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					TOWER
Investment Statement
and Prospectus




Fixed Rate Senior
Unsecured Bonds



8.5%
IN T ER EST R AT E PER A NN U M


Offer of up to $100 million Fixed Rate Senior Unsecured Bonds by TOWER Capital Limited
Joint Lead Managers: Forsyth Barr Limited, Goldman Sachs JBWere (NZ) Limited




                                                                                         1
    Important Information
    The information in this section is required under the Securities Act 1978.

    Investment decisions are very important.                           ƒ what types of investments the adviser gives advice
    They often have long term consequences.                              about; and
    Read all documents carefully. Ask                                  ƒ whether the advice is limited to investments
    questions. Seek advice before committing                             offered by one or more particular financial
                                                                         institutions; and
    yourself.
                                                                       ƒ information that may be relevant to the adviser’s
    Choosing an investment                                               character, including certain criminal convictions,
    When deciding whether to invest, consider carefully                  bankruptcy, any adverse findings by a court
    the answers to the following questions that can be                   against the adviser in a professional capacity, and
    found on the pages noted below:                                      whether the adviser has been expelled from, or
                                                                         prohibited from joining, a professional body; and
    What sort of investment is this?                         30
                                                                       ƒ any relationships likely to give rise to a conflict of
    Who is involved in providing it for me?                  30          interest.
    How much do I pay?                                       31        The adviser must also tell you about fees and
                                                                       remuneration before giving you advice about
    What are the charges?                                    31        an investment. The information about fees and
    What returns will I get?                                 32        remuneration must include -
                                                                       ƒ the nature and level of the fees you will be
    What are my risks?                                       34
                                                                         charged for receiving the advice; and
    Can the investment be altered?                           38        ƒ whether the adviser will or may receive a
    How do I cash in my investment?                          40          commission or other benefit from advising you.
                                                                       An investment adviser commits an offence if he
    Who do I contact with enquiries                          40        or she does not provide you with the information
    about my investment?                                               required.
    Is there anyone to whom I can complain                   41        This Investment Statement and Prospectus (‘Offer
    if I have problems with the investment?                            Document’) is an important document which should
                                                                       be read in its entirety. If you have any questions
    What other information can I obtain                      41
                                                                       about it, you should request advice from the Joint
    about this investment?
                                                                       Lead Managers, any Primary Market Participant or
    In addition to the information in this document,                   from an investment adviser.
    important information can be found in the current                  Investors should read in particular the section
    registered prospectus for the investment. You are                  ‘Answers to Important Questions’ on pages 30 to 41.
    entitled to a copy of that prospectus on request.1
                                                                       All amounts in this document, unless stated
    Engaging an investment adviser                                     otherwise, are in New Zealand dollars.
    An investment adviser must give you a written                      A copy of this Offer Document, duly signed by
    statement that contains information about the                      or on behalf of each of the directors of TOWER
    adviser and his or her ability to give advice. You                 Capital Limited and by TOWER Capital Limited and
    are strongly encouraged to read that document                      TOWER Limited, and having attached to it copies
    and consider the information in it when deciding                   of the documents required by section 41 of the
    whether or not to engage an adviser.                               Securities Act 1978 (being the material contract, any
    Tell the adviser what the purpose of your investment               agent authority forms, and an acknowledgement
    is. This is important because different investments                from NZX to the effect that application has been
    are suitable for different purposes, and carry                     made for permission to list the Senior Bonds),
    different levels of risk.                                          was delivered to the Registrar of Companies for
    The written statement should contain important                     registration in accordance with section 42 of
    information about the adviser, including -                         the Securities Act 1978 on the date of this Offer
    ƒ relevant experience and qualifications, and                      Document.
      whether dispute resolution facilities are available              This Offer Document is dated and prepared as at
      to you; and                                                      13 February 2009.

    1
     This document is a combined Investment Statement and Prospectus. The wording above is required by Schedule 3D to the
     Securities Regulations 1983 which contemplates a separate investment statement and prospectus. Accordingly the prospectus
     available on request is identical to this document.

2
Contents
  Letter from TOWER’s Chairman                     5


  Summary of the Offer                             8
  Main Terms of Offer                             10
  TOWER’s Business Overview                       14
  Directors and Management                        18
  Summary Financial Information                   21



Investment Statement Information
  Answers to Important Questions                  30



Other Information
  Summary of Trust Deed                           44
  Conditions of Senior Bonds                      48
  Trustee’s Statement                             60
  Prospectus Statutory Information                61
  Statutory Index                                 65
  Glossary                                        66
  Application Form and Application Instructions   71
  Directory                                       75




                                                       3
4
Letter from TOWER’s Chairman
13 February 2009


Dear Investor,


On behalf of TOWER’s Board, I have pleasure in presenting New Zealand investors with the opportunity
to subscribe for fixed rate senior unsecured Bonds to be issued by TOWER Capital Limited.
The TOWER Group is one of New Zealand’s leading insurance and financial services organisations with
a history dating back to 1869. The TOWER Group provides essential insurance and wealth management
products, including home and contents insurance, vehicle insurance, life insurance, health insurance,
managed funds and KiwiSaver investments, to customers throughout New Zealand and in the Pacific
Islands.
The TOWER Group has previously undertaken successful fixed interest offerings to investors in New
Zealand. As part of the 2006 separation of its New Zealand business from its Australian business (now
known as TOWER Australia), the TOWER Group repurchased for cash its last remaining series of fixed
interest securities.
This issue of Senior Bonds, to raise up to $100 million, is intended to be used to retire existing bank debt
and also to supplement the working capital requirements of the TOWER Group.
The Senior Bonds provide investors with a competitive fixed rate of interest of 8.5% per annum (paid
quarterly in arrears until the Maturity Date of 15 April 2014).
TOWER Capital is a wholly owned subsidiary of TOWER, and was established to make this Offer.
TOWER and TOWER Financial Services Group Limited have provided an unsubordinated and unsecured
guarantee of Interest when payable and of principal when payable and on a Liquidation.
TOWER’s Board has carefully considered the contents of this Offer Document and we commend the
Offer for consideration by New Zealand investors. It offers an excellent rate of return for the next five
years ahead, and an opportunity to invest with one of New Zealand’s longest-standing insurance and
investment organisations.
We welcome your participation in this Offer.


Yours faithfully,




A I (Tony) Gibbs, CNZM
Chairman
TOWER Limited




                                                                                                               5
6
7
                           Summary of the Offer
                           Size of Offer                                        duly complied with. However, NZX accepts no
Summary of the Offer




                           The Offer is for fixed rate senior unsecured Bonds   responsibility for any statement in this Offer
                           having aggregate issue proceeds of up to $80         Document.
                           million. TOWER reserves the right to accept over-    The Company intends the Senior Bonds will
                           subscriptions for further Senior Bonds having        commence quotation on the NZDX market on 24
                           aggregate issue proceeds of up to $20 million.       March 2009, and in any event no later than five
                           Senior Bonds with aggregate issue proceeds           business days after the Closing Date.
                           of up to $80 million have been reserved for
                           subscription by clients of Primary Market            Maturity of Senior Bonds
                           Participants.                                        The Maturity Date is 15 April 2014.
                                                                                At maturity Bondholders may elect to either:
                           Type of Investment
                           The Senior Bonds are unsubordinated, unsecured,      ƒ have their Senior Bonds redeemed or
                           fixed interest debt securities of TOWER Capital        purchased for cash; or
                           Limited (‘TOWER Capital’ or ‘the Company’).          ƒ if New Conditions are offered by the Company,
                           TOWER Limited (‘TOWER’), and TOWER                     rollover their Senior Bonds on the New
                           Financial Services Group Limited (‘TFSG’) (the         Conditions.
                           ‘Guarantors’) provide an unsubordinated and
                                                                                If New Conditions are offered by the
                           unsecured guarantee of Interest and principal
                                                                                Company, Bondholders who do nothing or
                           when payable, and of principal and Accrued
                                                                                who do not make a valid election will be
                           Interest and Unpaid Interest when payable and
                                                                                deemed to have elected to retain all of their
                           on commencement of Liquidation, on a joint and
                           several basis.                                       Senior Bonds on the New Conditions.

                           The Bonds are unsecured but referred to as           Despite a Bondholder’s election or deemed
                           senior because Bondholders will rank ahead of        election to rollover their Senior Bonds on the
                           Subordinated Creditors and shareholders of the       Maturity Date, the Company may elect to
                           Company and the Guarantors in the event of a         redeem or purchase some or all of their Senior
                           Liquidation. The Bonds rank equally with other       Bonds for cash at the Issue Price.
                           unsecured creditors of the Company and the
                           Guarantors in the event of a Liquidation.            Financial Covenants
                           Other than the Guarantors, no member of the          TOWER Limited (TOWER), TOWER Financial
                           TOWER Group provides any guarantee in respect        Services Group Limited (TFSG), and the Company
                           of the Senior Bonds.                                 have covenanted that while any Senior Bonds
                                                                                remain outstanding:
                           Use of Proceeds
                                                                                ƒ Net Assets of the TOWER Group shall be not
                           It is intended that the proceeds of the Offer
                                                                                  less than $200 million;
                           will be used to retire existing bank debt and to
                           supplement the working capital requirements of       ƒ Net Debt of the TOWER Group shall not exceed
                           the TOWER Group.                                       40% of Net Assets of the TOWER Group; and
                                                                                ƒ Secured Debt of the TOWER Group shall not
                           Interest Rate                                          exceed 10% of Net Assets of the TOWER
                           The Senior Bonds will bear Interest payable            Group.
                           quarterly in arrears at 8.5% per annum. The first
                                                                                If, and for so long as there is a breach of a
                           Interest Payment Date is 15 April 2009.
                                                                                Financial Covenant, the Company must pay
                           NZDX Listing and Quotation                           Interest at the Default Rate (being 2% higher
                                                                                than the usual Interest Rate) and TOWER may not
                           Application has been made to NZX for
                                                                                make any Distribution to its shareholders.
                           permission to list the Senior Bonds on the NZDX
                           market and the requirements of NZX relating          A breach of a Financial Covenant is not an Event
                           thereto that can be complied with on or before       of Default and does not entitle the Trustee to
                           the date of this Offer Document have been            accelerate repayment of the Senior Bonds.



                       8
Further Issues of Debt                                   Closing Date
Under the Trust Deed, the Company and the                The Offer is intended to close on the earlier of 20
Guarantors each have the power to create and             March 2009 or the date on which subscriptions
issue additional debt obligations ranking behind         are accepted for up to $100 million of Senior
or pari passu with the Senior Bonds without
                                                         Bonds.
the consent of Bondholders. The Guarantors
or any other company in the TOWER Group                  The Company reserves the right to alter any
may also grant security for obligations, subject         of the dates included in the timetable, subject




                                                                                                                   Summary of the Offer
to the Financial Covenants. Such further debt            to appropriate approvals, and to reject any
obligations may be issued on such terms as the           application to invest in Senior Bonds in whole or
Company or TOWER thinks fit, provided the                in part.
Financial Covenants are not breached.
                                                         Minimum Applications
Credit Rating
                                                         $5,000 and thereafter in multiples of $1,000.
The Senior Bonds are not rated. TOWER Limited
holds a bbb- (investment grade) issuer credit rating     How to Apply
from A.M. Best Company. For more details on the
                                                         Instructions on completing an application are set
credit rating of certain members of the TOWER
                                                         out on the reverse of the Application Form.
Group see page 17.

Offer in New Zealand                                     Definitions
The Offer is made only to New Zealand resident           See the sections ‘Glossary’ and ‘Conditions of
investors. No offer or invitation to invest is made      Senior Bonds’ for definitions of certain terms
in any other jurisdiction.                               used in this Offer Document.

Important dates
Opening Date of Offer                                                                    16 February 2009

Closing Date of Offer                                                                       20 March 2009

Allotment Date                                           24 March 2009 or if the Company determines,
                                                         within three business days of the Closing Date.

Expected date of initial quotation and                                                      24 March 2009
trading on NZDX

First Interest Payment Date                                                                   15 April 2009
(Interest payable to initial subscriber)

Subsequent Interest Payments                    15 January, 15 April, 15 July and 15 October in each year

Maturity Date                                                                                 15 April 2014




                                                                                                               9
                      Main Terms of Offer
                      THE FOLLOWING INFORMATION                            the requirements of NZX relating thereto that can
Main Terms of Offer




                      IS A SUMMARY OF THE MAIN                             be complied with on or before the date of this
                                                                           Offer Document have been duly complied with.
                      TERMS OF THE OFFER OF FIXED
                                                                           However, NZX accepts no responsibility for any
                      RATE SENIOR UNSECURED BONDS                          statement in this Offer Document.
                      BY TOWER CAPITAL. INVESTORS                          The Company intends the Senior Bonds will
                      SHOULD ALSO REFER TO THE MORE                        commence quotation on the NZDX market on 24
                      DETAILED INFORMATION IN THIS                         March 2009, and in any event no later than five
                      OFFER DOCUMENT INCLUDING                             business days after the Closing Date.
                      THE SECTIONS ‘ANSWERS TO
                                                                           Interest Rate
                      IMPORTANT QUESTIONS’ AND
                                                                           The Senior Bonds will bear Interest payable
                      ‘CONDITIONS OF SENIOR BONDS’.                        quarterly in arrears at 8.5% per annum. The
                      Size of Offer                                        Interest Rate will be fixed for the period to the
                                                                           Maturity Date of 15 April 2014.
                      The Offer is for fixed rate senior unsecured Bonds
                      having aggregate issue proceeds of up to $80         Payment of Interest
                      million. TOWER reserves the right to accept over-
                                                                           The first Interest Payment Date is 15 April
                      subscriptions for further Senior Bonds having
                                                                           2009. The first Interest Payment will be made
                      aggregate issue proceeds of up to $20 million.
                                                                           to the original subscriber for the Senior Bonds
                      Accordingly, the maximum size of the Offer is
                                                                           irrespective of any transfer of the Senior Bonds
                      $100 million.
                                                                           prior to 15 April 2009. Interest paid on the first
                      Senior Bonds with aggregate issue proceeds           Interest Payment Date will be calculated on a
                      of up to $80 million have been reserved for          daily basis from the date a valid application is
                      subscription by clients of Primary Market            received and processed, until the day prior to the
                      Participants.                                        first Interest Payment Date.
                                                                           Subsequent Interest Payments will be calculated
                      Issuer
                                                                           on an annual basis and paid in equal instalments
                      The issuer of the Senior Bonds is TOWER Capital.
                                                                           quarterly in arrears on 15 January, 15 April, 15
                      The Company is and must remain a wholly
                                                                           July and 15 October until the Maturity Date,
                      owned subsidiary of TOWER while any of the
                                                                           to registered Bondholders on the Record Date
                      Senior Bonds remain on issue.
                                                                           (as defined in the Trust Deed) for determining
                                                                           entitlement to Interest Payments.
                      Guarantee
                      TOWER and TFSG (the ‘Guarantors’) provide an         Options on Maturity
                      unsubordinated and unsecured guarantee of            The Maturity Date is 15 April 2014.
                      payment of Interest on Senior Bonds on every
                                                                           Prior to the Maturity Date, the Company may
                      Interest Payment Date and the principal amount
                                                                           offer to set New Conditions which will apply to
                      of Senior Bonds together with Accrued Interest
                                                                           Senior Bonds which are rolled over until the next
                      and Unpaid Interest payable to Bondholders
                                                                           maturity date.
                      when payable and on a Liquidation of the
                      Company, TFSG or TOWER.                              At maturity Bondholders may elect to either:
                      Other than the Guarantors, no member of the          ƒ have their Senior Bonds redeemed or
                      TOWER Group provides any guarantee in respect          purchased for cash; or
                      of the Senior Bonds.                                 ƒ if New Conditions are offered by the Company,
                                                                             rollover their Senior Bonds on the New
                      Type of security and transferability                   Conditions.
                      The Senior Bonds are unsubordinated, unsecured       If New Conditions are offered by the
                      fixed interest debt securities of the Company. The   Company, Bondholders who do nothing or
                      Senior Bonds are transferable.                       who do not make a valid election will be
                      Application has been made to NZX for permission      deemed to have elected to rollover all of their
                      to list the Senior Bonds on the NZDX market and      Senior Bonds on the New Conditions.


                 10
Irrespective of any Bondholder election or              change in taxation relating to the Senior Bonds
deemed election to rollover their Senior Bonds,         from the perspective of either the Company or
the Company may give notice to Bondholders              Bondholders, as determined by the Company,
that it will redeem or purchase for cash on that        or TOWER; or
Maturity Date some or all Senior Bonds on issue.      ƒ at the aggregate of 103% of the Issue Price,
Where less than all Senior Bonds are redeemed,          together with all Accrued Interest and Unpaid
they will be redeemed on a pro-rata basis.              Interest in respect of those Senior Bonds in the
                                                        event of a Major Restructuring Event prior to 15
Financial Covenants




                                                                                                             Main Terms of Offer
                                                        April 2011.
TOWER, TFSG and the Company have                      Bondholders have no ability to cash in their
covenanted that while any Senior Bonds remain         investments prior to the Maturity Date, except
outstanding:                                          following an Event of Default and acceleration of
ƒ Net Assets of TOWER Group shall be not less         repayment of Senior Bonds by the Trustee, on a
  than $200 million;                                  Takeover or by selling their Senior Bonds.
ƒ Net Debt of the TOWER Group shall not exceed
  40% of Net Assets of the TOWER Group; and           TOWER and subsidiaries may
                                                      purchase Senior Bonds
ƒ Secured Debt of the TOWER Group shall not
  exceed 10% of Net Assets of the TOWER               The Trust Deed permits TOWER or any of
  Group.                                              its subsidiaries (including the Company), to
                                                      purchase Senior Bonds for their own account at
Interest on the Senior Bonds is payable by
                                                      any time.
the Company at the Default Rate (being 2%
higher than the usual Interest Rate) instead of       Takeover provision
the usual Interest Rate for so long as there is an
                                                      If a Takeover of TOWER occurs where TOWER
unremedied breach of a Financial Covenant.
                                                      is delisted following acquisition of 90% of its
A breach of a Financial Covenant is not an Event      shares, the Company must offer to redeem or
of Default and does not entitle the Trustee to        purchase all Senior Bonds on issue at their Issue
accelerate repayment of the Senior Bonds.             Price at the next Interest Payment Date following
TOWER may not make any Distribution to its            delisting.
shareholders while any Interest has not been paid     See ‘Takeover Provision’ in the section
when due, while there is an unremedied Event of       ‘Conditions of Senior Bonds’ on page 53.
Default, or there remains an unremedied breach
of a Financial Covenant, or where to do so would      Events of Default
cause a breach of a Financial Covenant.               Following an Event of Default, the Trustee may
                                                      declare the Senior Bonds to be immediately due
Early Repayment                                       and payable. The Trustee may also (and must
The Trust Deed allows the Company at any time         if requested to do so by Bondholders holding
after 15 April 2011, to require the redemption or     more than 10% of Senior Bonds on issue) call
purchase of all or part of Senior Bonds on issue at   a meeting of Bondholders. The Company has
a premium to the Issue Price, together with any       the right to attend a meeting of Bondholders
Accrued Interest and Unpaid Interest on the Senior    and may submit proposals for Bondholders’
Bonds. The Redemption Price payable will be:          consideration. The Trustee must declare the
ƒ 103% of Issue Price (if the Early Repayment         Senior Bonds to be immediately due and payable
  is between 15 April 2011 and 14 April 2012,         if directed to do so by an Ordinary Resolution of
  inclusive);                                         Bondholders at such meeting.
ƒ 102% of Issue Price (if the Early Repayment         In summary, the Events of Default are:
  is between 15 April 2012 and 14 April 2013,         ƒ the Liquidation of the Company, TFSG or
  inclusive); and                                       TOWER;
ƒ 101% of Issue Price (if the Early Repayment is      ƒ the exercise of certain cross-acceleration rights
  after 14 April 2013).                                 by other creditors;
If the Company wishes to redeem or purchase           ƒ in the event that Interest has not been paid on
only part of the Senior Bonds on issue, it must do      the Senior Bonds within 10 business days of an
so on a pro-rata basis.                                 Interest Payment Date; or
The Company may also require the redemption           ƒ in the event that principal has not been paid on
or purchase of all of the Senior Bonds on issue:        the Senior Bonds within 10 business days of the
ƒ at no premium to the Issue Price, together with       Maturity Date or other due date for payment,
  any Accrued Interest and Unpaid Interest on         where the event continues and is not remedied,
  the Senior Bonds in the event of an adverse         and the Trustee has given a notice to the


                                                                                                            11
                      Company declaring such event to be an Event of       Trustee
                      Default. A breach of the Financial Covenants or
                                                                           The trustee is The New Zealand Guardian Trust
                      of any other provision of the Trust Deed does not
                                                                           Company Limited.
                      constitute an Event of Default.
                      Investors should refer to the Trust Deed for a       Applications
                      fuller description of the acts and omissions that    Applications for Senior Bonds must be for a
                      constitute an Event of Default.                      minimum aggregate Issue Price of $5,000 and
                      See ‘Early Repayment’ in the section ‘Conditions     thereafter in multiples of $1,000. Applications
Main Terms of Offer




                      of Senior Bonds’ on pages 50–51.                     must be made on the Application Form
                                                                           contained at the back of this Offer Document
                      Other Breaches                                       and are to be lodged with the Registrar or the
                      If there is a breach by the Company, TOWER or        Company, any Primary Market Participant or a
                      TFSG of a provision of the Trust Deed other than     Joint Lead Manager in time to enable forwarding
                      in an Event of Default, that continues unremedied    to the Registrar before 5.00pm on the Closing
                      for 30 days and the Trustee considers that such      Date. An application cannot be withdrawn
                      breach is materially prejudicial to the interests    or revoked by the applicant once it has been
                      of Bondholders, the Trustee may take such            submitted.
                      proceedings as it thinks fit against the Company,    If you have received a firm allocation from
                      TOWER or TFSG (as the case may be), provided         a Primary Market Participant, this should be
                      that the Trustee cannot accelerate payment of        returned to the Primary Market Participant in
                      Interest or principal on Senior Bonds on the basis   time for it to be forwarded to the Registrar before
                      of this breach.                                      5.00pm on the Closing Date.
                                                                           The aggregate Issue Price of the Senior Bonds
                      Liquidation and Ranking
                                                                           for which an application is made must be paid
                      On the Liquidation of the Company or either          in full on application. Cheques should be made
                      of the Guarantors the Senior Bonds will be           payable to ‘TOWER Bond Offer’, crossed ‘not
                      redeemable by the Company in cash and will           transferable’ and must not be post dated.
                      rank for payment:
                      ƒ ahead of subordinated creditors and                Allotments
                        shareholders of each of the Company and            Allotments will be made on the Allotment Date.
                        (in relation to their respective guarantee         The Company will advise successful applicants of
                        obligations) the Guarantors, and pari passu        the allotment of Senior Bonds to them as soon as
                        with other Bondholders and Senior Creditors;       possible after the Allotment Date. The Company
                        but                                                reserves the right to refuse all or any part of any
                      ƒ after the claims in point of security of Secured   application without giving a reason.
                        Creditors of each of the Company and the
                        Guarantors, and to indebtedness having             Underwriting
                        priority by operation of law.                      The Offer is not underwritten.
                      Creditors of non-guaranteeing subsidiaries of the
                                                                           Refunds
                      TOWER Group will rank ahead of Bondholders.
                                                                           If the Company accepts an application in part,
                      Cross-acceleration rights                            the balance of the application moneys will be
                      Bondholders have certain cross-acceleration          refunded (without interest) no later than five
                      rights in respect of the Senior Bonds. This means    business days after the date of allotment of the
                      that if, due to a default by the Company or          Senior Bonds to the applicant.
                      either of the Guarantors, other than in respect      Any application moneys received in respect
                      of the Senior Bonds, a Senior Creditor (or Senior    of applications that are not accepted will be
                      Creditors) of the Company or either of the           refunded to the applicant no later than five
                      Guarantors is entitled to and requires repayment     business days after the later of the date of receipt
                      of indebtedness in excess of $10 million (in         and the Closing Date. No interest will be paid
                      aggregate) prior to the stated maturity of that      on refunds. Any applications received after the
                      indebtedness, that event will also be an Event       Closing Date may not be accepted.
                      of Default in respect of the Senior Bonds, unless
                      it is remedied by the Company or the relevant        Offer only in New Zealand
                      Guarantor. In the event that the entitlement of a    This Offer is made only to New Zealand
                      Senior Creditor to require repayment is disputed,    residents. No offer or invitation is made under
                      it shall be determined by application to the         this Offer Document in any jurisdiction outside
                      courts in New Zealand and will not constitute an     New Zealand. No person may offer, sell or deliver
                      Event of Default pending such determination.         any Senior Bonds or distribute any document


                 12
(including this Offer Document) to any person
in any jurisdiction outside New Zealand, except
in accordance with all of the legal requirements
of that jurisdiction. Unless otherwise agreed with
the Company, any person or entity subscribing
for Senior Bonds will, by virtue of that
subscription, be deemed to represent that that
person or entity is not in a jurisdiction that does




                                                       Main Terms of Offer
not permit the making of an offer or invitation of
the kind described in this Offer Document and is
not acting for the account or benefit of a person
within such a jurisdiction.

Non-reliance
This Offer Document does not constitute a
recommendation by the Company, any member
of the TOWER Group, the Joint Lead Managers,
the Trustee, nor any of their respective directors,
officers, employees or agents to subscribe for or
purchase any of the Senior Bonds. Neither the
Company, any member of the TOWER Group,
the Joint Lead Managers, the Trustee, nor any
of their respective directors, officers, employees
or agents accepts any liability whatsoever for
any loss arising from this Offer Document, its
contents or otherwise arising in connection with
the offer of Senior Bonds.

Taxation
For New Zealand Bondholders (other than
tax exempt entities) the Senior Bonds are
financial arrangements for the purposes of
the Income Tax Act 2007. All Interest paid will
represent taxable income for the Bondholder.
The redemption or purchase for cash, or sale of
the Senior Bonds may require the Bondholder
to calculate a base price adjustment for the
purposes of the accrual rules.
Resident Withholding Tax (‘RWT’) will be
deducted by the Company from Interest paid to
or credited to Bondholders unless a Bondholder
provides the Company with a valid certificate
of exemption or evidence that they are not
otherwise liable to RWT and the Company is
satisfied that no deduction is required.
For more information in relation to tax, see the
question ‘What returns will I get?’ on page 32 or
consult your own adviser.




                                                      13
                            TOWER’s Business Overview
                            TOWER Capital was incorporated for the purpose          The TOWER Group continued its strong
TOWER’s Business Overview




                            of issuing the Senior Bonds. It is intended that        performance with a net profit after tax from
                            the proceeds of the Offer will be used to retire        continuing operations of $40.5 million for
                            existing bank debt and to supplement the                the financial year to 30 September 2008,
                            working capital requirements of the TOWER               representing a 17.1% improvement over
                            Group. This section is intended to give investors       the comparable result for the previous year.
                            more information about the business of the              Highlights from the 30 September 2008 year
                            TOWER Group.                                            included: earnings per share of 21.12 cents
                                                                                    (up 28.8%), a strong result from Health & Life
                            The TOWER Group is a leading provider of
                                                                                    (up 25.6%), a return on shareholders’ funds
                            financial services, offering insurance and
                                                                                    of 14.7% (up from 14.4%) and a dividend for
                            investment products in New Zealand and the              shareholders increasing by 33.3% to 8 cents.
                            Pacific Islands. TOWER, the parent company of
                                                                                    These results demonstrate that the TOWER
                            the Group, is listed on both the New Zealand
                                                                                    Group’s underlying strengths help to serve it
                            and Australian Stock Exchanges and has more
                                                                                    well in a slowing economy. The Group’s business
                            than 57,000 shareholders.
                                                                                    operates in New Zealand and the Pacific Islands,
                            The TOWER Group provides essential insurance            and has the benefit of not having to focus on
                            and wealth management products, including               other international relationships. The results also
                            home and contents insurance, vehicle insurance,         reflect the Group’s focus on becoming more
                            life insurance, health insurance, managed funds,        efficient with internal processes and improving
                            superannuation and KiwiSaver.                           customer service.

                            Summary of Group Results
                            Years ended 30 September
                                                                                                                           Net effect
                             NZ $million                                                        2008            2007       of change
                                                                                                                             in result

                             Health & Life                                                       28.5            22.7         +25.6%
                             General Insurance                                                   14.8            12.3         +20.3%
                             Investments                                                          3.7              7.6         -51.3%
                             Business unit net profit after tax                                  47.0            42.6         +10.3%

                             Finance & Corporate expenses                                        (6.5)           (8.0)        -18.8%

                             Profit after tax
                                                                                                 40.5            34.6          +17.1%
                             – continuing operations net of minority interest

                            The Summary of Group Results is extracted from the Summary Financial Information for the TOWER
                            Group which, along with explanatory notes, is set out on pages 21 to 27. Investors are encouraged
                            to read that information. It has been included to give further details about the Guarantors. No other
                            member of the TOWER Group provides any guarantee to Bondholders.

