ALBA 2007 – 1 plc - Irish Stock Exchange

Subordinated Notes. See also "Risk Factors – Risks Related to the Notes – Subordination of the B
Notes, C Notes, D Notes, E Notes and F Notes" and "– Risks Related to the Mortgage Loans".
Interest Rate Cap Agreement
To hedge against interest rate exposure arising from the possibility of Mortgage Loans becoming nonperforming
if Note LIBOR exceeds 8 per cent. the Issuer will enter into the Interest Rate Cap
Transaction on the Issue Date for a period of approximately 5 years and will in accordance with the
terms of the Interest Rate Cap Agreement and the Pre-Enforcement Interest Priority of Payments pay a
periodic fee in respect of this to the Cap Provider. Under the Interest Rate Cap Transaction, the Cap
Provider will pay to the Issuer on each Payment Date, the difference between (a) the amount produced
by applying LIBOR (determined in accordance with the terms of the Interest Rate Cap Transaction) for
the relevant Interest Period to the Notional Amount and (b) the amount produced by applying 8per
cent. to the Notional Amount for the same Interest Period (if such figure is positive).
In the event that the short-term, unsecured, unsubordinated and unguaranteed debt obligations of the
Cap Provider cease to be rated at least F1 by Fitch, A-1 by S&P or (for so long as the A Notes and the
B Notes are outstanding) P-1 by Moody's, or its long-term unsecured, unsubordinated and
unguaranteed debt obligations cease to be rated at least A+ by Fitch or (for so long as the A Notes and
the B Notes are outstanding) A2 by Moody's (the "Required Cap Provider Ratings"), then the Issuer
has the right (provided that, if such termination would result in a payment becoming due to the Cap
Provider, it has been able to find a replacement cap provider to enter into a replacement cap
transaction) to terminate the Interest Rate Cap Transaction unless the Cap Provider, within 30 days of
such cessation, at its own cost either:
(i)
(ii)
(iii)
(iv)
procures a third party with the Required Cap Provider Ratings of Fitch and/or S&P and/or
Moody's (as applicable) or who is otherwise approved by Fitch and/or S&P and/or Moody's (as
applicable) to become co-obligor or guarantor in respect of the Cap Provider's obligations under
the Interest Rate Cap Agreement; or
transfers all of its rights and obligations under the Interest Rate Cap Agreement to a
replacement third party that has all of the Required Cap Provider Ratings or who is otherwise
approved by Fitch, S&P and Moody's (as applicable); or
provides collateral for its obligations in accordance with the terms of the Interest Rate Cap
Agreement and on terms acceptable to Fitch and/or S&P and/or Moody's (as applicable); or
takes such other action satisfactory to Fitch and/or S&P and/or Moody's (as applicable) to
maintain the then current ratings of the Notes.
In the event that the unsecured, unsubordinated and unguaranteed debt obligations of the Cap Provider
cease to be rated as high as: (a) in the case of short-term debt obligations, F3 as determined by Fitch
and (for so long as the A Notes and the B Notes are outstanding) P-2 as determined by Moody's or (b)
in the case of long-term debt obligations, BBB- as determined by Fitch and (for so long as the A Notes
and the B Notes are outstanding) A3 as determined by Moody's, then the Issuer will have the right
(provided that, if such termination would result in a payment becoming due to the Cap Provider, it has
been able to find a replacement cap provider to enter into a replacement cap transaction) to terminate
the Interest Rate Cap Transaction unless the Cap Provider at its own cost takes any of the actions
described in (i), (ii) or (iv) above in the time frame prescribed in the Interest Rate Cap Agreement and,
in the case of Moody's only, provides collateral in accordance with (iii) above until such action is
taken.