Agreement to provide Subsidised Advances and Instalment Relief to Entitled Applicants in future, namely $50 million, might be refunded to the Bank to take account of the effects of such action by the Commonwealth, such refund not to exceed the following sums:

If, within a period of three (3) months after first verifying the facts, agreement has not been reached with the Commonwealth on the amount, if any, to be refunded to the Bank, then the parties shall refer the matter to arbitration in accordance with Clause 26 and any amount payable as a result of the arbitration shall be paid within seven (7) days of the determination of the arbitrator.

WARRANTIES

Bank

The Bank warrants that:

15.1.1 it undertakes and represents to the Commonwealth and it is a condition of this Agreement that the execution and delivery of this Agreement has been duly and validly authorised by all necessary corporate action on behalf of the Bank, the Bank has full corporate power and lawful authority to execute and deliver this Agreement and to perform or cause to be performed its obligations herein and this Agreement shall constitute a legal, valid and binding obligation of the Bank enforceable in accordance with its terms and does not conflict with or constitute or result in a breach of or default under any provision of the Bank’s Deed of Settlement;

15.1.2 to the best of the Bank’s knowledge, no statutory notices have been served on the Bank which might in any way impair, prevent or otherwise interfere with the Bank’s performance of its obligations hereunder; and

15.1.3 the Bank has all necessary licences (including statutory licences) and accreditation, consents, permissions, authorities and permits for the proper carrying on of its business and knows of no factors that might in any way prejudice the continuance or renewal of any of those licences, permissions or consents.

Commonwealth

The Commonwealth warrants that:

15.2.1 it has full power and authority to enter into, execute and complete the transactions contemplated by this Agreement;

15.2.2 the Amending Act shall be effective to transfer all of the rights, title, interests and obligations of the Corporation in and to the Portfolio Assets to the Bank in accordance with the provisions of this Agreement;

15.2.3 as at the date hereof the Corporation is not a party to any action, claim, demand or suit or other legal challenge pertaining to the Portfolio Assets or any of them, which it has not disclosed in writing to the Bank prior to the date of this Agreement;

15.2.4 the Corporation has not entered into any arrangement or understanding with any Borrower other than an agreement or understanding authorised by the Act under which it has agreed to vary or abrogate the Corporation’s rights under any relevant Portfolio Mortgage, Portfolio Contract of Sale, Portfolio Supplementary Agreement, or other Portfolio Agreement; and

15.2.5 the Portfolio Assets are as at the relevant Vesting Dates enforceable by the Corporation in accordance with their terms and, in the case of the Portfolio Mortgages, constitute effective security for the benefit of the Corporation.

16. INDEMNITIES

Obligations of Bank

The Bank shall indemnify and keep indemnified the Commonwealth, its officers, employees and agents (“the Commonwealth”) from and against all and any reasonable losses, costs (including legal costs), liabilities, refunds, expenses and other outgoings incurred by the Commonwealth in connection with any claim made by a third party against the Commonwealth in relation to a Portfolio Asset to the extent to which those losses, costs, refunds, liabilities, expenses or other outgoings are incurred by the Commonwealth as a result of the Bank’s failure to perform its obligations under this Agreement.

Obligations of Commonwealth

The Commonwealth shall indemnify and keep indemnified the Bank, its officers, employees and agents (“the Bank”) from and against all and any reasonable losses, costs (including legal costs), liabilities, refunds, expenses and other outgoings incurred by the Bank in connection with any claim made by a third party against the Bank to the extent to which those losses, costs, refunds, liabilities, including tortious liabilities, expenses or other outgoings are incurred by the Bank as a result of:

Obligation of Commonwealth

The Commonwealth shall indemnify and keep indemnified the Bank from and against all and any reasonable losses and costs (including legal costs) incurred by the Bank in the event of it being not entitled to take action under any Portfolio Agreement or Portfolio Supplementary Agreement by reason of its not being a party to those Agreements.

17. DEALINGS WITH SOUTH AFRICA AND NAMIBIA

The Bank hereby agrees that:

For the purposes of this Clause, a South African or Namibian person is defined as a “natural person who is a citizen of or resides in South Africa or Namibia or alternatively is a company or body corporate or any body not being a body corporate which is incorporated or formed in South Africa or Namibia”.