                            TOWER Group operating structure
                            The Group operates through the following core business units:
                            ƒ Health & Life Insurance
                            ƒ General Insurance
                            ƒ Investments




                      14
            TOWER Group
            Structure Chart                                                  TOWER Limited
                                                                               (Guarantor)




                                                                                                                                        TOWER’s Business Overview
                                                   TOWER Financial Services
                                                                                           TOWER Capital Limited
                                                      Group Limited
                                                                                                 (Issuer)
                                                        (Guarantor)




                TOWER Health & Life                TOWER General Insurance                   TOWER Investments
                    business                              business                               business




History                                                                  resulted in the creation of TOWER Australia
                                                                         Group which is listed on the ASX. TOWER
TOWER commenced in 1869 as the Government
                                                                         Australia Group is separate from the TOWER
Life Insurance Office selling life insurance policies
                                                                         Group, and is not involved with this Offer.
and pensions. Between 1989 and 1999 TOWER
acquired many businesses in New Zealand and                              In June 2008 GPG completed a partial takeover
Australia including National Insurance in New                            offer which increased its interest in TOWER to
Zealand and Friends Provident, Austrust and                              35%.
FAI Life in Australia. TOWER was demutualised                            TOWER is made up of three major trading
in 1999 and listed on the Australian and New                             divisions and has its head office in Auckland.
Zealand stock exchanges.                                                 The performance of each of these divisions is
TOWER undertook a group re-organisation                                  discussed in the following sections.
and recapitalisation in 2003 involving a pro
rata rights issue fully underwritten by Guinness                         Health & Life
Peat Group (GPG), with the proceeds used to                              TOWER’s Health & Life business provides a range
repay maturing senior debt. As a result of the                           of health and life insurance products in both the
overall recapitalisation and a small quantum                             retail and group New Zealand markets.
of on market purchases, GPG increased its                                TOWER considers it has an in-force premium
shareholding in TOWER to approximately 19.9%                             market share, relating to policies currently in-
of all shares on issue.                                                  force that have not been cancelled, ranking it
TOWER Limited has (through wholly owned                                  second and sixth in the New Zealand health and
subsidiary TOWER Finance Limited) issued debt                            life insurance markets.2
to the public in the past. In 2002 TOWER Finance                         Based on industry statistics published for the
offered $125 million of capital bonds, and in                            quarter ended 31 December 2008, TOWER had
2004, $80 million of capital notes. Outstanding                          a market share in the health insurance market of
debt under those capital notes and bonds was                             12.3% of new business by lives and 15.5% of the
repaid on the separation of TOWER’s New                                  in-force market by premiums.3 For the total life
Zealand and Australian businesses in late 2006.                          insurance market, TOWER had a market share of
In 2005 TOWER separated its Australian Wealth                            4.5% of new business by premiums and 5.2%
Management business (‘AWM’). In 2006 TOWER                               of the in-force market by premiums.4 TOWER
separated its Australian and New Zealand                                 Health & Life’s continuing focus is on developing
businesses into two separate listed entities, which                      aligned and new distribution channels and


2
    Sources: Health Insurance Statistics – Health Funds Association of New Zealand and Insurance Statistics – Investment Savings and
            Insurance Association

3
    Sources: Health Insurance Statistics December 2008 – Health Funds Association of New Zealand and TOWER’s internal new business
            by lives data

4
    Source: Insurance Statistics – December 2008 – Investment Savings and Insurance Association



                                                                                                                                       15
                            improving customer retention. The majority                               In the 2008 financial year, the general insurance
                            of Health & Life products are presently sold                             business produced a result which was more than
                            through third party intermediaries.                                      20% up on the previous year and an increase of
                            The Health & Life business accounts for more                             more than 87% over the last two years.
                            than two-thirds of the TOWER Group’s annual                              General Insurance
                            profits, and it has achieved strong profit growth                        Years ended 30 September
                            in the last two years, with profit after tax
                                                                                                                                                             Net
                            increasing by more than 49%.                                                                                                effect of
TOWER’s Business Overview




                                                                                                      NZ $million                   2008       2007
                                                                                                                                                         change
                            Strategic partnerships with high quality
                                                                                                                                                        in result
                            distribution groups, coupled with recently
                            created new products developed in collaboration                           Net premiums                  189.3      184.1      +2.8%

                            with distributors, makes for a strong driver of                           Incurred claims             (112.5)    (109.1)      -3.1%
                            new business.                                                             Expenses                     (66.4)     (65.4)      -1.5%
                                                                                                      Underwriting profit            10.4        9.6      +8.3%
                            Health & Life
                                                                                                      Investment returns             11.0       12.4     -11.3%
                            Years ended 30 September
                                                                                                      Tax                            (6.6)      (9.7)    +32.0%
                                                                                       Net            Profit after tax               14.8       12.3     +20.3%
                                                                                  effect of
                                NZ $million                  2008         2007
                                                                                   change
                                                                                  in result          Investments
                                Operating earnings
                                                               4.5         4.8       -6.3%           TOWER’s investment business operates in
                                 - Health
                                                                                                     wholesale and retail funds management and
                                Operating earnings                                                   superannuation, which includes its appointment
                                                              17.7        14.1     +25.5%
                                 - Life
                                                                                                     as one of the six default providers of KiwiSaver
                                Total operating
                                                              22.2        18.9     +17.5%            schemes. As at 30 September 2008, TOWER
                                earnings after tax
                                Investment returns             6.3         3.8     +65.8%            Investments had $3.7 billion of total funds under
                                Profit after tax              28.5        22.7     +25.6%
                                                                                                     management (‘FUM’). Based on figures published
                                                                                                     on the composition of the New Zealand funds
                                                                                                     market for the September Quarter 2008, TOWER
                            General Insurance
                                                                                                     held a market share of 6.5% in Retail funds and
                            TOWER provides general insurance in New                                  a combined Wholesale and Retail Market Share
                            Zealand and the Pacific Islands. The primary                             of 8.1%. TOWER considers it was ranked fourth
                            focus of TOWER’s general insurance business in                           in terms of total FUM in the New Zealand market
                            New Zealand is personal lines (with products                             and eighth in terms of Retail FUM.6
                            such as home and contents insurance and
                                                                                                     The investment business is divided into:
                            private motor vehicle insurance), a market
                            segment in which it has more than 400,000                                ƒ retail funds management (which offers a range
                            insurance policies in New Zealand. Based on                                of superannuation and retirement products).
                            TOWER Insurance’s internal personal lines data                             TOWER predominantly uses a network of
                            and the total market’s gross written premium                               independent financial planners to access the
                            for personal lines as supplied by the Insurance                            retail market;
                            Council of New Zealand, TOWER understands                                ƒ wholesale funds management which
                            that as at 30 September 2008, it held an 8.6%                              provides investment management services to
                            market share.5                                                             institutional investors, charitable trusts, and
                            TOWER also sells travel insurance and insurance                            other divisions of TOWER;
                            for the rural sector. In the Pacific Islands, in                         ƒ superannuation: TOWER offers TOWER
                            addition to personal lines insurance, TOWER also                           KiwiSaver, a default KiwiSaver scheme with
                            sells commercial insurance to small and medium                             approximately 7.8% share of the KiwiSaver
                            size enterprises.                                                          market as at 30 September 2008, based on
                            TOWER continues to focus on developing its                                 statistics published by the Reserve Bank of
                            direct sales distribution platform, making service                         New Zealand.7 TOWER also provides other
                            improvements, refining profitable product pricing,                         group and individual superannuation services.
                            improving retention and claims management and                            As at 30 September 2008, TOWER’s total FUM for
                            optimising the Pacific Islands business.                                 investments was split as follows:

                            5
                                Sources: Annual Insurance Industry Statistics 2007-2008 - Insurance Council of New Zealand, available at
                                http://www.icnz.org.nz/news/review/07-08/industry-statistics.php and TOWER Insurance’s internal personal lines data
                            6
                                Source: Wholesale and Retail Trends and Market Composition Reports, September Quarter, 2008 - FundSource Ltd
                            7
                                Source: Reserve Bank of New Zealand Statistics Table C15, available at http://www.rbnz.govt.nz/statistics/monfin/C15/data.html



                      16
ƒ retail 14.1%;                                          Current Rating (effective 5 December 2008)
ƒ wholesale 63.9%;                                       TOWER Health & Life Limited:
ƒ superannuation 22.0%.                                  ƒ Financial Strength Rating A- (Excellent)
The overall market in which TOWER Investments            ƒ Issuer Credit Rating a-
operates is currently challenging with difficult
investment markets affecting fund managers both          TOWER Insurance Limited:
locally and internationally. The amount of FUM           ƒ Financial Strength Rating A- (Excellent)
has reduced which has had a direct impact on the




                                                                                                                   TOWER’s Business Overview
                                                         ƒ Issuer Credit Rating a-
revenue derived from fees. However, TOWER is in
this business for the long term and continues to         TOWER Life (NZ) Limited:
invest to ensure the business is well positioned for     ƒ Financial Strength Rating A- (Excellent)
future growth.                                           ƒ Issuer Credit Rating a-
Investments                                              TOWER Limited:
Years ended 30 September                                 ƒ Issuer Credit Rating bbb-
                                                  Net
 NZ $million              2008       2007
                                             effect of   Financial Strength Ratings
                                              change
                                             in result   A.M. Best Company’s Financial Strength Ratings
                                                         provide an opinion of an insurer’s financial
 Total income              56.5      63.9     -11.6%
                                                         strength and ability to meet ongoing obligations
 Total expenses          (51.4)     (51.8)     +0.7%
                                                         to policyholders.
 Operating earnings         5.1      12.1     -57.9%
 Tax                       (1.4)     (4.5)   +68.9%
                                                         The following list outlines A.M. Best Company’s
                                                         rating scale and associated descriptions.
 Profit after tax           3.7        7.6    -51.3%
                                                          Secure               Vulnerable
Group Financial Position
                                                          A++, A+ (Superior)   B, B- (Fair)
TOWER has sought to maintain a strong and
                                                          A, A- (Excellent)    C++, C+ (Marginal)
conservative balance sheet in the current
                                                          B++, B+ (Good)       C, C- (Weak)
economic environment. Net Debt as at 30
                                                                               D (Poor)
September 2008 of $29.3 million represented
                                                                               E (Under Regulatory Supervision)
10% of Shareholders’ funds of $294.2 million,
and only 2% of Total Assets.                                                   F (In Liquidation)

TOWER also maintains a significant level of cash
liquidity, with cash of $58.3 million as at 30           Issuer Credit Ratings
September 2008.                                          A.M. Best Company’s Issuer Credit Ratings
TOWER Group Financial Position                           provide an opinion of an entity’s ability to meet
                                                         its senior obligations (being those which are not
Years ended 30 September
                                                         subordinated). The following list outlines A.M.
 NZ $million                         2008       2007     Best Company’s rating scale and associated
                                                         descriptions.
 Cash                                58.3        64.2
 Financial Assets                  1,099.0    1,106.4     Investment Grade     Non-Investment Grade
 Other Assets                       361.7       375.6
                                                          aaa (Exceptional)    bb (Fair)
 Total Assets                      1,519.0    1,546.2
                                                          aa (Superior)        b (Marginal)
 Interest bearing debt               87.6        87.2
                                                          a (Excellent)        ccc, cc (Weak)
 Other liabilities                 1,137.2    1,197.1
                                                          bbb (Good)           c (Poor)
 Total liabilities                 1,224.8    1,284.3
 Equity                             294.2       261.9    Ratings from ‘aa’ to ‘ccc’ may be enhanced with
                                                         a ‘+’ (plus) or ‘-’ (minus) to indicate whether
                                                         credit quality is near the top or bottom of a
Rating                                                   category.
Rating agency A.M. Best Company announced
                                                         For more information on the rating process, see
the following TOWER Group ratings in
                                                         www.ambest.com/ratings
December 2008.




                                                                                                                  17
                           Directors and Management
                           The Board of TOWER and                               in the formation and start up of a number of
Directors and Management




                           TOWER Capital Limited                                businesses. He was a partner of Arthur Young
                                                                                Chartered Accountants until 1981 and was an in-
                           A I (Tony) Gibbs                                     demand guest lecturer for Auckland University’s
                           CNZM, FInstD                                         MBA Programmes.
                           Non-Executive Chairman
                                                                                Rob was co-founder of Medic Aid, a medical
                           Tony was elected to TOWER’s board in March           insurance company which at its time became the
                           2003 and brings more than 25 years history of a      second largest medical insurer after Southern
                           diverse range of management and directorship         Cross. Subsequently, his senior executive roles
                           experience to the board covering mergers,            have included Managing Director of the New
                           acquisitions, divestments and restructuring.         Zealand Guardian Trust Company Limited as
                           Tony is the Chairman of Turners & Growers            well as serving as Director of Group Initiatives for
                           Limited and Staveley Inc, and a Director of          Royal Sun Alliance responsible for coordinating
                           various other companies including: Coats plc,        Group Strategic Planning, E-Business, Marketing
                           Coats Holdings Limited, Guinness Peat Group          and Communications, Group Purchasing, Risk
                           plc, Guinness Peat Group New Zealand Limited.        Management and Group Projects. Rob was
                           Tony resides in Matakana, Auckland,                  appointed CIO of the Promina Group.
                           New Zealand.                                         Rob resides in Auckland, New Zealand.

                           Bill Falconer                                        Michael Jefferies
                           LLB, CNZM, DFlnstD                                   BCom, CA
                           Non-Executive Director                               Non–Executive Director
                           Bill Falconer joined the TOWER Board in              Michael joined the TOWER Board in December
                           December 2003. Bill has had a successful career      2006. Michael is a chartered accountant with
                           as a public servant, lawyer and Company              extensive experience in finance and investment
                           Director.                                            and is a senior executive of GPG. Michael is
                                                                                currently Chairman of TAFMO Limited and a
                           Bill is currently the Chairman of Hellaby Holdings
                           Limited, Oyster Bay Marlborough Vineyards            Director of Ozgrowth Limited, Metals X Limited,
                           Limited, Waterfront Partnership and the Meat         Capral Limited and MMC Contrarian Limited.
                           Industry Association, and a Director of Westfield    Michael resides in Perth, Australia.
                           Trust (NZ) Limited and the New Zealand
                                                                                John Spencer
                           Symphony Orchestra. He is a Distinguished
                           Fellow of the Institute of Directors in New          BCom, FCA
                           Zealand, Inc.                                        Non-Executive Director

                           Bill resides in Cambridge, New Zealand.              John joined the TOWER Board in October 2003
                                                                                and has been the Chairman of the Audit and
                           Rob Flannagan                                        Compliance Committee since December 2003.
                           ACA OPM (Harvard) AMInstD JP                         John brings to the Board significant financial
                           Group Managing Director                              and commercial expertise gained over many
                           Rob was appointed as Chief Executive Officer of      years from senior management positions with
                           TOWER New Zealand in October 2006. In March          a number of major companies in New Zealand
                           2008, Rob was appointed to the Board and now         and overseas. Prior to the formation of Fonterra,
                           holds the position of Group Managing Director.       John was the Chief Executive Officer of New
                           He is a qualified Chartered Accountant, a            Zealand Dairy Group.
                           graduate of Harvard Business School and serves       John is Chairman of Tainui Group Holdings
                           as a Justice of the Peace.                           Limited, Telfer Young Limited and AsureQuality
                           Rob brings a wealth of expertise to his leadership   Limited, Deputy Chairman of Solid Energy New
                           of TOWER. His diverse range of experience in         Zealand Limited and a Director of WEL Networks
                           senior management positions has been both            Limited, Dairy NZ Ltd and Allied Nationwide
                           within and outside of the financial services         Finance Ltd.
                           industry and he has also been a key participant      John resides in Wellington, New Zealand.


                     18
Susie Staley                                        Trustee Corporation Association and has held
LLB (Otago), FNZIM, FInstD                          senior management positions in sales and the
Non-Executive Director                              financial services industry over the past 20 years.
Susie Staley was elected to TOWER Corporation’s
                                                    Steve Boomert
Board in October 1999. She served on several
due diligence committees for the TOWER Group        MBA
and was chair of the capital raising programme      Chief Executive Officer – Health & Life




                                                                                                           Directors and Management
in 2003 and the separation project in 2006.         Steve Boomert took up the role of Chief
A property and business lawyer, Susie has a         Executive Officer for Health & Life in June
background in strategic management and              2005. He has over 15 years’ experience in
brings a wide range of business and corporate       the financial services and health industries
experience to the Board. She is currently chair     and his roles have included responsibility for
of Maritime New Zealand, a Director of Global       business development, marketing, product and
Technologies (NZ) Limited, Allied Nationwide        information technology. In 1989 Steve moved
Finance Limited, and a trustee of University of     from New Zealand to Melbourne, Australia to
Otago Foundation Trust. She is an Accredited
                                                    join Colonial Mutual Life as IT Strategy Manager,
Member and Fellow of the Institute of Directors
                                                    rising to become Head of Strategic Planning for
in New Zealand, Inc.
                                                    the listed Colonial Group. During this time he
Susie resides in Dunedin, New Zealand.
                                                    led a number of major business development
Denis Wood                                          initiatives including life company acquisitions
MA(Hons) Economics                                  in Australia, New Zealand and the UK. In 2000
Non-Executive Director                              he joined Medibank Private, Australia’s largest
                                                    private health insurer as a General Manager
Denis Wood was appointed to the TOWER Board
                                                    responsible for product, marketing, strategy and
in May 2005 and is Chairman of the TOWER
                                                    corporate affairs.
Group Investment Committee. He previously had
a career in investment banking and has extensive    Sam Stubbs
experience in investment management,                MA (first class Hons)
corporate restructuring, strategic planning and     Chief Executive Officer – Investments
capital raising. Denis is the Chairman of Mercy
                                                    Sam Stubbs joined as Chief Executive Officer
Hospice Auckland Limited.
                                                    of TOWER Investments in February 2008. He
Denis resides in Auckland, New Zealand.             has 18 years experience in finance and asset
Anthony Eisen                                       management, previously as CEO of Hanover
Alternate Non-Executive Director                    Group in New Zealand and with Goldman Sachs
Anthony Eisen is the alternate director for         in London and Hong Kong.
Anthony Ian Gibbs and Michael Leslie Jefferies on   Eric O’Sullivan
the Board of TOWER.                                 CA, FCIS
The Directors of TOWER Capital and TOWER can        Group Chief Financial Officer and acting Company
be contacted at Level 11, TOWER Centre,             Secretary and Investor Relations Manager
22 Fanshawe Street, Auckland Central.               Eric O’Sullivan joined TOWER in January 2007
                                                    as Company Secretary and Investor Relations
TOWER Management                                    Manager. In January 2009 he was appointed
Rob Flannagan                                       Group Chief Financial Officer. His background
Group Managing Director                             is as a Chartered Accountant with many years
                                                    top level experience both in the accounting
James Douglas
                                                    profession and in commercial finance roles. He
BCom, Dip Tchg
                                                    was a partner in the Auckland office of Coopers
Chief Executive Officer – General Insurance
                                                    & Lybrand for 10 years specialising in audit
James Douglas took up the role as Chief             and corporate services. More recently he has
Executive Officer for General Insurance in April
                                                    held various senior finance roles in several New
2007. James was previously Managing Director
                                                    Zealand listed companies operating across a
of The New Zealand Guardian Trust Company
                                                    wide range of business sectors.
Limited and a director of a number of related
companies such as Asteron Life NZ Limited and       Eric is a qualified Chartered Accountant, a Fellow
New Zealand Guardian Trust Funds Management         of the Institute of Chartered Secretaries and a
Limited. James is the past Chairman of the          member of the Institute of Directors.


                                                                                                          19
                           Tony Dixon
                           ONC in Business Studies, ICMA
                           Chief Information Officer
                           Tony Dixon became Chief Information Officer for
                           TOWER in November 2006, bringing 38 years
                           of IT all round experience to his role. His career
                           has included setting up Novell in NZ during the
                           early 80’s and working as a Programme Director
Directors and Management




                           at Air New Zealand on the Ansett/Air NZ merger.
                           Tony was involved in business re-engineering
                           in the Blue Star Group and more recently
                           head of customer service management with
                           Gen-i/Telecom.




                     20
Summary Financial Information
TOWER Capital was incorporated on 18 December                        is itself a wholly owned subsidiary of TOWER.




                                                                                                                                Summary Financial Information
2008 and has not yet commenced business. The                         As such, although no guarantee is given by any
sole purpose of the Company is to issue the Senior                   companies in the TOWER Group other than the
Bonds that are the subject of this Offer.                            Guarantors, the obligations of the Company
It is intended that the funds received from the                      for the Senior Bonds are guaranteed by entities
Offer will be made available by the Company to                       controlling substantially all the resources of
subsidiaries of TOWER by way of interest-bearing                     the TOWER Group. Refer to page 14 for more
advances. The Company will receive interest                          information on the structure of the TOWER
from such subsidiaries to enable it to pay interest                  Group.
to Bondholders.
                                                                     The financial information of the TOWER Group
In reviewing information contained in this
                                                                     set out in this section has been included to
section, investors should bear in mind that for
                                                                     give further background information about
the purposes of the Securities Regulations 1983,
                                                                     the Guarantors. No other person, including
the Company is the Issuer and the Borrowing
                                                                     any subsidiary of TFSG, has guaranteed the
Group and is the sole obligor of the Senior
Bonds (the ‘Borrowing Group’ is a defined term                       obligations of TOWER Capital in relation to the
in the Securities Regulations 1983, and means                        Senior Bonds.
the issuer of the securities and all guaranteeing
subsidiaries of the company that is the issuer).
                                                                     Financial Summary – TOWER Group
                                                                     The information contained below for the five
TOWER and TFSG (the ‘Guarantors’) provide
an unsubordinated and unsecured guarantee                            accounting periods ended 30 September 2008
of Interest when payable, and of principal and                       has been taken from the audited financial
Accrued Interest and Unpaid Interest when                            statements of TOWER for the periods ended 30
payable and on commencement of Liquidation.                          September 2004 to 30 September 2008. The
TFSG is the holding company for all the                              auditors’ reports on these financial statements
operating companies in the TOWER Group and                           were unqualified.

Summary Statement of Financial Performance of TOWER Group for the 12 month periods ended

                                       30 Sep 2008    30 Sep 2007    30 Sep 2006   30 Sep 2005    30 Sep 2005    30 Sep 2004
 NZ$’000                       Notes       NZ IFRS        NZ IFRS        NZ IFRS       NZ IFRS    Previous NZ    Previous NZ
                                                                                            (4)         GAAP        GAAP (5)

 Total operating revenue                   454,799        481,217        472,336       459,202      1,131,366      1,047,182
 Net profit before interest      (3)        32,817         60,402         54,057        22,705        143,628        121,453
 and income tax
 Total interest expense                     (8,140)        (5,574)      (15,258)       (15,416)       (17,511)      (16,244)
 Gain on disposal                (2)              -              -             -              -        23,045              -
 Profit before taxation                     24,677         54,828         38,799         7,289        149,162        105,209
 Taxation (credit) / expense     (3)       (15,791)        19,598         23,645        13,270         49,649         50,473
 Profit from continuing          (1)        40,468         35,230         15,154        (5,981)        99,513         54,736
 operations
 Profit from discontinued        (2)              -       198,030         49,404       126,113               -             -
 operations
 Net profit after tax                      40,468        233,260         64,558        120,132         99,513        54,736

 Profit attributable to:
 Shareholders                               40,460        232,632         63,494       119,330         97,828         54,593
 Minority interests                              8            628          1,064           802          1,685           143
                                           40,468        233,260         64,558        120,132         99,513        54,736




                                                                                                                               21
                                Summary Statement of Financial Position of TOWER Group as at

                                                                         30 Sep 2008   30 Sep 2007   30 Sep 2006   30 Sep 2005    30 Sep 2005   30 Sep 2004
                                NZ$’000                        Notes         NZ IFRS       NZ IFRS       NZ IFRS       NZ IFRS       Previous      Previous
                                                                                                                            (4)     NZ GAAP       NZ GAAP

                                Total assets                               1,519,018     1,546,193     6,062,138     5,248,017      5,164,619     4,948,228
                                Total tangible assets                      1,445,637     1,465,139     5,974,595     4,976,271      5,148,649     4,863,920
                                Total liabilities                          1,224,798     1,284,296     5,432,765     4,701,079      4,383,879     4,151,829
Summary Financial Information




                                Total equity                       (2)      294,220        261,897       629,373      546,938         780,740       796,399


                                Summary other financial information of TOWER Group for the 12 months ended

                                                                         30 Sep 2008   30 Sep 2007   30 Sep 2006   30 Sep 2005    30 Sep 2005   30 Sep 2004
                                NZ$’000                        Notes         NZ IFRS       NZ IFRS       NZ IFRS       NZ IFRS       Previous      Previous
                                                                                                                            (4)     NZ GAAP       NZ GAAP

                                Shares on issue                          191,890,515   189,348,179   359,765,609   358,468,109    358,468,109   412,418,208
                                Basic earnings (cents per share)               21.12        110.16         17.66         31.57          25.88         13.37
                                Basic earnings continuing                      21.12         16.39          3.92         (1.79)         18.30         13.37
                                operations (cents per share)
                                Diluted earnings continuing                    21.10         16.37          3.92         (1.79)         18.30         13.37
                                operations (cents per share)
                                Total dividend paid to shareholders           14,844             -             -              -             -             -
                                (NZ$’000)


                                Notes:                                                                   does not have any impact on the amount
                                                                                                         reported as Profit after Tax – Continuing
                                In relation to the TOWER Group’s five year
                                                                                                         Operations, which belongs to shareholders.
                                financial summary, the following items highlight
                                the key drivers of changes to the reported                           (4) Transition to NZ IFRS
                                financial results over that period:                                      The summary financial information for
                                (1) Profit from continued operations                                     the 2005 through to 2008 financial years
                                                                                                         has been presented on the basis of the
                                    Consistent increases have been achieved
                                                                                                         New Zealand Equivalents to International
                                    in the three years of operating on a stand
                                                                                                         Financial Reporting Standards (NZ IFRS).
                                    alone basis driven primarily by results from
                                                                                                         The information for 2004 financial year has
                                    the Health & Life and General Insurance
                                                                                                         been presented under the previous financial
                                    businesses.
                                                                                                         reporting standards (Previous NZ GAAP) The
                                (2) Discontinued operations                                              summary financial information for the 2005
                                    – Separation of the Australian and                                   financial year has been presented under
                                      New Zealand businesses                                             both NZ IFRS and Previous NZ GAAP, for
                                    The spin-off of the Australian Wealth                                comparative purposes.
                                    Management business (effective 30                                (5) 2004 Year
                                    September 2005) and the separation of
                                                                                                         2004 figures have not been restated to
                                    the Australian and New Zealand businesses
                                                                                                         separately identify discontinued operations.
                                    (effective 30 September 2007) had a
                                    significant impact on the financial results
                                    over the period.
                                (3) Tax expense
                                    The financial statements for the 2008
                                    year show an apparent fall in profit before
                                    tax and a substantial tax credit. This
                                    presentation is driven by the International
                                    Financial Reporting Standards (IFRS). Under
                                    IFRS TOWER must report both policyholder
                                    and shareholder impacts within a single
                                    Income Statement. Policyholder returns fell
                                    in the 2008 financial year due to negative
                                    investment market performance which
                                    impacted both profit before tax and the tax
                                    amount. The IFRS reporting requirement


                         22
Items 2 – 4 are discussed in more detail below.
(2) Discontinued operations
    – Separation of the Australian and New Zealand businesses
    Profit from discontinued operations for the 2007, 2006 and 2005 financial years includes gains on
    sale of Australian Wealth Management Business (AWM) and the Australian operations of TOWER
    Group as well as operating results of these businesses for the three years. These are included in the
    table below.




                                                                                                                 Summary Financial Information
                                                                30 Sep 2007     30 Sep 2006     30 Sep 2005
 (NZD 000’s)                                                        NZ IFRS         NZ IFRS         NZ IFRS

 Operating profit from Australian Wealth Management                        -                -          7,943
 Profit on Sale of Australian Wealth Management                            -                -        72,955
                                                                           -                -        80,898
 Operating profit / (loss) from TOWER Australia                      (4,560)          49,404         45,215
 Profit on Sale of TOWER Australia                                  202,590                 -               -
                                                                    198,030          49,404         126,113


Separation of the Australian and New Zealand businesses
On 8 August 2006, TOWER announced its plan to separate the Australian and New Zealand businesses
of the Group (separation effective 20 November 2006). TOWER remains listed on the Australian and
New Zealand stock exchanges and continues to own the New Zealand and Pacific Island businesses. The
Australian business is now called TOWER Australia Group Limited (TAL) and is listed on the ASX.

