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SECTION 8 ADDITIONAL INFORMATION 8.4.3 Issue of further BBIPL shares In order to maintain the one-for-one conversion ratio between B Class shares and Babcock & Brown Shares, it will be necessary to maintain the number of issued Shares and Options in Babcock & Brown at exactly the same number as the A Class Shares which Babcock & Brown holds in BBIPL. In this way, both a Share in Babcock & Brown and a B Class share will have the same per share dividend entitlement, and this should ensure that (all else being equal) both shares have a comparable value so as to make the one-for-one conversion ratio fair to both BClass shareholders and Babcock & Brown’s Shareholders. Accordingly, whenever Babcock & Brown issues further Shares and Options (for example, under a placement, dividend reinvestment plan, employee incentive plan, etc.) it will be obliged to subscribe for an equal number of new A Class Shares in BBIPL.The issue price for those new A Class Shares will be the amount (net of issue costs) that Babcock & Brown receives for the issue of its own Shares. The only scope for the issue of further B Class shares in BBIPL is if there is a rights issue at Babcock & Brown level, in which case BBIPL may be obliged to offer rights to its own shareholders in the same ratio. B Class shareholders also have the right to “cash out” their BBIPL rights at the applicable market price of Babcock & Brown’s rights. 8.4.4 Voting rights and election of directors to the BBIPL board Generally, A Class and B Class shares have equal voting rights at a general meeting of BBIPL. There are some cases, however, where the A Class Shares “flow through” the votes taken at a general meeting of Babcock & Brown. In these cases, a “proportional voting requirement” applies under which Babcock & Brown is obliged to vote and abstain from voting its A Class Shares in the same proportions as “for” and “against” votes were cast and Shares were not voted (respectively) by shareholders at the Babcock & Brown level. One of the key matters to which the proportional voting requirement applies is the election of directors at the BBIPL level. It is intended that the boards of Babcock & Brown and BBIPL should closely mirror one another, subject to BBIPL B Class shareholders having a vote at the BBIPL level. For instance, whenever a BBIPL director who is also a director of Babcock & Brown retires and stands for re-election at the Babcock & Brown level, the director must also retire and stand for re-election at the BBIPL level. Even if a BBIPL director is not a director of Babcock & Brown, the person must retire and stand for re-election on the same rotational basis as if he or she was a director of a listed company.The right of the BBIPL board to appoint a new director as a casual vacancy is also limited to people who are also directors of Babcock & Brown. Further, the Constitution provides that after the date on which BBIPL is entitled to compulsorily redeem B Class shares (see above) Babcock & Brown will essentially be able to exercise complete control over the composition of the BBIPL board. 8.4.5 Election of directors to Babcock & Brown’s board B Class shareholders do not have any voting rights at a general meeting of Babcock & Brown, including in relation to the appointment of directors to Babcock & Brown’s board. However, Babcock & Brown is obliged to accept a nomination from the board of BBIPL where an election is to be held to fill a board vacancy at Babcock & Brown level. However, such nominations do not displace the right of Babcock & Brown’s board to put its own nominees to a vote of shareholders. 8.4.6 Sale of substantial assets by BBIPL Upon listing, all of Babcock & Brown’s business interests, investments and assets will be held through BBIPL and BBIPL’s subsidiaries.The BBIPL Constitution maintains this position going forward. If Babcock & Brown’s shareholders are to vote on a significant acquisition, disposal or related party transaction to which Chapter 10 or 11 of the ASX Listing Rules applies and which affects BBIPL (which will usually be the case), any such decision must also be approved by BBIPL’s shareholders to the extent that it affects BBIPL’s assets. Babcock & Brown can vote its A Class Shares on that resolution, and the proportional voting requirement referred to above applies to this resolution. 154
BABCOCK & BROWN PROSPECTUS Similarly, the sale by Babcock & Brown of its A Class Shares in BBIPL (this will be Babcock & Brown’s major, and initially only, directly held asset) also requires the approval of BBIPL shareholders. Babcock & Brown can vote its A Class Shares on this resolution, and the proportional voting requirement referred to above applies. These special provisions in relation to substantial assets only apply until the date on which BBIPL becomes entitled to compulsorily redeem B Class shares. After that date, acquisitions or disposals of this kind do not require the approval of BBIPL shareholders. 8.4.7 Dividends A Class Shares and B Class shares have the same per share dividend rights.While there are B Class shareholders in BBIPL, Babcock & Brown may not pay a total dividend which exceeds the total dividend that it receives from BBIPL on its A Class Shares. 8.4.8 General minority shareholder protection The Constitution requires Babcock & Brown not to do anything that would materially prejudice the ability of B Class members to have their B Class shares redeemed or converted.This restriction does not apply where the relevant event is specifically provided for elsewhere in the Constitution, such as under a scheme of arrangement or takeover bid. 8.5 INTERESTS OF DIRECTORS Set out below are details of the current interests of the Directors (and their associates) in Babcock & Brown: Director Shares Options James Babcock 21,501,522 100,000 James Fantaci 8,498,699 100,000 Phillip Green 12,622,963 800,000 Ian Martin 100,000 – Elizabeth Nosworthy 100,000 – Martin Rey 2,423,788 200,000 Michael Sharpe 50,000 – NOTES: “Shares” includes shares in BBIPL and Shares to be issued under the Restructure (see Section 8.3), but not under the IPO. “Options” are Options to be granted in relation to the Employee Trusts (see Section 4.7.7). 8.6 BBIPL SHAREHOLDERS Members of the Executive Committee or other senior Executives (or their associates) who have shares in BBIPL and may exchange their shares for Shares in Babcock & Brown as described in Section 8.16, are: Name of holder Number of BBIPL shares held 1 Daniel Brickman 6,561,249 Bruce Carusi 3,437,621 Robert Falkenberg 4,285,725 Michael Garland 5,008,751 Ted Lachowicz 5,461,060 Paul Marini 4,362,732 Victoria McManus 2,369,598 Leonard Shavel 3,803,226 Richard Umbrecht 5,599,505 Steven Zissis 8,436,920 NOTE: 1. Number of BBIPL shares are approximate as they include proposed pre-IPO adjustments and proposed purchases through or shortly after the Offer (see Section 4.7.8). 155
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