18. NON-MERGING ON SETTLEMENT AND SEVERABILITY

Any provision in this Agreement which is to take effect after 1 December 1988 or the date of commencement of the Amending Act, whichever is the later, shall not merge on settlement but rather shall continue in full force and effect.

19. STAMP DUTY, ADMINISTRATIVE ARRANGEMENTS AND STATE/TERRITORY GOVERNMENT FEES

Stamp Duty

Subject to Sub-clause 19.2, any stamp duty arising out of this Agreement or its implementation shall be borne by the Bank.

Assessment

Where the Bank receives an assessment in respect of stamp duty on this Agreement or the transfer of Portfolio Assets to the Bank it shall forthwith deliver a copy of that assessment to the Commonwealth.

Until the earlier of twenty one (21) days after delivering a copy of such assessment to the Commonwealth or the last day for payment of any stamp duty assessed prior to the Bank becoming liable to pay any fine or penalty, the Bank shall not make payment.

During the period referred to in Sub-clause 19.2.2 the Bank and the Commonwealth shall, if the Commonwealth requests, discuss what action, if any, should be taken in relation to the assessment. If the Commonwealth request and indemnifies the Bank against any costs or expenses which the Bank may incur in so doing, the Bank shall:

In the event that it is a condition of making any objection or appeal pursuant to Sub-clause 19.2.3(b) or commencing legal proceedings pursuant to Sub-clause 19.2.3(d) that all or any part of the stamp duty assessed be paid then, subject to Sub-clause 19.2.8, the Commonwealth shall pay the Bank the amount of such stamp duty:

Where stamp duty has been paid pursuant to Sub-clause 19.2.4 and an objection, appeal or legal proceedings establishes that all or part of such stamp duty is not chargeable and the Bank receives a refund of stamp duty paid then the Bank shall forthwith reimburse the Commonwealth the amount of stamp duty not chargeable which has been paid by the Commonwealth, and pay to the Commonwealth any interest or like compensation received by the Bank in connection with that part of the refunded stamp duty paid by the Commonwealth.

If the Commonwealth does not request the Bank to lodge any objection or appeal within the time period specified in Sub-clause 19.2.2 or to commence legal proceedings after an unsuccessful objection or appeal before the last day for payment of stamp duty prior to the Bank becoming liable to pay any fine or penalty, the Bank shall pay the stamp duty assessed and, subject to Sub-clause 19.2.8, the Commonwealth shall reimburse the Bank within fourteen (14) days of a request for payment.

At the time of informing the Commonwealth of the outcome of any legal proceedings under Sub-clause 19.2.3(e), the Bank shall, where it is determined that stamp duty is payable, notify the Commonwealth of the remaining amount payable under the indemnity given by the Commonwealth pursuant to Sub-clause 19.2.3. Upon receipt of such notification, the Commonwealth shall pay the Bank the amount payable under the indemnity and, subject to Sub-clause 19.2.8, such stamp duty.

The Commonwealth shall only be obliged to pay or reimburse the Bank in respect of stamp duty to the extent that the sum of such stamp duty and any other stamp duty paid by the Bank on this Agreement and the transfer of Portfolio Assets to the Bank exceeds $500,000.

Commonwealth to facilitate the transfer

The Commonwealth shall inform the Governments of all States and Territories of the proposed vesting of Portfolio Assets in the Bank and shall use its best endeavours to ensure that administrative arrangements are made by those Governments to facilitate the substitution of the Bank as the mortgagee (or registered proprietor or registered lessee under a Crown lease as appropriate) of all Portfolio Assets.

Fees or charges necessary to give effect to the transfer of Portfolio Assets shall be borne by the Commonwealth

Any other fees or charges, including lodgement or registration fees, charged by any State or Territory the payment of which is necessary to give effect to the transfer of Portfolio Assets to the Bank pursuant to the Amending Act shall be borne by the Commonwealth.

20. LEGAL AND ACCOUNTING COSTS

The parties hereto shall bear their own legal and accounting costs of and incidental to the preparation, execution and implementation of this Agreement.

21. APPLICABLE LAW

This agreement shall be governed by and construed in accordance with the law for the time being in force in the Australian Capital Territory and the parties hereto agree to submit to the non-exclusive jurisdiction of the Courts of the Australian Capital Territory.

22. NOTICES

Any notice, approval, request, consent or other communication given or made to a party under this Agreement must be in writing and delivered in person or sent by registered post, telegram, telex or facsimile transmission to the party at the following address, telex number or facsimile number.