Spin-off of Australian Wealth Management (AWM) businesses
During the 2005 financial year TOWER separated and listed on the Australian Stock Exchange (ASX) its
Australian Wealth Management business (AWM) which resulted in TOWER Group recording $73 million
of gain on disposal.
The gain is included in the $126 million of profit from discontinued operations as per the summary
statement of financial performance for the year ended 30 September 2005.
The financial impact of AWM’s spin-off on TOWER Group is shown in the table below:

                                                                                   Summary
                                                                                  Statement
                                                                                 of Financial
 (NZD 000’s)                                                                    Performance       Net Assets
                                                                                     NZ IFRS        NZ IFRS

 Sale Proceeds                                                                      272,460                 -
 Less carrying value                                                               (193,401)                -
 Less costs of separation                                                            (6,104)                -
 Gain recognised on distribution of shares                                            72,955         72,955
 Distribution of AWM shares                                                                 -     (130,990)
 Impact on Net Assets                                                                              (58,035)




                                                                                                                23
                                Revenue, expenses, cash flows, assets and liabilities related to the separation of the Australian business
                                and AWM
                                Revenue and expenses of the discontinued operations for the 2007, 2006 and 2005 financial years are as
                                follows:

                                 (NZD 000’s)                                                      30 Sep 2007      30 Sep 2006    30 Sep 2005
                                                                                                      NZ IFRS          NZ IFRS        NZ IFRS

                                 Revenue                                                              216,568          746,439        641,889
Summary Financial Information




                                 Expenses                                                           (223,516)         (656,650)      (551,274)
                                 Pre-tax operating profit                                             (6,948)           89,789         90,615
                                 Tax on operating profit                                                2,388          (40,385)       (37,457)
                                 After tax operating profit                                           (4,560)           49,404         53,158
                                 Gain on sale                                                         198,403                 -        72,955
                                 Tax gain on sale                                                       4,187                 -              -
                                 Profit from discontinued operations                                  198,030           49,404        126,113

                                Cash flows generated by discontinued operations are as follows:

                                 (NZD 000’s)                                                     30 Sep 2007       30 Sep 2006    30 Sep 2005
                                                                                                     NZ IFRS           NZ IFRS        NZ IFRS

                                 Net operating cash flows                                            (13,009)          (74,270)      (181,480)
                                 Investing activities                                                (71,288)         (151,182)       319,024
                                 Financing activities                                                (20,533)          113,427            (59)
                                 Net cash flows                                                     (104,830)        (112,025)        137,485


                                The carrying amount of assets and liabilities of the discontinued operations are as follows:
                                 (NZD 000’s)                                                                    30 Sep 2007       30 Sep 2006
                                                                                                                    NZ IFRS           NZ IFRS

                                 Assets
                                  Cash and cash equivalents                                                               -           389,357
                                  Receivables                                                                             -           188,687
                                  Financial Assets at fair value through profit and loss                              3,148         3,282,741
                                  Deferred acquisition costs                                                              -            77,614
                                  Other assets                                                                            -             3,677
                                  Property, Plant and Equipment                                                           -             4,960
                                  Assets arising from reinsurance contracts                                               -           189,382
                                  Deferred tax assets                                                                     -            58,978
                                  Intangible assets                                                                       -           176,300
                                 Total assets classified as held for sale                                             3,148         4,371,696

                                 Liabilities
                                  Payables                                                                                -           220,092
                                  Current tax liabilities                                                                 -            17,273
                                  Provisions                                                                              -            19,910
                                  Interest bearing liabilities                                                            -           114,325
                                  Insurance liabilities                                                                   -            59,015
                                  Deferred tax liabilities                                                                -            74,904
                                  Other liabilities                                                                    342              1,902
                                  Deferred revenue liability                                                              -           115,115
                                  Life insurance contract liabilities                                                     -           683,347
                                  Life investment contract liabilities                                                    -         2,487,053
                                 Total liabilities classified as held for sale                                         342          3,792,936

                                 Net assets of disposal group                                                        2,806           578,760




                          24
(3) Tax expense                                                                   2006. The financial information for the 2005
     In the 2008 financial year TOWER Group                                       financial year had been restated to comply
     recorded a taxation benefit of $15.8                                         with NZ IFRS.
     million. The benefit mostly arose due to                                     The summary financial information
     the specifics of the life insurance taxation                                 for the 2005 financial year includes
     regime. It includes $13.8 million tax                                        financial information presented under
     benefit attributable to the policyholders as                                 Previous NZ GAAP and its restatement in
     compared, for example, with $10.2 million                                    accordance with NZ IFRS requirements.




                                                                                                                                               Summary Financial Information
     of tax expense in 2007. Taxation attributable                                It has been impacted by the adjustments
     to the policyholders does not have an impact                                 made upon transition to NZ IFRS and by
     on the Group’s net profit after tax. The 2008                                the reclassification of the discontinued
     tax benefit also includes $1.3 million of tax                                operations upon disposal of AWM.
     credits resulting from the changes in the
                                                                                  The impact of the reclassification of
     legislation in the PIE regime.
                                                                                  discontinued operations is discussed in (2)
(4) Transition to NZ IFRS                                                         above. The impact of adoption of NZ IFRS
     TOWER Group adopted NZ IFRS for the                                          on the Statement of Financial Performance of
     reporting period beginning on 1 October                                      TOWER is presented below.

Reconciliation of profit for the year ended 30 September 2005
Consolidated Statement of Financial Performance for the year ended 30 September 2005

                                                                                                                Effect of
                                                                               Previous NZ                  transition to
 NZ$’000                                                           Notes             GAAP       Reclass          NZIFRS          NZIFRS

 Revenue from continuing operations
 Premium revenue                                                                  622,242        (1,471)                -        620,771
 Less: Outwards reinsurance expense                                              (106,557)              -               -      (106,557)
 Net premium income                                                               515,685        (1,471)                -        514,214
 Investment revenue                                                  (i)(ii)       517,079       (2,090)        (33,166)         481,823
 Fee and other revenue                                                             98,602       (37,380)                -         61,222
 Net operating revenue                                                           1,131,366      (40,941)        (33,166)       1,057,258

 Claims expense                                                                    375,641              -            (30)        375,611
 Less: Reinsurance recoveries revenue                                             (63,848)              -               -        (63,848)
 Net claims expense                                                                311,793              -            (30)        311,763
 Change in life insurance contract liabilities                         (vi)              -       34,585                 -         34,585
 Change in life investment contract liabilities        (vi)(v)(ii)(vii)(xi)        269,051     (34,047)              744         235,748
 Management and sales expenses                              (vi) (vii) (xi)       403,453      (28,808)          (2,926)         371,719
 Net claims and operating expenses                                                984,297      (28,270)          (2,212)         953,815
 Amortisation expense                                                  (iv)          3,441              -        (3,441)                 -
 Financing costs                                                                    17,511       (2,095)                -          15,416
 Gain on disposal of AWM                                               (iii)       23,045      (72,955)           49,910                 -
 Profit before taxation                                                            149,162     (83,532)          22,397           88,027

 Income tax expense                                (vi)(v)(ii)(iii)(vii)(xi)        49,649       (2,634)             895           47,910
 Profit from continuing operations                                                  99,513     (80,898)           21,502          40,117
 Profit from discontinued operations                                                     -       80,898                 -         80,898
 Profit for the year                                                                99,513              -         21,502         121,015
 Profit attributable to minority interests                                         (1,685)              -               -         (1,685)
 Profit for the year attributable to                                               97,828               -         21,502         119,330
 shareholders

Note that the above Consolidated Statement of Financial Performance does not reflect the accounting treatment of the Australian business as
a discontinued operation and does not therefore reconcile on a line by line basis to the 2005 Summary Statement of Financial Performance.




                                                                                                                                              25
                                The explanations of main adjustments made on            are held against the foreign denominated
                                transition to NZ IFRS are as follows:                   subsidiary investment is reported through
                                   (i) Removal of unrealised revaluations of            the income statement when it is disposed
                                       investment in subsidiaries                       of. Under Previous NZ GAAP the balance
                                                                                        held in the FCTR would have been
                                      Under Previous NZ GAAP, subsidiaries
                                                                                        transferred directly to retained earnings.
                                      were carried at directors’ valuation
                                      with valuation movements going to the          (iv) Removal of amortisation of goodwill
                                      statement of financial performance. Upon          On transition to NZ IFRS, previously
Summary Financial Information




                                      adoption of NZ IFRS these revaluations            recognised amortisation of goodwill was
                                      have been reversed. The reversal had an           reversed.
                                      impact on the recognised gain on the           (v) Adjustments to DAC for non life investment
                                      sale of AWM and the value of goodwill.             contracts
                                      The subsidiary revaluation adjustments            Under NZ IFRS, entirely variable
                                      have also impacted the valuation of               acquisition costs (transaction costs
                                      subsidiaries of life insurance entities.          including initial commission and volume
                                      Under Previous NZ GAAP, life insurance            bonuses) are deferred and amortised over
                                      entities and their parents, were required         the life of the contracts. The deferred
                                      to carry investments in subsidiaries at           acquisition costs (DAC) asset is subject to
                                      market value and recognised the excess            an impairment test.
                                      over the value of net assets as excess of
                                                                                        This differs from Previous NZ GAAP
                                      market value over net asset (EMVONA).
                                                                                        where non-commission acquisition
                                      EMVONA included both acquired and
                                                                                        costs were also deferred. The change in
                                      internally generated goodwill.
                                                                                        treatment resulted in the lower level of
                                      On adoption of NZ IFRS, EMVONA was                DAC recognised on transition to NZ IFRS.
                                      reclassified as goodwill and restated to
                                                                                     (vi) Adjustments to valuations of life insurance
                                      the value acquired goodwill less any
                                                                                          and life investment contracts
                                      amortisation and impairment recognised
                                      under Previous NZ GAAP.                           The adoption of NZ IFRS required
                                                                                        a reclassification of some of the life
                                   (ii) Adjustments from net market value to fair
                                                                                        insurance contracts, which do not meet
                                        value
                                                                                        the definition of a life insurance contract
                                      Under NZ IFRS, fair values must be                under NZ IFRS 4 Insurance contracts, to life
                                      determined using bid price, as compared           investment contracts.
                                      to the use of last sale price under Previous
                                                                                        All key actuarial assumptions for life
                                      NZ GAAP. In addition selling costs are no
                                                                                        insurance contracts used under NZ
                                      longer allowed for under NZ IFRS.
                                                                                        IFRS are consistent with assumptions
                                   (iii)Adjustments to recognised gain on               previously applied under NZ GAAP
                                        separation of discontinued businesses           with the exception of the discount rate
                                      As noted in (i) and (ii) above the                applied.
                                      adoption of NZ IFRS resulted in changes           To the extent that the benefits under life
                                      to the carrying value of subsidiaries             insurance contracts are not contractually
                                      recognised on the balance sheet and               linked to the performance of the assets
                                      as a result the gain on sale, being the           held, the life insurance liabilities shall
                                      difference between the net sale proceeds          be discounted for the time value of
                                      and the carrying value of the subsidiary,         money using risk-free discount rates. This
                                      also changes.                                     contrasts with Previous NZ GAAP which
                                      Under Previous NZ GAAP, subsidiaries              required the use of discount rates based
                                      were carried at directors’ valuation              on market returns on the investments
                                      with valuation movements going to the             supporting the policy liabilities.
                                      income statement. Upon adoption of                The investment contracts policy liabilities
                                      NZ IFRS these revaluations have been              are computed using discounting
                                      reversed. In the case of the AWM sale this        and other fair value techniques. The
                                      has resulted in the gain on sale increasing       computations are made with regard to
                                      because the carrying value is now lower           relevant actuarial principles to ensure the
                                      than previously reported under Previous           liability best represents its fair value. Any
                                      NZ GAAP.                                          change in fair value is recognised in the
                                      In addition NZ IFRS requires that any             statement of financial performance.
                                      balances recognised in the foreign                Annual fee income for the investment
                                      currency translation reserve (FCTR) that          services contract is recognised as revenue


                         26
     on receipt and entry fees are deferred to            unearned premium liability is shown
     be recognised as service is provided.                to be deficient, the deficiency must
     DAC is amortised over the life of the                be recognised through the income
     contract. The DAC asset is subject to an             statement.
     impairment test.                                     The liability adequacy test performed on
(vii) Adjustments for share based payments                the unearned premium liability held in
                                                          respect of the general insurance business
     Under NZ IFRS the cost of option
                                                          has shown that the level of reserves
     schemes entered into with employees




                                                                                                          Summary Financial Information
                                                          held under NZ GAAP meet the reserves
     is recognised through the income
                                                          required under NZ IFRS.
     statement as an expense over the
     periods in which the equity instruments              The outstanding claims liability is
     vest. There is an equal and opposite                 measured as the central estimate of the
     adjustment made to the share based                   present value of the expected future
     payments reserve reported in equity.                 payments for claims incurred with an
                                                          additional risk margin to allow for the
     The expense recognised over the vesting
                                                          inherent uncertainty in the central
     period is based on the fair value of the
                                                          estimate. The adoption of NZ IFRS has
     options at the grant date which is subject
                                                          not had a material effect on the unearned
     to performance conditions being met.
                                                          premium reserve in the balance sheet.
     Under Previous NZ GAAP options
                                                      (xi) Adjustments to recognise capital guarantees
     issued to employees under performance
     incentive schemes were not recognised as             TOWER provides capital guarantees to
     an expense in the statement of financial             certain funds. Some funds are included
     performance.                                         on the TOWER consolidated balance
                                                          sheet and some are held off balance
(viii) Adjustments for foreign currency translation
                                                          sheet.
       reserve
                                                          Under Previous NZ GAAP TOWER
     Upon transition to NZ IFRS the foreign
                                                          disclosed these guarantees as contingent
     currency translation reserve was
                                                          liabilities but did not recognise a
     transferred to retained earnings.
                                                          provision for these capital guarantees as
(ix) Adjustments for non discounting of deferred          it was assessed that it was not probable
     tax                                                  that the liability will materialise. TOWER
     Under NZ IFRS discounting of tax assets              has assessed that, in accordance with the
     and liabilities, that was previously                 principles of NZ IFRS, certain guarantees
     required under Previous NZ GAAP, is                  are embedded derivatives and therefore
     prohibited. The impacts reported arise               a provision should be raised to recognise
     from the removal of discounting on                   the value of these embedded liabilities.
     deferred tax balances.                               The impacts reported arise from adopting
(x) Adjustments to general insurance liabilities          this approach.
     As all general insurance contracts
     issued by TOWER meet the definition
     of insurance contracts as defined by NZ
     IFRS 4 the adoption of NZ IFRS have
     had minimal change on the accounting
     treatment of this business.
     The only notable changes from the
     adoption of IFRS is the liability adequacy
     testing that must be performed to
     support the adequacy of the unearned
     premium liability and the measurement
     of outstanding claims liabilities that must
     include a risk premium.
     The liability adequacy test is performed
     at the reporting entity level by portfolios
     of contracts that are subject to broadly
     similar risks and are managed together as
     a single portfolio. The test must include
     a risk margin to reflect the inherent
     uncertainty in a central estimate. If the



                                                                                                         27
28
Investment Statement Information


                                   29
                                   Answers to Important Questions
                                   THIS PART OF THE OFFER                                 The Senior Bonds will be constituted by and
Investment Statement Information




                                   DOCUMENT COMPRISES THE                                 issued under the Trust Deed. The Senior Bonds
                                   INVESTMENT STATEMENT FOR THE                           have the benefit of and are subject to the
                                                                                          provisions of the Trust Deed and conditions
                                   PURPOSES OF THE SECURITIES
                                                                                          applicable to Senior Bonds. For more detailed
                                   ACT 1978 AND SECURITIES
                                                                                          description of the terms of the Trust Deed and
                                   REGULATIONS 1983.                                      the conditions applicable to the Senior Bonds
                                                                                          see the section ‘Summary of Trust Deed’ on
                                   What sort of investment is this?
                                                                                          page 44 and ‘Conditions of Senior Bonds’ on
                                   The Senior Bonds are unsubordinated, unsecured
                                                                                          page 48.
                                   fixed interest debt securities of the Company.
                                   The Guarantors provide an unsubordinated and           The Senior Bonds will remain in existence unless
                                   unsecured guarantee in accordance with the             and until they are either redeemed or purchased
                                   terms of the Trust Deed.                               by the Company. Bondholders have no rights
                                                                                          to early repayment, other than in the case of
                                   The Senior Bonds are not shares and no voting
                                                                                          an Event of Default. In summary the Events of
                                   rights attach to the Senior Bonds (other than
                                                                                          Default are:
                                   the right to attend and vote at meetings of
                                   Bondholders). The Senior Bonds are transferable.       ƒ the event of Liquidation of the Company, TFSG
                                   The Senior Bonds will rank pari passu, and               or TOWER; or
                                   without preference, among themselves.                  ƒ the exercise of certain cross-acceleration rights
                                   The Senior Bonds offer investors a fixed Interest        by other creditors; or
                                   Rate until the day before the Maturity Date.           ƒ in the event that Interest has not been paid on
                                   Interest will be payable quarterly in arrears on the     the Senior Bonds within 10 business days of an
                                   Interest Payment Dates (15 January, 15 April, 15         Interest Payment Date; or
                                   July and 15 October in each year) with the first       ƒ in the event that principal has not been paid
                                   Interest Payment Date on 15 April 2009. Default          on the Senior Bonds within 10 business days
                                   Interest is payable in certain circumstances – see       of the Maturity Date or other due date for
                                   ‘What Returns do I get?’ in this section.                payment,
                                   Subsequent Maturity Dates and the New                  where the event continues and is not remedied,
                                   Conditions, including the Interest Rate payable        and the Trustee has given a notice to the
                                   may be specified by the Company.                       Company declaring such event to be an Event of
                                   At maturity Bondholders may elect to either:           Default.
                                   ƒ have their Senior Bonds redeemed or                  See ‘Events of Default’ under ‘What returns will I
                                     purchased for cash; or                               get?’ in this section.
                                   ƒ if New Conditions are offered by the                 Subject to NZSX Listing Rules, the constitution of
                                     Company, rollover their Senior Bonds on the          the Company and to the extent relevant the Trust
                                     New Conditions which may be advised by the           Deed, and in particular the Financial Covenants,
                                     Company.                                             the Company may from time to time, without
                                   If New Conditions are offered by the                   the consent of Bondholders create and issue
                                   Company, Bondholders who do nothing or                 further bonds, shares, or other securities or incur
                                   who do not make a valid election will be               indebtedness or issue obligations ranking pari
                                   deemed to have elected to retain all of their          passu in all respects with, or subordinated to, the
                                   Senior Bonds on the New Conditions.                    Senior Bonds and otherwise on such terms as
                                   Despite a Bondholder’s election, on the Maturity       the Company may determine. The Trustee is not
                                   Date the Company may elect to redeem or                required to consent to any issue of Senior Bonds
                                   purchase some or all of their Senior Bonds for         not subject to the Trust Deed.
                                   cash at their Issue Price.
                                                                                          Who is involved in providing it for me?
                                   For more information on the election procedures
                                   generally, see Condition 6 (Notice of New              Issuer
                                   Conditions) in the section ‘Conditions of Senior       TOWER Capital Limited (company number
                                   Bonds’.                                                2198245) is the issuer of the Senior Bonds.


                            30
The Company was incorporated in New                 Registrar
Zealand under the Companies Act 1993 on 18          The Registrar of the Senior Bonds is
December 2008 for the purpose of issuing the        Computershare Investor Services Limited. The
Senior Bonds.                                       Registrar can be contacted at:
TOWER has covenanted that the Company is and           Computershare Investor Services Limited
will remain a wholly owned subsidiary of TOWER
                                                       Level 2
while any Senior Bonds remain on issue. TOWER
                                                       159 Hurstmere Road
is the promoter of this Offer.
                                                       Takapuna




                                                                                                          Investment Statement Information
The Company and TOWER can be contacted at:             North Shore City
    Level 11
    TOWER Centre                                    How much do I pay?
    22 Fanshawe Street                              Investors must pay the Issue Price of $1.00
    PO Box 90347                                    for each Senior Bond allotted to them. An
    Auckland 1142                                   application cannot be withdrawn or revoked
    Telephone 09 369 2000                           by the applicant once it has been submitted.
    Facsimile 09 369 2160                           Applications to subscribe for Senior Bonds must
                                                    be for a minimum principal amount of $5,000
The directors of the Company, and of TOWER,
                                                    and thereafter in multiples of $1,000.
and their principal places of residence are:
                                                    Applications must be made on the Application
ƒ Anthony Ian Gibbs -
                                                    Form contained in the back of this Offer
  Auckland, New Zealand
                                                    Document and must be lodged with the
ƒ Robin Albert Flannagan -                          Registrar or the Company, any Primary Market
  Auckland, New Zealand                             Participant or a Joint Lead Manager in time
ƒ William John Falconer -                           to enable forwarding to the Registrar before
  Cambridge,New Zealand                             5.00pm on the Closing Date.
ƒ John Lewis Spencer -                              The aggregate principal amount of the Senior
  Wellington, New Zealand                           Bonds for which application is made must be
ƒ Susannah Adair Staley -                           paid in full on application. Cheques should be
                                                    made payable to ‘TOWER Bond Offer’, be crossed
  Dunedin, New Zealand
                                                    ‘not transferable’, and must not be post-dated.
ƒ Denis Michael Wood -
                                                    Applications cannot be revoked or withdrawn.
  Auckland, New Zealand
                                                    Further information on how to apply for Senior
ƒ Michael Leslie Jefferies -                        Bonds is set out in the section ‘Application
  Perth, Australia                                  Instructions’ on the reverse of the Application
Anthony Eisen is the alternate director for         Form.
Anthony Ian Gibbs and Michael Leslie Jefferies      The Company reserves the right to refuse all or
on the TOWER Board.                                 any part of an application without giving any
The Company has not yet commenced                   reason. Refunds will be paid within five business
business. The intended activities of the            days of the Closing Date. No interest will be paid
Company (to issue the Senior Bonds) is              on refunded subscriptions.
described in section of this Offer Document
entitled ‘Main terms of Offer’.                     What are the charges?
The activities of TOWER are summarised in the       Investors are not required to pay any charges to
section ‘TOWER’s Business Overview’ on page 14.     the Company, TOWER, the Trustee, the Registrar
                                                    or any other person in relation to the Offer,
Trustee                                             other than the amount subscribed on account of
The trustee in respect of the Senior Bonds is The   the Senior Bonds allotted to them.
New Zealand Guardian Trust Company Limited.         Any fees or expenses payable to the Trustee or
The Trustee can be contacted at:                    the Registrar and all expenses of the Offer are to
    The New Zealand Guardian Trust                  be paid by the Company or TOWER.
    Company Limited                                 Details of expenses incurred in respect of the
    Corporate Trusts                                Offer and payable by the Company are set out
    Guardian Trust House                            under ‘Issue Expenses’ in the section ‘Prospectus
    15 Willeston Street                             Statutory Information’ on page 62. Those expenses
    PO Box 913                                      are estimated to total $2.1 million (exclusive of
    Wellington 6140                                 goods and services tax where applicable).
    Phone 04 495 7900                               No brokerage is payable by any subscriber for
    Facsimile 04 499 1454                           Senior Bonds under the Offer.


                                                                                                         31
                                   What returns will I get?                              amount of Senior Bonds together with Accrued
                                                                                         but Unpaid Interest payable to Bondholders
                                   The information set out in this section must be
                                                                                         when payable and on a Liquidation of the
                                   read in conjunction with the information set
                                                                                         Company, TFSG or TOWER. The Guarantors and
                                   out in the section ‘What are my risks?’ below.
                                                                                         the Company are associated persons in that
                                   Certain events could reduce or eliminate the
                                                                                         both the Company and TFSG are subsidiaries of
                                   returns which may be derived from holding
                                                                                         TOWER.
                                   Senior Bonds.
                                                                                         The guarantee is not subject to any conditions,
                                   The principal factors that will determine the
Investment Statement Information




                                                                                         is unsecured and subordinated to (ranks behind)
                                   returns to Bondholders are:
                                                                                         the interests in point of security of Secured
                                   ƒ the rate of Interest attaching to the Senior        Creditors of the Guarantors and to indebtedness
                                     Bonds, which can be varied at any Maturity          having priority by operation of law.
                                     Date;
                                                                                         Other than the Guarantors no member of the
                                   ƒ whether Interest is paid;                           TOWER Group or any other person guarantees
                                   ƒ the level of market interest rates and other        the Senior Bonds or the returns that investors
                                     market factors which will affect the price at       may receive as Bondholders.
                                     which Senior Bonds may be sold;                     If Interest is not paid on its due date interest is
                                   ƒ the financial condition of the Company and          payable by the Company at the Default Rate on
                                     the Guarantors, and their respective abilities to   any unpaid amount due, from its due date until
                                     meet their obligations; and                         the unpaid amount is paid. TOWER may not
                                   ƒ each Bondholder’s individual circumstances for      make any Distribution to its shareholders while
                                     tax purposes.                                       Interest remains unpaid.

                                   Interest                                              Events of Default

                                   The Senior Bonds will bear Interest payable           Following an Event of Default, the Trustee may
                                                                                         declare the Senior Bonds to be immediately due
                                   quarterly in arrears at 8.5% per annum. That
                                                                                         and payable. The Trustee may also (and must
                                   Interest Rate will be fixed for the period to the
                                                                                         if requested to do so by Bondholders holding
                                   Maturity Date of 15 April 2014.
                                                                                         more than 10% of Senior Bonds on issue) call
                                   Interest will be denominated and payable in           a meeting of Bondholders. The Company has
                                   New Zealand dollars.                                  the right to attend a meeting of Bondholders
                                   Payment of Interest                                   and may submit proposals for Bondholders’
                                                                                         consideration. The Trustee must declare the
                                   The first Interest Payment Date is 15 April
                                                                                         Senior Bonds to be immediately due and payable
                                   2009. The first Interest payment will be made
                                                                                         if directed to do so by an Ordinary Resolution of
                                   to the original subscriber for the Senior Bonds
                                                                                         Bondholders at such meeting.
                                   irrespective of any transfer of the Senior Bonds
                                   prior to 15 April 2009. Interest paid on the first    In summary, the Events of Default are:
                                   Interest Payment Date will be calculated on a         ƒ the Liquidation of the Company, TFSG or
                                   daily basis from the date a valid application is        TOWER;
                                   received and processed, until the day prior to        ƒ the exercise of certain cross-acceleration
                                   the first Interest Payment Date.                        rights;
                                   Subsequent Interest payments will be calculated       ƒ in the event that Interest has not been paid on
                                   on an annual basis and paid in equal instalments        the Senior Bonds within 10 business days of an
                                   quarterly in arrears on 15 January, 15 April, 15        Interest Payment Date; or
                                   July and 15 October until the Maturity Date,
                                                                                         ƒ in the event that principal has not been paid
                                   to registered Bondholders on the Record Date
                                                                                           on the Senior Bonds within 10 business days
                                   (as defined in the Trust Deed) for determining          of the Maturity Date or other due date for
                                   entitlement to Interest payments.                       payment,
                                   The person legally liable to pay Interest (if any)    where the event continues and is not remedied,
                                   on Senior Bonds, and whom for the purposes of         and the Trustee has given a notice to the
                                   the Securities Regulations 1983 has promised to       Company declaring such event to be an Event
                                   pay Interest, is the Company.                         of Default. A breach of the Financial Covenants
                                   Guarantee                                             or of any other provision of the Trust Deed does
                                                                                         not constitute an Event of Default.
                                   TOWER Limited and TOWER Financial Services
                                   Group Limited (the ‘Guarantors’) have                 Investors should refer to the Trust Deed for a
                                   guaranteed to each Bondholder the obligations         fuller description of the acts and omissions that
                                   of the Company to pay Interest on Senior Bonds        constitute an Event of Default.
                                   on an Interest Payment Date and of the principal      If the Senior Bonds are repaid prior to their


                            32
Maturity Date, the returns Bondholders will           otherwise) excluded from the income spreading
receive will be different from the returns they       methods of the Tax Act.
would have received if the Senior Bonds were          The redemption or purchase for cash, or sale of
repaid on their Maturity Date.                        the Senior Bonds may require the Bondholder
Other Breaches                                        to calculate a base price adjustment (‘BPA’)
                                                      for the purposes of the financial arrangements
If there is a breach by the Company, TOWER
                                                      rules. Any gain arising will be taxable income
or TFSG of a provision of the Trust Deed other
                                                      and losses will be deductible where the relevant
than in an Event of Default, that continues




                                                                                                            Investment Statement Information
                                                      criteria are met. The calculation will include all
unremedied for 30 days and the Trustee
                                                      consideration both paid and received by the
considers that such breach is materially
                                                      Bondholder, including the amount paid on the
prejudicial to the interests of Bondholders, the
                                                      issue of the Senior Bonds, interest received, and
Trustee may take such proceedings as it thinks
                                                      the cash received on redemption or purchase
fit against the Company, TOWER or TFSG (as the
                                                      or sale as applicable. All amounts returned as
case may be), provided that the Trustee cannot
                                                      income or expenditure in prior years in relation
accelerate payment of Interest or Principal on
                                                      to the Senior Bond (including interest income)
Senior Bonds on the basis of this breach.
                                                      are adjusted in the BPA.
Taxation                                              Resident Withholding Tax (‘RWT’) will be
The Offer is made only to New Zealand                 deducted by the Company from Interest
residents. Therefore the tax information              including an early redemption premium paid to
provided below is limited in application to New       or credited to Bondholders unless a Bondholder
Zealand residents.                                    provides the Company with a valid certificate
Should any Bondholder become non                      of exemption or evidence that they are not
resident, or a non resident acquire any Senior        otherwise liable to RWT and the Company is
Bonds, the investor should immediately                satisfied that no deduction is required.
notify the Company.                                   RWT will be deducted at the rates applicable at
The Company plans to register under the               the time Interest is paid. The current rates are:
Approved Issuer Levy (‘AIL’) regime. Accordingly,     ƒ 33% where notification is received that
unless advised otherwise, the Company will,             the Bondholder is a company (other than
where it is lawfully able to, deduct AIL (currently     a company holding the Senior Bonds as
at 2% of Accrued Interest) from payments made           trustee);
or credited to non resident Bondholders who do        ƒ 19.5% where the Bondholder is not a
not engage in business in New Zealand through           company (other than a company holding the
a fixed establishment in New Zealand. Non               Senior Bonds as trustee) and the Bondholder
resident Bondholders may request by a written           provides the Company its IRD number;
notice to the Registrar that AIL not be deducted.
                                                      ƒ 39% where the Bondholder does not provide
In this case non resident witholding tax will be
                                                        its IRD number;
deducted at the appropriate rate.
                                                      ƒ Bondholders who have provided their IRD
The following information is based on
                                                        numbers may elect to have RWT deducted at
applicable tax legislation current at the date of
                                                        33% or 39%.
this Offer Document. All comments in relation
to taxation in this Offer Document are of a           The Taxation (Urgent Measures and Annual
general nature only, and are not (and should          Rates) Act 2008 has introduced an optional
not be construed as) legal or tax advice to any       38% rate to replace the 39% rate for the 2010
investor in Senior Bonds. These comments              income year only. It applies at the option of
should therefore be treated with appropriate          TOWER to interest paid from 1 April 2009 to 31
caution.                                              March 2010. TOWER currently intends to use the
                                                      38% rate where applicable. A further legislative
Investors should consult their own taxation
                                                      change is expected to align the RWT rates with
or other financial advisers concerning the
                                                      the personal tax rates starting from the 2011
taxation implications arising in their particular
                                                      income year.
circumstances.
                                                      Joint Bondholders will be taxed at the rates
The Senior Bonds are financial arrangements for
                                                      described above as if they were one person.
the purposes of the Income Tax Act 2007 (‘Tax
Act’). All interest will represent taxable income     A tax credit for RWT deducted will be available
for the Bondholder (other than tax exempt             against any tax liability of the Bondholder.
Bondholders) calculated under the financial           No transactional taxes such as Goods and
arrangements rules of the Tax Act. Bondholders        Services Tax will be applicable to the issue,
who are cash basis persons under the financial        redemption, purchase or sale of the Senior
arrangements rules are (unless they elect             Bonds.


