<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: June 27, 1996
(Date of earliest event reported)
GATEWAY MORTGAGE ACCEPTANCE CORPORATION
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
Delaware 33-42987 75-2253882
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
77 West Wacker Drive
Suite 3100
Chicago, Illinois 60601
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's Telephone Number, Including Area Code: (800) 346-6616
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
Reference is hereby made to the Registrant's Registration Statement on
Form S-11 (File No. 33-42987) filed with the Securities and Exchange Commission
(the "Commission") and declared effective by the Commission on February 26,
1992 (the "Registration Statement") pursuant to which the Registrant registered
$309,362,000 aggregate principal amount of its Collateralized Mortgage
Obligations, issuable in various series, for sale in accordance with the
provisions of the Securities Act of 1933, as amended (the "Act"). Reference is
also hereby made to the Prospectus dated June 18, 1996 and the Prospectus
Supplement dated June 18, 1996 which were filed with the Commission on June 25,
1996 pursuant to Rule 424(b) of the General Rules and Regulations under the
Act, with respect to the Registrant's Collateralized Mortgage Obligations,
Series 1996A, consisting of $9,422,000 of its 7.05% Collateralized Mortgage
Obligations (the "Bonds").
The Registrant is filing this Current Report on Form 8-K to report the
acquisition by the Registrant of certain "fully modified pass-through"
certificates issued by the Government National Mortgage Association ("GNMA
Certificates") on June 27, 1996 from EVEREN Securities, Inc. ("EVEREN"), a
wholly owned subsidiary of the Registrant's indirect parent corporation. The
GNMA Certificates were subsequently pledged by the Registrant to secure the
Bonds. The GNMA Certificates were acquired for a purchase price of
$9,181,679.29 including accrued interest, which was paid by (i) the transfer to
EVEREN by the Registrant of $9,092,230.00, which represents the net proceeds of
the sale of the Bonds and (ii) payment in cash from the Registrant to EVEREN of
$89,449.29, which amount was funded pursuant to a Revolving Subordinated
Promissory Note from the Registrant to its indirect parent corporation, EVEREN
Securities Holdings, Inc.
In accordance with Registrant's Terms Indenture dated as of March 29,
1989, as amended, incorporating by reference the Registrant's Standard
Indenture Provisions dated as of January 1, 1989, as amended, and the Series
1996A Supplement thereto dated as of June 27, 1996 (the "Series Supplement")
between the Registrant and The Bank of New York, as trustee (the "Trustee")
pursuant to which the Bonds were issued, the Registrant has granted to the
Trustee to secure the bonds all of the Registrant's right, title and interest
in and to the GNMA Certificates and all proceeds of the conversion of the GNMA
Certificates into cash or other liquid property. A complete listing of the
GNMA Certificates and related information (as of the date of the Series
Supplement) is set forth in Schedule A to the Series Supplement filed herewith
as Exhibit 4.1.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Description
----------- -----------
*4.1 Series Supplement relating to the Bonds
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*Filed herewith.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
GATEWAY MORTGAGE ACCEPTANCE CORPORATION
June 27, 1996 By: /s/ Christopher J. Blum
-----------------------------
Christopher J. Blum
Vice President and Treasurer
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INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------
*4.1 Series Supplement relating to the Bonds
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*Filed herewith.
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D.1
GATEWAY MORTGAGE ACCEPTANCE CORPORATION,
as Issuer,
and
THE BANK OF NEW YORK,
as Trustee,
- --------------------------------------------------------------------------------
SERIES 1996A SUPPLEMENT
Dated as of June 27, 1996
to
TERMS INDENTURE
Dated as of March 29, 1989
incorporating by reference the
STANDARD INDENTURE PROVISIONS
Dated as of January 1, 1989
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$9,422,000
COLLATERAL MORTGAGE OBLIGATIONS
SERIES 1996A
- --------------------------------------------------------------------------------
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TABLE OF CONTENTS
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Page
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PRELIMINARY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GRANTING CLAUSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2. Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. Date of Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4. Aggregate Principal Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 5. Places for Payment of Principal of Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 6. Authentication of Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 7. Denomination of Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 8. Interest Payment Dates; Principal Payment Dates; Special Payment Dates. . . . . . . . . . . . 7
SECTION 9. Payments of Principal and Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 10. Bond Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 11. Transfer of GNMA Certificates to Trustee; Collection Account; Deposits to Trust Accounts. . . 11
SECTION 12. Requirements for Issuance of Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 13. Redemption Price for Mandatory Redemptions. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 14. Redemption at the Option of the Issuer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 15. Calculations With Respect to Underlying Mortgage Loans. . . . . . . . . . . . . . . . . . . . . 14
SECTION 16. Special Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 17. Transfer of the Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 18. Independent Accountants' Reports Pursuant to Section 8.09(b) of the Standard Indenture
Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 19. Deposit and Withdrawal of GNMA Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 20. Form of the Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 21. Maintenance of the Trust Estate and Other Representations by the Trustee. . . . . . . . . . . . 16
SECTION 22. Expense Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 23. Ratification and Confirmation of Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 24. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 25. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 26. Address of Issuer and Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 27. Incorporation of Terms Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Schedule A - List of GNMA Certificates Granted to the Trustee on the
---------- Closing date as Security for the Bonds
Exhibit A - Form of Bond
---------
Exhibit B - Letter Agreement with Clearing Agency
---------
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SERIES 1996A SUPPLEMENT (this "Series Supplement") dated as of June
27, 1996, between GATEWAY MORTGAGE ACCEPTANCE CORPORATION, a Delaware
corporation (together with its permitted successors and assigns being herein
called the "Issuer"), and THE BANK OF NEW YORK, (together with its permitted
successors herein called the "Trustee") as trustee for the Bonds (as
hereinafter defined) under a Terms Indenture dated as of March 29, 1989, as
amended (the "Terms Indenture"), incorporating by reference the Issuer's
Standard Indenture Provisions dated as of January 1, 1989, as amended (the
"Standard Indenture Provisions", and the Terms Indenture and Standard Indenture
Provisions, constituting one and the same instrument, are collectively referred
to herein as the "Indenture"), as the Indenture is modified by this Series
Supplement.
PRELIMINARY STATEMENT
Section 9.01 and 2.03 of the Standard Indenture Provisions provide,
among other things, that the Issuer, when authorized by its Board of Directors,
and the Trustee may at any time and from time to time enter into an indenture
supplemental to the indenture for the purpose of authorizing a Series of Bonds
and to specify certain terms of such Series of Bonds. The Issuer has duly
authorized the creation of a Series of Bonds with an aggregate principal amount
of $9,422,000 to be known as its 7.05% Collateralized Mortgage Obligations,
Series 1996A, due July 31, 2027 (the "Bonds"), and the Issuer and the Trustee
are executing and delivering this Series Supplement in order to provide for the
Bonds.