In the case of the Commonwealth to:

Address: Secretary

Department of Veterans’ Affairs

MLC Tower

Keltie Street

Woden ACT 2606

Fax: (062) 81 3822

Telex: 62706

For attention: The Secretary

In the case of the Corporation:

Address: Defence Service Homes Corporation

MLC Tower

Keltie Street

Woden A C T 2606

Fax: (062) 85 2857

Telex: 62706

For attention: General Manager

In the case of the Bank to:

Westpac Banking Corporation

Address: 66 Pitt Street Sydney

Fax: (02) 226 4905

Telex: AA20122

Answerback: WBANK

For attention: Chief Manager Consumer Banking

or such other address, telex number or facsimile number as the party from time to time may notify to the other party for the purpose of this Clause.

Any notice, approval, request, consent or other communication given or made pursuant to this Clause shall be deemed to be duly given or made:

but if such delivery or receipt is later than 5 p.m. (local time) on a day on which business is generally carried on in the place to which such communication is delivered or sent, it shall be deemed to have been duly given at the commencement of business on the next such day in that place.

23. WAIVER

Failure by either party at any time to enforce any of the provisions of this Agreement or any amendments pursuant thereto by the other party shall not be construed as a waiver by such party of such provision or in any way affect the validity of this Agreement or any part thereof, or the rights of the other party thereafter to enforce each and every such provision. The waiver by either party of any provision of this Agreement shall not constitute a waiver of any future obligation to comply with such provision.

24. ENTIRE AGREEMENT

The terms and conditions in this Agreement together with any written amendments which are confirmed by the parties as amendments to this Agreement shall constitute the complete agreement between the parties and it is expressly agreed and declared that no further or other covenants or provisions in respect of this Agreement or otherwise shall be deemed to be implied in this Agreement or to exist between the parties by way of collateral or other agreement by reason of any promise, representation, warranty or undertaking given or made by any party to another party on or prior to the execution of this Agreement and the existence of any such implication or collateral or other agreement is hereby negated.

25. AMENDMENTS OR VARIATION

No variation, modification or waiver of any provision of this Agreement nor consent to any departure by any party therefrom shall in any event be of any force or effect unless the same shall be confirmed in writing, signed by all the parties hereto, and then such variation, modification, waiver or consent shall be effective only to the extent for which it may be made or given.

26. ARBITRATION

Notice of dispute, question or difference

If any party considers that a dispute, question or difference has arisen as to the meaning, operation or effect of the provisions of this Agreement or the rights or liabilities of any of the parties then such party shall serve on the other party a notice of such dispute, question or difference and the parties shall meet forthwith in an attempt to settle such dispute, question or difference.

Submitting a dispute to Arbitration

In the event that such dispute, question or difference is not settled within fourteen (14) days from the date of service of the notice, either party may submit the dispute, question or difference to arbitration by serving a further notice on the other party stating that it requires that the dispute, question or difference be referred to arbitration and the giving of such further notice shall refer such dispute, question or difference to arbitration. Such dispute, question or difference shall then be determined, subject to the provisions of this Agreement, by an arbitrator selected by agreement in writing by the parties within fourteen (14) days of the giving of the aforementioned further notice or, in the absence of such agreement, by an arbitrator appointed in accordance with the provisions of the law relating to arbitration in force in the Australian Capital Territory. Every reference to arbitration under this Clause shall be deemed to be a reference to arbitration within the meaning of such law. The fees and expenses of the arbitrator shall be borne equally by the Bank and the Commonwealth. The parties may be represented or assisted in any arbitration proceedings by persons of their choice.

27. ASSIGNMENT

The Agreement may not be assigned in whole or in part by either party without the prior written consent of the other party.

28. DISPOSAL BY BANK

The Bank shall not, without the prior written consent of the Commonwealth, transfer, assign, sell, give or otherwise dispose of its interests, rights, title and obligations in any mortgages, including but not limited to Portfolio Assets which the Bank has obtained pursuant to this Agreement and/or the Act and/or the Amending Act, to any person, including a subsidiary, partner or joint venturer of the Bank, or any Company or organization, whether incorporated or not, in which the Bank has an interest, holds stocks or shares, or is a member of or holds a position in either directly or otherwise, unless:

29. CONFIDENTIALITY

Bank’s acknowledgement of material

The Bank acknowledges that any information or document supplied by the Commonwealth in respect of applicants, Entitled Applicants or Borrowers pursuant to this Agreement is to be received by the Bank in confidence and is not to be copied, used, disclosed or otherwise made available to any third person in circumstances in which disclosure is not authorised by a Banker/Customer relationship.