                                                                                                           33
                                   Sale of Senior Bonds                                       Group, or for any other reason, they may
                                   Bondholders are entitled to sell their Senior              not be able to sell Senior Bonds for their full
                                   Bonds at any time subject to the terms of                  Issue Price;
                                   the Trust Deed, applicable securities laws               ƒ they may not receive back all or any of the
                                   and regulations. See ‘How do I cash in my                  Issue Price invested into Senior Bonds in the
                                   investment?’ on page 40.                                   event of a Liquidation of the Company, TFSG
                                                                                              or TOWER.
                                   Maturity                                                 These factors could mean that a Bondholder
Investment Statement Information




                                   Maturity Notice                                          may receive on the realisation of the investment,
                                                                                            less than the Issue Price paid for that Senior
                                   If New Conditions are offered by the Company,
                                                                                            Bond.
                                   the Company must send a maturity notice to
                                   Bondholders not less than 30, but not more               The principal factors that may affect the
                                   than 60, business days before the Maturity Date          performance or position of the Company and of
                                   specifying New Conditions as to Interest Rate,           the TOWER Group are summarised below:
                                   Interest Payment Dates, the New Maturity Date,
                                   early repayment options and otherwise varying
                                                                                            The performance of the Company and
                                   the Conditions applying to Senior Bonds after            risks inherent in TOWER’s business
                                   the Maturity Date.                                       The performance of the TOWER Group is
                                                                                            influenced by a range of risk factors, many of
                                   Bondholder Election
                                                                                            which are beyond the control of TOWER and the
                                   At maturity Bondholders may (within 15 business          Company. Investors should consider carefully
                                   days of receipt of a maturity notice) elect to either:   the risk factors below and other information
                                   ƒ have their Senior Bonds redeemed or                    contained in this Offer Document.
                                     purchased for cash; or
                                                                                            General risks of TOWER and its
                                   ƒ if New Conditions are offered by the
                                                                                            operating subsidiaries
                                     Company, rollover their Senior Bonds on the
                                     New Conditions which may be advised by the             Failure of strategy and growth
                                     Company.                                               The successful implementation of TOWER’s
                                   If New Conditions are offered by the                     strategies for its three business units will drive
                                   Company, Bondholders who do nothing or                   TOWER’s financial performance. Any material
                                   who do not make a valid election will be                 failure of those strategies to deliver expected
                                   deemed to have elected to retain all of their            results could have a significant adverse impact
                                   Senior Bonds on the New Conditions.                      on TOWER’s profitability. Failure of TOWER’s
                                                                                            strategies to deliver growth will ultimately
                                   For more information on the election procedure
                                                                                            impact on the appraisal values of strategic
                                   generally, see Condition 6 (Notice of New
                                                                                            assets, and on TOWER’s performance. TOWER
                                   Conditions) in the section ‘Conditions of Notes’.
                                                                                            has a robust governance structure in place to
                                   Option to Redeem                                         monitor performance and the likely impact on
                                   No later than 10 business days before                    strategy of changes in economic conditions and
                                   the Maturity Date and irrespective of any                to make the necessary adjustments to optimise
                                   Bondholder election or deemed election to                returns.
                                   rollover their Senior Bonds, the Company may             Change in economic conditions
                                   give notice to Bondholders that it will redeem or
                                                                                            The performance of TOWER’s operations
                                   purchase for cash on that Maturity Date some
                                                                                            depends on global economic conditions,
                                   or all Senior Bonds on issue. Where less than
                                                                                            particularly as they affect conditions in New
                                   all Senior Bonds are redeemed, they will be
                                                                                            Zealand. TOWER cannot predict the impact
                                   redeemed on a pro-rata basis.
                                                                                            that future economic conditions will have on its
                                                                                            business - be they positive or negative. Changes
                                   What are my risks?
                                                                                            in economic conditions can impact on the
                                   The principal risks for investors in Senior Bonds        financial results of TOWER through investment
                                   are related to the financial performance and/or          returns and through changes in consumer
                                   position of the Company, the Guarantors and              demand for TOWER’s products and services,
                                   the TOWER Group which could mean that:                   or the value of assets under management.
                                   ƒ they may not receive Interest Payments on the          Economic downturns can also result in higher
                                     Senior Bonds, or they may receive them late;           claims’ costs for specific classes of business, and
                                   ƒ due to either increases in market interest             in turn, higher premium costs.
                                     rates and/or actual or perceived poor financial        There can be no assurance that future conditions
                                     condition of the Company or the TOWER                  will not materially adversely affect TOWER’s


                            34
profitability. Recent turmoil in the global credit       there could similarly impact on its financial
and financial markets, and economic recession            performance. The outbreak of a major global
is likely to affect insurance and financial              health epidemic may also impact on TOWER’s
services sector companies like TOWER through             claims’ experience or on general business
investment volatility and decreased customer             conditions.
spend on products.
                                                         Business continuity and disaster recovery
Changes in industry conditions affecting                 There is a risk that some current business
insurance and investments businesses                     continuity and disaster recovery plans will not




                                                                                                              Investment Statement Information
Insurance markets are increasingly cyclical              effectively provide for continuity in the event
in nature. Whilst this has been evident in               of a disaster. These plans are presently under
general insurance premiums and claims, trends            review to ensure that they represent the current
in life, disability and health insurance are             business structure and systems.
also becoming more cyclical. These cyclical              Competition in the financial services industry
trends may influence the demand for, and the
                                                         The financial services industry is highly
pricing of, TOWER’s products and services.
                                                         competitive. TOWER’s competitors include
Consequently, this may impact on TOWER’s
                                                         a large number of life insurers and general
financial performance and position.
                                                         insurers as well as non-insurance financial
TOWER’s Group companies maintain significant             services companies such as banks. Consolidation
investment portfolios for both shareholder               of the financial services industry is expected.
and policyholder funds. Investment returns               In addition, the entry of new participants,
are typically expected to generate a significant         development of innovative products and new
proportion of TOWER’s revenue. For TOWER’s               methods of distribution may threaten TOWER’s
life insurance businesses, investment returns are        market share, access to distribution networks,
divided between shareholders and policyholders.          and could force more price competition amongst
The components of these returns directly impact          participants. This may impact on TOWER’s
on the Group’s profitability. Approximately              financial performance and financial position.
one third of TOWER’s shareholder funds is
invested in equities, with approximately two             Crown Deposit Guarantee Scheme
thirds invested in fixed interest securities. Poor       In October 2008, in response to the global credit
investment market conditions, or a deterioration         crisis, New Zealand’s government announced a
in investment markets (particularly in equity            deposit guarantee scheme, extending to certain
markets which are typically more volatile than           debt securities for a two year period. There is
fixed interest markets) may significantly reduce         a risk that it could result in funds flowing from
TOWER’s investment income, and adversely                 traditional managed funds which are not subject
affect TOWER’s investment business. Interest rate        to the guarantee into guaranteed debt. This
fluctuations will also impact on the performance         could adversely impact on TOWER’s investment
of TOWER’s fixed interest portfolios. The                business.
condition of investment markets generally may            Exchange rate fluctuations
also adversely impact on TOWER’s ability in the
                                                         TOWER holds investment portfolios containing
future to raise further capital to fund capital
                                                         securities in foreign currencies. Exchange rate
requirements, and impact on surplus assets, and
                                                         movements affecting the currencies may impact
therefore on TOWER’s capital adequacy.
                                                         on the financial performance of TOWER to the
The main source of income for the retail funds           extent that such exposures are not hedged, and
management section of TOWER Investments                  may impact on the TOWER Group’s profitability.
is fees derived from managed investment
                                                         Changes in government policy and regulatory
products. As approximately 97% of these fees
                                                         compliance
are directly related to the level of funds under
management, this source of income is exposed             Financial services industry participants like
to the state of investment markets generally and         TOWER are subject to a broad range of
the level of funds flow that TOWER receives. If          regulation and supervision. The regulatory
the level of funds under management falls, so            regimes in New Zealand and the Pacific Islands
will the income from these fees.                         in which TOWER operates are subject to change.
                                                         An example is the current government proposal
Impact of hostilities, political instability,            for the prudential regulation and supervision
terrorism and health epidemics                           of the insurance sector by the Reserve Bank
The threat of war, outbreak of hostilities or            (which will prescribe and enforce insurer
terrorist attacks could impact on TOWER’s                compliance with the regulatory prudential
financial performance. TOWER Insurance                   requirements), and the regulation of non-bank
operates in the Pacific Islands. Political instability   deposit takers, which will apply to TOWER


                                                                                                             35
                                   Capital Limited. TOWER will also be affected        is the nominated company. Large prepaid
                                   by legislative changes in the taxation regimes      tax assets exist in TOWER. Adverse market
                                   for financial service companies, funds and          movements may affect the ability to realise the
                                   individuals. TOWER is committed to ensuring         tax asset or recognise it for financial reporting
                                   that all reasonable measures are taken to           purposes.
                                   maintain a responsible compliance environment
                                                                                       Taxation – life insurance
                                   through which legislative obligations are fully
                                   met. The TOWER Compliance Plan establishes          The Taxation (International Taxation, Life
                                                                                       Insurance, and Remedial Matters) Bill introduced
Investment Statement Information




                                   a framework to implement and monitor
                                                                                       on 2 July 2008 proposes the introduction of a
                                   compliance. Non-compliance with regulations
                                                                                       whole new tax regime for the taxation of life
                                   may give rise to adverse publicity for TOWER.
                                                                                       insurance. With the dissolution of Parliament
                                   In addition, as the complexity of the regulatory
                                                                                       the Bill had lapsed and has recently been
                                   regime increases, so may the cost of compliance
                                                                                       reinstated under the new Government. If the Bill
                                   and the risk of non-compliance. TOWER
                                                                                       is enacted in its entirety it will affect the taxation
                                   cannot predict the impact of future legislative
                                                                                       of TOWER Group’s life insurance business: the
                                   changes, taxation changes, or stricter regulatory
                                                                                       Bill proposes an introduction date of the new
                                   controls on its business. Such changes may
                                                                                       regime for TOWER on 1 October 2009, the
                                   have an adverse impact on TOWER’s financial
                                                                                       new regime as currently drafted will result in
                                   performance and on the way in which it may
                                                                                       more tax to pay for new term life business, the
                                   undertake future business.
                                                                                       effect of grandfathering provisions will however
                                   Reinsurance                                         reduce the impact of these changes for the first
                                   TOWER enters into a number of reinsurance           five years. The proposed regime is still under
                                   arrangements in its insurance operations. The       consultation and is likely to be subject to further
                                   availability and cost of reinsurance depend         change.
                                   on prevailing market conditions and TOWER’s         Taxation - over paid tax
                                   own financial position. A number of reinsurers
                                                                                       In February 2004, the Inland Revenue
                                   are taking a more conservative position on
                                                                                       Department (IRD) refunded TOWER $30 million
                                   reinsurance arrangements. In the general
                                                                                       in respect of over paid tax. The IRD now
                                   insurance market, TOWER Insurance may               believes it ought not to have paid this refund
                                   be exposed to multiple catastrophic events,         and has written to TOWER disputing TOWER’s
                                   however the catastrophe reinsurance they            entitlement to this refund. The IRD has not
                                   purchase includes one automatic reinstatement.      issued demand for payment. TOWER has
                                   Should that automatic reinstatement be              received strong legal advice that it is fully
                                   triggered they would then need to source and        entitled to the refund.
                                   purchase further catastrophe reinsurance, the
                                                                                       TOWER has commenced IRD’s formal dispute
                                   cost and availability of which would depend on
                                                                                       resolution process in relation to the refund paid
                                   the reinsurance market at the time. In the last
                                                                                       plus potential use of money interest and penalty
                                   25 years TOWER Insurance has only had five
                                                                                       amounts. The IRD has agreed that no tax in
                                   events that exceeded $5 million, those events
                                                                                       respect of this matter will be payable until this
                                   occurred in 2006, 2004, 1994, 1985 and 1983.
                                                                                       process is complete which is expected to take up
                                   TOWER Insurance also has other reinsurance
                                                                                       to one year. In the unlikely event that TOWER is
                                   contracts on individual risks that are purchased
                                                                                       unsuccessful, the $30 million could be repaid to
                                   to reduce its exposure from a single non
                                                                                       the IRD plus penalties of up to $16 million could
                                   catastrophic event.
                                                                                       be levied. The payment (excluding penalties)
                                   TOWER is exposed to the risk that its reinsurers    would reinstate a tax asset representing prepaid
                                   may default on their obligations and can give       taxes that would be available to offset future tax
                                   no assurances that it will be able to obtain        liabilities.
                                   reinsurance on terms and conditions that it
                                                                                       Taxation - use of money interest
                                   deems appropriate.
                                                                                       The IRD has advised TOWER it is considering
                                   TOWER Insurance also has various inwards
                                                                                       TOWER’s entitlement to use of money interest
                                   reinsurance treaties that are in run off. These
                                                                                       paid to TOWER on prepaid tax assets for the
                                   treaties may be subject to adverse experience
                                                                                       income tax years 1996 to 2006. The amount of
                                   however TOWER believes it is adequately
                                                                                       interest involved is $13.9 million which has been
                                   reserved for these.
                                                                                       fully provided for in the financial statements. In
                                   Group taxation                                      the unlikely event that TOWER is unsuccessful
                                   TOWER Limited and its New Zealand wholly-           and is required to repay the use of money interest
                                   owned subsidiaries comprise a New Zealand tax       received, there would be no impact on profit.
                                   consolidated group of which TOWER Limited           TOWER has received independent advice


                            36
supporting the position taken by TOWER and            cannot at this stage predict what effect this
will defend its position if the matter is formally    will have on the earnings of TOWER’s insurance
challenged by the IRD.                                business, as this will depend on a number of
                                                      factors, including ongoing renewals and the
Legacy risks
                                                      extent to which that business is profitably
Compliance errors can on occasion be identified       replaced.
in older financial products and systems which
are complex or require significant manual             Actual claims experience differing from
processes. TOWER has a number of historical           underwriting and reserving assumptions




                                                                                                             Investment Statement Information
complex products and manual processes which           The TOWER Group’s earnings depend
may have undetected compliance breaches.              significantly on the claims paid under its
The costs to rectify compliance breaches can          insurance contracts, and will vary from period
be material in both compensation costs to             to period depending upon the amount of claims
policyholders and rectification costs. Should         incurred in the relevant periods. The Group
material compliance breaches arise this could         establishes and carries liabilities which are
result in TOWER’s financial performance and           actuarially determined or set by management
brand being adversely affected.                       to provide for such claims. In addition to
Systems risk and IT                                   determining the estimated level of policy
                                                      liabilities, the TOWER Group has a reinsurance
TOWER and its operating subsidiaries are highly
                                                      programme to manage, to an extent, its
reliant on information technology systems to
                                                      exposure to claims. Owing to the nature of
operate, and any failure or inadequacies of the
                                                      the underlying risks and the high degree of
systems or increased cost of technology could
                                                      uncertainty associated with the determination
adversely affect the Group’s profitability. Some
                                                      of the liabilities of unpaid policy benefits and
of these systems are coming to the end of their
                                                      claims, TOWER cannot determine precisely the
useful lives and will need to be replaced or the
                                                      amounts that will ultimately be paid to settle
products they support migrated to alternate
                                                      these liabilities. If the actual claims’ experience
systems. These projects have significant
                                                      is greater than the amount provided for on the
associated risks including: legacy system failures,
                                                      basis of actuarial determination or management
failed implementation, unexpected costs to
                                                      provision, estimated claim costs will be
migrate data, install and run new systems,
                                                      exceeded. Any increase in claims’ liabilities as
or in migrating clients from one product to
                                                      a result may have a materially adverse effect
another, which could adversely affect TOWER’s
                                                      on TOWER’s business, results of operation and
profitability.
                                                      financial performance.
TOWER is proposing to replace the legacy
information technology systems that support           Credit ratings
the TOWER Insurance and TOWER Health &                Credit ratings for various TOWER Group
Life businesses to provide a more stable and          members are referred to on page 17. A number
functional system. In addition to the IT risks        of TOWER’s businesses rely on the credit rating
outlined above, the implementation programme          to write business. A deterioration in those credit
for the proposed migration is both complex            ratings may result in some agents, brokers,
and has a long period of delivery. If the legacy      distributors and other alliance partners and
systems are not successfully replaced or the          customers ceasing to do business with TOWER.
implementation is delayed, there is a significant
                                                      Reliance on key personnel
risk the legacy systems could fail to perform to
competitors’ standards.                               The TOWER Group has qualified and
                                                      experienced management and investment
Alliances                                             personnel. There are a relatively small number
TOWER’s primary product and service                   of key senior executives actively involved in
distribution channel is through third parties         major strategic decisions and who are integral
and, in particular, through financial planners        to the control and profitability of the TOWER
and alliances. The loss of any one of these           Group operations. The loss of any of these key
relationships (which may be a consequence             management or investment personnel may have
of any change of ownership of a party to an           an adverse affect on the Group’s operations.
alliance contract) could have a negative impact
                                                      Brand and reputation
over time on the earnings of the General
Insurance business in particular. ANZ National        TOWER’s brand name and those of its operating
Bank Limited has purported to terminate the           companies are important to maintaining
alliance relationship in New Zealand for the          existing business and sourcing new business.
provision of general insurance, and that is           Poor financial performance and/or compliance
currently subject to a legal dispute. TOWER           issues may result in adverse media coverage and


                                                                                                            37
                                   changed perceptions. The negative impact on         outstanding:
                                   TOWER’s brand reputation is liable to result in a   ƒ Net Assets of TOWER Group shall be not less
                                   decrease in new business and the withdrawal of        than $200 million;
                                   existing business. Damage to the reputation of
                                                                                       ƒ Net Debt of the TOWER Group shall not
                                   the TOWER name may have an adverse impact
                                                                                         exceed 40% of Net Assets of the TOWER
                                   on the financial performance of the TOWER
                                                                                         Group;
                                   Group.
                                                                                       ƒ Secured Debt of the TOWER Group shall not
                                   Risks relating to the nature of the Senior
Investment Statement Information




                                                                                         exceed 10% of Net Assets of the TOWER
                                   Bonds                                                 Group.
                                   Other risks relate to the nature of the Senior      Interest on the Senior Bonds is payable by the
                                   Bonds.                                              Company at the Default Rate instead of the
                                   The Senior Bonds may only be redeemed or            usual Interest Rate for so long as there is an
                                   purchased for cash:                                 unremedied breach of a Financial Covenant.
                                   ƒ at the Maturity Date or, in certain               TOWER may not make any Distribution to its
                                     circumstances, earlier (see ‘Early Repayment’     shareholders while any Interest is unpaid, while
                                     under ‘Can the investment be altered?’ in this    there is an unremedied Event of Default, or there
                                     section);                                         remains an unremedied breach of a Financial
                                   ƒ after an Event of Default;                        Covenant, or where to do so would cause a
                                                                                       breach of a Financial Covenant.
                                   ƒ at the next Interest Payment Date following a
                                     Takeover of TOWER.                                Secured Creditors
                                   The Senior Bonds will remain in existence unless    As the Senior Bonds are not secured all of the
                                   and until they are redeemed. Senior Bonds           obligations of the Company and the Guarantors,
                                   cannot be converted into shares.                    and the rights of Bondholders rank behind the
                                   The Trustee’s role is limited. Other than the       rights of all Secured Creditors of the Company
                                   Financial Covenants and the limited Events of       and the Guarantors in point of security.
                                   Default there are no other covenants in the Trust   The Company and the Guarantors may issue
                                   Deed or restrictions as to how the Company          further Senior Bonds which rank equally with or
                                   or TOWER operates its business. Other than in       behind the Senior Bonds.
                                   relation to the Events of Default, a breach by
                                                                                       Consequences of insolvency
                                   the Company of the representations, warranties
                                   or covenants contained in the Trust Deed            No Bondholder will be liable to pay any further
                                   (including the Financial Covenants) does not        amounts to the Company or any other person in
                                   entitle the Trustee to require the Company to       respect of those Senior Bonds if the Company or
                                   redeem or purchase Senior Bonds but if and          either of the Guarantors becomes insolvent.
                                   for so long as there is a breach of a Financial     In the event of the Liquidation of the Company
                                   Covenant Interest is payable at the Default         or either of the Guarantors, the Trustee
                                   Rate (instead of the usual Interest Rate) and no    can prove in the Liquidation on behalf of
                                   Distributions may be made by TOWER to its           Bondholders for the principal amount of their
                                   shareholders.                                       Senior Bonds plus any Accrued or Unpaid
                                   Further details on the limitations on payment       Interest that is payable. The claims of all Secured
                                   and enforcement rights are set out under ‘Status    Creditors and other creditors having priority by
                                   of the Senior Bonds’, in the section ‘Conditions    operation of law will be paid, in respect of the
                                   of Senior Bonds’ on page 48.                        security held, ahead of Bondholders. This means
                                                                                       that no payment will be made to Bondholders
                                   Further Issues of Debt
                                                                                       until all of the other Secured Debts of the
                                   Under the Trust Deed, the Company and the           Company and the Guarantors are paid in full to
                                   Guarantors each have the power to create and        the extent of the security given. The interests
                                   issue additional debt obligations ranking behind    of Bondholders will, however, rank ahead of
                                   or pari passu with the Senior Bonds without         subordinated creditors and shareholders in the
                                   the consent of Bondholders. The Guarantors          Company and the Guarantors. Bondholders
                                   or any other company in the TOWER Group             under this Offer will rank pari passu with each
                                   may also grant security for obligations, subject    other and other Senior Creditors.
                                   to the Financial Covenants. Such further debt
                                   obligations may be issued on such terms as the      Can the investment be altered?
                                   Company or TOWER thinks fit, provided the           The terms of this Offer and the terms and
                                   Financial Covenants are not breached.               conditions on which investors may apply for
                                   However, TOWER, TFSG and the Company have           and purchase Senior Bonds may be altered
                                   covenanted that while any Senior Bonds remain       by an amendment to this Offer Document by


                            38
the Company. Any amendment that altered              Takeover of TOWER
the fundamental terms and conditions of the          The obligations of the Company and TOWER
Offer would be notified to investors. Details of     under the Trust Deed will not change as a result
any such amendment must be filed with the            of any change in the shareholding of TOWER,
Registrar of Companies.                              whether by Takeover or otherwise. If a Takeover
On the Maturity Date, the New Condition              offer is made for TOWER Shares, the offeror may
Interest Rate payable on Senior Bonds may be         also choose to offer to acquire the Senior Bonds.
set by the directors of the Company at their         If a party acquires a relevant interest in 90%




                                                                                                           Investment Statement Information
discretion.                                          or more of TOWER Shares, the compulsory
Amendment to Trust Deed                              acquisition provisions of applicable law would be
                                                     invoked. The Trust Deed provides that should a
The provisions of the Trust Deed, and the
                                                     Takeover of TOWER occur, (which is defined to
Conditions of Senior Bonds under the Trust
                                                     occur when a party obtains a relevant interest
Deed may be altered by the Company and the
                                                     in 90% or more of TOWER Shares and where
Guarantors with the approval of the Trustee.
                                                     TOWER Shares cease to be listed on NZX and
Certain amendments do not require                    ASX), the Company must offer to redeem or
Bondholder approval under the terms of the           purchase all Senior Bonds on issue for cash at
Trust Deed. Other amendments must be                 the Issue Price at the next Interest Payment Date.
approved by an extraordinary resolution of           See the section ‘Conditions of Senior Bonds’.
Bondholders. More information on Trust Deed          Senior Bonds cannot be converted into TOWER
amendments is contained under ‘Amendment             Shares on the occurrence of a Takeover.
of Trust Deed’ in the section ‘Summary of Trust
Deed’ on page 47.                                    Other early repayment
                                                     Bondholders have no ability to cash in their
Early repayment by the Company
                                                     investments prior to the Maturity Date, except
The Trust Deed allows the Company at any time        following an Event of Default and acceleration
after 15 April 2011, to require the redemption or    of repayment of Senior Bonds by the Trustee, on
purchase of all or part of Senior Bonds on issue     a Takeover or by selling their Senior Bonds. See
at a premium to the Issue Price, together with       ‘Early Repayment’ in the section ‘Conditions of
any Accrued Interest and Unpaid Interest on the      Senior Bonds’ on page 50.
Senior Bonds. If the Company wishes to redeem
or purchase part only of Senior Bonds on issue, it   Liquidation and ranking
must do so on a pro-rata basis.                      On the Liquidation of the Company or either
The redemption price payable will be:                of the Guarantors the Senior Bonds will be
                                                     redeemable by the Company in cash and will
ƒ 103% of Issue Price (if the Early Repayment
                                                     rank for payment:
  is between 15 April 2011 and 14 April 2012,
  inclusive);                                        ƒ ahead of subordinated creditors and
                                                       shareholders of the Company and (in relation
ƒ 102% of Issue Price (if the Early Repayment
                                                       to their respective guarantee obligations)
  is between 15 April 2012 and 14 April 2013,
                                                       the Guarantors, and pari passu with other
  inclusive); and
                                                       Bondholders and Senior Creditors; but
ƒ 101% of Issue Price (if the Early Repayment is
                                                     ƒ after the claims in point of security of Secured
  after 14 April 2013).
                                                       Creditors of the Company or of either of
The Company may also require the redemption            the Guarantors, and to indebtedness having
or purchase of all of the Senior Bonds on issue:       priority by operation of law.
ƒ at no premium to the Issue Price, together         Creditors of non-guaranteeing subsidiaries of the
  with any Accrued Interest and Unpaid               TOWER Group will rank ahead of Bondholders.
  Interest on the Senior Bonds in the event of       Cross-acceleration
  an adverse change in taxation relating to the
                                                     Bondholders have certain cross-acceleration
  Senior Bonds from the perspective of either
                                                     rights in respect of the Senior Bonds. This
  the Company or Bondholders, as reasonably
                                                     means that if, due to a default by the Company
  determined by the Company or TOWER; or
                                                     or either of the Guarantors, other than in
ƒ at the aggregate of 103% of the Issue Price,       respect of the Senior Bonds, a Senior Creditor
  together with all Acrued Interest and Unpaid       (or Senior Creditors) of the Company or either
  Interest in respect of those Senior Bonds in the   of the Guarantors is entitled to and requires
  event of a Major Restructuring Event prior to      repayment of indebtedness in excess of $10
  15 April 2011.                                     million (in aggregate) prior to the stated
See ‘Early Repayment’ in the section ‘Conditions     maturity of that indebtedness, that event
of Senior Bonds’ on page 50.                         will also be an Event of Default in respect of