All covenants and agreements made by the Issuer in this Series
Supplement are for the benefit and security of the Holders of the Bonds. The
Issuer is entering into this Series Supplement, and the Trustee is accepting
the trusts created hereby, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged.
All things necessary to make this Series Supplement a valid agreement
of the Issuer in accordance with its terms have been done.
GRANTING CLAUSES
The Issuer hereby Grants, in trust, to the Trustee, for the exclusive
benefit of the Holders of the Bonds, all of the Issuer's right, title and
interest in and to:
1. The "fully modified pass-through" mortgage-backed certificates
guaranteed as to timely payment of principal and interest by the Government
National Mortgage Association ("GNMA Certificates") and other mortgage-related
certificates, if any, listed on Schedule A to this Series Supplement and all
amounts payable to the holders of such GNMA Certificates and other
mortgage-related certificates, if any, in accordance with the terms thereof;
2. All GNMA Certificates and other mortgage-related certificates,
if any, hereafter delivered by the Issuer to the Trustee pursuant to the terms
of the Indenture and this Series Supplement, and all amounts payable to the
holders of such GNMA Certificates and other mortgage-related certificates, if
any, in accordance with the terms thereof;
<PAGE> 4
3. All cash, instruments or other property deposited in the trust
account referred to as the "Collection Account" in the Indenture and this
Series Supplement, including all income from the investment of funds in such
Collection Account;
4. All cash, instruments or other property deposited into a trust
account, if any, comprising a part of the Trust Estate and referred to as a
"Reserve Fund" in the Indenture and this Series Supplement, including all
income from the investment of funds in any such Reserve Fund;
5. All distributions on the GNMA Certificates and other
mortgage-related Certificates referred to above;
6. All present and future accounts, contract rights, goods,
letters of credit, general cash and non-cash proceeds, and other rights arising
from or by virtue of, the disposition of, or collections with respect to, or
insurance proceeds payable with respect to, or claims against other persons
with respect to, all or any part of the foregoing; and
7. All products and proceeds of any of the foregoing items of
collateral specified in paragraphs 1 through 6 above, including without
limitation the conversion, voluntary or involuntary, of any of the foregoing
into cash or other liquid property.
Such Grants are made in trust, to secure the Bonds equally and ratably
without prejudice, priority or distinction, between any Bond and any other Bond
issued under this Series Supplement by reason of difference in time of issuance
or otherwise, but to secure such Bonds separately from any other series of
bonds issued previously or hereafter by the Issuer, pursuant to the terms of
the Indenture or otherwise, and to secure (i) the payment of all amounts due on
the Bonds as such amounts become due in accordance with their terms, (ii) the
payment of all other sums payable under the Indenture or this Series Supplement
with respect to the Bonds, and (iii) compliance with the provisions of the
Indenture and this Series Supplement with respect to the Bonds, all as provided
in the Indenture and this Series Supplement.
The Trustee acknowledges such Grants, accepts the trusts hereunder in
accordance with the provisions hereof and of the Indenture and agrees to
perform the duties herein or therein required.
SECTION 1. Designation.
The Bonds shall be designated generally as the "7.05% Collateralized
Mortgage Obligations, Series 1996A".
SECTION 2. Certain Defined Terms.
All terms used in this Series Supplement which are defined in the
Indenture, either directly or by reference therein, have the meanings assigned
to them therein as supplemented by Section 2 hereof, if applicable, except to
the extent such terms are defined otherwise in this Series Supplement or the
context clearly requires otherwise. To the extent applicable, all of the
calculations made as a part of the following definitions are made assuming a
360-day year consisting of twelve 30-day
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months. With respect to the Bonds, the following provisions shall govern the
defined terms set forth below:
"Accounting Party": The Issuer, except that in the case of Section
2.09(e) of the Standard Indenture Provisions, the Accounting Party shall be the
Trustee.
"Accrual Date": June 27, 1996.
"Applicable Overcollateralization Amount": An amount equal to 30
days' interest on, or .5875% of the aggregate principal amount of, the Bonds
then outstanding.
"Assumed Date of Receipt": For Distributions on GNMA Certificates
that are (i) GNMA I Certificates, on the twentieth day of the month in which
the Distribution Due Date occurs, and (ii) GNMA II Certificates, on the
twenty-fifth day of the month in which the Distribution Due Date occurs.
"Assumed Reinvestment Rate": For all funds, no more than two and
one-half percent (2.50%), or such higher rate as the Rating Agency may permit
for mortgage-backed securities having the same rating as the initial rating of
the Bonds. Before using any such higher rate in making any calculation
required under the Indenture with respect to the Bonds, the Issuer shall
deliver to the Trustee notice of its intention to do so accompanied by a letter
from such Rating Agency, stating that such use of such higher rate will not
result in the downgrading of its rating of the Bonds.
"Authenticating Agent": If Definitive Bonds are issued following a
Book Entry Termination, the Trustee.
"Bond Interest Rate": As defined in Section 10 hereof.
"Bond Value": The Bond Value for each Certificate Group on the last
day of a Due Period (or on the day preceding the first Due Period) will be in
the case of each Certificate Group, the Maximum Bond Value Percentage of the
lesser of (x) the present value of the sum of (a) the Scheduled Distributions
on all the GNMA Certificates included in such Certificate Group, excluding any
portion thereof payment of which is not due prior to the latest Stated Maturity
of the Bonds that such Certificate Group secures, and (b) the Reinvestment
Income thereon from the Assumed Date of Receipt to the next succeeding
Principal Payment Date at the Assumed Reinvestment Rate, such sum of the
amounts in (a) and (b) discounted monthly at the Bond Interest Rate, and (y)
the aggregate Certificate Principal Balance of all the GNMA Certificates in
such Certificate Group as of the end of the related Due Period.
"Book Entry Bonds": Unless an event resulting in Book Entry
Termination (as described in this Section 2 and Section 2.14 of the Standard
Indenture Provisions) shall occur, the Bonds shall be Book Entry Bonds for
which ownership and transfers of beneficial ownership interests shall be made
through book entries by the Clearing Agency; provided, that after Book Entry
Termination, Definitive Bonds shall, after execution and delivery of a
supplemental indenture containing any provisions which in the opinion of the
Trustee and the Issuer are necessary for such purpose, be
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issued to the Beneficial Owners of Bonds Outstanding at the time of such Book
Entry Termination and such Bonds shall no longer be "Book Entry Bonds".
"Book Entry Termination": The occurrence of any event described in
Section 2.14 of the Standard Indenture Provisions.
"Capitalized First Interest Payment Date Deposit": A deposit made to
the Collection Account, in the amount of $7,380.57, representing four days'
interest at the Bond Interest Rate on the aggregate initial principal amount of
the Bonds. Such deposit shall be made in accordance with the provisions of
Section 11(b) hereof.