The Bank agrees not to copy, use, disclose or otherwise make available other than for the Bank’s own internal use or to satisfy an obligation arising from this Agreement any names and/or addresses or other identifying particulars of persons who are or were applicants, Entitled Applicants or Borrowers without the prior written consent of the applicant, Entitled Applicant or Borrower.

Commonwealth’s acknowledgement of material

The Commonwealth acknowledges that any information or document supplied by the Bank pursuant to this Agreement is received by the Commonwealth in confidence and is not to be copied, used, disclosed or otherwise made available to any third person other than for the Commonwealth’s own internal use or to satisfy an obligation arising under this Agreement or the Amended Act, without the prior written consent of the Bank and/or the applicant, entitled applicant or Borrower.

30. PERFORMANCE OF OBLIGATIONS BY CORPORATION

The Commonwealth undertakes to procure the due and proper performance by the Corporation of any obligation imposed upon the Corporation by the terms of this Agreement.

IN WITNESS WHEREOF the parties have executed this Agreement as at the day and year first before written:

SCHEDULE “A”

DOCUMENTS TO BE PROVIDED BY THE COMMONWEALTH

In relation to all applications for Corporation or Subsidised Advances referred to in Sub-clause 5.1, each or any of the following documents described below that are in the possession of the Corporation:

Description

– Application Forms

– Property Inspection Reports

– Title Searches

– Loan Approval Letters

– Any other documents in the possession of the Corporation that are necessary for the Bank to process applications for Subsidised Advances

– Any other documents that come into the possession of the Corporation after the date of commencement of the Amending Act or 1 December 1988, whichever is the later, and which are necessary for the Bank to process the applications for Corporation or Subsidised Advances referred to in Sub-clause 5.1.

SCHEDULE “B”

DOCUMENTS TO BE PROVIDED BY THE COMMONWEALTH AFTER EACH RELEVANT VESTING DATE

A. In relation to applications or requests referred to in Sub-Clause 5.2, each or any of the documents described below that are in the possession of the Corporation:

– Application Forms/Written Requests

– Property Inspection Reports

– Title Searches

– Loan Approval/other approval letters

– Any other documents in the possession of the Corporation that are necessary for the Bank to process the applications or requests referred to in Sub-clause 5.2.

Time of Supply

– Documents are to be sent to the Bank on each Vesting Date.

B. In relation to Portfolio Assets, the documents that are in the possession of, and the data available to, the Corporation as described below:

– A computer tape containing the following information:

Time of Supply

– As agreed between the parties

– All documents relating to Portfolio Assets held by the Corporation in its security packets, including as appropriate:

Time of Supply

– As agreed between the parties

– Copies of the Corporation’s settlement sheet for the original Corporation Advance and all documents in the possession of the Corporation that evidence any change to the terms and conditions of the original Corporation Advance, including but not limited to changes to the identity of the Borrower, title or security details, amount of loan, interest rate(s) or repayment instalment(s).

Time of Supply

– As agreed on between the parties

– Computer tapes containing as at the relevant Vesting Date the following information

– A hard copy of the information contained on the computer tapes referred to immediately above.

Time of Supply

The computer tapes are to be supplied on the morning of the first business day immediately following the relevant Vesting Date. The hard copy of the information contained on the Computer Tapes to be supplied within 2 weeks of the day of supply of the said tapes.

SCHEDULE “C”

The Bank’s lending criteria are:

Known commitments of an applicant or Entitled Applicant will be taken into consideration in determining the capacity of an applicant or Entitled Applicant to meet the repayments.