                                                                                                          39
                                   the Senior Bonds, unless it is remedied by the         Company may give notice to any Bondholder
                                   Company or the relevant Guarantor. In the              holding less than the minimum holding of Senior
                                   event that the entitlement of a Senior Creditor        Bonds requiring the sale of those Senior Bonds in
                                   to require repayment is disputed, it shall be          accordance with the Trust Deed. Brokerage may
                                   determined by application to the courts in New         be payable by Bondholders on any transfer of
                                   Zealand and will not constitute an Event of            Senior Bonds.
                                   Default pending such determination.                    Senior Bonds may be redeemed or purchased for
                                   Non-payment of Interest or principal                   cash in certain circumstances. See ‘What returns
Investment Statement Information




                                   If Interest is not paid within 10 business days of     will I get?’ in the section ‘Answers to Important
                                   an Interest Payment Date or if principal is not        Questions’.
                                   paid within 10 business days of the Maturity Date
                                   or other due date for payment, Bondholders may
                                                                                          Who do I contact with enquiries about
                                   also be entitled to early repayment. See ‘Events       my investment?
                                   of Default’ on page 32.                                Inquiries about this Offer should be directed to
                                                                                          any Primary Market Participant or:
                                   How do I cash in my investment?                           Company Secretary
                                   Bondholders may sell or transfer their Senior Bonds       TOWER Limited
                                   at any time, subject to the terms of the Trust Deed       Level 11
                                   and applicable securities laws and regulations.           TOWER Centre
                                   Bondholders also have limited rights to repayment         22 Fanshawe Street
                                   and redemption. See the section ‘Limitation of
                                                                                             PO Box 90347
                                   rights’ under ‘Summary of the Trust Deed’.
                                                                                             Auckland 1142
                                   As the Offer contained in this Offer Document
                                                                                             Telephone 09 369 2000
                                   is an initial issue of Senior Bonds, there is
                                                                                             Facsimile 09 369 2160
                                   currently no established market for sale of the
                                   Senior Bonds. An application has been made for         And to:
                                   permission to list the Senior Bonds and all the           Arranger, Joint Lead Manager and Organising
                                   requirements of NZX relating thereto that can             Participant
                                   be complied with on or before the date of this
                                                                                             Goldman Sachs JBWere (NZ) Limited
                                   Offer Document have been duly complied with.
                                                                                             Level 38
                                   However, NZX accepts no responsibility for any
                                                                                             Vero Centre
                                   statement in this Offer Document.
                                                                                             48 Shortland Street
                                   Senior Bonds may be transferred using a transfer
                                                                                             PO Box 887
                                   document in the form prescribed by the Trust
                                                                                             Auckland 1140
                                   Deed or otherwise approved by the Company or
                                   by any other method to transfer securities which          Telephone 09 357 3200
                                   is not contrary to any law, and which may be              Facsimile 09 357 3222
                                   operated in accordance with NZSX Listing Rules.        And to:
                                   Applicants for Senior Bonds should not attempt
                                                                                             Joint Lead Manager
                                   to sell those Senior Bonds until they know
                                   whether, and how many, Senior Bonds have                  Forsyth Barr Limited
                                   been allotted to them. None of the Company,               The Octagon
                                   the Guarantors, TOWER, nor any of its related             Private Bag 1999
                                   companies, the Joint Lead Managers, the Trustee,          Dunedin 9054
                                   nor any of their respective directors, officers           Telephone 0800 367 227
                                   or employees or any other person accepts any              Facsimile 03 477 4928
                                   liability or responsibility should any applicant for
                                                                                          Inquiries about Senior Bonds should be directed
                                   Senior Bonds attempt to sell or otherwise deal
                                                                                          to the Registrar:
                                   with Senior Bonds before receiving a FASTER
                                   statement recording the number of Senior Bonds            Computershare Investor Services Limited
                                   (if any) allotted to that applicant.                      Level 2
                                                                                             159 Hurstmere Road
                                   Bondholders can generally sell Senior Bonds by
                                                                                             Takapuna
                                   contacting a Primary Market Participant. Except
                                                                                             North Shore City 0622
                                   as approved by the Company or as required
                                   under NZSX Listing Rules, no transfer of Senior           Private Bag 92119
                                   Bonds will be registered if registration (together        Auckland 1142
                                   with the registration of all contemporaneous              Freephone 0800 222 065
                                   transfers) would result in the vendor or purchaser        Telephone 09 488 8777
                                   holding a parcel of less than the minimum                 Facsimile 09 488 8787
                                   holding (currently 5,000) of Senior Bonds. The

                            40
   Is there anyone to whom I can                What other information can I obtain
   complain if I have problems with             about this investment?
   the investment?                              Other information about the Senior Bonds,
Complaints about Senior Bonds can be made to:   and on the Company is contained or referred
   Company Secretary                            to in this Offer Document, the Trust Deed and
                                                in the financial statements for the Company
   TOWER Limited
                                                (once available). You may obtain copies of
   Level 11
                                                these documents (once available), and other




                                                                                                        Investment Statement Information
   TOWER Centre
                                                documents of, or relating to the Company
   22 Fanshawe Street
                                                (including the constitution of the Company and
   PO Box 90347                                 the material contracts referred to in this Offer
   Auckland 1142                                Document) without fee during normal business
   Telephone 09 369 2000                        hours at the Company, Level 11, TOWER Centre,
   Facsimile 09 369 2160                        22 Fanshawe Street, PO Box 90347, Auckland
                                                1142.
And to:
                                                You can also obtain copies of this Offer
   The Trustee
                                                Document free of charge on request in writing,
   The New Zealand Guardian Trust               or by telephone, from the Joint Lead Managers,
   Company Limited                              Primary Market Participants, and the Registrar.
   Guardian Trust House
                                                This Offer Document, the Trust Deed and the
   15 Willeston Street
                                                financial statements of the Company (once
   PO Box 913                                   available) are also filed on a public register which
   Wellington 6140                              may be inspected on the Companies Office
   Telephone 04 495 7900                        website at www.companies.govt.nz, or (for
   Facsimile 04 499 1454                        a fee) at the Companies Office, Level 18, ASB
                                                Centre, 135 Albert Street, Auckland.
And to:
                                                Bondholders will be sent annually a copy of the
   Computershare Investor Services Limited
                                                financial statements for the Company, together
   Level 2
                                                with such other information as is required to
   159 Hurstmere Road
                                                be sent to Bondholders in accordance with the
   Takapuna
                                                Securities Act 1978, NZSX Listing Rules, and
   North Shore City 0622
                                                other relevant law.
   Private Bag 92119
   Auckland 1142                                On request information
   Telephone 09 488 8777                        Applicants may receive copies of:
   Facsimile 09 488 8787                        ƒ the audited annual financial statements of the
                                                  Company;
There is no ombudsman to whom complaints
about the Senior Bonds can be made in           ƒ the constitution of the Company;
New Zealand.                                    ƒ the Trust Deed;
                                                ƒ this Offer Document;
                                                ƒ the material contracts referred to in this Offer
                                                  Document; and
                                                ƒ any other information that may be requested
                                                  under regulation 23A of the Securities
                                                  Regulations 1983.
                                                This information will be provided to you at
                                                no cost if you request it in writing from the
                                                Registrar at the above address prior to the
                                                Closing Date. In any other case a reasonable fee
                                                may be charged.
                                                In addition, a copy of this Offer Document,
                                                TOWER’s annual and half-yearly reports and the
                                                TOWER Group’s latest financial statements can
                                                also be found on TOWER’s website:
                                                www.towerlimited.com




                                                                                                       41
42
Other Information


                    43
                    Summary of Trust Deed
                    The Trust Deed, the parties to which are the         respect of security held, rank behind in right of
Other Information




                    Company, the Guarantors and the Trustee, is          payment to the claims of all Secured Creditors
                    dated 12 February 2009. The Senior Bonds             of TFSG and TOWER and indebtedness having
                    offered under this Offer Document are all            priority by operation of law.
                    subject to the detailed provisions of the Trust      Under the Trust Deed, the Company is permitted
                    Deed.                                                to create and issue additional Senior Bonds,
                    The following is a summary of the principal          subject to the Trust Deed, with the consent of
                    provisions of the Trust Deed which comprises         the Trustee. The consent of the Trustee will not
                    three main parts: the general trust deed             be required to issue debt which is not subject to
                    provisions setting out the rights and the            the Trust Deed.
                    obligations of the Company, the Guarantors
                    and the Trustee in respect to the Senior             Guarantee
                    Bonds, detailed Senior Bond Conditions and           There are no guaranteeing subsidiaries of the
                    meeting procedures. An extract of the Senior         Company.
                    Bond Conditions is contained in the section          The Guarantors have guaranteed on an
                    ‘Conditions of Senior Bonds’ on page 48.             unsubordinated, unsecured basis payment of
                    Investors requiring further information should       Interest on Senior Bonds which becomes due
                    refer to the Trust Deed, which is available for      for payment on an Interest Payment Date, and
                    inspection at the places referred to in this Offer   the principal amount of Senior Bonds including
                    Document under the heading ‘What other               Accrued but Unpaid Interest payable to
                    information can I obtain about this investment?’,    Bondholders when payable and on a Liquidation
                    in the section ‘Answers to Important Questions’      of the Company, TFSG or TOWER.
                    on page 41.                                          No person or company (other than the
                    Bondholders are entitled to the benefit of, are      Guarantors) guarantees the Senior Bonds
                    bound by, and are deemed to have notice of the       or the returns that investors may receive as
                    provisions of the Trust Deed.                        Bondholders.

                    Introduction                                         No Restrictions on Borrowing
                    The Senior Bonds offered under this Offer            Other than the Financial Covenants, the
                    Document will be constituted by and issued in        Trust Deed does not restrict TOWER and
                    accordance with the Trust Deed. The Trustee          its subsidiaries (including the Company)
                    acts as trustee for the Bondholders. The Trust       from incurring, varying or dealing with any
                    Deed provides for the issue of the Senior Bonds      borrowings or issuing obligations or creating
                    by the Company.                                      new mortgages or charges ranking equal with or
                                                                         subordinate to the interests of Bondholders.
                    Ranking of the Senior Bonds
                    The Senior Bonds constitute unsubordinated,
                                                                         The Company’s covenants
                    unsecured fixed interest debt securities of the      The Company has covenanted with the Trustee
                    Company and an unsubordinated, unsecured             in the Trust Deed that it will:
                    contingent liability of the Guarantors.              ƒ promptly notify the Trustee and each
                    No security is given over the assets of the            Bondholder if interest will not be paid, or if the
                    Company (being the borrowing group for the             Company fails to make a payment of interest
                    purposes of the Securities Act). No securities are     or any amount due in respect of the Senior
                    therefore secured by a mortgage or charge over         Bonds, when payable including an Event of
                    any of the assets of the borrowing group (being        Default of which the Company is aware;
                    the Company) that rank in point of security          ƒ send copies to the Trustee of all notices given
                    equally with, or ahead of, the Senior Bonds.           by it to Bondholders generally;
                    Under the Trust Deed, the rights of Bondholders      ƒ whenever so requested, whether or not at
                    on Liquidation of the Company, TFSG or TOWER           the relevant time there are any Senior Bonds
                    will rank ahead of the rights of Shareholders of       outstanding, give to the Trustee or any person
                    the Company, pari passu with each other, but in        authorised by the Trustee to receive it, such


               44
  information as may reasonably be required              − not engage in any business or activities not
  with respect to all matters necessary for the            permitted by the Company’s constitution
  purpose of the discharge of the duties, trusts           or other relevant laws applicable to its
  and powers vested in the Trustee under the               continued corporate existence;
  Trust Deed or imposed upon it by law and             ƒ comply with the provisions of each of the
  for this purpose produce and facilitate the            Securities Act 1978 and the Listing Rules
  provision of information to the Trustee by the         applicable to the Senior Bonds; and
  auditors of the Company or TOWER (as the
                                                       ƒ comply with its obligations under the




                                                                                                            Other Information
  case may be) as required by any applicable law
                                                         Conditions.
  and for this purpose will procure and facilitate
  the provision of information to the Trustee          TOWER’s Covenants
  by the auditors of the Company under the
                                                       TOWER has covenanted with the Trustee in the
  procedures contemplated by section 50 of the
                                                       Trust Deed that it will:
  Securities Act;
                                                       ƒ send copies to the Trustee of all notices given
ƒ use all reasonable endeavours to maintain
                                                         by it to Bondholders generally;
  quotation of the Senior Bonds on the Stock
  Exchange and to provide to the Stock                 ƒ whenever so requested, give to the Trustee
                                                         or any person authorised by the Trustee to
  Exchange such information as it may require
                                                         receive it, such information as may reasonably
  in accordance with its normal requirements, or
                                                         be required with respect to all matters
  in accordance with any arrangements for the
                                                         necessary for the purpose of the discharge of
  time being made with the Stock Exchange;
                                                         the duties, trusts and powers vested in the
ƒ promptly notify the Trustee if the Company             Trustee under the Trust Deed or imposed on it
  becomes aware that any provision of the Trust          by law;
  Deed or any terms of issue of the Senior Bonds
                                                       ƒ forward to the Trustee and all Bondholders
  has not been or, as the case may be, cannot
                                                         (other than those to whom the same are
  be complied with by the Company, TFSG or
                                                         sent as holders of TOWER Shares) copies of
  TOWER;
                                                         all notices, reports and financial statements
ƒ if and to the extent that a Senior Bond can            which it sends to its shareholders at the same
  be transferred or traded under a system                time as those communications are distributed;
  authorised or approved under the Securities
                                                       ƒ ensure that the Company remains a wholly
  Transfer Act 1991, at all times use reasonable
                                                         owned subsidiary of the TOWER Group;
  endeavours to comply (or procure that
  the Registrar complies) with all material            ƒ procure that the Company complies with its
  requirements of, or otherwise relating to, such        covenants;
  system (including any applicable arrangement         ƒ carry on its business in a proper manner as a
  made between the Company and the Stock                 full, effective and valid going concern;
  Exchange or requirement imposed on the               ƒ unless otherwise permitted by the Trustee:
  Company by the Stock Exchange);
                                                         − ensure the net proceeds of the issue of the
ƒ advise the Trustee and each Bondholder in                Senior Bonds are utilised in favour of or for
  accordance with any terms of issue of the                the benefit of, any one or more of TOWER or
  Senior Bonds promptly upon becoming aware                TOWER’s related companies; and
  of a Takeover;
                                                         − not engage in any business or activities not
ƒ pay all duties, registration fees, and other             permitted by TOWER’s constitution or other
  similar duties or fees, including penalties (if          relevant laws applicable to its continued
  any) payable on or in connection with the                corporate existence;
  constitution and issue of the Senior Bonds,
                                                       ƒ deliver to the Trustee on time all reports
  the execution and registration of the Trust            required to be given by it;
  Deed and the admissibility in evidence of the
                                                       ƒ not make any Distribution:
  foregoing;
                                                         − while there is Unpaid Interest; or
ƒ carry on its business in a proper manner and
  with sufficient assets to meet all its obligations     − while there is an unremedied breach of a
  under the Trust Deed and in respect of the               Financial Covenant; or
  Senior Bonds as they fall due;                         − where to do so would cause a breach of a
ƒ unless otherwise permitted by the Trustee:               Financial Covenant; or
  − ensure that the net proceeds of the issue            − while there is an unremedied Event of
    of the Senior Bonds are utilised in favour             Default.
    of or for the benefit of, any one or more of       ƒ comply with its obligations under the
    TOWER or TOWER’s related companies; and              Conditions.


                                                                                                           45
                    Financial Covenants                                 as it thinks fit against the Company, TOWER or
                                                                        TSFG (as the case may be), but cannot in that
                    TOWER, TFSG and the Company have
                                                                        event accelerate repayment of the Senior Bonds.
                    covenanted that while any Senior Bonds remain
                    outstanding:
                                                                        Trustee’s Duties
                    ƒ the Net Assets of TOWER Group shall be not
                                                                        The Trustee shall exercise reasonable diligence
                      less than $200 million;
                                                                        to ascertain whether or not any breach of the
                    ƒ Net Debt of the TOWER Group shall not             terms of the Trust Deed or of the Conditions of
Other Information




                      exceed 40% of Net Assets of the TOWER             the Senior Bonds has occurred and, except where
                      Group; and                                        it is satisfied that the breach shall not materially
                    ƒ Secured Debt of the TOWER Group shall not         prejudice the interests of the Bondholders, shall
                      exceed 10% of Net Assets of the TOWER             do all such reasonable things as it is empowered
                      Group.                                            to do to cause any breach of those terms to be
                    If, and for so long as a breach of either of the    remedied. The Trustee is also required under
                    Financial Covenants occurs, the Company must        clause 1 of the Fifth Schedule to the Securities
                    pay interest at the Default Rate (instead of the    Regulations 1983 to exercise reasonable diligence
                    usual Interest Rate), and TOWER may not make        to ascertain whether or not the assets of the
                    any Distribution to its shareholders. Bondholders   borrowing group (being the Company) that are
                    and the Trustee have no other remedies if these     or may be available, whether by way of security
                    covenants are breached – see ‘Limitation on         or otherwise, are sufficient or likely to be sufficient
                    Rights’ in this section.                            to discharge Senior Bonds as they become due.
                                                                        The Trustee’s duties under the Trust Deed as
                    Early Repayment                                     prescribed by clause 1 of the Fifth Schedule to the
                    Bondholders have no ability to cash in their        Securities Regulations 1983 shall be construed and
                    investments prior to the Maturity Date, except      interpreted to recognise and take into account the
                    following an Event of Default and acceleration      following characteristics of the Senior Bonds:
                    of repayment of Senior Bonds by the Trustee, on     ƒ Subject to the Trust Deed, the Company, TFSG
                    a Takeover or by selling their Senior Bonds. See      and TOWER (including its subsidiaries), may
                    ‘Early Repayment’ in the section ‘Conditions of       freely incur further indebtedness;
                    Senior Bonds’ on pages 50–51.                       ƒ The limited Events of Default;
                                                                        ƒ Outside an Event of Default, the limitations on
                    Events of Default
                                                                          the rights of the Bondholders or the Trustee
                    Events of Default are set out on page 32.             (including in respect of any breach by the
                                                                          Company, TFSG or TOWER of the Financial
                    Limitation on Rights
                                                                          Covenants) provided in the Trust Deed and the
                    The Senior Bonds carry only limited rights            Conditions;
                    of enforcement. Under the Trust Deed, the
                                                                        ƒ the limitations on the rights of the Trustee to
                    Trustee has a limited role to act on behalf of
                                                                          make any directions or otherwise interfere in
                    Bondholders in restricted circumstances, and to
                                                                          the conduct of the business of the Company,
                    take any steps necessary to protect the interests
                                                                          TFSG or TOWER;
                    of Bondholders in respect of amounts payable
                    to Bondholders on an Event of Default of the        and, the Trustee’s duties, shall, to the maximum
                    Company, TFSG or TOWER.                             extent possible, be limited accordingly.
                    Other than in the case of an Event of Default,      Under section 62 of the Securities Act 1978, the
                    such matters as a breach of a Financial Covenant,   Trustee cannot lawfully be exempted from, or
                    or a breach by the Company or TOWER of any          indemnified against, liability for breach of trust
                    representation, warranty or covenant contained      where the Trustee fails to show the degree of care
                    in the Trust Deed or the Conditions will not        and diligence required of the Trustee as trustee
                    entitle the Trustee or Bondholders to exercise      having regard to the provisions of the Trust Deed.
                    any rights of acceleration against the Company,     All Bondholders shall be deemed to have
                    TFSG or TOWER. The only right of the Trustee or     knowledge of and to have accepted that the
                    a Bondholder to require redemption or purchase      duties and obligations of the Trustee under clause
                    of Senior Bonds prior to the Maturity Date is       1 of the said Fifth Schedule shall be construed,
                    following an Event of Default.                      interpreted and limited as provided above.
                    The Company must offer to redeem Senior Bonds       Without limiting the generality of the foregoing
                    at the Issue Price at the next Interest Payment     the Trust Deed also provides that:
                    Date in the event of a Takeover of TOWER.           ƒ the Trustee may and is entitled to assume
                    Where a material breach of the Trust Deed             without enquiry, until the Trustee receives
                    occurs, the Trustee may take such proceedings         actual notice of a Liquidation of the Company,


               46
  TFSG or TOWER, that the Senior Bonds remain              transfer and trading of the Senior Bonds on
  valid and (if not redeemed or purchased in               the NZDX or otherwise; or
  accordance with the Conditions) remain debt            ƒ if it is necessary or desirable in order to ensure
  securities which are not and will not fall due           compliance with any statutory or regulatory
  for payment;                                             requirements.
ƒ other than in the case of an Event of Default,         The Trustee may also concur with the Company,
  the Trustee will not be bound to take steps            TFSG and TOWER in making any variation or
  to ascertain whether or not the Company,               addition to the Trust Deed or the Conditions if




                                                                                                                 Other Information
  TFSG or TOWER has committed any breach                 it is authorised by an extraordinary resolution of
  of the provisions of the Trust Deed or any of          Bondholders.
  the Senior Bonds and cease to be entitled to
  assume without enquiry that no such breach is          Miscellaneous
  occurring or has occurred only upon either:            The Trust Deed also contains detailed provisions
  − the Trustee receiving specific advice that a         relating to meetings of Bondholders, the register
    breach has, or appears to have, occurred             of Senior Bonds, the transfer of Senior Bonds,
    or threatens to occur, from the directors            reporting obligations, and various other matters.
    of TOWER, TFSG or the Company or the                 For further information on the transfer of Senior
    auditors; or                                         Bonds see Condition 8 (‘Transfers of Senior
  − the Trustee receives actual notice of a              Bonds’) in the section ‘Conditions of Senior
    Liquidation of the Company, TFSG or TOWER;           Bonds’ on page 53.
ƒ the Trustee is not required to monitor                 The Trustee, TFSG, TOWER and the Company
  compliance by the Company, TFSG, TOWER or              are entitled to rely on the Register as the sole
  any other party with NZSX Listing Rules and,           and conclusive record of the Senior Bonds.
  in the absence of notice to the contrary from          Neither the Trustee nor the Company is liable
  the Company, TFSG, TOWER or NZX, shall be              to the other or to any Bondholder or former
  entitled to assume that they are complying;            Bondholder for accepting in good faith as valid
ƒ nothing expressed in the Trust Deed or implied         any certificate subsequently found to be forged,
  by law shall prohibit the Trustee or any of its        irregular or not authentic.
  related companies or the officers of the Trustee
  from being a Bondholder, Shareholder or
  creditor of, or having any further interests in,
  the Company, TFSG or TOWER or from acting in
  any representative capacity for a Bondholder in
  relation to other engagements or transactions
  with the Company, TFSG or TOWER. The
  Trustee may enter into any transactions with
  the Company, TFSG or TOWER and shall not be
  accountable to the Company, TFSG, TOWER or
  the Bondholders for any profits arising from any
  such transactions.

Amendment of Trust Deed
The Trustee may, subject to the requirements
of NZX, without the consent of Bondholders,
concur with the Company, TFSG and TOWER
in making any variation or addition to the Trust
Deed or the Conditions in certain circumstances,
being:
ƒ if in the Trustee’s opinion it is made to correct
  a manifest error, or is of a formal or technical
  nature or is made to comply with law, or is
  convenient for the purposes of obtaining or
  maintaining any quotation of the Senior Bonds
  on the NZDX; or
ƒ if it is the Trustee’s opinion that it is not, or is
  not likely to become, materially prejudicial to
  the general interests of the Bondholders; or
ƒ if it is necessary or desirable to facilitate the



                                                                                                                47
                    Conditions of Senior Bonds
                    This section contains an extract from                             Creditors are entitled to, and
Other Information




                    the Trust Deed which describes the                                demand accelerated repayment
                    conditions applying to the Senior                                 of that Senior Debt in excess of
                                                                                      (in aggregate) $10,000,000. If
                    Bonds. References in this section to
                                                                                      entitlement to demand accelerated
                    clause numbers and conditions relate
                                                                                      repayment is disputed by
                    to the clauses and conditions set out                             TOWER, that entitlement shall be
                    in the Trust Deed.                                                determined by application to the
                    The extracts of the Trust Deed describing the                     courts in New Zealand; or
                    Conditions of Senior Bonds set out below are
                                                                               1.3.3 any amount of interest payable in
                    subject to the detailed provisions of the Trust
                                                                                     respect of any Senior Bond is not
                    Deed. Words and expressions defined in the
                                                                                     paid in the manner specified in the
                    Trust Deed have those meanings where they
                                                                                     Trust Deed within 10 business days
                    are used in the extracts set out below, unless
                                                                                     of the relevant Interest Payment
                    they are given different meanings below or
                                                                                     Date where the event continues
                    are otherwise defined elsewhere in this Offer
                                                                                     and is not remedied, and the
                    Document.
                                                                                     Trustee has given a notice to the
                    Interpretation                                                   Company declaring such event to
                                                                                     be an Event of Default; or
                    Some definitions from the Trust Deed which are
                    relevant to the Conditions of Senior Bonds are             1.3.4 any amount of principal payable in
                    set out at the end of this section.                              respect of any Senior Bond is not
                                                                                     paid in the manner specified in
                    1 Trust Deed                                                     the Trust Deed within 10 business
                      1.1 The Senior Bonds are constituted under                     days of when payment is required,
                          the Trust Deed dated 12 February                           including on the Maturity Date.
                          2009 between TOWER Capital Limited               1.4 The Bondholder is entitled to the benefit
                          (Company), TOWER Financial Services                  of, is bound by, and is deemed to have
                          Group Limited (TFSG), TOWER Limited                  notice of, the provisions of the Trust
                          (TOWER) and The New Zealand                          Deed.
                          Guardian Trust Company Limited                   1.5 Words and expressions defined in
                          (Trustee).                                           the Trust Deed not otherwise defined
                      1.2 The statements in these Conditions                   in these Conditions shall, unless the
                          include summaries of, and are subject                context otherwise requires, have the
                          to the detailed provisions of, the Trust             same meanings where used in these
                          Deed. If there is a discrepancy between              Conditions.
                          the provisions of the Trust Deed and
                          these Conditions, the provisions of the
                                                                          2 Status of the Senior Bonds
                          Trust Deed will prevail.                         Issue
                      1.3 The Trust Deed provides for only                 2.1 Each of the Senior Bonds to be issued
                          limited Events of Default which entitle              will have an Issue Price and face value of
                          acceleration of payment of outstanding               $1.00 per Senior Bond, and must be paid
                          Senior Bonds on issue. An Event of                   for in full on application.
                          Default (as defined in the Trust Deed) is if:    Status
                           1.3.1 the Company or either TOWER or            2.2 The Senior Bonds constitute unsecured
                                 TFSG becomes insolvent, is placed             unsubordinated obligations of
                                 in Liquidation or any analogous               the Company and rank pari passu
                                 procedure occurs in respect of it; or         and without priority or preference
                           1.3.2 the Company or either TOWER                   amongst themselves and with all
                                 or TFSG defaults on Senior Debt               other outstanding unsecured and
                                 (other than that incurred under               unsubordinated debt obligations of the
                                 the Trust Deed) and Senior                    Company.