"Certificate Group": All GNMA Certificates that are backed by the
same pool of mortgage loans.
"Clearing Agency": The registered Holder of the single Bond
evidencing the Bonds, initially issued as Book Entry Bonds. The initial
Clearing Agency with respect to the Bonds shall be The Depository Trust Company
of New York, the nominee for which is Cede & Co. The Clearing Agency shall at
all times be a "clearing corporation" as defined in Section 8.102(c) of the
Uniform Commercial Code of the State of Texas.
"Closing Date": June 27, 1996.
"Corporate Trust Office": The Bank of New York, 101 Barclay Street
12E, New York, New York 10286, Attention: Mortgage Backed Securities.
"Debt Service Requirement": With respect to a particular Payment
Date, the sum of
(i) all interest accrued (whether or not then payable) on
the then Outstanding Bonds during the Interest Accrual Period for such
Payment Date, plus thirty days' interest accrued with respect to the
Principal Distribution Amount (other than the initial Payment Date, on
which thirty-four days' interest will be accrued with respect to the
Principal Distribution Amount) and
(ii) the Principal Distribution Amount for such Payment
Date.
"Debt Service Requirement Determination Date": With respect to any
Principal Payment Date, the twelfth Business Day of the month in which such
Principal Payment Date occurs, the first such Debt Service Requirement
Determination Date being July 17, 1996.
"Deceased Holder": With respect to any Book Entry Bond, the estate of
a deceased Beneficial Owner or a deceased Holder thereof , acting through the
representative of such estate, a surviving joint tenant, surviving tenant,
surviving tenant by the entirety, surviving tenant in common or other Person
empowered to act on behalf of the deceased Beneficial Owner or the deceased
Holder, respectively.
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"Deceased Holder Preference": The amount specified in the clause
beginning "first" in the first sentence in Section 9(d) (iii) hereof.
"Due Period": With respect to each Principal Payment Date for the
Bonds, the related Due Period shall be the period beginning immediately
following the preceding Due Period (or, in the case of the Due Period that is
applicable to the first Principal Payment Date, beginning on the Closing Date)
and ending at the close of business on the second Business Day prior to the
related Principal Payment Date.
"Eligible Investments": The obligations and securities specified in
Section 1.01 of the Standard Indenture Provisions, except that (i) any
obligation of, or guaranteed by, FHLMC, GNMA, the Federal Home Loan Banks or
the Federal Farm Credit System and (ii) a repurchase obligation that would be
an Eligible Investment only pursuant to clause (b) of paragraph (iii) of the
definition of the term "Eligible Investments" shall be an Eligible Investment
only if, at the time of investment, such investment is acceptable to the Rating
Agency as collateral for securities having the rating equivalent to the rating
of the Bonds that was in effect at the Closing Date; and the Eligible
Collateral, as defined in paragraph (iii) of the definition of the term
"Eligible Investments", that is the subject of a repurchase obligation must
have a stated maturity of one year or less; provided further that any Eligible
Investment specified in such Section 1.01 constitutes a "permitted investment"
under Code section 860G(a)(5).
"Expense Fund": As defined in Section 22.
"Interest Accrual Period": With respect to any Interest Payment Date,
the period beginning on the first day of the month preceding the month in which
such Interest Payment Date occurs (or on the Accrual Date in the case of the
first Interest Payment Date) and ending on the last day of the month preceding
the month in which such Interest Payment Date occurs. Accordingly, the
Interest Accrual Period with respect to the first Interest Payment Date shall
consist of thirty-four (34) days.
"Interest Payment Date": As defined in Section 8(a) hereof.
"Issuer": Gateway Mortgage Acceptance Corporation.
"Letter Agreement": The Letter of Representations to The Depository
Trust Company from the Trustee and the Issuer dated June 27, 1996, attached
hereto as Exhibit B.
"Maximum Bond Value Percentage": (A) At any date on which the Reserve
Fund is established and funded with cash and/or a Qualified Letter of Credit as
provided in Section 11(c)(ii) hereof, the Maximum Bond Value Percentage shall
be 100% and (B) at any date on which the Issuer has deposited GNMA Certificates
with the Trustee or designated certain GNMA Certificates already securing the
Bonds, in either case having the Applicable Overcollateralization Amount to
secure the Bonds in lieu of a Reserve Fund funded with cash and/or a Qualified
Letter of Credit, the Maximum Bond Value Percentage shall be 99.4159314%.
"New York Agent": If Definitive Bonds are issued following a Book
Entry Termination, the agent appointed by the Issuer pursuant to Section 3.02
of the Standard Indenture Provisions.
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"New York Office": If Definitive Bonds are issued following a Book
Entry Termination, the office appointed by the Issuer pursuant to Section 3.02
of the Standard Indenture Provisions.
"Overdue Bond Interest Rate": The Bond Interest Rate for the Bonds as
specified in Section 10 hereof.
"Payment Date": Any Principal Payment Date or Interest Payment Date.
"Principal Distribution Amount": An aggregate amount equal to the
amount, if any, by which the Aggregate Current Principal Amount of the Bonds
plus $1,000 exceeds the aggregate Bond Values of the GNMA Certificate Groups
pledged as security for the Bonds as of the end of the Due Period ending on the
second Business Day preceding such Principal Payment Date.
"Principal Payment Date": As defined in Section 8(b) hereof.
"Rating Agency": Standard & Poor's Ratings Group, and its successors.
"Record Date": With respect to any Payment Date, the last day of the
month preceding the month in which such Payment Date occurs.
"Redemption Price": With respect to any redemption at the option of
the Issuer, an amount equal to the applicable percentage of the unpaid
principal amount of the Bonds as described in subsection (a) of Section 14
hereof.
"Required Rating Category": "AAA" by the Rating Agency.
"Reserve Fund": Initially there shall be no Reserve Fund for the
Bonds. However, the Issuer may, at any time, elect to establish a Reserve Fund
in accordance with the requirements of the Standard Indenture Provisions, Terms
Indenture and Section 11(c)(ii) hereof.
"Scheduled Distributions": With respect to any Certificate Group
consisting of GNMA Certificates, for any Due Period ending after the date of
determination, the aggregate of the minimum scheduled Distributions, assuming
no prepayments, receivable in that Due Period with respect to the GNMA
Certificates included in the Certificate Group.
"Special Payment Date": As defined in Section 8(c) hereof.
"Special Record Date": With respect to any Special Payment Date, the
last Business Day of the month preceding the month in which any Special Payment
Date occurs.
"Spread Percentage": For any Principal Payment Date, 0%.
"Stated Maturity": July 31, 2027.
"Tender Date": A day during the period from the first through the
tenth day of the month in which a Principal Payment Date occurs.
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"Trust Estate": The Trust Estate for the Bonds which is described
more fully in the Granting Clauses to this Series Supplement.
