ALBA 2007 – 1 plc - Irish Stock Exchange

Linked Mortgage Loans) and Note LIBOR, the Issuer will on the Issue Date enter into the BBR -LIBOR
Basis Swap Transaction with the Interest Rate Swap Counterparty. Under the BBR -LIBOR Basis Swap
Transaction, on each Payment Date, the Issuer will pay to the Interest Rate Swap Counterparty an
amount equal to the (1) product of: (a) the average of the Bank of England repo rate during the period
from (and including) the twelfth day of the calendar month in which the preceding Payment Date falls
(or, in respect of the first Payment Date, from (and including) the Issue Date) (the "Reference Period
Commencement Date") to (but excluding) the twelfth day of the calendar month during which that
Payment Date falls and (b) the aggregate outstanding principal balance of Non Defaulted Bank of
England Repo Rate-Linked Mortgage Loans (save for the Fixed-Reverting to SVR Mortgage Loans to
the extent they accrue a fi xed rate of interest) in the Mortgage Pool on the Reference Period
Commencement Date (the "IRBS Notional Amount") pro rated to the calculation period applicable to
the Issuer (as set out in the BBR-LIBOR Basis Swap Transaction confirmation) plus (2) a margin to the
relevant IRBS Notional Amount pro rated to the calculation period applicable to the Interest Rate Swap
Counterparty (as set out in the BBR-LIBOR basis Swap Transaction confirmation). The Interest Rate
Swap Counterparty will pay to the Issuer on each Payment Date an amount obtained by applying
LIBOR (as determined in accordance with the terms of the BBR-LIBOR Basis Swap Transaction on the
preceding Payment Date, or in respect of the first Payment Date, the Issue Date).
In order to hedge the interest rate risk arising by virtue of the difference between LIBOR (by reference
to which the Mortgage Rate is calculated under the LIBOR -Linked Mortgage Loans) and Note LIBOR,
the Issuer will enter into the LIBOR Basis Swap Transaction with the Interest Rate Swap Counterparty.
Under the LIBOR Basis Swap Transaction, the Issuer and the Interest Rate Swap Counterparty will, on
each Payment Date, make payments to each other based on the outstanding principal balance of the Non
Defaulted LIBOR-Linked Mortgage Loans (save for the Fixed Reverting to LIBOR Mortgage Loans, to
the extent they accrue a fixed rate of interest) on the preceding Payment Date (or, in respect of the first
Payment Date, the Issue Date). The LIBOR rate applicable to the payments by the Issuer in relation to
the Mortgage Loans is determined on the Interest Determination Date. The LIBOR rate applicable to
payments by the Interest Rate Swap Counterparty is determined on the preceding Payment Date (or
Issue Date, as the case may be).
In order to hedge the interest rate risk arising by virtue of the difference between (a) the fixed rate of
interest during the fixed rate period in which the Mortgage Rate is calculated under each of the Fixed
Reverting to SVR Mortgage Loans, the Fixed Reverting to Tracker Rate Mortgage Loans and the Fixed
Reverting to LIBOR Mortgage Loans and (b) Note LIBOR, the Issuer will on the Issue Date enter into
the Fixed-LIBOR Swap Transaction with the Interest Rate Swap Counterparty. Under the Fixed-
LIBOR Swap Transaction, on each Payment Date, the Issuer will pay to the Interest Rate Swap
Counterparty an amount equal to the product of: (i) a weighted average of the fixed rate of interest
specified to be applicable to the Fixed Reverting to SVR Mortgage Loans, the fixed rate of interest
specified to be applicable to the Fixed Reverting to Tracker Rate Mortgage Loans and the fixed rate of
interest specified to be applicable to the Fixed Reverting to LIBOR Mortgage Loans; and (ii) the
aggregate outstanding principal balance of the Non Defaulted Fixed Reverting to SVR Mortgage Loans,
the Fixed Reverting to Tracker Rate Mortgage Loans and the Fixed Reverting to LIBOR Mortgage
Loans on the Issue Date or preceding Payment Date (as the case may be) (pro rated to the calculation
period applicable to the Issuer as set out in the Fixed-LIBOR Swap Transaction confirmation). The
Interest Rate Swap Counterparty will pay to the Issuer on each Payment Date an amount obtained by
applying LIBOR (as determined in accordance with the terms of the Fixed-LIBOR Swap Transaction on
the preceding Payment Date or, in respect of the first Payment Date, the Issue Date) to the aggregate
outstanding principal balance of the relevant Non Defaulted Fixed Reverting to LIBOR Mortgage
Loans, the Fixed Reverting to Tracker Rate Mortgage Loans and the Fixed Reverting to SVR Mortgage
Loans as determined on the Issue Date or preceding Payment Date (as the case may be) (pro rated to