               48
3 Interest                                        Default Interest
 Interest Rate and Calculation of Interest        3.6 If any interest is not so paid on its due
 3.1 Subject to this Condition 3, each Senior         date or if there is an unremedied breach
     Bond will accrue interest on a daily             of the Financial Covenants contained in
     basis calculated on its Issue Price as           clause 5.5 of the Trust Deed then:
     recorded in the Register at the Record            3.6.1 in respect of any Unpaid Interest,
     Date, from the relevant Issue Date and                  interest shall be payable at the
     at the rate determined by the Company                   Default Rate on such Unpaid




                                                                                                     Other Information
     on each issue of Senior Bonds. In                       Interest, from its due date for
     respect of the Senior Bonds to be issued                so long as such interest remains
     on or about March 2009, in accordance                   unpaid; and
     with these Conditions, the Interest Rate          3.6.2 in respect of any unremedied
     will be fixed by the Company on the                     breach of the Financial Covenants,
     basis and applicable from that date                     interest shall be paid on the Senior
     as specified in the Offer Documents                     Bonds at the Default Rate in lieu of
     relating to such Senior Bonds. On any                   the Interest Rate payable, from the
     offer of Senior Bonds, the Company                      date of breach until such time as
     may issue and allot Senior Bonds both                   the breach is remedied.
     conditionally and progressively over the
                                                  3.7 Any interest payable at the Default Rate
     offer period as is specified in the Offer
                                                      in accordance with Condition 3.6 will
     Documents.
                                                      accrue daily and compound on each
 3.2 All calculations of interest on the Senior       subsequent Interest Payment Date. All
     Bonds will be to two decimal places.             such interest will fall due for payment on
     For the purpose of making any interest
                                                      the subsequent Interest Payment Date.
     payment in respect of a Bondholder’s
                                                  3.8 The Company may, at its option and
     aggregate Senior Bonds, any fraction of a
     cent will be disregarded.                        upon giving not more than 14 business
                                                      days’, nor less than seven business days’
 3.3 Interest will cease to accrue on each
                                                      notice to the Bondholders (which notice
     Senior Bond on the earliest of:
                                                      may be accompanied by a post-dated
     3.3.1 the date on which the Senior Bond          cheque), pay all or part of any Unpaid
           is redeemed or purchased for cash          Interest. If part only is paid, it must be
           by the Company in accordance               paid on a pro rata basis across all Senior
           with these Conditions; and                 Bonds. Unpaid Interest relating to any
     3.3.2 in the event of Liquidation, the           Interest Period may not be paid before
           date on which the Senior Bond              the Unpaid Interest relating to any earlier
           is redeemed by payment of the              Interest Period has been paid. All Unpaid
           Liquidation Amount.                        Interest shall become due and payable
 Interest Payment Dates                               in and upon the Commencement of
                                                      Liquidation of the Company, TFSG or
 3.4 Subject to this Condition 3, interest
                                                      TOWER, but subject to section 2 of the
     on each Senior Bond will be calculated
     from the date that a valid application           Trust Deed.
     is received and processed until the First    3.9 TOWER will not make any Distribution:
     Interest Payment Date. Thereafter interest        3.9.1 while there is Unpaid Interest; or
     shall be calculated on an annual basis at
                                                       3.9.2 while there is an unremedied
     the applicable rate and payment will be
                                                             breach of the Financial Covenants;
     made in arrears on each Interest Payment
                                                             or
     Date of an amount being one quarter of
     such annual sum.                                  3.9.3 where to make any Distribution
                                                             would cause a breach of a Financial
 3.5 Any interest paid on the First Interest
                                                             Covenant; or
     Payment Date shall be paid to the
     original subscriber of the Senior Bonds,          3.9.4 while there is an unremedied Event
     whether or not on that date the                         of Default.
     Bondholder of the Senior Bonds is some       3.10 The Company agrees that it will promptly
     other person. All subsequent interest is          notify the Trustee and each Bondholder
     only payable to those persons registered          if the Company intends not to or fails to
     in the Register as holders of Senior Bonds        make a payment of interest on the Senior
     at the Record Date during the relevant            Bonds when due in accordance with
     Interest Period.                                  these Conditions.


                                                                                                    49
                     Certificate by Company conclusive                   Senior Bonds. If the Company proposes
                     3.11 A certificate by the Company as to             to redeem or purchase any portion of
                          the amount of interest payable to a            the Senior Bonds, such redemption
                          Bondholder on an Interest Payment              or purchase must be made on a pro-
                          Date is, in the absence of manifest            rata basis across all Bondholders. The
                          error, conclusive and binding on the           Company agrees that if a pro-rata
                          Bondholder.                                    redemption or purchase would result in a
                                                                         Bondholder holding:
Other Information




                    4 Payments                                           5.1.1 Senior Bonds that have an
                     Method of payment                                         aggregate Issue Price that is less
                     4.1 All payments in relation to a Senior Bond             than the Minimum Holding, then
                         may be satisfied by:                                  the Company will redeem or
                                                                               purchase all Senior Bonds held by
                         4.1.1 mailing cheques to the address of;
                                                                               that Bondholder; or
                               or
                         4.1.2 direct credit to any bank account         5.1.2 Senior Bonds that have an
                               nominated in writing (prior to the              aggregate Issue Price other
                               Record Date) by,                                than the Minimum Holding and
                                                                               thereafter integral multiples
                         the Bondholder entered in the Register
                                                                               of $1,000, the Company shall
                         on the Record Date. Such mailing or
                                                                               redeem or purchase the number
                         direct credit will occur prior to 5.00pm
                                                                               of Senior Bonds necessary to
                         on the relevant Interest Payment Date
                                                                               reduce the Bondholder’s holding
                         (or, if that date is not a business day,
                                                                               to an aggregate Issue Price of the
                         the next business day after that date) or
                                                                               nearest multiple of $1,000 over the
                         other date on which payment is required
                                                                               Minimum Holding of $5,000,
                         to be made.
                                                                         in each case such redemptions or
                     Deduction for withholding tax
                                                                         purchases will be made in accordance
                     4.2 All payments or credits to, or to the           with Conditions 5.2 and 5.7.
                         account of, Bondholders (including
                                                                     Redemption Price
                         payments of, and credits in respect
                         of, interest) will be made net of any       5.2 Subject to Condition 5.3, if the Company
                         tax in respect thereof required by any          exercises its right to redeem or purchase
                         Government Agency in New Zealand to             all or any portion of the Senior Bonds
                         be withheld, deducted or paid by the            under Condition 5.1, the redemption
                         Company, except to the extent that the          price paid to Bondholders shall be:
                         Company is satisfied that the Bondholder        5.2.1 The aggregate of 103% of the Issue
                         is exempt from any such tax or is a                   Price of, plus any Accrued Interest
                         person in respect of whom any such                    and Unpaid Interest as at the date
                         withholding, deduction or payment is not              of payment of the redemption
                         required to be made. Any Bondholder                   price in respect of, such Senior
                         claiming any such exemption or to be                  Bond, if redeemed or purchased
                         such a person must provide the Company                between 15 April 2011 and 14 April
                         and the Registrar with such evidence as               2012 (inclusive);
                         the Company or the Registrar may from           5.2.2 The aggregate of 102% of the Issue
                         time to time require to satisfy itself in
                                                                               Price of, plus any Accrued Interest
                         respect of the validity of that claim.
                                                                               and Unpaid Interest as at the date
                     Time limit for claims                                     of payment of the redemption
                     4.3 A claim against the Company for a                     price in respect of, such Senior
                         payment under or in respect of a Senior               Bond, if redeemed or purchased
                         Bond is void unless made within six years             between 15 April 2012 and 14 April
                         of the due date for that payment.                     2013 (inclusive); or
                                                                         5.2.3 The aggregate of 101% of the Issue
                    5 Early repayment                                          Price of, plus any Accrued Interest
                     Call Option                                               and Unpaid Interest as at the date
                     5.1 The Company may at any time after                     of payment of the redemption
                         15 April 2011 and having given                        price in respect of, such Senior
                         Bondholders (and the Trustee) at least                Bond, if redeemed or purchased
                         45 business days’ written notice, require             after 14 April 2013 but before the
                         redemption of all or any portion of the               Maturity Date.


               50
5.3 Notwithstanding any other Condition,                withholdings on account of taxes which
    the Company shall have the option to                are required by law to be made from
    redeem or purchase all (but not part                such payments).
    only) of Senior Bonds outstanding on           5.8 Each such payment, when cleared, shall
    any date following a Tax Event, at the             (notwithstanding Conditions 8.1 to
    Issue Price, together with all Accrued             8.4) operate as a transfer of the Senior
    Interest and Unpaid Interest in respect of         Bond, or the relevant part thereof, to
    those Senior Bonds, and the provisions of          the Company (or its nominee) (and the




                                                                                                       Other Information
    Conditions 5.2.1 to 5.2.3 shall not apply.         Registrar shall amend, or be deemed to
5.4 Notwithstanding any other Condition,               have amended, the Register accordingly)
    the Company shall have the option to               and shall be a complete satisfaction
    redeem or purchase all (but not part               and discharge of any obligation of
    only) of Senior Bonds outstanding                  the Company, TFSG and TOWER to
    prior to 15 April 2011 following a Major           the relevant Bondholder in relation to
    Restructuring Event, at the aggregate of           payment of principal, interest and any
    103% of the Issue Price, together with all         other sums payable under the relevant
    Accrued Interest and Unpaid Interest in            part of such Senior Bond, including any
    respect of those Senior Bonds.                     obligation to issue Ordinary Shares in
5.5 Other than in respect of a redemption              conversion of the relevant Senior Bonds
    under Conditions 5.2 and 5.4, the                  or the relevant part thereof, and the
    redemption price shall be the aggregate            Company, TFSG and TOWER shall have
    of 100% of the Issue Price of, plus any            no further obligations or liabilities to the
    Accrued Interest and Unpaid Interest               relevant Bondholder in respect of such
    as at the date of payment of the                   Senior Bond or part thereof.
    redemption price in respect of, such
    Senior Bond.                                  6 Notice of New Conditions
5.6 If and to the extent that the Company          Election Notice
    elects to exercise the option contained        6.1 The Company may give to each
    in clause 5.3 it shall give notice of such         Bondholder (and send a copy to the
    exercise to the relevant Bondholders and           Trustee) not later than three business
    the Trustee not later than 90 days prior to        days after the Election Record Date,
    the date of payment of the redemption              a notice (Election Notice) in a form
    price in such manner as the Company                reasonably satisfactory to the Trustee
    determines to be the most practicable              specifying if applicable, the New
    in all the circumstances (including by             Conditions as to Interest Rate, Interest
    telephone subject to later confirmation            Payment Dates, New Maturity Date,
    in writing), but any omission to give              early repayment options (as set out in
    such notice and/or the non receipt of              Condition 5), and otherwise varying
    such notice by a Bondholder shall not              the Conditions to apply to the Senior
    invalidate or otherwise affect the rights          Bonds after the Maturity Date. The
    and obligations of the Company to                  Election Notice must also clearly state
    redeem or purchase Senior Bonds.                   the Bondholders may elect not to accept
    For this purpose:                                  the New Conditions, and specify the
    Tax Event means the introduction of,               date by which such an election must be
    or any change in, any law or directive             received. The Company shall seek the
    or in its interpretation by any relevant           Trustee’s confirmation that it is prepared
    agency or authority or court which, in             to continue to act as Trustee in respect
    the reasonable opinion of the Company,             of the Senior Bonds to be subject to
    TFSG or TOWER, is likely to have a                 the proposed New Conditions (such
    material adverse effect on the taxation            confirmation not to be unreasonably
    position (other than on account of a               delayed or withheld, and not being
    change in the rate of tax on overall net           required where the New Conditions
    income) of either the Company, TFSG,               differ from the previous terms and
    TOWER or the Bondholders generally in              Conditions of the Senior Bonds only as
    respect of their respective rights and/or          to Interest Rate, Interest Payment Dates
    obligations under the Senior Bonds.                or New Maturity Date).
5.7 Payment of the redemption price for such       6.2 The Election Notice shall be given to the
    Senior Bonds shall be made without any             Bondholders whose names appear on the
    deduction (other than any deductions or            Register on the Election Record Date.


                                                                                                      51
                    Bondholder’s election to retain or redeem                   accordance with Conditions 6.11
                    6.3 Subject to the Company’s right to                       and 6.12.
                        redeem or purchase Senior Bonds              6.6 For Senior Bonds that are to be redeemed
                        contained in these Conditions,                   or purchased on the Maturity Date,
                        Bondholders may elect by notice in               the Company will redeem or purchase
                        writing to the Company within 15                 such Senior Bonds in accordance with
                        business days of the date of the Election        Conditions 6.11 and 6.12.
                        Notice:                                      Acceptance of New Conditions
Other Information




                         6.3.1 to retain some (subject to            6.7 As from the Maturity Date, in respect of
                               the Bondholder retaining the              the Senior Bonds which the Bondholder
                               Minimum Holding) or all of                has (or is deemed to have) accepted the
                               their Senior Bonds on any New             New Conditions, the New Conditions
                               Conditions offered; or
                                                                         will be deemed to be amended by
                         6.3.2 to have their Senior Bonds                incorporation into the Conditions as if
                               redeemed or purchased for cash.           such New Conditions were expressly
                    6.4 If, in relation to a Senior Bond:                set out in such Conditions. As soon as
                         6.4.1 the Company does not receive              practicable after the Maturity Date the
                               an Election Notice from the               Company will give to the Bondholder a
                               Bondholder on or before the               notice setting out such New Conditions,
                               Notification Date; or                     or if there is a valid Certificate for such
                                                                         Senior Bonds, the Company will give
                         6.4.2 the Election Notice requires a
                                                                         to the Bondholder a new Certificate
                               declaration to be completed by the
                                                                         incorporating (whether by endorsement
                               Bondholders as to the name and
                                                                         or reference) such New Conditions.
                               domicile of the beneficial owner
                               of the Senior Bonds and such          Redemption or purchase at option of
                               declaration is not duly completed;    Company on Maturity Dates
                               or                                    6.8 No later than 10 business days before
                         6.4.3 if for any other reason (not              and including the Maturity Date the
                               attributable to the Company, TFSG         Company may, notwithstanding
                               or TOWER) the Election Notice is          any election by Bondholders under
                               defective,                                Condition 6.3, elect that it redeems, or
                         the Company must send a notice                  that it compulsorily purchases, for cash
                         (Maturity Notice) not later than 10             some or all of the Senior Bonds held by
                         business days before and including the          Bondholders by giving notice in writing
                         Maturity Date to the Bondholder which           of such election to Bondholders.
                         advises whether the Bondholder will         6.9 If the Company elects that it will
                         be deemed to have accepted the New              compulsorily redeem, or that it will
                         Conditions in respect of all such Senior        purchase, for cash some or all of the
                         Bonds, or those Senior Bonds will be            Senior Bonds, the Company must
                         redeemed or purchased on the Maturity           promptly notify Bondholders that
                         Date in such proportion as the Company          such redemption or purchase of the
                         in its discretion decides, in accordance        Senior Bonds for cash will occur on the
                         with Conditions 6.11 and 6.12.                  Maturity Date, and such redemption or
                    6.5 Where the Company:                               purchase for cash will be at the price
                                                                         calculated in accordance with
                         6.5.1 receives an Election Notice from
                                                                         Condition 6.11.
                               the Bondholder under Condition
                               6.3.1 electing to retain only some    6.10 If the Company elects to exercise its
                               of that Bondholder’s Senior Bonds;         rights under Condition 6.8 to redeem
                               or                                         or purchase some but not all of those
                         6.5.2 receives an Election Notice from           Senior Bonds, then any such redemption
                               the Bondholder under Condition             or purchase for cash must be on a
                               6.3.2 electing to have their Senior        pro-rata basis across all relevant Senior
                               Bonds redeemed or purchased for            Bonds.
                               cash; the Company will, in respect    6.11 The redemption or purchase price shall
                               of Senior Bonds that are not being         be an amount equal to the aggregate
                               retained by the Bondholder,                of the Issue Price of, and any Unpaid
                               redeem or purchase the Senior              Interest in respect of, such Senior Bond
                               Bonds on the Maturity Date in              or part thereof as at the date of payment


               52
     of the Issue Price. Payment for such            Redemption on Liquidation
     Senior Bonds shall be made without              6.16 Notwithstanding any other Condition
     deduction (other than any deductions                 or any provision of the Trust Deed,
     or withholdings on account of taxes                  on Commencement of Liquidation of
     which are required by law to be made                 either the Company, TFSG or TOWER,
     from such payments), in accordance with              the Senior Bonds will immediately
     Condition 4.2.                                       become redeemable by payment of the
6.12 Each such payment, when cleared, shall               Liquidation Amount which will only be




                                                                                                          Other Information
     (notwithstanding Conditions 8.1 to                   payable in accordance with the Trust
     8.4) operate as a transfer of the Senior             Deed and Conditions.
     Bond, or the relevant part thereof, to
     the Company (or its nominee) (and the          7 Rights attaching to Senior Bonds
     Registrar shall amend, or be deemed to          Issues of securities
     have amended, the Register accordingly)
                                                     7.1 The Senior Bonds carry no right to
     and shall be a complete satisfaction
                                                         participate in any offering of securities
     and discharge of any obligation of
                                                         by the Company or TOWER, and each of
     the Company, TFSG and TOWER to
                                                         the Company and TOWER reserves the
     the relevant Bondholder in relation to
                                                         right at all times to issue securities to any
     payment of principal, interest and any
                                                         person in any manner.
     other sums payable under the relevant
     part of such Senior Bond, including any         Voting rights
     obligation to issue Ordinary Shares in          7.2 Except as required by the Securities Act
     conversion of the relevant Senior Bonds             or the Companies Act, Bondholders will
     or the relevant part thereof, and the               not have any right to vote at general
     Company, TFSG and TOWER shall have                  meetings of the Company or TOWER
     no further obligations or liabilities to the        respectively.
     relevant Bondholder in respect of such         8 Transfers of Senior Bonds
     Senior Bond or part thereof.
                                                     Transfers
Takeover Provision
                                                     8.1 Subject to the provisions of this
6.13 If a Takeover occurs which results                  Condition 8, the Senior Bonds may
     in TOWER being delisted from ASX                    be transferred in minimum amounts
     and NZX, (not being connected to a                  of $1,000, subject to the Bondholder
     capital restructuring arranged by the               retaining the Minimum Holding in
     Company or TOWER which results in
                                                         accordance with Condition 8.12, or such
     a new listed holding company where,
                                                         lesser amount as the Company may from
     following the restructuring, at least
                                                         time to time permit.
     80% of the consolidated assets of the
     new holding company is comprised of             Form of transfer
     assets which were consolidated assets           8.2 Subject to these Conditions and the Trust
     of the Company or TOWER prior to the                Deed, a Bondholder may transfer any
     restructuring) but no offer is made to              Senior Bond held by him or her by:
     Bondholders to redeem or purchase all                8.2.1 a written instrument or transfer
     of the Senior Bonds, the Company must                      in the usual or common form
     give notice prior to the next Interest                     signed by the transferor and the
     Payment Date to all Bondholders,                           transferee; or
     offering to redeem or purchase all
                                                          8.2.2 means of the FASTER system
     Senior Bonds on that next Interest
                                                                operated by NZX; or
     Payment Date.
                                                          8.2.3 any other method of transfer of
6.14 The offer to redeem or purchase shall be
                                                                marketable securities which is not
     in addition to, and not in replacement
                                                                contrary to any law and which may
     of, the Company’s obligations to issue
                                                                be operated in accordance with
     Election Notices.
                                                                any Listing Rules, and which is
6.15 If a Bondholder elects that the Company                    approved by the Company.
     redeems or purchases their Senior Bonds,
                                                     Registration process
     such redemption or purchase must occur
     on that Interest Payment Date at a price        8.3 The following provisions apply to
     equal to the aggregate of the Issue Price           instruments of transfer other than any
     of, and any Unpaid Interest in respect of,          transfer via FASTER:
     such Senior Bonds.                                   8.3.1 the instrument of transfer must be


                                                                                                         53
                                left at the registry accompanied by            five business days after the date on which
                                the Certificate (if any) in respect of         the transfer was lodged. The failure to
                                the Senior Bonds to be transferred             give such a notice will not invalidate the
                                or such other evidence as the                  decision not to register.
                                Registrar or the Trustee requires to      Retention of transfers
                                prove the transferor’s title to, or
                                                                          8.8 The Company is to direct the Registrar to
                                right to transfer, the Senior Bonds;
                                                                              retain all instruments of transfer of Senior
                                and
                                                                              Bonds which are registered, but any
Other Information




                         8.3.2 on registration of a transfer of a             instrument of transfer of Senior Bonds
                               Senior Bond, the Certificate (if any)          the registration of which was declined
                               evidencing that Senior Bond will               or refused (except on the ground of
                               be cancelled and replaced.                     suspected fraud) is to be returned to the
                    8.4 The Company will direct the Registrar                 party lodging the transfer.
                        not to charge a fee to any Bondholder             Powers of attorney
                        for:
                                                                          8.9 Any power of attorney granted by a
                         8.4.1 registering transfers of Senior                Bondholder empowering the donee
                               Bonds; or                                      to deal with, or transfer Senior Bonds,
                         8.4.2 splitting Certificates in relation to          which is lodged, produced or exhibited
                               Senior Bonds; or                               to the Registrar will be deemed to
                         8.4.3 issuing Certificates (where bound              continue and remain in full force and
                               to do so) and transmission receipts            effect as between the Company, the
                               in relation to Senior Bonds; or                Trustee, the Registrar and the grantor of
                                                                              that power, and may be acted on, until
                         8.4.4 using holder or FASTER
                                                                              express notice in writing that it has been
                               identification numbers in relation
                                                                              revoked or notice of the death of the
                               to Bondholders; or
                                                                              grantor has been received at the registry.
                         8.4.5 effecting conversions between sub-
                                                                          Transmission by operation of law
                               registers (if any) of the Register; or
                                                                          8.10 Any person becoming entitled to
                         8.4.6 noting transfer forms in relation to
                                                                               any Senior Bond by operation of law
                               Senior Bonds,
                                                                               (including the death or bankruptcy of
                         except in the case where Certificates,                any Bondholder) may, upon producing
                         or any information necessary to effect                evidence of such entitlement as shall
                         a transfer of Senior Bonds are issued to              be acceptable to the Company, obtain
                         replace lost or destroyed Certificates.               registration as the Bondholder of such
                    Transfers must be registered                               Senior Bond or may execute a transfer
                    8.5 Subject to this Condition 8, the Company               of such Senior Bond. This provision
                        must direct the Registrar not to refuse to             includes any case where a person
                        register or fail to register or give effect to,        becomes entitled as a survivor of persons
                        a transfer of Senior Bonds.                            registered as a joint Bondholder.
                    Refusal to register transfers                         Replacement of Certificates
                    8.6 The Company may direct the Registrar to           8.11 Should any valid Certificate be lost,
                        refuse to register any transfer of Senior              stolen, mutilated, defaced or destroyed,
                        Bonds where:                                           it may be replaced at the office of the
                         8.6.1 these Conditions, the Trust Deed,               Registrar upon payment by the claimant
                               any Listing Rules or any applicable             of the fees and expenses incurred in
                               legislation permits, or requires the            connection with such replacement
                               Company to do so;                               and on such terms as to evidence and
                                                                               indemnity as the Company and the
                         8.6.2 the Company elects to redeem
                                                                               Registrar may require. Mutilated or
                               or purchase Senior Bonds under
                                                                               defaced Certificates must be surrendered
                               Conditions 5.1 or 6.7.
                                                                               before replacements will be issued.
                    Notice of refusal to register                              Where there is a valid Certificate on
                    8.7 Where registration of a transfer of Senior             issue for a Senior Bond, the Registrar
                        Bonds is refused under Condition 8.6,                  may decline to register any transfer of
                        the Company must direct the Registrar                  that Senior Bond unless the relevant
                        to give written notice of the refusal and              valid Certificate is produced, but may at
                        the precise reasons for the refusal to the             its discretion dispense with production
                        party lodging the transfer, if any, within             of the Certificate subject to production


               54
     instead of such indemnity or declaration          of several joint Bondholders) is the only
     of loss as it may require.                        person recognised by the Company
 Sale of less than Minimum Holding                     as having any title to Senior Bonds
                                                       registered in the name of the deceased
 8.12 Except as approved by the Company (at
                                                       Bondholder. Subject to compliance
      its absolute discretion), which approval
                                                       by the transferee with the Terms of
      may be recorded in any prospectus
                                                       Issue, the Board may register any
      or other offer document in relation
                                                       transfer signed by a Bondholder prior
      to the Senior Bonds, no transfer shall




                                                                                                    Other Information
                                                       to the Bondholder’s death, despite
      be permissible or be accepted for
                                                       the Company having notice of the
      registration where any proposed transfer
                                                       Bondholder’s death.
      would result in the transferee holding
      Senior Bonds with the same Maturity          Transmission by operation of law
      Date having an aggregate Issue Price of      9.2 A person (a transmittee) who establishes
      less than the Minimum Holding.                   to the satisfaction of the Board that
 8.13 The Company may at any time give                 the right to any Senior Bonds has
      notice to any Bondholder holding Senior          devolved on the transmittee by will or
      Bonds of an aggregate Issue Price of less        by operation of law may be registered as
      than the Minimum Holding that if at the          a holder in respect of the Senior Bonds
      expiration of three months after the date        or may (subject to the provisions of
      the notice is given the Bondholder still         the Terms of Issue relating to transfers)
      holds Senior Bonds of an aggregate Issue         transfer the Senior Bonds. The Board has
      Price of less than the Minimum Holding           the same right to refuse to register the
      then the Company may exercise the                transmittee as if the transmittee was the
      power of sale of those Senior Bonds as set       transferee named in a transfer presented
      out in this Condition 8.13. If that power        for registration.
      of sale becomes exercisable:
     8.13.1 the Company may arrange for
            the sale of those Senior Bonds
            through the Stock Exchange or in
            some other manner approved by
            the Stock Exchange;
     8.13.2 the Bondholder shall be deemed
            to have authorised the Company
            to act on the Bondholder’s behalf
            and to execute all necessary
            documents for the purposes of
            that sale;
     8.13.3 the Company shall account to the
            Bondholder for the net proceeds
            of sale of the Senior Bonds (after
            deduction of reasonable sale
            expenses), which shall be held
            on trust for the Bondholder by
            the Company and paid to the
            Bondholder on surrender of any
            Certificates for the Senior Bonds
            sold; and
     8.13.4 the title of a purchaser of any
            Senior Bonds sold under this
            Condition 8.13 shall not be
            affected by any irregularity or
            invalidity in the exercise of the
            power of sale or the sale itself.