SCHEDULE “D”

INFORMATION TO BE PROVIDED BY THE BANK ON A MONTHLY BASIS

A. MONTHLY SUBSIDY REPORT ON SPECIFIED PORTFOLIO ASSETS AND SUBSIDISED ADVANCES (TO BE SUPPLIED BY COMPUTER TAPE)

Particulars

Subsidy Scheme (Commonwealth) File Number

Account Name (full name(s) of borrowers)

Account Number (includes Bank State Branch number)

B. MONTHLY SUBSIDY REPORT—VARIATIONS IN INTEREST ON SPECIFIED PORTFOLIO ASSETS AND BANK ADVANCES (TO BE SUPPLIED ON COMPUTER TAPE)

Particulars

Subsidy Scheme (Commonwealth) File Number

Account Name (full name(s) of borrowers)

Account Number

Open/Closed dates

Variations reason i.e. New Account

Repaid

Adjustment

C. SUBSIDY INVOICE—MONTHLY SUMMARY OF SUBSIDY CLAIMS (TO BE SUPPLIED ON COMPUTER TAPE AND PAPER)

Particulars

Total Limits

Total Balances

Benchmark accruals

Interest accruals

Subsidy sub-total

Less arrears adjustment (if any)

Subsidy sub-total

Loan variations since previous month

Subsidy adjustments from previous month (plus/minus)

Next subsidy due

D. REPORT ON RETURN COPY OF CERTIFICATE OF ENTITLEMENT

Particulars—Subsidised Advances and Instalment Relief

Subsidy Scheme (Commonwealth) File Number Account Name (full name(s) of borrowers)

Subsidised Advances

Date of settlement

Date and amount of progress payments

Term of Advance

Source of unsubsidised borrowing (i.e. Bank/Other)

Amount of unsubsidised borrowing by source

Consideration of property acquired/capital cost for extensions

Certification

Instalment Relief only:

Date of settlement

Certification

E. REPORT—INDIVIDUAL ADVICE

Particulars—(as relevant)

Subsidy Scheme (Commonwealth) File Number

Account Name (full name(s) of borrowers)

Change of account name

new account name

Notice of marriage

date of marriage

name of spouse

Notice of death

name of deceased

date of death

Purported transfer of land or land and dwelling-house subject to Subsidy without Commonwealth consent

date of transfer

name of transferee

Bankruptcy or insolvency

name of bankrupt

date of bankruptcy

Seizure of dwelling-house

date of seizure

whom seized by

authority for seizure

date of proposed sale

Ownership of other dwelling house at date of Certificate of Entitlement

name of owner

address of dwelling-house

Cessation of occupation of home

date occupation ceased

Failure to use Advance for purpose set out in Certificate of Entitlement.

Title particulars of property acquired.

SCHEDULE E

WITHDRAWAL OF AMOUNTS UNDER EXCESS CREDIT ARRANGEMENTS

Amounts may be withdrawn by a borrower under an excess credit arrangement referred to in Clause 9 of this Agreement, and used, for any of the following purposes:

Definitions

Where this Supplementary Agreement includes a reference to a term which is defined in the Agreement the definition in the Agreement as amended by this Supplementary Agreement is to be applied except where the contrary intention is expressed.

Interpretation

Words importing one gender shall include the other gender.

Words importing the singular shall include the plural and vice-versa.

A reference to a Clause shall be a reference to all of its Sub-clauses, and a reference to a Sub-clause shall be a reference to all its Sub-sub-clauses unless the context otherwise admits.

The Clause headings in this Supplementary Agreement are for reference only and have no effect on the construction, interpretation or meaning of the Clauses.

The Schedule referred to herein forms part of and is subject to the terms of this Supplementary Agreement.

Where in this Supplementary Agreement any period of time dating from a given day, act or event, is prescribed or allowed for any purpose, the time shall, unless the contrary intention appears, be reckoned inclusive of such day or of the day of such act or event.

Where the last day of any period prescribed or allowed by this Supplementary Agreement for the doing of anything falls on a Saturday, or on a Sunday or on a day which is a public holiday or a bank holiday in the place in which the thing is to be or may be done, the thing may be done on the first day following which is not a Saturday, or Sunday or public holiday or bank holiday in that place.

Where in this Supplementary Agreement any reference to time occurs, such time shall, unless it is otherwise specifically stated, be deemed in each State or part of the Commonwealth to mean the standard or legal time in that State or part of the Commonwealth.

A reference to a Clause shall be a reference to a Clause in this Supplementary Agreement unless otherwise specified.

A reference to the parties shall be a reference to the parties to this Supplementary Agreement.

All sums of money and all payments made under this Supplementary Agreement shall be in Australian dollars.

2. AGREEMENT

The Bank agrees to provide Variation Advances in the same manner as prescribed with respect to Subsidised Advances under the provisions of the Amended Agreement.

The Commonwealth agrees to grant the Bank the exclusive right to receipt of Subsidy in respect of each Variation Advance pursuant to Clause 5 hereof.