"Trust Indenture Act" or "TIA": The Trust Indenture Act of 1939 as
amended and as in force at the Closing Date, unless otherwise specifically
provided or unless and to the extent that any subsequent amendment to the Trust
Indenture Act of 1939 shall apply retroactively to the Indenture.
SECTION 3. Date of Bonds.
The Bonds that are authenticated and delivered by the Trustee to or
upon the order of the Issuer on the Closing Date for the Bonds shall be dated
June 27, 1996. All other Bonds that are authenticated after the Closing Date
for the Bonds for any other purpose under the Indenture shall be dated the date
of their authentication.
SECTION 4. Aggregate Principal Amount.
The aggregate principal amount of Bonds that may be authenticated and
delivered under this Series Supplement is limited to $9,422,000, except for
Bonds authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Bonds pursuant to Section 2.06, 2.07, 2.08
or 9.06 of the Standard Indenture Provisions.
SECTION 5. Places for Payment of Principal of Bonds.
(a) The final payment of principal in retirement of each Bond (or
the Redemption Price of any Bond called for redemption in full or redeemed at
the option of the Bondholder) shall be payable upon presentation and surrender
thereof only at the office of the Trustee in the City of New York, New York.
(b) Notices with respect to the final payment of principal on the
Bonds or Overdue Bonds will be mailed pursuant to Section 2.09(c) or 10.02 of
the Standard Indenture Provisions as the case may be, no later than the fifth
Business Day preceding such Principal Payment Date or Special Payment Date to
the Person in whose name such Bond is registered at the close of business on
the tenth Business Day preceding such Principal Payment Date or Special Payment
Date. Copies of such notices shall be sent simultaneously to the Rating
Agency.
SECTION 6. Authentication of Bonds.
The Bonds may be authenticated by the Trustee at the Corporate Trust
Office or other appropriate office of the Trustee.
SECTION 7. Denomination of Bonds.
The Bonds are Book Entry Bonds which shall be evidenced by a single
Bond representing the entire Aggregate Current Principal Amount of the Bonds at
the Closing Date, beneficial ownership of which may be held in denominations of
$1,000 and integral multiples thereof. The Bonds shall initially be registered
on the bond Register in the name of Cede & Co., the nominee of
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<PAGE> 10
the Clearing Agency, and no Beneficial Owner will receive a Definitive Bond
representing such Beneficial Owner's interest in the Bonds, except in the event
of Book Entry Termination.
SECTION 8. Interest Payment Dates; Principal Payment Dates;
Special Payment Dates.
Except as otherwise provided below, payments of interest and principal
of the Bonds shall be made in the manner provided in Section 2.09 of the
Standard Indenture Provisions.
(a) The last day of each month, commencing with August 31, 1996,
shall be an "Interest Payment Date" for all purposes of the Indenture.
Notwithstanding the provisions of the first sentence of this Section 8(a),
thirty-four (34) days' interest at the Bond Interest Rate shall accrue and be
payable on the July 31, 1996 Principal Payment Date on the portion of the
principal of the Bonds that is redeemed on such July 31, 1996 Principal Payment
Date.
(b) The last day of each month, commencing with July 31, 1996,
shall be a "Principal Payment Date" for all purposes of the Bonds.
(c) The last day of each month following the month in which any
Outstanding Bond is an Overdue Bond shall be a "Special Payment Date" for any
such Bond.
SECTION 9. Payments of Principal and Interest.
(a) Principal payments on the Bonds will be made on each Principal
Payment Date in the form of redemptions as described below in an aggregate
amount equal to the Principal Distribution Amount. On each Principal Payment
Date, principal payments will be applied first to redemption of Bonds at the
request of beneficial Owners and then to mandatory redemption in accordance
with the procedures outlined in this Section 9. Notwithstanding the foregoing,
the entire outstanding principal balance of the Bonds shall be paid no later
than the Stated Maturity of the Bonds unless the unpaid principal balance of
the Bonds becomes due and payable at an earlier date by reason of the
occurrence of an Event of Default or redemption at the option of the Issuer
pursuant to Section 10.05 of the Standard Indenture Provisions as modified by
Section 14 hereof, or otherwise. Notwithstanding the provisions of the first
sentence of this Section 9(a), any amounts required to be paid as principal of
the Bonds that are in excess of an integral multiple of $1,000 shall be
retained in the Collection Account until the following Principal Payment Date
and shall be paid on such following Principal Payment Date, subject to the
requirement that distributions of principal of the Bonds always be made in
integral multiples of $1,000.
(b) Interest on the Current Principal Amount (before giving effect
to payments of principal due upon redemption on any Principal Payment Date
which is also an Interest Payment Date) of each Outstanding Bond to be paid on
any Interest Payment Date shall be the amount accrued thereon at the Bond
Interest Rate for the related Interest Accrual Period and if such Interest
Payment Date is the Principal Payment Date (other than July 31, 1996) on which
the Bond matures or any Principal Payment Date on which the Bond is redeemed,
30 days' interest at the Bond Interest Rate on the whole or any portion of the
principal amount of the Bond so paid at maturity or redemption. If a Bond
matures, or is redeemed, on July 31, 1996, the holder of such Bond will receive
thirty-four (34) days' interest at the Bond Interest Rate.
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<PAGE> 11
(c) Each payment of principal of and interest on the Bonds shall
be paid to the Clearing Agency, which shall credit the amount of such payments
to the accounts of its Clearing Agency Participants in accordance with its
normal procedures. Each Clearing Agency Participant shall be responsible for
disbursing such payments to the Beneficial Owners of the Book Entry Bonds that
it represents and to each indirect participating brokerage firm (a "brokerage
firm" or "indirect participating firm") for which it acts as agent. Each
brokerage firm shall be responsible for disbursing funds to the Beneficial
Owners of the Book Entry Bonds that it represents. All such credits and
disbursements are to be made by the Clearing Agency and the Clearing Agency
Participants in accordance with the provisions of the Bonds. Neither the
Trustee, the bond Registrar nor the Issuer shall have any responsibility
therefor except as otherwise provided by applicable law.
(d) To the extent applicable and not contrary to the rules of the
Clearing Agency, the Trustee shall comply with the provisions of the form of
the Bonds as set forth in Exhibit A hereto. The Trustee shall also comply with
the following additional procedures relating to the Book Entry Bonds:
(i) The Trustee shall maintain a list of Deceased Holders
of which the Trustee has received notice and shall require a death
certificate as evidence of the holding of Book Entry Bonds by a
Deceased Holder (it being understood that all death certificates
received by the Trustee with respect to requests for redemption shall
be presumed to be legally valid and further that the Trustee not be
under any duty, express or implied, to determine independently the
occurrence of the death of a Deceased Holder but may rely conclusively
upon documentation delivered to it pursuant to this subsection).