9 Transmission on death or by law
 Transmission on death
 9.1 The personal representative of a
     deceased Bondholder (who is not one



                                                                                                   55
                    10 Indemnity to the Company, TFSG                         the Senior Bonds for all money
                       and TOWER                                              paid by the Company, TFSG or
                                                                              TOWER in respect of the Senior
                      Liability of the Company, TFSG and TOWER
                                                                              Bonds under or because of any
                      10.1 Condition 10.2 applies if any law                  law;
                           imposes or purports to impose any
                                                                       10.2.3 the Company, TFSG and
                           immediate or future or possible liability
                                                                              TOWER have a lien on all
                           on the Company, TFSG or TOWER to
                                                                              interest and other money
Other Information




                           make any payment, or empowers any
                                                                              payable in respect of the
                           Governmental Agency to require the
                                                                              Senior Bonds registered in the
                           Company, TFSG or TOWER to make
                                                                              Register as held either jointly
                           any payment, in respect of any Senior
                                                                              or solely by the Bondholder for
                           Bonds held either jointly or solely by
                                                                              all money paid or payable by
                           any Bondholder or in respect of any
                                                                              the Company, TFSG or TOWER
                           transfer of those Senior Bonds or in
                                                                              in respect of the Senior Bonds
                           respect of any interest or other money
                                                                              under or in consequence of any
                           due or payable or accruing due or
                                                                              law, together with interest at a
                           which may become due or payable
                                                                              rate the Board of the Company
                           to the Bondholder by the Company,
                                                                              may determine from the date
                           TFSG or TOWER on or in respect of any
                                                                              of payment to the date of
                           Senior Bonds or for or on account or
                                                                              repayment, and may deduct
                           in respect of any Bondholder, whether
                                                                              or set off against any interest
                           because of:
                                                                              or other money payable any
                            10.1.1 the death of the Bondholder;               money paid or payable by the
                            10.1.2 the non-payment of any                     Company, TFSG or TOWER
                                   income tax or other tax by the             together with interest;
                                   Bondholder;                         10.2.4 the Company, TFSG and
                            10.1.3 the non-payment of any                     TOWER may recover as a debt
                                   estate, probate, succession,               due from the Bondholder or
                                   death, stamp or other duty                 the Bondholder’s personal
                                   by the Bondholder or a                     representative, or any person
                                   personal representative of that            who becomes registered as the
                                   Bondholder or by or out of the             holder of the Senior Bonds on
                                   Bondholder’s estate;                       the distribution of the deceased
                            10.1.4 any assessment of income                   Bondholder’s estate, any
                                   tax against the Company,                   money paid by the Company,
                                   TFSG or TOWER in respect of                TFSG or TOWER under or in
                                   interest paid or payable to the            consequence of any law which
                                   Bondholder; or                             exceeds any interest or other
                            10.1.5 any other act or thing in                  money then due or payable by
                                   relation to a Senior Bond or the           the Company, TFSG or TOWER
                                   Bondholder.                                to the Bondholder together
                                                                              with interest at a rate the Board
                      Indemnity
                                                                              of the Company may determine
                      10.2 In each case referred to in                        from the date of payment to
                           Condition 10.1:                                    the date of repayment; and
                            10.2.1 the Company, TFSG and               10.2.5 the Company may, if any
                                   TOWER are to be fully                      money is paid or payable by
                                   indemnified, as a continuing               the Company, TFSG or TOWER
                                   indemnity, against all liability           under any law, refuse to
                                   by the Bondholder or the                   register a transfer of any Senior
                                   Bondholder’s personal                      Bonds by the Bondholder or
                                   representative and by any                  the Bondholder’s personal
                                   person who becomes registered              representative until the
                                   as the holder of the Senior                money and interest is set off
                                   Bonds on the distribution of the           or deducted or, in case the
                                   deceased Bondholder’s estate;              money and interest exceeds the
                            10.2.2 the Company, TFSG and                      amount of any interest or other
                                   TOWER have a lien or charge on             money then due or payable by


               56
                the Company, TFSG or TOWER            Company means TOWER Capital Limited and
                to the Bondholder, until the          includes any permitted successor or assignee
                excess is paid to the Company,        or transferee.
                TFSG or TOWER.                        Conditions means the terms and
  Remedies cumulative                                 conditions (including, where appropriate,
  10.3 Nothing in Conditions 10.1 and 10.2            New Conditions) applicable to the Senior
       affects any right or remedy which any          Bonds which, as provided in this deed, are
       law confers on the Company, TFSG               applicable to (and which will be endorsed




                                                                                                         Other Information
       or TOWER and any right or remedy               on) the Certificates or sent to Bondholders,
       is enforceable by the Company,                 and shall be in, or substantially in the form
       TFSG or TOWER whether against                  set out in Schedule 2 (as modified from time
       the Bondholder or the Bondholder’s             to time in accordance with this deed or the
       personal representative.                       Conditions) and any reference in this deed to
                                                      a particular numbered Condition or clause in
11 Definitions and interpretations                    the Conditions shall be construed accordingly
  Definitions                                         and shall also include the terms and
                                                      conditions specified to be applicable to such
  11.1   The following definitions from the Trust
                                                      Senior Bonds in any deed, agreement, offer
         Deed and the Conditions are set out to
                                                      documentation or other document issued
         assist interpretation of the Conditions.
                                                      or executed by the Company, TFSG and
  Accrued Interest means all interest on the          TOWER in relation to the issue, allotment or
  Senior Bonds which has accrued but which            offering of such Senior Bonds and which the
  at the relevant time is unpaid and has not          Bondholder has accepted (either expressly or
  become payable in accordance with the               otherwise).
  Conditions.
                                                      Default Rate means the rate which is 2% per
  Board means the Board of Directors of               annum above the Interest Rate applicable to
  TOWER, TFSG or the Company (as the case             the Senior Bonds.
  may be) from time to time.
                                                      Distribution has the same meaning as in
  Bondholder means, in relation to any Senior         section 2 of the Companies Act.
  Bonds, a person (including future persons)
                                                      Election Notice has the meaning given to it
  registered in the Register as the holder of
                                                      in Condition 6.1.
  those Senior Bonds from time to time and
  shall include the legal personal representative     First Interest Payment Date means 15 April
  or successor of such Bondholder.                    2009.

  Certificate means a certificate issued by the       Governmental Agency means any
                                                      government or semi-governmental,
  Company in, or substantially in, the form set
                                                      administrative, fiscal or judicial entity or
  out in Schedule 1 of the Trust Deed or such
                                                      authority of New Zealand.
  other form of confirmation as the Trustee
  approves, and includes any new certificate,         Interest Payment Date means the 15th day
  in each case relating to the applicable             of January, April, July and October in each
  Conditions and evidencing the entitlement of        year.
  the Bondholder of the Senior Bonds specified        Interest Period means:
  therein.                                            (a) the period from (and including) the Issue
  Commencement of Liquidation of the                      Date relevant to each Senior Bond to (but
  Company, TFSG or TOWER (as the case may                 excluding) the First Interest Payment Date;
  be) means the earliest of:                              and
  (a) the date of the passing by that company         (b) each subsequent period from (and
      of an effective resolution for Liquidation of       including) an Interest Payment Date to
      the Company, TFSG or TOWER; or                      (but excluding) the next Interest Payment
  (b) the date of the order of a court of                 Date.
      competent jurisdiction for the Liquidation      Interest Rate means the relevant interest rate
      of the Company, TFSG or TOWER; or               specified in the Certificate in respect of the
  (c) the date of the appointment of a receiver,      Senior Bonds.
      receiver and manager, administrative            Issue Date means, in relation to a Senior
      receiver or statutory manager of the            Bond, the issue date specified in the Register.
      Company, TFSG or TOWER.                         Issue Price means, in relation to a Senior
  Companies Act means the Companies Act               Bond, the principal amount specified in the
  1993 of New Zealand.                                Conditions applicable to their issue.


                                                                                                        57
                    Liquidation in relation to the Company,          Maturity Date in respect of a Senior Bond,
                    or, where the context so requires, TFSG          means 15 April 2014, being the date on
                    or TOWER, means the winding up,                  which the Company may:
                    dissolution or liquidation of the Company,       (a) redeem the Senior Bonds; or
                    TFSG or TOWER (as the case may be) in
                                                                     (b) reset the Interest Rate and the
                    New Zealand and any other analogous
                                                                         New Maturity Date.
                    proceedings whereby the Company, TFSG
                    or TOWER (as the case may be) may,               Maturity Record Date means a date not less
Other Information




                    at the conclusion of such proceedings,           than 30, and not greater than 60 business
                    cease to be duly incorporated or validly         days before the Maturity Date.
                    existing in New Zealand and includes             Minimum Holding means $5,000.
                    the appointment of a receiver, receiver          New Maturity Date means the next
                    and manager, administrator or statutory          Maturity Date that will apply to the Senior
                    manager of the Company, TFSG or TOWER            Bonds, following the initial Maturity Date, as
                    but does not include any Arrangement,            specified in the New Conditions.
                    liquidation or appointment to effect a
                                                                     New Conditions means the new conditions
                    solvent reconstruction or amalgamation.
                                                                     as to Interest Rate, Interest Dates, Maturity
                    For the avoidance of doubt, Liquidation
                                                                     Date, early repayment options, and any other
                    does not include a capital restructuring
                                                                     condition otherwise varying the Conditions
                    arranged by TFSG or TOWER which results
                                                                     to apply to the Senior Bonds after the
                    in a new listed holding company where,
                                                                     Maturity Date.
                    following the restructuring, at least 80% of
                    the assets (and if being determined by value,    Notification Date means 15 business
                    are valued on a consistent basis) of the new     days after an Election Notice is sent to
                    holding company is comprised of assets           Bondholders after a Maturity Record Date.
                    which were assets of TFSG or TOWER or any        Offer Documents means the investment
                    of its subsidiaries prior to the restructuring   statement and prospectus documents issued
                    provided that, prior to such restructuring,      by the Company in respect of any particular
                    the new holding company is approved by           issue of Senior Bonds.
                    the Trustee including, if reasonably required    Record Date means, in relation to an Interest
                    by the Trustee in any instance where such        Period, 5pm on that date:
                    restructure could be materially prejudicial
                                                                     (a) which is 10 calendar days prior to the
                    to the general interests of the Bondholders,
                                                                         relevant Interest Payment Date or, if
                    by an Extraordinary Resolution and such
                                                                         that date is not a business day, then the
                    new holding company enters into a deed
                                                                         preceding business day; or
                    supplemental to the Trust Deed in a form
                    reasonably approved by the Trustee under         (b) such other date as the Company (with the
                    which the obligations of TFSG or TOWER               approval of the Trustee and NZX) may
                    under the Trust Deed are assumed by such             determine,
                    new holding company, with appropriate            before the Interest Payment Date for that
                    adjustments having been made, subject only       Interest Period.
                    to any consequential or other modifications      Register means the register in respect of the
                    thereto as the Trustee, TFSG, TOWER and the      Senior Bonds established and maintained in
                    Company may agree.                               accordance with the Trust Deed.
                    Liquidation Amount means the Issue Price         Registrar means the registrar or (where there
                    of the Senior Bonds plus Accrued Interest        is more than one Register) each registrar from
                    and Unpaid Interest (if any) in respect of       time to time appointed by the Company to
                    those Senior Bonds as at the date of the         maintain the Register.
                    Commencement of Liquidation of the
                                                                     Securities Act means the Securities Act 1978.
                    Company, TFSG or TOWER (whichever
                    occurs first) and (to the extent recoverable     Senior Bonds means the unsubordinated,
                    at law) interest on such amount at the rate      unsecured debt securities issued by the
                    prescribed in the Conditions, from the date      Company which are on issue and have not
                    of such Commencement of Liquidation until        been redeemed or purchased by TOWER or
                    payment.                                         its subsidiaries.
                    Major Restructuring Event means a                Senior Creditors means the persons from
                    restructuring of the TOWER Group which in        time to time entitled to Senior Debt.
                    the reasonable opinion of TOWER is material      Senior Debt means all obligations of the
                    to the Company, TFSG or TOWER.                   Company, TFSG or TOWER (whether in their



               58
   capacity as a guarantor of the Company             Unpaid Interest means, on any date and in
   or of any other person or otherwise) as the        respect of any Senior Bond, all interest which
   case may be, in respect of indebtedness            was not paid on its due date.
   whether existing now or established after
   and whether actual or contingent and
   notwithstanding that such obligations may
   arise in respect of credit facilities or other
   arrangements in favour of the Company,




                                                                                                        Other Information
   TFSG or TOWER (as aforesaid) either in place
   now or made available later (regardless of
   the extent to which such credit facilities or
   such other arrangements may now or at
   any time later be utilised, drawn or repaid
   and re-utilised or redrawn by the Company,
   TOWER or TFSG (as aforesaid)) including
   obligations of the Company, TOWER or TFSG
   (as the case may be) under or in respect of
   the Senior Bonds, except obligations which
   rank, or are intended or expressed to rank,
   pari passu with, or subordinate to, the
   obligations of the Company, TFSG or TOWER
   (as the case may be) to Subordinated
   Creditors.
   Stock Exchange means:
   (a) in respect of the Senior Bonds, the NZDX
       on which the Senior Bonds are quoted
       or any alternative or substitute market in
       New Zealand for Senior Bonds or other
       arrangement on or through which Senior
       Bonds may be freely traded and which is
       generally regarded as the principal such
       market or arrangement for the trading of
       Senior Bonds; and
   (b) in respect of TOWER Shares, the NZSX
       on which the TOWER Shares are quoted
       or any alternative or substitute market for
       TOWER Shares or other arrangement on
       or through which TOWER Shares are freely
       traded and which is generally regarded as
       the principal such market or arrangement
       for the trading of TOWER Shares and if
       at any time any doubt exists as to the
       principal exchange for TOWER Shares,
       such exchange as is determined as such at
       the relevant time by the Board of TOWER.
Takeover means where any person whether
acting alone or in concert with other persons:
(a) becomes, or is entitled to become, the holder
    (absolutely or beneficially and whether
    directly or indirectly) of more than 90% of all
    Ordinary Shares; or
(b) has or will have the right to cast more
    than 90% of all votes on a poll at a general
    meeting of the Company on a matter on
    which holders of Ordinary Shares are entitled
    to vote, and
as a consequence TOWER ceases to be listed on
NZX and ASX.




                                                                                                       59
                    Trustee’s Statement
Other Information




                      13 February 2009
                      To: Investors under this Offer Document


                      Dear Investors,


                      Clause 13(3) of the Second Schedule to the Securities Regulations 1983 requires us to confirm
                      that the offer of securities (Senior Bonds) set out in this Offer Document complies with any
                      relevant provisions of the Trust Deed between TOWER Capital Limited, TOWER Financial
                      Services Group Limited, TOWER Limited and the Trustee dated 12 February 2009 (Trust
                      Deed). The relevant provisions of the Trust Deed are those which:
                      (a) entitle the Company to constitute and issue under the Trust Deed the Senior Bonds
                          offered under this Offer Document;
                      (b) impose restrictions on the right of the Company to offer the Senior Bonds; and
                      are described in the Summary of the Trust Deed set out on pages 44–47 of this Offer
                      Document.
                      Our statement does not refer to any financial information, or to any other material in this
                      Offer Document which does not relate to the Trust Deed.
                      We confirm that the offer of the Senior Bonds set out in this Offer Document complies with
                      any relevant provisions of the Trust Deed. We have given the above confirmation on the basis:
                      (a) set out above; and
                      (b) that the Trustee relies on the information supplied to it by the Company and TOWER
                          Limited pursuant to the Trust Deed and does not carry out an independent check of the
                          statements or the figures supplied to it in that information.
                      The Trustee draws your attention to the explanation of the Trustee’s role described under the
                      heading ‘Limitation on Rights’ and ‘Trustee’s Duties’ on page 46 of this Offer Document.
                      The Trustee does not guarantee the repayment or purchase of the Senior Bonds offered or
                      the payment of Interest thereon.


                      Signed for and on behalf of the Trustee




                      JB Sewell
                      Manager Corporate Trusts




               60
Prospectus Statutory Information
The following information is provided in           Details of incorporation of Issuer




                                                                                                        Other Information
accordance with the Second Schedule to the
                                                   The Company was incorporated on
Securities Regulations 1983:
                                                   18 December 2008 under the Companies Act
                                                   1993. Its registered number is 2198245.
Main Terms of Offer
                                                   The public file relating to the incorporation
The issuer of the Senior Bonds is TOWER Capital
                                                   and registration of the Company is kept at the
Limited (‘the Company’), whose registered office
                                                   office of the Registrar of Companies, Ministry of
is at:
                                                   Economic Development. These documents may
   Level 11                                        be inspected on the Companies Office website
   TOWER Centre                                    at www.companies.govt.nz.
   22 Fanshawe Street
   Auckland 1142                                   Directorate and advisers
   Telephone 09 369 2000                           The name, address and technical or professional
   Facsimile 09 369 2160                           qualifications (if any) of every director of the
A description of Senior Bonds, including the       Company, are set out in the section ‘Directors
maximum amount being offered and the price         and Management’ on page 18. The names and
to be paid for Senior Bonds is set out in the      addresses of the Company’s auditors, securities
sections ‘Main Terms of Offer’ on page 10, and     registrar, Joint Lead Managers and legal advisors
‘What sort of investment is this?’ on page 30.     to the Company and the Trustee who have each
                                                   been involved in the preparation of this Offer
Guarantors                                         Document, are set out in the Directory inside the
There are no guaranteeing subsidiaries of the      back cover of this Offer Document.
Company.
                                                   Restrictions on directors’ powers
TOWER and TFSG have guaranteed on an
unsubordinated, unsecured basis payment of         There are no specific modifications, exceptions
Interest on Senior Bonds on an Interest Payment    or limitations on the powers of the Company’s
Date, and the principal amount of Senior           Board imposed under the Companies Act 1993
Bonds including Accrued and Unpaid Interest        or the Company’s constitution other than as set
payable to Bondholders when payable and on a       out below.
Liquidation of the Company, TFSG or TOWER.         The Companies Act contains a number of
The amount of the net tangible assets of the       provisions that could have the effect, in certain
Guarantors as shown in their most recent           circumstances, of imposing modifications,
audited balance sheet as at 30 September 2008      exceptions or limitations on the powers of
and excluding any assets that are also assets      the Company (including the requirement
of the Company (that has no guaranteeing           that ‘major transactions’, as defined in that
subsidiaries) are: TOWER Limited ($141,987,000),   legislation, be approved by a special resolution
TOWER Financial Services Group Limited             of shareholders). These provisions apply to any
$373,124,000.                                      company registered under the Companies Act.

The above balances are the stand alone positions   The Company has applied for the Senior Bonds
for each Guarantor and in the case of TOWER        to be quoted on the NZDX market. The NZSX
Limited do not include the net tangible assets     Listing Rules contain a number of provisions that
of the wider TOWER consolidated Group.             could have the effect, in certain circumstances,
The consolidated net tangible assets of the        of imposing modifications, exceptions or
TOWER Group as at 30 September 2008 were           limitations on the powers of TOWER’s Board.
$260,929,000.                                      These provisions apply to any issuer listed on
                                                   NZX.
No person or company (other than the
Guarantors), has guaranteed any of the             Description of activities of borrowing
obligations of TOWER or the Company in             group
relation to the Senior Bonds.
                                                   The Company constitutes the borrowing group
                                                   for the purposes of the Securities Regulations
                                                   1983.


                                                                                                       61
                    The Company is a subsidiary of TOWER and           Company (on the basis of an Offer amount of
                    has not yet commenced business. Its intended       $80 million), and the fee payable to Goldman
                    activities will be to issue the Senior Bonds       Sachs JBWere (NZ) Limited as Arranger, Joint
                    described in this Offer Document.                  Lead Manager and Organising Participant.
                    It is intended that the proceeds of the Offer      From its fee, the Arranger, Joint Lead Manager
                    will be used to retire existing bank debt and to   and Organising Participant will pay brokerage
                    supplement the working capital requirements of     and firm allocation participation incentives
                    the TOWER Group. A description of the activities   to Primary Market Participants in respect of
Other Information




                    of TOWER Group are set out in the section          allotments made under a firm allocation. With
                    ‘TOWER’s Business Overview’ on pages 14–17.        regard to all other allotments made in respect of
                                                                       application forms bearing the stamp of a Primary
                    Summary of financial statements                    Market Participant or an approved financial
                    Financial statements in summary form in            intermediary, brokerage will be paid by the
                    respect of the Company are not required as the     Arranger, Joint Lead Manager and Organising
                    company has not yet commenced business.            Participant at a rate of 1.25%, subject to receipt
                    Financial statements for TOWER Group in            of such fees from the Company.
                    summary form in respect of the five consecutive
                                                                       Ranking of securities
                    financial years to 30 September 2008 are
                    set out in the section ‘Summary of Financial       The Senior Bonds constitute unsubordinated,
                    Information’ on pages 21–27 as additional          unsecured fixed interest debt securities of the
                    information for investors.                         Company. For more information on the status
                                                                       of the Senior Bonds see the section ‘Conditions
                    Acquisition of business or subsidiary              of Senior Bonds’ on page 48. No security has
                    The Company is a newly incorporated company        been given over the assets of the Company. No
                    and has not acquired any business during the       securities are therefore secured by a mortgage
                    two years preceding the date of this Offer         or charge over any of the assets of the Company
                    Document.                                          that rank in point of security equally with, or
                                                                       ahead of the Senior Bonds.
                    Material contracts                                 On the Liquidation of the Company or either
                    The following material contract (not being a       of the Guarantors the Senior Bonds will be
                    contract entered into in the ordinary course of    redeemable by the Company in cash and
                    business) has been entered into by the Company     will rank for payment ahead of subordinated
                    during the two years preceding the date of         creditors and shareholders of the Company
                    registration of this Offer Document:               and (in relation to their respective guarantee
                    ƒ On 12 February 2009 the Company, TOWER,          obligations) the Guarantors, and pari passu
                      TFSG and the Trustee entered into a trust deed   with other Bondholders and Senior Creditors,
                      (‘Trust Deed’) pursuant to which the Trustee     but rank behind the claims of Secured Creditors
                      agrees to act as trustee for Bondholders in      of the Company or the Guarantors in point
                      connection with the Senior Bonds on the          of security and indebtedness having priority
                      terms and conditions set out in the Trust        by operation of law. For more details on the
                      Deed.                                            limitations on payment and enforcement rights
                                                                       see the section ‘Conditions of Senior Bonds’ on
                    Pending proceedings                                pages 48–59.
                    There are no legal proceedings or arbitrations
                                                                       Provisions of Trust Deed and other
                    pending at the date of this Offer Document
                    that may have a material adverse effect on the
                                                                       restrictions on Issuer
                    Company or TOWER.                                  The Trust Deed, the parties to which are the
                                                                       Company, TOWER, TFSG and the Trustee, is
                    Issue expenses                                     dated 12 February 2009. The Senior Bonds are
                    Estimated issue costs of $2.1 million (excluding   all subject to the detailed provisions of the Trust
                    goods and services tax where applicable)           Deed.
                    comprising legal and advisory fees, accounting     The duties of the Trustee under the Trust Deed
                    and audit fees, Lead Manager and Organising        are summarised under ‘Trustee’s Duties’ in the
                    Participant’s fees, advertising costs, printing    section ‘Summary of the Trust Deed’ on pages
                    and postage, registry fees and other offer costs   46–47 and the Trustee’s statement is set out on
                    will be paid by the Company. In addition,          page 60 of this Offer Document.
                    the Company will pay fees to the Trustee in        The Financial Covenants given by the Company
                    accordance with the Trust Deed.                    and the Guarantors under the Trust Deed
                    This estimate includes brokerage payable by the    are summarised on page 46 in the section


               62
‘Summary of the Trust Deed’. The Trust Deed            agreement (Facility) entered into by TOWER
contains no other restriction on the ability of the    Finance Limited as borrower with ANZ National
Company or the Guarantors to borrow. No other          Bank Limited (Bank), various financiers, TOWER
undertaking given or contract or deed entered          and TFSG. Funds advanced to TOWER Finance
into by the Company in respect of the Senior           under the Facility are used in the ongoing
Bonds contains any restriction on the ability of       capital requirements of the TOWER Group. It is
the Company to borrow.                                 intended that the proceeds of the Offer will be
Subject to compliance with the Financial               utilised to repay (or partly repay) the Facility.




                                                                                                             Other Information
Covenants, the Trust Deed contains no                  To the extent not repaid, moneys owed to the
limitations on the Company or the Guarantors           Bank will rank equally with the Senior Bonds.
relating to the creation of new mortgages or           In the event that moneys remain owing to the
charges ranking in point of security ahead of or       Bank after the Offer, the Company will become a
equally with the Senior Bonds or the incurring         guarantor under the terms of the Facility.
of further indebtedness ranking equally with, or       The Company intends to use proceeds from the
subordinated to the Senior Bonds.                      Offer to repay (or partly repay) the existing bank
See page 60 for the Trustee’s statement required       debt advanced to TOWER Finance Limited and
by clause 13(3) of the Second Schedule to the          to supplement the working capital requirements
Securities Regulations 1983.                           of the TOWER Group. This may trigger the
                                                       conduit issuer provisions under the Financial
Other terms of Offer                                   Reporting Act 1993, resulting in TOWER Finance
There are no other terms of the Senior Bonds           (and potentially other related companies of
or the Offer which are not set out elsewhere in        the Company who receive proceeds from
this Offer Document, other than those implied          the Offer) qualifying as a ‘recipient of money
by law, or set out in a document which is              from a conduit issuer’, with an obligation to
registered with a public official, and available for   prepare and file audited financial statements
public inspection, and referred to in this Offer       in accordance with the Act. There are no other
Document.                                              material matters relating to the Senior Bonds
                                                       offered under this Offer Document other than
Requirements in respect of financial                   the matters set out elsewhere in this Offer
statements                                             Document.
There are no historical financial statements
                                                       Directors’ statement
for the Company as the company has not yet
                                                       The Company has not commenced business
commenced business.
                                                       or produced any financial statements so the
Certain financial information for the TOWER
                                                       requirements of clause 35 of the Second
Group is set out in the section ‘Summary
                                                       Schedule to the Securities Regulations 1983 are
Financial Information’ on pages 21–27 as
                                                       not applicable.
additional information for investors.
                                                       Auditors’ report
Places of inspection of documents
                                                       There are no historical financial statements
During the currency of this Offer Document,
                                                       for the Company as the company has not
copies of the constitution of the Company and
                                                       commenced business. Accordingly, no auditor’s
TOWER and the material contracts referred to in
                                                       report is required to be included.
this Offer Document may be inspected by any
person without payment of a fee at:
    TOWER Limited
    Level 11
    TOWER Centre
    22 Fanshawe Street
    Auckland 1142
Copies of these documents can also be
obtained on payment of the relevant fee (if
any) from the Companies Office website at
www.companies.govt.nz under the Company’s
file reference, or by calling the Companies Office
Contact Centre on 0508 266 726.