The Commonwealth further agrees to pay to the Bank a Subsidy with respect to each Variation Advance in accordance with the provisions of Clause 11 of the Amended Agreement.

The Bank further agrees that with respect to each Variation Advance it shall be bound by and act at all times in accordance with this Supplementary Agreement and the Amended Agreement.

The Commonwealth and the Bank agree that in order to give effect to this Supplementary Agreement the provisions of the Agreement are to be amended in accordance with the provisions of the Schedule to this Supplementary Agreement.

3. UNIT FEE

The Bank agrees to pay to the Commonwealth

For the purposes of this Clause the Bank shall be taken to have granted a Variation Advance to an Entitled Applicant upon the execution by the Entitled Applicant of all necessary mortgage or security documentation, or if mortgage or security documentation does not exist or is not required by the Bank, the date on which the Borrower first draws upon the Variation Advance.

On or after 1 May of each year commencing on 1 May 1991 the Commonwealth shall provide to the Bank a written invoice detailing its claim for payment of the Unit Fee referred to in Sub-clause 3.1 in respect of the Unit Fee Claim Period.

The Bank shall pay the Commonwealth the total amount by way of Unit Fee which the Bank has verified by 11:00 am. on the day which is thirty (30) days after receipt of the Commonwealth’s invoice pursuant to Sub-clause 3.3.

Payment shall be made by depositing a cheque for the relevant amount with the Receiver of Public Monies, Department of Veterans’ Affairs, Sydney, New South Wales or in such other manner as the Commonwealth may from time to time advise.

In the event of a dispute or disagreement arising between the Commonwealth and the Bank as to the amount payable to the Commonwealth by the Bank in accordance with this Supplementary Agreement the following provisions shall apply:

In the event that any such dispute or disagreement cannot be resolved between the Commonwealth and the Bank within a period of seven (7) days after first occurring, the dispute or disagreement is to be referred to arbitration in accordance with the procedure outlined in Clause 26 of the Agreement, except that the Commonwealth and the Bank agree that for the purpose of such dispute/disagreement the arbitrator shall be appointed by the President for the time being of the Australian Institute of Chartered Accountants.

Upon resolution of such dispute or disagreement in the event that there has been an overpayment by the Bank to the Commonwealth of the amount of the Unit Fee the Commonwealth shall pay to the Bank within seven (7) days of such resolution by way of adjustment the amount of such overpayment.

The Commonwealth and the Bank agree that the amount of adjustment shall bear interest at the Benchmark rate fixed in accordance with Sub-clause 11.10 of the Agreement.

4. FURTHER AMENDING ACT

This Supplementary Agreement is binding on the parties but, except for this Clause, is subject to and conditional upon Part 2 of the Veterans’ Affairs Legislation Amendment Act 1990 being passed by Parliament in the form of the draft Bill initialled on behalf of the parties at the time of execution of this Supplementary Agreement with such amendments only as are agreed in writing by the parties.

In the event that Part 2 of the Veterans’ Affairs Legislation Amendment Act 1990 passed by Parliament should contain any amendments from the draft Bill referred to in Sub-clause 4.1 the Commonwealth shall within two (2) days of the passage of the Veterans’ Affairs Legislation Amendment Act 1990 give notice to the Bank of the amendments together with such information relating to those amendments as it wishes to provide.

If in the opinion of the Bank, such amendments:

and are unacceptable to the Bank, the Bank shall notify the Commonwealth of such opinion within seven (7) days of receipt of the notice under Sub-clause 4.2, or such further period as may be agreed upon by the parties, and upon receipt of such notice this Supplementary Agreement shall terminate.

In the event that the Bank does not give notice under Sub-clause 4.3, it shall be taken to have agreed to such amendments for the purposes of Sub-clause 4.1.

The Commonwealth agrees that Part 2 of the Veterans’ Affairs Legislation Amendment Bill 1990 referred to in Sub-clause 4.1 which is submitted to Parliament shall have only such amendments as may be agreed in writing between the parties.

In the event that Part 2 of the Veterans’ Affairs Legislation Amendment Act 1990 is not passed in the form of the draft Bill referred to in Sub-clause 4.1 and, as a result, the condition contained in Sub-clause 4.1 is not met and this Supplementary Agreement is terminated or has no force or effect, neither the Bank nor the Commonwealth will have any right to claim compensation, losses, expenses, costs or damages arising or resulting from this Supplementary Agreement against the other.

