ALBA 2007 – 1 plc - Irish Stock Exchange

In the event that the long-term, unsecured, unsubordinated and unguaranteed debt obligations of the
Cap Provider are downgraded below BBB- by S&P, 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 counterparty to enter into a replacement cap transaction) to terminate the Interest Rate Cap
Transaction unless the Cap Provider, within 10 days of such downgrade and at its own cost, transfers
its obligations under the Interest Rate Cap Agreement as described in paragraph (ii) above.
The Interest Rate Cap Transaction may, in addition, be terminated by the Cap Provider in
circumstances including, broadly, where the Issuer is in default by reason of failure by the Issuer to
make payments, where certain insolvency-related or corporate reorganisation events affect the Issuer, in
the event that proceedings are taken against the Issuer by the Trustee to enforce payment of the Notes
or if the Notes are redeemed in full. The Interest Rate Cap Transaction may be terminated by the Issuer
in circumstances including, broadly where the Cap Provider is in default by reason of failure to make
payments, where the Cap Provider is otherwise in breach of the Interest Rate Cap Agreement or has
made certain misrepresentations, where certain insolvency-related or corporate reorganisation events
affect the Cap Provider, where certain tax representations given by the Cap Provider prove to be
incorrect, where there is a merger without assumption in respect of the Cap Provider and where the
Cap Provider or any credit support provider of the Cap Provider defaults under any credit support
document.
If the Issuer becomes obliged to withhold tax from any payment due by it under the Interest Rate Cap
Agreement, such tax shall be withheld and paid over to the relevant authorities and the Issuer will not
be obliged to gross up its payment to the Cap Provider. In the event of an imposition of any tax on any
payment due by a Cap Provider to the Issuer under the Interest Rate Cap Agreement, the Cap Provider
will be obliged to gross up for the tax so withheld. However, if any such withholding or deduction is
required resulting from a change in law or change in application of the relevant law or a merger of a
party or transfer of its assets, which cannot be avoided by both parties, the Cap Provider may terminate
the Interest Rate Cap Agreement whereupon, in accordance with accepted market practice, the cost or
gain (if any) to the Issuer of entering into a replacement transaction, which would have the effect of
preserving the economic equivalent of all future payments which would otherwise have been due, will
be calculated and a termination payment made. The Interest Rate Cap Transaction may be terminated
early by the Issuer or the Cap Provider in the event that there are changes in law resulting in illegality
of the obligations to be performed by either party.
Upon termination of the Interest Rate Cap Transaction, either party may be required to make a
termination payment to the other, depending on the circumstances then prevailing.
Where the Cap Provider provides collateral in accordance with the terms of the Interest Rate Cap
Agreement, such collateral will, upon receipt by the Issuer, be credited to a separate ledger (created to
record such amounts) and transferred (if in cash form) to the Issuer Transaction Account or such other
account established for such purpose (provided that any such account shall be maintained in England).
Any collateral (including any income in respect thereof) provided by the Cap Provider will not form
part of the Available Revenue Funds, the Actual Redemption Funds or the Charged Assets except to the
extent of any such collateral retained by the Issuer following the termination of the Interest Rate Cap
Transaction other than such portion of collateral that is not required to satisfy any termination payment
due to the Cap Provider or to enter into a replacement transaction with a replacement cap provider.
Swap Agreements
In order to hedge the interest rate risk arising by virtue of the difference between Bank of England repo
rate (by reference to which the Mortgage Rate is calculated under the Bank of England Repo Rate-