(ii) In determining the Book Entry Bonds to be redeemed to
the extent of the Principal Distribution Amount on any Principal
Payment Date, the Trustee shall follow the order of the time-stamped
requests for redemption received by the Trustee from the Clearing
Agency, subject to the priorities set forth below (it being understood
that the Trustee may rely conclusively and be fully protected in
relying upon the authenticity of such requests for redemption and that
the Trustee shall not be liable for any delay in delivery of requests
for redemption by the Clearing Agency or any Clearing Agency
Participant).
(iii) If the aggregate principal amount of Bonds for which
timely requests for redemption have been submitted exceeds the
Principal Distribution Amount for any Principal Payment Date,
principal payments allocated to the Book Entry Bonds will be allocated
on such Principal Payment Date by the Trustee as follows: first, to
Clearing Agency Participants on behalf of Deceased Holders in the
order that such Deceased Holders' time-stamped requests for such
redemption have been received by the Clearing Agency until each
Deceased Holder requesting redemption through a Clearing Agency
Participant has received an initial priority principal distribution of
up to $100,000 with respect to the Book Entry Bonds held by such
Deceased Holder; second, to Clearing Agency Participants on behalf of
other Beneficial Owners in the order that such Beneficial Owners
requests for redemption have been received until each Beneficial Owner
requesting redemption through a Clearing Agency Participant has
received an initial priority principal distribution, of up to $10,000
with respect to such Beneficial Owner's Book Entry Bonds; third, to
Clearing Agency Participants on behalf of Deceased Holders owning
Bonds in excess of such $100,000
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<PAGE> 12
limitation in the order that such time-stamped requests for redemption
have been received by the Clearing Agency and without limitation as to
the principal amount which may be so redeemed; and fourth, to Clearing
Agency Participants on behalf of other Beneficial Owners owning Bonds
in excess of such $10,000 limitation in the order that such
time-stamped requests for redemption have been received by the
Clearing Agency and without limitation as to the principal amount
which may be so redeemed. For purposes of these limitations, a Bond
held by tenants by the entirety, joint tenants or tenants in common is
considered to be held by a single Beneficial Owner. However, a Bond
held by a trustee is considered to be held by each beneficiary of the
trust to the extent of such beneficiary's beneficial interest therein.
Also for purposes of these limitations, the death of a tenant by the
entirety, joint tenant or tenant in common will be deemed to be the
death of the holder of the Bond and the entire principal amount of the
Bond so held will be subject to priority redemption, and the death of
a beneficiary of a trust will be deemed to be the death of the holder
of a Bond held by the trustee of the trust to the extent of such
beneficiary's beneficial interest in such Bond. A person who is, or
during his lifetime was, entitled to substantially all of the
beneficial interests of ownership of a Bond will be deemed to be the
Beneficial Owner and holder of such Bond to the extent of his
beneficial interest therein, regardless of the person or entity in
whoever name such Bond is registered, if such beneficial interest can
be established to the satisfaction of the Trustee. Such beneficial
interest will be deemed to exist in typical cases of street name or
nominee ownership, ownership by a trustee, ownership under the Uniform
Gifts to Minors Act and community property or other joint ownership
arrangements between a husband and wife and in trust arrangements and
certain other arrangements where a person has substantially all of the
beneficial ownership interest in the Bond during his or her lifetime.
Beneficial interests shall include the power to sell, transfer or
otherwise dispose of a Bond and the right to receive the proceeds
therefrom, as well as interest and principal payable with respect
thereto.
(iv) If any Bond for which redemption was requested is not
redeemed on the Principal Payment Date for which such request was
initially submitted, a request for redemption will remain in effect on
each subsequent Principal Payment Date until the subject Bonds have
bean redeemed or until written notice is submitted withdrawing such
request for redemption. In order to be effective for any particular
Principal Payment Date, a withdrawal notice must be received by the
Trustee on or prior to the tenth day of the month in which the
Principal Payment Date occurs.
(v) If the Principal Distribution Amount for any
Principal Payment Date exceeds the aggregate principal amount of Bonds
for which timely requests for redemption have been submitted to the
Clearing Agency and forwarded to the Trustee, the Trustee shall notify
the Clearing Agency of the amount of such excess by 3:00 pm. Eastern
Standard Time on or prior to the 20th day of the month in which such
Principal Payment Date occurs. The Clearing Agency shall allocate
such excess by random lot in accordance with its rules, among the
Clearing Agency Participants.
(vi) As soon as possible, and in any event no later than
the 20th day of the month in which each Principal Payment Date occurs,
the Trustee shall notify the Clearing Agency and those Clearing Agency
Participants whose requests for redemption are to be honored in
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<PAGE> 13
accordance with the priorities set forth in paragraph (iii) of this
subsection (d). The notice shall include (i) the names of the
Clearing Agency Participants, indirect participating firms and
Beneficial Owners (including account numbers thereof if provided upon
submission of the original redemption requests to the Trustee) whose
Book Entry Bonds are to be redeemed, (ii) the amount of each such
Person's Book Entry Bonds to be redeemed and (iii) the aggregate
amount of principal required to be paid on the Bonds on the related
Principal Payment Date.
(vii) The Bonds shall at all times, prior to Book Entry
Termination, remain registered in the name of the Clearing Agency or
its nominee and at all times: (i) registration of the Bonds may not
be transferred by the Trustee or the Bond Registrar except to another
Clearing Agency; (ii) the Clearing Agency shall maintain book entry
records with respect to the Beneficial Owners and with respect to
ownership and transfers of such Book Entry Bonds; (iii) ownership and
transfers of registration of the Book Entry Bonds on the books of the
Clearing Agency shall be governed by applicable rules established by
the Clearing Agency; (iv) the Clearing Agency may collect its usual
and customary fees, charges and expenses from its Clearing Agency
Participants; (v) the Trustee shall deal with the Clearing Agency,
Clearing Agency Participants and indirect participating firms as
representatives of the Beneficial Owners of the Book Entry Bonds for
purposes of exercising the rights of Holders under the Indenture, and
requests and directions for and votes of such representatives shall
not be deemed to be inconsistent if they are made with respect to
different Beneficial Owners; and (vi) the Trustee may rely and shall
be fully protected in relying upon information furnished by the
Clearing Agency with respect to its Clearing Agency Participants and
furnished by the Clearing Agency Participants with respect to indirect
participating firms and their direct or indirect Beneficial Owners.
(e) The redemption price of any Bonds selected for redemption
pursuant to the provisions of this Section 9 is equal to 100% of the principal
portion of the Bond so redeemed plus accrued interest to the Principal Payment
Date on which such Bond (or any portion thereof) is so redeemed.
SECTION 10. Bond Interest Rate.
The Bonds shall bear interest at the rate of 7.05% per annum (the
"Bond Interest Rate").
