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LAW OF THE REPUBLIC OF ARMENIA

of June 21, 2008 No. ZR-97

About secured mortgage bonds

Accepted by National Assembly of the Republic of Armenia on May 26, 2008

Chapter 1. General provisions

Article 1. Subject of regulation of the law

1. This Law governs the relations connected with release, the address, repayment by banks and commercial organizations of secured mortgage bonds, control of implementation of activities of the issuer, monitoring of portfolio of utilities, appointment and activities of the mortgage managing director and also other relations connected with secured mortgage bonds.

Article 2. Legal regulation of the relations connected with secured mortgage bonds

1. The relations connected with activities for release of secured mortgage bonds are regulated by this Law, other regulatory legal acts adopted on its basis, the laws of the Republic of Armenia "About banks and banking activity", "About credit institutions", "About the security market" and "About bankruptcy of banks, credit institutions, the investment companies managing investment fund and insurance companies", other laws and regulatory legal acts.

2. On the relations connected with release of secured mortgage bonds provisions of the Law of the Republic of Armenia "On securitization of assets and on asset-backed securities" do not expatiate.

Article 3. The basic concepts used in the Law

1. The basic concepts used in this Law:

1) asset - money from the assets established by the Law of the Republic of Armenia "About financial accounting" and (or) rights to claim on them, and (or) other financial assets which provide or can provide certain cash inflows;

2) nominal value of asset - remaining balance of the main credit amount - in case of mortgage loans, remaining balance of nominal value of the bonds which are in circulation - in case of bonds, contribution remaining balance - in case of contribution, within the limits registered in the register of utilities;

3) the secured mortgage bond or the mortgage bond - publicly offered bond issued by bank or credit institution provided with pledge of mortgage loans, and also other financial assets;

4) utilities according to secured mortgage bonds or utilities - the assets registered in the register of utilities and serving as instrument for ensuring of the obligations following from mortgage bonds;

5) the controlling person of utilities or the controlling person - person performing the special functions specified in this Law directed to protection of interests of investors in mortgage bonds (owners of mortgage bonds);

6) the register of utilities - the stipulated in Article 15 these Laws system of accounting by the issuer of utilities;

7) primary pledge - the mortgage right granting the privilege to receipt of satisfaction from pledge subject before other mortgage rights to the same subject;

8) net present value - the amount of all discounted cash flows as of reporting day with use of the interest rates prevailing in the market;

9) the issuer - the bank or credit institution performing release of mortgage bonds in the procedure established by this Law;

10) mortgage loan - corresponding to article 6 of this Law:

and. the credit provided with mortgage, and also

. the mortgage housing loan established by the Law of the Republic of Armenia "About mortgage housing lending";

11) the replacing assets - the money issued and (or) the bonds and other assets established by regulatory legal acts of the Central bank of the Republic of Armenia which are solidary guaranteed by the Republic of Armenia (further - the Central bank);

12) additional assets - the mortgage loans and the replacing assets included in portfolio for the purpose of observance of requirements to equivalence of utilities and also to ratio of credit amount and market price of subject of pledge;

13) the mortgage managing director - person exercising control of means of ensuring of mortgage bonds in case of recognition of the issuer insolvent and (or) began productions on bankruptcy or in other cases established by this Law;

14) portfolio of utilities - set of the utilities aimed at providing execution of undertaken obligations according to mortgage bonds;

15) the program of the offer of secured mortgage bonds - stipulated in Item 11 parts 1 of article 3 of the Law of the Republic of Armenia "About the security market" the program of the offer based on which implementation of permanent releases of mortgage bonds of one class during certain time is provided;

16) the secured refinanced loan - the credit which the issuer of mortgage bonds refinanced the mortgage loan granted by other bank or other commercial organization to other persons and which is included in portfolio of means of ensuring of the issuer;

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