BABCOCK & BROWN

This right is independent of Babcock & Brown’s right to
defer interest under the Terms.
• Whilst the Dividend Stopper applies to prevent Babcock
& Brown from doing certain things under clause 2.6 of the
Terms or there is any deferred interest outstanding under
the BBIPL Loan Agreement, BBIPL must not:
– declare or pay any dividend or make any return of
capital or other payment to its shareholders in respect of
shares of any class;
– set aside any amount of cash or any assets for doing any
of those things; or
– undertake any arrangement, reconstruction or
reorganisation between itself and its members or any
class of them, or between itself and its creditors or any
class of them, which would have a material adverse
effect on the value of its shares.
• Babcock & Brown’s rights (as lender) against BBIPL (as
borrower) under the BBIPL Loan Agreement are currently
subject to the terms of the Parent Subordination Deed only
and are not subordinated to BBIPL’s creditors generally.
The BBIPL Loan Agreement does however provide
for subordination of the BBIPL Loan to additional debt
obligations at the discretion of BBIPL.
• Where BBSN are Exchanged under the Terms and the
exchange is effected by the issue of new Ordinary Shares,
Babcock & Brown must subscribe for an equivalent number
of A Class Shares in BBIPL. That subscription effectively
offsets a corresponding portion of BBIPL’s obligations under
the BBIPL Loan Agreement. Where the Exchange under the
Terms is effected by a transfer of existing Ordinary Shares,
a corresponding portion of the BBIPL Loan and interest
is payable.
8.9 Subordination Deeds
8.9.1 BBSN Subordination Deed
Under the BBSN Subordination Deed, no amount that may
become payable under the Guarantee is payable until the
BBSN Senior Debt is paid in full, however, BBIPL may make
payments in respect of the Guarantee to the extent permitted
by the Existing Corporate Facility. The Existing Corporate
Facility permits payments in connection with the Guarantee
where there is no actual or potential event of default or review
event subsisting.
The Trustee is not permitted to requisition a meeting to
consider a resolution for the winding up of, or appointment of
an administrator to, BBIPL, vote for the winding up of BBIPL
or in connection with the composition with creditors of BBIPL
or apply to a court to wind up BBIPL or prove in any such
winding up, except in accordance with the directions of BWA
Custodians Limited, as security trustee for the Senior Creditors.
A winding up of Babcock & Brown or BBIPL (among other
things) is an event of default under the Existing Corporate
Facility. Accordingly, if Babcock & Brown or BBIPL is wound
up, no payment may be made under the Guarantee until the
BBSN Senior Debt is paid in full.
Events of default and review events under the Existing
Corporate Facility are described more fully under the heading
“Parent Subordination Deed” in this Section 8.9.
8.9.2 Parent Subordination Deed
Under the Parent Subordination Deed, none of the
Subordinated Debt (including any amount that may become
payable under the BBIPL Loan) is payable until the BBSN
Senior Debt is paid in full, other than where Babcock & Brown
lodges proof of the Subordinated Debt in accordance with
the Parent Subordination Deed. However, BBIPL may make
payments in respect of the BBIPL Loan to the extent permitted
by the Existing Corporate Facility. The Existing Corporate
Facility permits payments in connection with the BBIPL Loan
where there is no actual or potential event of default or review
event subsisting.
Events of default under the Existing Corporate Facility include
the following:
• BBIPL does not pay on the due date any amount payable
pursuant to the Existing Corporate Facility in the manner
required under it, subject to certain technical difficulties
which are rectified within the required time.
• Any requirement under certain covenants (including
financial covenants and covenants relating to financial
indebtedness, cross collateralisation and change of business
or investments) is not satisfied.
• BBIPL does not comply with any provision of the Existing
Corporate Facility (other than those referred to in the above
two paragraphs), Babcock & Brown does not comply with
any provision of the Parent Subordination Deed or BBIPL
or Babcock & Brown does not comply with any condition
of any waiver or consent by a lender under the Existing
Corporate Facility and such failure is remediable but not
remedied within the required time.
• Any representation or statement made by BBIPL in the
Existing Corporate Facility or by Babcock & Brown in the
Parent Subordination Deed is incorrect or misleading in any
material respect when made or deemed to be made.
BABCOCK & BROWN SUBORDINATED NOTES 75