SECTION 11. Transfer of GNMA Certificates to Trustee; Collection
Account; Deposits to Trust Accounts.
(a) GNMA Certificates. The GNMA Certificates shall have been
registered, in trust, in either the name of the Trustee or a Qualified Trustee
Nominee of the Trustee or all action necessary to cause such registration in
the name of the Trustee or a Qualified Trustee Nominee of the Trustee shall
have been taken, as of a date prior to the Closing Date and in such form shall
have been delivered to the Trustee or its bailee (other than the Issuer or an
Affiliate of the Issuer).
(b) Collection Account. The Issuer shall not be required to
deposit on the Closing Date any funds in the Collection Account. The Issuer
directs the Trustee to retain, in the Collection Account, from the funds it
will receive on the July 1996 Distribution Due Date for the GNMA
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<PAGE> 14
Certificates, an amount equal to $7,380.57, which represents the Capitalized
First Interest Payment Date Deposit on the Bonds.
Section 8.02(d) of the Standard Indenture Provisions is hereby amended
with respect to the Bonds to read in its entirety as follows:
"On or after each Payment Date for the Bonds, so long as the
Accounting Party shall have prepared a Payment Date Statement in
respect of such Payment Date and the Issuer shall have made, or, in
accordance with Section 3.03 of the Standard Indenture Provisions, set
aside from amounts in the Collection Account for such Bonds an amount
sufficient to make the payment of principal of and interest on the
Bonds then required to be made as indicated in such Payment Date
Statement, the cash balance, if any, then remaining in the Collection
Account, less the amount of Distributions due on the related GNMA
Certificates but not received during the prior Due Period, shall be
withdrawn from such Collection Account by the Trustee and applied
first, to retain any amount otherwise required to be paid as principal
of the Bonds that is in excess of an integral multiple of $1,000 until
the following Principal Payment Date pursuant to Section 9(a) hereof,
second, to the Trustee for the payment of any unpaid amount due the
Trustee pursuant to the Section 6.07 of the Standard Indenture
Provisions, and
third, the balance, if any, upon receipt of an Issuer Order specifying
payee and amount, to the payment of any tax payable as provided in
Section 11.21 of the Standard Indenture Provisions as an expense of
the Trust Estate, up to such amount.
The balance, if any, of the amount so withdrawn shall be released from
the lien of the Indenture and paid to the Issuer, subject to
satisfaction of the following conditions:
(i) no Default or Event of Default shall have occurred
and be continuing,
(ii) the Issuer shall have paid all amounts due to all
Persons under the Indenture with respect to the Bonds, including all
reasonable fees and expenses of the Trustee,
(iii) the Accounting Party shall have delivered to the
Report Recipient the Payment Date Statement in respect of such Payment
Date,
(iv) the Issuer shall have delivered to the Trustee the
report or certificate of Independent Accountants required by Section
8.09(b) of the Standard Indenture Provisions, as amended by Section 18
of this Series Supplement, with respect to the most recent Payment
Date for which such a report is required by this Series Supplement,
(v) the Issuer shall have delivered to the Trustee an
Officers' Certificate stating that all conditions precedent to such
release specified in this subsection (d) have been satisfied, and
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<PAGE> 15
(vi) the Issuer shall have delivered to the Trustee an
Opinion of Counsel to the effect that all documents delivered to the
Trustee in connection with such release comply as to form with the
requirements of this subsection (d) and all conditions precedent to
such release specified in this subsection (d) have been satisfied."
(c) Reserve Fund; Debt Service Reserve Fund; Special Reserve Fund.
(i) There shall be no Debt Service Reserve Fund or
Special Reserve Fund for the Bonds.
(ii) Initially, there shall be no Reserve Fund for the
Bonds. In the event that the Issuer elects to establish a Reserve
Fund, it shall comply with all requirements of the Indenture and this
Series Supplement which relate to the establishment and maintenance of
a Reserve Fund, in particular, or a Trust Account, in general. Any
such Reserve Fund may be funded by any combination of cash and/or a
Qualified Letter of Credit in an amount equal, in the aggregate, to
the Applicable Overcollateralization Amount. In the event that the
Issuer elects to establish and fund a Reserve Fund, the Maximum Bond
Value Percentage shall be equal to 100%.
(d) Qualified Letters of Credit. A Qualified Letter of Credit
shall not initially be delivered to the Trustee with respect to any Trust
Account for the Bonds.
(e) Qualified GIC. A Qualified GIC shall not be granted to the
Trustee with respect to the investment of funds in any Trust Account for the
Bonds.
(f) Expense Fund. An Expense Fund shall be maintained as provided
in Section 22.
(g) Investment of Funds. Investment and reinvestment of funds in
any Trust Account or in the Expense Fund shall be in one or more Eligible
Investments as directed to the Trustee by the Issuer.
SECTION 12. Requirements for Issuance of Bonds.
No additional items shall be required to be delivered to the Trustee
pursuant to Section 2.12(r) of the Standard Indenture Provisions in connection
with the issuance of the Bonds.
SECTION 13. Redemption Price for Mandatory Redemptions.
The Bonds will be redeemable pursuant to Section 10.02(e) of the
Standard Indenture Provisions at a redemption price equal to 100% of the unpaid
principal portion of the Bond so redeemed, plus accrued interest to the
Principal Payment Date on which such Bond (or any portion thereof) is so
redeemed.
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<PAGE> 16
SECTION 14. Redemption at the Option of the Issuer.
(a) The Bonds will be redeemable, in whole but not in part, at the
Issuer's option, on any Principal Payment Date on or after the earlier of (i)
the fourth anniversary of their issuance or (ii) the date on which the
Aggregate Current Principal Amount of the Bonds (after giving effect to any
redemptions of the Bonds on such Payment Date other than redemptions under this
Section 14) is less than 20% of the initial aggregate principal amount of the
Bonds, at a redemption price (the "Redemption Price") equal to 100% of the
Aggregate Current Principal Amount of the Bonds on the Redemption Date,
together with interest as described below. On any Principal Payment Date on
which the Bonds are optionally redeemed pursuant to this Section 14, interest
will be paid on the principal portion of Bonds so redeemed (i) at the Bond
Interest Rate for the Interest Accrual Period related to such Principal Payment
Date and (ii) 30 days' interest at the Bond Interest Rate for the period from
the end of such Interest Accrual Period to such Principal Payment Date.
