BABCOCK & BROWN

(c) For the purposes of clause 2.1(a), Interest will accrue from (and including):
(1) for the first issue of BBSN, the Settlement Date; and
(2) for any subsequent issues of BBSN, the Business Day prior to the date of issue of such BBSN.
2.2 Payment of Interest
(a) Subject to clause 2.3, the Issuer must pay Interest accrued on each BBSN in arrears on each Interest Payment Date.
(b) While BBSN remain on issue, Interest Payment Dates are as follows:
(1) 15 May 2006 and after that each 15 May and 15 November, or the dates determined under clause 3
(or if any of such dates is not a Business Day, the next Business Day); and
(2) in respect only of the relevant BBSN, any Realisation Date (unless the relevant BBSN is Resold).
2.3 Deferred Interest
(a) Subject to clause 2.5, payment of any interest which is otherwise due and payable on any Interest Payment
Date (other than on the Maturity Date), including any Deferred Interest arising from prior operation of this
clause 2.3(a) and any other Outstanding Interest, may be deferred by the Issuer if:
(1) the Issuer is insolvent or the interest payment would cause the Issuer to become insolvent;
(2) the interest payment would cause the Issuer to breach any legal obligation; or
(3) the Directors determine that the Issuer does not have sufficient cash to make the interest payment
(including, without limitation, where this arises because Babcock & Brown International Pty Limited
fails to make payments to the Issuer),
and will, subject to the further operation of this clause 2.3(a) at that time, fall due for payment on the next
Interest Payment Date.
(b) The Issuer will give notice to the Trustee and Holders that payment of interest will be deferred under clause
2.3(a) as soon as practicable after it makes such determination.
(c) The deferral of any interest under clause 2.3(a) will not constitute a default by the Issuer for any purpose.
2.4 Cumulative Interest
(a) Outstanding Interest means, in relation to each BBSN the aggregate of any:
(1) unpaid Deferred Interest; and
(2) other unpaid interest which is due and payable (including any interest accrued under clause 2.4(b)).
(b) Interest accrues on any Outstanding Interest on a daily basis from and including the relevant Interest
Payment Date (or any other date it became due and payable) up to, but excluding, the date of payment of the
Outstanding Interest at a rate equal to the sum of the then applicable Interest Rate determined under clause
2.1(a) plus 2.00% per annum.
(c) Subject to clause 2.3, the Issuer must pay Outstanding Interest accrued on each BBSN in arrears on each
Interest Payment Date.
BABCOCK & BROWN SUBORDINATED NOTES 93