Other material matters
The TOWER Group has been advanced $85
million dollars under its existing facility


                                                                                                            63
                    This Offer Document has been signed by:
                    ƒ each director of TOWER Capital Limited (or by
                      their agent authorised in writing); and
                    ƒ TOWER Capital Limited and TOWER Limited
                      by their Directors.
Other Information




                    Anthony Ian Gibbs




                    William John Falconer




                    Robin Albert Flannagan




                    Michael Leslie Jefferies




                    John Lewis Spencer




                    Susannah Adair Staley




                    Denis Michael Wood




               64
Statutory Index
For the purposes of Regulation 5(6) of the Securities Regulations 1983, the matters required to be stated




                                                                                                             Other Information
or contained in this Offer Document by virtue of the Second Schedule to the Regulations are:



 Matter                                                  Second Schedule Page
 Main terms of offer                                     Clause 1               10, 61

 Name and address of offeror                             Clause 2               31, 61

 Details of incorporation of issuer                      Clause 3               30, 31, 61

 Guarantors                                              Clause 4               32, 61

 Directorate and advisers                                Clause 5               18, 31, 61

 Restrictions on directors’ powers                       Clause 5A              61

 Description of activities of borrowing group            Clause 6               14, 31, 61

 Summary of financial statements                         Clause 7               62

 Acquisition of business or subsidiary                   Clause 8               62

 Material contracts                                      Clause 9               62

 Pending proceedings                                     Clause 10              62

 Issue expenses                                          Clause 11              62

 Ranking of securities                                   Clause 12              48, 62

 Provisions of trust deed and other restrictions on      Clause 13              44, 60, 62
 borrowing group

 Other terms of offer and securities                     Clause 14              63

 Financial statements                                    Clause 15 to 32        63

 Places of inspection of documents                       Clause 33              41, 63

 Other material matters                                  Clause 34              63

 Directors’ statement                                    Clause 35              63

 Auditors’ report                                        Clause 36              63




                                                                                                            65
                    Glossary
                    Accrued Interest                                            of a Senior Creditor to require payment is
Other Information




                    has the meaning given to it in the section                  disputed, it shall be determined by application
                    ‘Conditions of Senior Bonds’ on page 57.                    to the courts in New Zealand and will not
                    Allotment Date                                              constitute an Event of Default pending such
                    24 March 2009 or if the Company determines,                 determination; or
                    within three business days of the Closing Date.         (c) if the Company fails to make any payment of
                                                                                Interest on the Senior Bonds within 10 business
                    Application Form
                                                                                days of an Interest Payment Date; or
                    the application form contained in or accompanying
                                                                            (d) if the Company fails to make any payment
                    this Offer Document.
                                                                                of principal on the Senior Bonds within 10
                    Arranger and Organising Participant                         business days of the Maturity Date or other
                    Goldman Sachs JBWere (NZ) Limited.                          due date for payment.
                    ASX, and ASX Listing Rules                              Financial Covenants
                    Australian Securities Exchange Limited (ABN 98          the financial covenants of the Company and
                    008 624 691), and the listing rules of the Australian   TOWER described under ‘Financial Covenants’
                    Stock Exchange.                                         in the section ‘Summary of the Trust Deed’ on
                    Board                                                   page 46.
                    means the board of directors of the Company.            Guarantors
                    Bondholder                                              TOWER Limited and TOWER Financial Services
                    holder of Senior Bonds.                                 Group Limited.
                    business day                                            IFRS
                    means a day other than a Saturday, Sunday or            International Financial Reporting Standards
                    public holiday when registered banks are open for
                                                                            Interest
                    business in both Auckland and Wellington.
                                                                            interest payable on Senior Bonds, under the Trust
                    Closing Date                                            Deed.
                    20 March 2009 or such other date as the Company
                                                                            Interest Payment
                    determines.
                                                                            the amount of Interest payable on an Interest
                    Companies Act                                           Payment Date.
                    Companies Act 1993.
                                                                            Interest Payment Dates
                    Company                                                 15 January, 15 April, 15 July and 15 October in each
                    TOWER Capital Limited.                                  year, until the Maturity Date of 15 April 2014 and
                    Conditions of Senior Bonds, or Conditions               thereafter as specified by the Company.
                    the conditions relating to the Senior Bonds set out     Interest Period
                    on pages 48 to 59 of this Offer Document, and           has the meaning given to it in the section
                    including any New Conditions.                           ‘Conditions of Senior Bonds’ on page 57.
                    Default Rate                                            Interest Rate
                    the rate which is 2% per annum above the Interest       the relevant Interest rate applying to Senior Bonds.
                    Rate payable on Senior Bonds.
                                                                            Issue Price
                    Early Repayment                                         $1.00 per Senior Bond.
                    means the redemption or purchase by the
                                                                            Joint Lead Managers
                    Company of all or part of the Senior Bonds on issue
                                                                            Goldman Sachs JBWere (NZ) Limited and Forsyth
                    together with any Accrued Interest and Unpaid
                                                                            Barr Limited.
                    Interest prior to the Maturity Date.
                                                                            Liquidation
                    Event of Default
                                                                            has the meaning given to it in the section
                    if the Company or either TOWER or TFSG:
                                                                            ‘Conditions of Senior Bonds’ on page 58.
                    (a) becomes insolvent, is placed in Liquidation or
                         any analogous procedure occurs in respect of       Major Restructuring Event
                         it; or                                             a restructuring of the TOWER Group which in the
                    (b) defaults on Senior Debt (other than in              reasonable opinion of TOWER is material to the
                         respect of Senior Bonds) and Senior Creditors      Company, TFSG or TOWER.
                         are entitled to, and demand accelerated            Market Participant
                         repayment of Senior Debt in excess of (in          a participant in the markets provided by NZX who
                         aggregate) $10,000,000. If entitlement             has been accredited and approved by NZX and


               66
includes an NZX Trading and Advising Firm in              Registrar
accordance with the NZX Market Participant Rules.         Computershare Investor Services Limited.
Maturity Date                                             Secured Creditors
15 April 2014, being the date on which the                persons from time to time entitled to Secured
Company may                                               Debt.
(a) redeem the Senior Bonds; or                           Secured Debt
(b) reset the Interest Rate and the New                   all obligations of the Company, TFSG or TOWER
    Maturity Date.                                        (whether in their capacity as a guarantor of the




                                                                                                                   Other Information
Net Assets                                                Company or of any other person or otherwise) or
total assets less total liabilities, as stated in TOWER   of the TOWER Group (as the case may be) secured
Group’s most recent consolidated statement of             by an interest or power:
financial position.                                       (a) reserved in or over an interest in any asset,
Net Debt                                                       including any retention of title; or
is determined on the basis of TOWER Group’s most          (b) created or otherwise arising in or over any
recent consolidated statement of financial position,           interest in any asset under a bill of sale,
in accordance with New Zealand generally                       mortgage, charge, lien, trust or power, by
accepted accounting practice (as defined in the                way of security for payment of debt, any other
Financial Reporting Act 1993) as the aggregate of              monetary obligation or the performance of
all interest bearing liabilities ranking equally with,         any obligation, and includes a security interest
or senior to, the Senior Bonds, net of cash and                under the Personal Property Securities Act
cash equivalents.                                              1999 and claims having preference to Senior
                                                               Debt by law.
New Conditions
new conditions as to Interest Rate, Interest              Senior Bonds or Bonds
Payment Dates, New Maturity Date, early                   the unsubordinated, unsecured, fixed rated debt
repayment options, and any other condition                securities offered for subscription under this Offer
otherwise varying the Conditions applying from            Document.
the Maturity Date.                                        Senior Creditors
NZ IFRS                                                   persons from time to time entitled to Senior Debt.
the New Zealand equivalents to International              Senior Debt
Financial Reporting Standards (IFRS).                     has the meaning given to it in the section
NZDX                                                      ‘Conditions of Senior Bonds’ on page 59.
the New Zealand debt market operated by NZX.              Stock Exchange
NZSX                                                      has the meaning given to it in the section
                                                          ‘Conditions of Senior Bonds’ on page 59.
the main board equity security market operated by
NZX.                                                      Subordinated Creditors
                                                          the holders of any class of securities issued by the
NZX, and NZSX Listing Rules
                                                          Company, TFSG or TOWER (as the case may be),
NZX Limited and the rules of NZX Limited.
                                                          the terms of issue of which provide that they are
NZX Participant Rules                                     subordinated so as to rank behind the Senior Bonds
the NZX Participant Rules 2004 as amended from            and any other person to whom the Company, TFSG
time to time.                                             or TOWER (as the case may be) owes obligations
Offer                                                     which are subordinated in such manner.
the offer of Senior Bonds made in this Offer              Takeover
Document.                                                 has the meaning given to it in the section
Offer Document                                            ‘Conditions of Senior Bonds’ on page 59.
this combined Investment Statement and                    TFSG
Prospectus for the Offer of Senior Bonds.                 TOWER Financial Services Group Limited
Opening Date                                              TOWER
16 February 2009.                                         TOWER Limited.
Ordinary Resolution                                       TOWER Group
a resolution approved by a simple majority of votes       TOWER and its subsidiaries.
of Bondholders entitled to vote and voting at a
                                                          TOWER Shares
meeting.
                                                          ordinary shares of TOWER.
Previous NZ GAAP
                                                          Trust Deed
Generally Accepted Accounting Practice in New
                                                          the trust deed dated 12 February 2009 entered
Zealand complied with prior to adoption of NZ
                                                          into between the Company, TOWER and the
IFRS.
                                                          Trustee in relation to the Senior Bonds.
Primary Market Participant
                                                          Trustee
a Market Participant approved by NZX to bring
                                                          The New Zealand Guardian Trust Company
new offers of securities to a market provided by
                                                          Limited.
NZX.


                                                                                                                  67
                    Unpaid Interest
                    has the meaning given to it in the section
                    ‘Conditions of Senior Bonds’ on page 59.
                    $
                    New Zealand dollars.
Other Information




               68
                         Notes




69
     Other Information
Notes




                            70
        Other Information
                                                                                                                 BROKER’S
                                                                                                                 STAMP:

                            TOWER Capital Limited Fixed
                            Rate Senior Unsecured Bonds
                                                                                                                 ADVISER

                            Application Form                                                                     CODE:




   If you have a Common Shareholder Number (CSN) or
   Computershare Shareholder Number please enter it here:

   Completing this Application Form constitutes an offer to acquire Senior Bonds as described in the Investment Statement and Prospectus dated
   13 February 2009 (the Offer Document).
   Completed Application Forms, together with payment of the application money payable in respect of the principal amount of Senior Bonds applied
   for must be received by the Registrar, Computershare Investor Services, before 5.00pm on 20 March 2009 (Closing Date). If you have received a firm
   allocation from a Primary Market Participant, this should be returned to the Primary Market Participant in time for it to be forwarded to the Registrar
   before 5.00pm on the Closing Date.
   This Application Form must not be issued, circulated or distributed unless accompanied by the Offer Document.
   Please refer to the ‘Main Terms of Offer’ section of the Offer Document and to the reverse of this Application Form for additional instructions regarding its
   completion.

Investor Details      Please print in block letters
   Title    First Name(s)                                                                    Surname

   Title    First Name(s)                                                                    Surname

   Title    First Name(s)                                                                    Surname

   Corporate Name

   Postal Address

   Telephone    Home (      )                                                                Work (     )

   Email (optional)

Application Amount
   Principal Amount of Senior Bonds Applied for: NZ$                                                                (Minimum of $5,000, and thereafter in multiples of $1,000)

   CHEQUES MUST BE PAYABLE TO ‘TOWER BOND OFFER’ AND CROSSED ‘NOT TRANSFERABLE’ AND SHOULD BE FOR IMMEDIATE VALUE. PAYMENT MUST BE MADE IN NEW
   ZEALAND DOLLARS AND DRAWN ON A REGISTERED NEW ZEALAND BANK. CHEQUES MUST NOT BE POST DATED.

IRD Number
   Please enter your IRD Number

Resident Withholding Tax Rate (Tick One) (19.5% Only Applicable If IRD Number Is Supplied)
   19.5%              33%                39%
   If you hold a current Resident Withholding Tax Exemption Certificate please tick this box and attach a copy of the Certificate

Interest Payments
   IF YOU CURRENTLY RECEIVE INTEREST OR DIVIDEND PAYMENTS FROM COMPUTERSHARE BY DIRECT CREDIT, AND WISH THE INTEREST FROM THE SENIOR BONDS TO BE
   DIRECT CREDITED TO THE SAME ACCOUNT, PLEASE DO NOT COMPLETE THE SECTION BELOW.

   OPTION 1
   My New Zealand Bank Account Details            Account Name

   My Bank Account Details
                                  BANK           BRANCH                  ACCOUNT NUMBER                 SUFFIX
   OPTION 2
   My Cash Management Account Details

   Name of NZX Firm where Cash Management Account held:

   Cash Management Client Account Number

Annual And Half-Yearly Reports
   Tick this box    if you wish to have copies of TOWER Capital Limited’s annual and half-yearly reports sent to you each year. You may also obtain copies
   of TOWER’s most recent annual and half-yearly reports on TOWER’s website at any time: www.towerlimited.com

Privacy Act 1993
   Personal information provided by you will be held by TOWER Capital Limited, the Registrar or the Trustee at the addresses shown in the directory on the
   inside back cover of this Offer Document or such other place as is notified upon request. This information will be used for the purpose of managing your
   investment in Senior Bonds and to provide you with information regarding other products or investments offered by members of the TOWER Group.
   Under the Privacy Act 1993, you have the right to access and correct any personal information held about you.

Agreement On Terms
   I/We, irrevocably apply for the principal amount of Senior Bonds shown above (or such lesser number as TOWER Capital Limited may allocate) on the
   terms and conditions set out in the Offer Document, the Trust Deed and this Application Form. I/We agree to be bound by the Trust Deed (as amended
   from time to time). I/We confirm the information I/We have given on this Application Form is true and correct.

   Signature:                                                                                                                         Date:

   Signature:                                                                                                                         Date:

   Signature:                                                                                                                         Date:

   If this Application Form is signed under Power of Attorney, a copy must be lodged with the Application Form for noting by the Registrar.
Application Instructions
Read the Offer Document and in particular the section ‘Answers                    cancel that applicant’s allotment of Senior Bonds. Cheques will be
to Important Questions’ carefully before applying for Senior                      banked immediately on receipt. The banking of application monies
Bonds and lodging the Application Form.                                           will not constitute an allotment of Senior Bonds nor acceptance of
                                                                                  an offer to purchase Senior Bonds.
COMPLETING THE APPLICATION FORM
                                                                                   S
                                                                                •	 	 enior	Bonds	issued	will	be	allotted	on	the	Allotment	Date	(with	
   I
•	 	f	you	have	been	allocated	a	Common	Shareholder	Number	(‘CSN’)	
                                                                                   Interest payable from the date that a valid application is received
   or have a Computershare Shareholder Number please enter it on
                                                                                   and processed, until the day prior to the Maturity Date). TOWER
   the Application Form.
                                                                                   Capital Limited will advise successful investors of the allotment of
•	 Set	out	your	full	name(s),	address	and	telephone	number.	                       Senior Bonds to them as soon as possible after the allotment.
   A
•	 	 pplications	must	be	in	the	name(s)	of	natural	persons,	companies	             T
                                                                                •	 	 OWER	Capital	Limited	reserves	the	right	to	reject	any	application	
   or incorporated bodies. At least one full first name and surname is             in whole or in part without giving any reason.
   required for each natural person.
                                                                                   A
                                                                                •	 	 	joint	application	must	be	signed	by	all	applicants.	Only	the	
   A
•	 	 pplications	in	the	name	of	a	minor,	trust,	fund	or	estate,	business,	         address of the first named of the joint applicants will be recorded
   firm or partnership, club or other unincorporated body cannot                   by the Registrar and all distributions and interest payments, notices
   be accepted unless they are made in the individual name(s) of the               etc will be sent to that address.
   person(s) who is (are) legal guardian(s), trustee(s), proprietor(s),
                                                                                   T
                                                                                •	 	 he	Offer,	unless	closed	earlier	by	TOWER	Capital	Limited,	will	close	
   partner(s) or office bearer(s) as appropriate.
                                                                                   on the earlier of the Closing Date (20 March 2009), or the date on
   A
•	 	 	maximum	of	three	applicants	can	apply	jointly.                               which applications for the maximum amount of the Senior Bonds
•	 	 omplete	the	amount	of	Senior	Bonds	applied	for.	Please	note	
   C                                                                               offered have been received and accepted. TOWER Capital Limited
   the minimum application amount of $5,000 and the minimum                        reserves the right to vary the Closing Date without notification.
   multiples thereafter of $1,000.                                                 F
                                                                                •	 	 ASTER	Statements	for	the	Senior	Bonds	will	be	dispatched	as	soon	
•	 	 lease	provide	your	bank	account	or	cash	management	account	
   P                                                                               as practicable after allotment, but in any event, no later than 5
   details if interest payments are to be made by direct credit to your            business days after allotment.
   bank account. If you currently receive any interest or dividend                 E
                                                                                •	 	 xpressions	defined	in	the	Offer	Document	have	the	same	meaning	
   payments from Computershare by direct credit please do not                      in the Application Form.
   complete this section.
                                                                                •	 The	Application	Form	is	governed	by	New	Zealand	law.
SIGNING                                                                            W
                                                                                •	 	 hen	completed,	this	Application	Form	together	with	the	
•	 	 he	Application	Form	must	be	signed	by	each	applicant.	
   T                                                                               appropriate payment, should be forwarded to:
   Companies must sign by authorised signatories of the company.                  TOWER Capital Limited
•	 	 n	Attorney	or	Agent	can	sign	for	any	applicant.	If	the	Application	
   A                                                                              C/- Computershare Investor Services Limited
   Form is signed by an Attorney or Agent, the Attorney or Agent                  Level 2, 159 Hurstmere Road
   must complete the Certificate of Non-Revocation of Power of                    Takapuna
   Attorney/Agency (as applicable).                                               North Shore City 0622
                                                                                  Private Bag 92119
TERMS OF APPLICATION                                                              Auckland 1142
   B
•	 	 y	signing	the	Application	Form,	an	applicant	offers	to	subscribe	             A
                                                                                •	 	 pplications	may	also	be	forwarded	to	TOWER	Capital	Limited,	
   for Senior Bonds on the terms set out in the Offer Document, the                any Primary Market Participant or the Joint Lead Managers referred
   Trust Deed and the Application Form.                                            to in the Offer Document, in time to enable forwarding to the
•	 An	application	cannot	be	withdrawn	or	revoked	by	the	applicant.                 Registrar before 5.00pm on the Closing Date.
   F
•	 	 ull	payment	for	the	Senior	Bonds	must	accompany	the	Application	              I
                                                                                •	 	f	you	have	received	a	firm	allocation	from	a	Primary	Market	
   Form. Payment must be in New Zealand dollars for immediate                      Participant, this should be returned to the Primary Market
   value and not post dated. Cheques must be drawn on a registered                 Participant in time for it to be forwarded to the Registrar before
   New Zealand bank and made in favour of ‘TOWER Bond Offer’                       5.00pm on the Closing Date.
   and crossed ‘Not Transferable’. If an applicant’s cheque does not               A
                                                                                •	 	 pplications	which	are	received	after	the	Closing	Date	will	not	be	
   subsequently clear, TOWER Capital Limited reserves the right to                 accepted unless TOWER Capital Limited determines otherwise.




Certificate Of Non-Revocation Of Power Of Attorney/Agent
PLEASE COMPLETE THE FOLLOWING IF YOU ARE ACTING ON BEHALF OF SOMEONE FOR WHOM YOU HOLD POWER OF ATTORNEY/AGENT.

Select representation: Power of Attorney          Agent

I,                                                                                                   (Name of Attorney/Agent)

of,                                                                                                  (Address and Occupation of Attorney/Agent)

HEREBY CERTIFY THAT:

1. As Attorney/Agent of                                                                                             under a deed/agreement dated
 (dd/mm/yy) given to me by him/her/them.

2. I have executed the application for Senior Bonds on the printed on this Application Form as Attorney/Agent pursuant to the powers conferred on
     me by that Power of Attorney/agreement.

3. At the date of this certificate I have not received any notice or information of the revocation of that appointment, whether by the death or
     dissolution of the donor or otherwise.


Signed at                                                                      this                        day of                      2009


Signature of Attorney/Agent
                                                                                                                 BROKER’S
                                                                                                                 STAMP:

                            TOWER Capital Limited Fixed
                            Rate Senior Unsecured Bonds
                                                                                                                 ADVISER

                            Application Form                                                                     CODE:




   If you have a Common Shareholder Number (CSN) or
   Computershare Shareholder Number please enter it here:

   Completing this Application Form constitutes an offer to acquire Senior Bonds as described in the Investment Statement and Prospectus dated
   13 February 2009 (the Offer Document).
   Completed Application Forms, together with payment of the application money payable in respect of the principal amount of Senior Bonds applied
   for must be received by the Registrar, Computershare Investor Services, before 5.00pm on 20 March 2009 (Closing Date). If you have received a firm
   allocation from a Primary Market Participant, this should be returned to the Primary Market Participant in time for it to be forwarded to the Registrar
   before 5.00pm on the Closing Date.
   This Application Form must not be issued, circulated or distributed unless accompanied by the Offer Document.
   Please refer to the ‘Main Terms of Offer’ section of the Offer Document and to the reverse of this Application Form for additional instructions regarding its
   completion.

Investor Details      Please print in block letters
   Title    First Name(s)                                                                    Surname

   Title    First Name(s)                                                                    Surname

   Title    First Name(s)                                                                    Surname

   Corporate Name

   Postal Address

   Telephone    Home (      )                                                                Work (     )

   Email (optional)

Application Amount
   Principal Amount of Senior Bonds Applied for: NZ$                                                                (Minimum of $5,000, and thereafter in multiples of $1,000)

   CHEQUES MUST BE PAYABLE TO ‘TOWER BOND OFFER’ AND CROSSED ‘NOT TRANSFERABLE’ AND SHOULD BE FOR IMMEDIATE VALUE. PAYMENT MUST BE MADE IN NEW
   ZEALAND DOLLARS AND DRAWN ON A REGISTERED NEW ZEALAND BANK. CHEQUES MUST NOT BE POST DATED.

IRD Number
   Please enter your IRD Number

Resident Withholding Tax Rate (Tick One) (19.5% Only Applicable If IRD Number Is Supplied)
   19.5%              33%                39%
   If you hold a current Resident Withholding Tax Exemption Certificate please tick this box and attach a copy of the Certificate

Interest Payments
   IF YOU CURRENTLY RECEIVE INTEREST OR DIVIDEND PAYMENTS FROM COMPUTERSHARE BY DIRECT CREDIT, AND WISH THE INTEREST FROM THE SENIOR BONDS TO BE
   DIRECT CREDITED TO THE SAME ACCOUNT, PLEASE DO NOT COMPLETE THE SECTION BELOW.

   OPTION 1
   My New Zealand Bank Account Details            Account Name

   My Bank Account Details
                                  BANK           BRANCH                  ACCOUNT NUMBER                 SUFFIX
   OPTION 2
   My Cash Management Account Details

   Name of NZX Firm where Cash Management Account held:

   Cash Management Client Account Number

Annual And Half-Yearly Reports
   Tick this box    if you wish to have copies of TOWER Capital Limited’s annual and half-yearly reports sent to you each year. You may also obtain copies
   of TOWER’s most recent annual and half-yearly reports on TOWER’s website at any time: www.towerlimited.com

Privacy Act 1993
   Personal information provided by you will be held by TOWER Capital Limited, the Registrar or the Trustee at the addresses shown in the directory on the
   inside back cover of this Offer Document or such other place as is notified upon request. This information will be used for the purpose of managing your
   investment in Senior Bonds and to provide you with information regarding other products or investments offered by members of the TOWER Group.
   Under the Privacy Act 1993, you have the right to access and correct any personal information held about you.

Agreement On Terms
   I/We, irrevocably apply for the principal amount of Senior Bonds shown above (or such lesser number as TOWER Capital Limited may allocate) on the
   terms and conditions set out in the Offer Document, the Trust Deed and this Application Form. I/We agree to be bound by the Trust Deed (as amended
   from time to time). I/We confirm the information I/We have given on this Application Form is true and correct.

   Signature:                                                                                                                         Date:

   Signature:                                                                                                                         Date:

   Signature:                                                                                                                         Date:

   If this Application Form is signed under Power of Attorney, a copy must be lodged with the Application Form for noting by the Registrar.
Application Instructions
Read the Offer Document and in particular the section ‘Answers                    cancel that applicant’s allotment of Senior Bonds. Cheques will be
to Important Questions’ carefully before applying for Senior                      banked immediately on receipt. The banking of application monies
Bonds and lodging the Application Form.                                           will not constitute an allotment of Senior Bonds nor acceptance of
                                                                                  an offer to purchase Senior Bonds.
COMPLETING THE APPLICATION FORM
                                                                                   S
                                                                                •	 	 enior	Bonds	issued	will	be	allotted	on	the	Allotment	Date	(with	
   I
•	 	f	you	have	been	allocated	a	Common	Shareholder	Number	(‘CSN’)	
                                                                                   Interest payable from the date that a valid application is received
   or have a Computershare Shareholder Number please enter it on
                                                                                   and processed, until the day prior to the Maturity Date). TOWER
   the Application Form.
                                                                                   Capital Limited will advise successful investors of the allotment of
•	 Set	out	your	full	name(s),	address	and	telephone	number.	                       Senior Bonds to them as soon as possible after the allotment.
   A
•	 	 pplications	must	be	in	the	name(s)	of	natural	persons,	companies	             T
                                                                                •	 	 OWER	Capital	Limited	reserves	the	right	to	reject	any	application	
   or incorporated bodies. At least one full first name and surname is             in whole or in part without giving any reason.
   required for each natural person.
                                                                                   A
                                                                                •	 	 	joint	application	must	be	signed	by	all	applicants.	Only	the	
   A
•	 	 pplications	in	the	name	of	a	minor,	trust,	fund	or	estate,	business,	         address of the first named of the joint applicants will be recorded
   firm or partnership, club or other unincorporated body cannot                   by the Registrar and all distributions and interest payments, notices
   be accepted unless they are made in the individual name(s) of the               etc will be sent to that address.
   person(s) who is (are) legal guardian(s), trustee(s), proprietor(s),
                                                                                   T
                                                                                •	 	 he	Offer,	unless	closed	earlier	by	TOWER	Capital	Limited,	will	close	
   partner(s) or office bearer(s) as appropriate.
                                                                                   on the earlier of the Closing Date (20 March 2009), or the date on
   A
•	 	 	maximum	of	three	applicants	can	apply	jointly.                               which applications for the maximum amount of the Senior Bonds
•	 	 omplete	the	amount	of	Senior	Bonds	applied	for.	Please	note	
   C                                                                               offered have been received and accepted. TOWER Capital Limited
   the minimum application amount of $5,000 and the minimum                        reserves the right to vary the Closing Date without notification.
   multiples thereafter of $1,000.                                                 F
                                                                                •	 	 ASTER	Statements	for	the	Senior	Bonds	will	be	dispatched	as	soon	
•	 	 lease	provide	your	bank	account	or	cash	management	account	
   P                                                                               as practicable after allotment, but in any event, no later than 5
   details if interest payments are to be made by direct credit to your            business days after allotment.
   bank account. If you currently receive any interest or dividend                 E
                                                                                •	 	 xpressions	defined	in	the	Offer	Document	have	the	same	meaning	
   payments from Computershare by direct credit please do not                      in the Application Form.
   complete this section.
                                                                                •	 The	Application	Form	is	governed	by	New	Zealand	law.
SIGNING                                                                            W
                                                                                •	 	 hen	completed,	this	Application	Form	together	with	the	
•	 	 he	Application	Form	must	be	signed	by	each	applicant.	
   T                                                                               appropriate payment, should be forwarded to:
   Companies must sign by authorised signatories of the company.                  TOWER Capital Limited
•	 	 n	Attorney	or	Agent	can	sign	for	any	applicant.	If	the	Application	
   A                                                                              C/- Computershare Investor Services Limited
   Form is signed by an Attorney or Agent, the Attorney or Agent                  Level 2, 159 Hurstmere Road
   must complete the Certificate of Non-Revocation of Power of                    Takapuna
   Attorney/Agency (as applicable).                                               North Shore City 0622
                                                                                  Private Bag 92119
TERMS OF APPLICATION                                                              Auckland 1142
   B
•	 	 y	signing	the	Application	Form,	an	applicant	offers	to	subscribe	             A
                                                                                •	 	 pplications	may	also	be	forwarded	to	TOWER	Capital	Limited,	
   for Senior Bonds on the terms set out in the Offer Document, the                any Primary Market Participant or the Joint Lead Managers referred
   Trust Deed and the Application Form.                                            to in the Offer Document, in time to enable forwarding to the
•	 An	application	cannot	be	withdrawn	or	revoked	by	the	applicant.                 Registrar before 5.00pm on the Closing Date.
   F
•	 	 ull	payment	for	the	Senior	Bonds	must	accompany	the	Application	              I
                                                                                •	 	f	you	have	received	a	firm	allocation	from	a	Primary	Market	
   Form. Payment must be in New Zealand dollars for immediate                      Participant, this should be returned to the Primary Market
   value and not post dated. Cheques must be drawn on a registered                 Participant in time for it to be forwarded to the Registrar before
   New Zealand bank and made in favour of ‘TOWER Bond Offer’                       5.00pm on the Closing Date.
   and crossed ‘Not Transferable’. If an applicant’s cheque does not               A
                                                                                •	 	 pplications	which	are	received	after	the	Closing	Date	will	not	be	
   subsequently clear, TOWER Capital Limited reserves the right to                 accepted unless TOWER Capital Limited determines otherwise.




Certificate Of Non-Revocation Of Power Of Attorney/Agent
PLEASE COMPLETE THE FOLLOWING IF YOU ARE ACTING ON BEHALF OF SOMEONE FOR WHOM YOU HOLD POWER OF ATTORNEY/AGENT.

Select representation: Power of Attorney          Agent

I,                                                                                                   (Name of Attorney/Agent)

of,                                                                                                  (Address and Occupation of Attorney/Agent)

HEREBY CERTIFY THAT:

1. As Attorney/Agent of                                                                                             under a deed/agreement dated
 (dd/mm/yy) given to me by him/her/them.

2. I have executed the application for Senior Bonds on the printed on this Application Form as Attorney/Agent pursuant to the powers conferred on
     me by that Power of Attorney/agreement.

3. At the date of this certificate I have not received any notice or information of the revocation of that appointment, whether by the death or
     dissolution of the donor or otherwise.


Signed at                                                                      this                        day of                      2009


Signature of Attorney/Agent
Directory
Registered office        Arranger, Joint               Trustee




                                                                                       Other Information
TOWER Capital Limited    Lead Manager and              The New Zealand Guardian
Level 11                 Organising Participant        Trust Company Limited
TOWER Centre             Goldman Sachs JBWere          Guardian Trust House
22 Fanshawe Street       (NZ) Limited                  15 Willeston Street
PO Box 90347             Level 38, Vero Centre         PO Box 913
Auckland 1142            48 Shortland Street,          Wellington 6140
                         PO Box 887
TOWER Group Acting       Auckland 1010                 Registrar
Company Secretary        Freephone 0800 555 555        Computershare Investor
and Investor Relations   Telephone 09 357 3200         Services Limited
Manager                  Facsimile 09 357 3248         Level 2
Eric O’Sullivan          Level 8,                      159 Hurstmere Road
TOWER Limited            The State Insurance Tower     Takapuna
PO Box 90347             1 Willis Street               North Shore City 0622
Auckland 1142            Wellington 6011               Private Bag 92119
Telephone 09 369 2000    Freephone 0800 555 554        Auckland 1142
Facsimile 09 369 2160    Telephone 04 471 6260         Freephone 0800 222 065
                         Facsimile 04 471 6261
                         Level 1, HSBC House           Auditors
                         141 Cambridge Terrace         PricewaterhouseCoopers
                         Christchurch 8013             PricewaterhouseCoopers Tower
                         Freephone 0800 555 553        188 Quay Street
                         Telephone 03 364 5610         Auckland 1010
                         Facsimile 03 364 5611
                                                       Tax advisors
                         Website
                         www.gsjbw.co.nz               Deloitte

                         Email                         Deloitte House
                         nzclientservice@gsjbw.co.nz   8 Nelson Street
                                                       Auckland 1010
                         Joint Lead Manager
                                                       Legal Advisors to
                         Forsyth Barr Limited
                                                       TOWER Capital Limited
                         The Octagon
                                                       DLA Phillips Fox
                         Private Bag 1999
                         Dunedin                       Level 5, TOWER Centre
                                                       50-64 Customhouse Quay
                         Telephone 0800 367 227
                                                       Wellington 6011
                         Facsimile 03 477 4928
                         Website                       Legal Advisors to the
                         www.forsythbarr.co.nz         Trustee
                                                       Buddle Findlay
                                                       1 Willis Street
                                                       Wellington 6011




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