(b) Notwithstanding that Section 10.05 of the Standard Indenture
Provisions provides for a longer notice period with respect to the Bonds, in
the event of an optional redemption pursuant to this Section 14, the Issuer
shall notify the Trustee at least twenty (20) days prior to the Principal
Payment Date on which the optional redemption will be conducted. Following
such notice from the Issuer, the Trustee will notify the Clearing Agency (by
certified mail) at least fifteen (15) days prior to such Principal Payment
Date; provided, however, that prior to the delivery of such notice by the
Trustee to the Clearing Agency, the Issuer shall have deposited or caused to be
deposited the Redemption Price with the Trustee. Following Book Entry
Termination, notice to Bondholders of an optional redemption shall be made in
accordance with the provisions of Section 10.02 of the Standard Indenture
Provisions and any supplemental indenture entered into between the Trustee and
the Issuer in connection with such Book Entry Termination.
(c) Prior to the delivery of the notice by the Trustee to the
Clearing Agency pursuant to Section 14(b) hereof, the Issuer shall deposit or
cause to be deposited in the Collection Account cash, Eligible Investments or a
letter of credit meeting the criteria of the Rating Agency such that the amount
so deposited will equal the Redemption Price on the Redemption Date, plus
accrued interest on such GNMA Certificates to the Redemption Date.
SECTION 15. Calculations With Respect to Underlying Mortgage
Loans.
Calculations with respect to the mortgage loans underlying the GNMA
Certificates Granted as security for the Bonds shall be made on the basis of
the assumptions specified in Section 1.02 of the Standard Indenture Provisions,
rather than on a mortgage loan-by-mortgage loan basis, with each Distribution
assumed to be received and deposited in the Collection Account on the Assumed
Date of Receipt.
In using the foregoing assumption for the purpose of calculating
assumed reinvestment income on such Distributions, (1) notwithstanding Section
1.02(g) of the Standard Indenture Provisions, the calendar day on which
Distributions are assumed to be received shall be used, irrespective of whether
it is a Business Day, (2) each month shall be assumed to consist of 30 days,
and (3) notwithstanding Section 1.02(g) of the Standard Indenture Provisions,
such Distributions
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<PAGE> 17
shall remain invested until the day, irrespective of whether it is a Business
Day, on which such funds are required to be available for application under the
Indenture.
SECTION 16. Special Redemption.
The Bonds are not subject to special redemption pursuant to Article 10
of the Standard Indenture Provisions. Accordingly, the provisions of Sections
10.01(a) through 10.01(d) of the Standard Indenture Provisions shall not apply
to the Bonds.
SECTION 17. Transfer of the Bonds.
All transfers by Beneficial Owners of Book Entry Bonds shall be made
in accordance with the procedures established by the Clearing Agency
Participant or brokerage firm representing such Beneficial Owner. Each
Clearing Agency Participant shall transfer only Book Entry Bonds of Beneficial
Owners it represents or brokerage firms for which it acts as agent in
accordance with the Clearing Agency's normal procedures.
SECTION 18. Independent Accountants' Reports Pursuant to Section
8.09(b) of the Standard Indenture Provisions.
Notwithstanding that Section 8.09(b) of the Standard Indenture
Provisions requires the opinion or certificate required thereby to be delivered
by the Independent Accountants more frequently, with respect to the Bonds the
Issuer, or the Trustee on behalf of the Issuer, shall direct the firm of
Independent Accountants appointed pursuant to Section 8.09(a) of the Standard
Indenture Provisions to deliver the opinion or certificate required by Section
8.09(b) of the Standard Indenture Provisions only
(i) on the second Business Day next succeeding the Debt
Service Requirement Determination Date for each of the first three (3)
Principal Payment Dates following the issuance of the Bonds
(commencing with the July 31, 1996 Principal Payment Date and running
through the September 30, 1996 Principal Payment Date); and
(ii) thereafter on the second Business Day next succeeding
the Debt Service Requirement Determination Date for each December 31
Principal Payment Date (commencing with the December 31, 1996
Principal Payment Date), which report or certificate shall verify, in
each case, the Principal Payment Date Statement most recently
delivered by the Trustee pursuant to this Series Supplement during the
period since the preceding report or certificate of Independent
Accountants delivered pursuant to this Section.
However, in the event that any report or certificate of such
Independent Accountants shall set forth any exceptions to any such Principal
Payment Date Statements delivered pursuant to this Series Supplement during the
period described in clause (i) of the preceding sentence or thereafter at any
time while the Bonds are outstanding, then a report or certificate of such
Independent Accountants pursuant to clause (i) above will be required to be
delivered on the Debt Service Requirement Determination Date for each Principal
Payment Date until there have been no exceptions in any of the immediately
preceding three (3) consecutive reports or certificates of such
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<PAGE> 18
Independent Accountants with respect to such Principal Payment Date Statements,
in which event the annual delivery of reports or certificates of such
Independent Accountants may be resumed as described in clause (ii) of the
foregoing sentence.
SECTION 19. Deposit and Withdrawal of GNMA Certificates.
In addition to the conditions specified in Section 8.11 of the
Standard Indenture Provisions, the substitutions, withdrawals and deposits of
GNMA Certificates will be subject to the following terms and conditions:
(a) All GNMA Certificates securing the Bonds must bear interest at
rates ranging from 6.5% to 10.0% per annum.
(b) All GNMA Certificates initially pledged to secure the Bonds
must have maturity dates no earlier than February 1, 2016 and no later than
July 1, 2026. Substitute GNMA Certificates, if any, may have maturity dates no
later than August 1, 2029, provided that no payments of principal and interest
scheduled to be received after July 31, 2027, the Stated Maturity of the Bonds,
may be included in the calculation of Bond Value.
(c) The Bond Value of the total pool of GNMA Certificates securing
the Bonds may not, at any time, exceed 104% of the Bond Value then required to
be maintained to secure the Bonds pursuant to the provisions of the Indenture
and this Series Supplement.
SECTION 20. Form of the Bonds.
The Bonds, upon original issuance, are Book Entry Bonds and will be
issued in the form of a single typewritten bond certificate to be delivered to
the Clearing Agency by the Issuer substantially in the form attached hereto as
Exhibit A. Such Bonds shall be initially registered on the Bond Register in
the name of the nominee of such Clearing Agency and no Beneficial Owner will
receive a certificate representing its interests in the Bonds except in the
event that the Trustee issues Definitive Bonds, as provided in Section 2.14 of
the Standard Indenture Provisions. Pursuant to the Letter Agreement, while the
Bonds remain outstanding and such Clearing Agency remains the Holder, it will
agree to make book-entry transfers among the Clearing Agency Participants and
receive and transmit payments of principal of, and interest on, the Bonds until
and unless the Trustee authenticates and delivers Definitive Bonds to the
Beneficial Owners of the Bonds or their nominees, as described in Section 2.14
of the Standard Indenture Provisions.
SECTION 21. Maintenance of the Trust Estate and Other
Representations by the Trustee.