5. GRANT OF EXCLUSIVE RIGHT

The Commonwealth hereby grants to the Bank on the terms set out in this Supplementary Agreement the exclusive right to provide the first twenty five thousand dollars ($25,000.00), or such other amount as may be agreed upon by the parties, of the Variation Advances upon which Subsidy is payable to all persons who satisfy the tests of eligibility and entitlement under the Defence Service Homes Act 1918 as amended by the Veterans’ Affairs Legislation Amendment Bill 1990.

The Commonwealth agrees to notify all persons who seek Subsidised Advances in accordance with the Variation Advances under Part 2 of the Veterans’ Affairs Legislation Amendment Act 1990 that the Bank has the exclusive right to grant these Variation Advances.

6. ADOPTION AND APPLICATION OF AGREEMENT

The Commonwealth and the Bank agree that they will adopt, apply, read and construe this Supplementary Agreement in accordance with the provisions of the Agreement as amended by the Schedule to this Supplementary Agreement.

7. NON - MERGING ON SETTLEMENT AND SEVERABILITY

Any provision in this Supplementary Agreement which is to take effect after the last date of commencement of Part 2 of the Veterans’ Affairs Legislation Amendment Bill 1990, shall not merge on settlement but rather shall continue in full force and effect.

8. STAMP DUTY

Any stamp duty arising out of this Supplementary Agreement or its implementation shall be borne by the Bank.

9. APPLICABLE LAW

This Supplementary Agreement shall be governed by and construed in accordance with the law for the time being in force in the Australian Capital Territory and the parties hereto agree to submit to the non-exclusive jurisdiction of the Courts of the Australian Capital Territory.

10. WAIVER

Failure by either party at any time to enforce any of the provisions of this Supplementary Agreement or any amendments pursuant thereto by the other party shall not be contrued as a waiver by such party of such provision or in any way affect the validity of this Supplementary Agreement or any part thereof, or the rights of the other party thereafter to enforce each and every such provision. The waiver by either party of any provision of this Supplementary Agreement shall not constitute a waiver of any future obligation to comply with such provision.

11. AMENDMENTS OR VARIATION

No variation, modification or waiver of any provision of this Supplementary Agreement nor consent to any departure by any party therefrom shall in any event be of any force or effect unless the same shall be confirmed in writing, signed by all the parties hereto, and then such variation, modification, waiver or consent shall be effective only to the extent for which it may be made or given.

12. ASSIGNMENT

This Supplementary Agreement may not be assigned in whole or in part by either party without the prior written consent of the other party.

IN WITNESS WHEREOF the parties have executed this Agreement as at the day and year first before written:

SCHEDULE OF AMENDMENTS TO AGREEMENT

Clause   1

Amend the following definitions:

Insert the following new definitions:

Clause   5

Clause   7

Clause   8

Clause   9

Clause   10

Insert a new Sub-clause 10.1(i) after Sub-clause 10.1(h) in the following terms:

“written notice that the Entitled Applicant’s right of residence in a retirement village has been terminated.”

Clause   11

Delete Sub-clause 11.5 and insert the following:

Clause   22

Delete the Commonwealth’s Fax number recorded as: (062) 813 822

Insert the following new Fax numbers for the Commonwealth:

Insert the following after the words “For attention the Secretary”:

“Notices issued to the Commonwealth should also be addressed to:

State Manager

Defence Service Homes

in the State/Territory in which the Westpac account is held.”

Insert: “Notices issued to the Bank should be addressed to:

Delete the words: “66 Pitt Street, Sydney”.

Insert the words:

“Australian Marketing Group

P.O. Box H258

Australia Square

Sydney, N.S.W. 2001”

Schedule D

E. REPORT—INDIVIDUAL ADVICE

Insert the words “or retirement village accommodation” after “dwelling house” wherever the latter appears.”.

The remaining provisions of this Act shall come into operation on the twenty-eighth day after the day on which this Act receives the Royal Assent.

Subject to this section, this Act shall come into operation on the twenty-eighth day after the day on which it receives the Royal Assent.

Subject to this section, this Act shall come into operation on the day on which it receives the Royal Assent.

(3) Sections 61 and 63 shall be deemed to have come into operation immediately before the provisions of the Veterans’ Entitlements (Transitional Provisions and Consequential Amendments) Act 1986 (other than section 61 of that Act) came into operation.