ALBA 2007 – 1 plc - Irish Stock Exchange

F = the aggregate Principal Amount Outstanding of the F Notes on such date.
MERCs
The MERCs will be secured by the same security as the Notes and other Instruments and constitute an
obligation on the part of the Issuer to pay to MERC Holders Mortgage Early Repayment Charges. On
each Payment Date, the Mortgage Early Repayment Charges (other than the Ported Mortgage Early
Repayment Charges) received during the preceding three Collection Periods as calculated on the
Calculation Date immediately preceding such Payment Date will be applied in payment on a pro rata
basis to amounts payable to the MERC Holders divided by the number of MERCs existing on the
Calculation Date prior to the relevant Payment Date. The Rating Agencies have determined their
respective ratings of the MERCs on the basis of the Issuer's obligation and there is no certainty as to
the amounts receivable by MERC Holders. There is no certainty as to the amount of Mortgage Early
Repayment Charges that will actually be received by the Issuer. If no Mortgage Early Repayment
Charges are received by the Issuer, regardless of the reason, there is no payment obligation on the
Issuer to MERC Holders.
Following the earliest to occur of redemption of all the Notes or an enforcement of the Security and
subsequent disposal of the Charged Assets, no termination payment or other amount (other than
amounts then payable in respect of MERC Holder Payments) will be payable in respect of the MERCs
and, following the payment of any amounts then payable in respect of MERC Holder Payments (to be
paid, if such payment is made after enforcement of the Security and subsequent disposal of the Charged
Assets, in accordance with the Post-Enforcement Priority of Payments), the MERCs shall no longer
constitute a claim against the Issuer.
The ratings of Fitch and Moody's of the MERCs address the likelihood of receipt by MERC Holders of
the MERC Holder Payments. However, such rating assumes, without any independent investigation that
(i) the payment of the corresponding Mortgage Early Repayment Charges is legally valid, binding and
enforceable against the Borrowers and (ii) such Mortgage Early Repayment Charges are actually
collected from Borrowers and received by the Issuer.
The rating of S&P on the MERCs addresses the likelihood of receipt by the MERC Holders of
Mortgage Early Repayment Charges actually received by the Issuer if enforceable. See "Terms and
Conditions of the MERCs".
The Subordinated Notes
The net proceeds of the issue of the Subordinated Notes will be used to fund the initial amount of the
Reserve Fund. The Subordinated Notes will be secured by the same security as the Notes and other
Instruments. Payments of interest and principal on the Subordinated Notes will be made on each
Payment Date from Available Revenue Funds in accordance with the Pre-Enforcement Interest Priority
of Payments and where interest on the Subordinated Notes is not paid due to a shortfall of funds
available for this purpose, it will be deferred until such later Payment Date on which it can be paid in
accordance with the Pre-Enforcement Interest Priority of Payments and any amount of interest so
deferred will itself accrue interest, but any such deferral will cease on the Final Payment Date, when all
accrued interest will become due and payable. The principal amount of the Subordinated Notes due on
each Payment Date will be an amount limited to the Cumulative Revenue Fund Excess on such Payment
Date. See "Terms and Conditions of the Subordinated Notes".
Following the early redemption in full of all the Notes, the Issuer shall redeem the Principal Amount
Outstanding under the Subordinated Notes in an amount equal to the lesser of (i) the then Principal
Amount Outstanding under the Subordinated Amounts; and (ii) the amounts (if any) remaining to the