(a) The Trustee will maintain possession of the documents,
certificates and other instruments evidencing the assets comprising the Trust
Estate within the States of Texas and New York and will not cause such assets
to lose their separate identity or become commingled or merged with any assets
not comprising the Trust Estate; provided, however, (a) the Trustee shall be
entitled to hold, directly or indirectly, an undivided interest in any GNMA
Certificates which constitute a part of the Trust Estate so long as the books
and records of the Trustee indicate that such GNMA
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<PAGE> 19
Certificates are a part of the Trust Estate and such GNMA Certificates are held
pursuant to that certain letter agreement between Bankers Trust Company and
NationsBank of Texas, National Association dated August 8, 1994 (the "Letter
Agreement), those certain Instructions to the Participants Trust Company from
Bankers Trust Company and those certain Participants Trust Company Certificates
of Transfer and (b) the Trustee shall be entitled to invest the Trust Estate in
Eligible Investments in accordance with the Indenture and this Series
Supplement, so long as such Eligible Investments are identified on the books
and records of the Trustee as a part of the Trust Estate and the Trustee uses
its best efforts to cause any person or entity with which the Trustee has
placed an Eligible Investment to cause its books and records to show that such
Eligible Investment is for the benefit of the Trustee.
(b) The Trustee will maintain all cash held in all Trust Accounts
in trust accounts maintained with a corporate trust department, rather than the
commercial banking side of the Trustee.
(c) In no event will the Trustee charge to the Trust Estate or to
the Issuer any costs associated with the maintenance of portions of the Trust
Estate pursuant to the terms of the Letter Agreement or any Custodian Agreement
between the Trustee and Bankers Trust Company.
(d) In the event of the resignation or disqualification of the
Trustee, and in the event that the successor Trustee is unwilling to make the
representations of the Trustee in paragraph (c) above, the Issuer agrees that
the charges of the Participants Trust Corporation may be paid out of any excess
cash flow before remittance of such excess cash flow to the holders of the
residual interest in the Trust Estate securing the Bonds.
SECTION 22. Expense Fund.
The Expense Fund for the Bonds shall initially be $75,000.00. The
Issuer will fund the Expense Fund by depositing such amount with the Trustee on
the Closing Date. The funds in the Expense Fund, if any, together with
reinvestment earnings thereon at the then applicable Assumed Reinvestment Rate,
will be available to pay future expenses relating to the administration of the
Bonds by the Trustee. Reinvestment income in excess of the then applicable
Assumed Reinvestment Rate shall be remitted to the Issuer, or to the direction
of the Issuer, on a yearly basis. The funds maintained in the Expense Fund
will not be subject to the lien of the Indenture and will not be available for
payment of principal or interest on the Bonds. The Issuer has the option to
substitute a Qualified Letter of Credit for all or a portion of the funds in
the Expense Fund at any time. Additionally, all or any portion of the funds in
the Expense Fund may be released to the Issuer at any time upon a determination
by the Rating Agency that such release of funds will not result in a
downgrading of the Bonds.
SECTION 23. Ratification and Confirmation of Indenture.
The Indenture as modified and supplemented by this Series Supplement
with respect to the Bonds (but which modification and supplement shall not
apply to any other Series of Bonds unless otherwise specified in the related
Series Supplement for such other Series of Bonds) is in all respects ratified
and confirmed except that the Indenture shall be modified and supplemented to
the extent
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<PAGE> 20
necessary to comply with the Trust Indenture Act, and the Indenture as so
modified and supplemented by this Series Supplement shall be read, taken and
construed as one and the same instrument. With respect to the Bonds, if any
provision of the Terms Indenture is inconsistent with any provision of this
Series Supplement, then such provision of the Terms Indenture shall not apply
to the Bonds. If any provision of this Series Supplement is inconsistent with
any provision of the Terms Indenture, then such provision of this Series
Supplement shall apply only to the Bonds and shall not apply to any other
Series of Bonds unless otherwise specified in the related Series Supplement for
such other Series of Bonds.
SECTION 24. Counterparts.
This Series Supplement may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all of such
counterparts shall together constitute but one and the same instrument.
SECTION 25. Governing Law.
AS PROVIDED IN SECTION 11.13 OF THE STANDARD INDENTURE PROVISIONS,
THIS SERIES SUPPLEMENT AND EACH BOND ISSUED HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF TEXAS APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED THEREIN.
SECTION 26. Address of Issuer and Trustee.
(a) The address of the chief executive office of Issuer is 77 West
Wacker Drive, Suite 3100, Chicago, Illinois 60601, and the address of the
Corporate Trust Office of the Trustee is 101 Barclay Street 12E, New York, New
York 10286, Attention: Mortgage Backed Securities.
(b) In the event that the Issuer changes its name or its chief
business office, the Issuer agrees to give written notice to the Trustee no
more than thirty (30) days following such event and further agrees to assist
the Trustee in making any filing necessitated by such event in order to
maintain the priority of the Trustee's security interest in the Trust Estate.
SECTION 27. Incorporation of Terms Indenture.
The Issuer and the Trustee hereby agree that, subject to Section 23
hereof, all terms and provisions of the Terms Indenture dated as of March 29,
1989, which incorporates the provisions of the Issuer's Standard Indenture
Provisions dated as of January 1, 1989, in each case as filed with the
Securities and Exchange Commission by means of one or more Current Reports on
Form 8-K, are hereby incorporated herein and shall govern the issuance and
administration of the Bonds.
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<PAGE> 21
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this Series
Supplement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
GATEWAY MORTGAGE ACCEPTANCE
CORPORATION, as Issuer
By: /s/ CHRISTOPHER J. BLUM
-------------------------------------
Christopher J. Blum, Vice President
STATE OF TEXAS Section
Section
COUNTY OF DALLAS Section
On this 27th day of June, in the year 1996 before me, a Notary Public
of said State, duly commissioned and sworn, personally appeared Christopher J.
Blum, known to me to be a Vice President of Gateway Mortgage Acceptance
Corporation, a Delaware corporation, that executed the within instrument on
behalf of such corporation therein named and acknowledged to me that such
officer executed the same.
In Witness Whereof, I have hereunto set my hand and affixed my
official seal the day and year this certificate first above written.
/s/ NOTARY PUBLIC
-----------------------------------------
Notary Public
<PAGE> 22
THE BANK OF NEW YORK, as Trustee
By: /s/ RICHARD COSTANTINO
-------------------------------------
Richard Costantino, Vice President
STATE OF NEW YORK Section
Section
COUNTY OF Section
On this 27th day of June, in the year 1996 before me, a Notary Public
of said State, duly commissioned and sworn, personally appeared Richard
Costantino, known to me to be a Vice President of The Bank of New York, that
executed the within instrument on behalf of the Trustee and acknowledged to me
that such officer executed the same.
In Witness Whereof, I have hereunto set my hand and affixed my
official seal the day and year this certificate first above written.
/s/ NOTARY PUBLIC
-----------------------------------------
Notary Public
<PAGE> 23
Schedule A
To Series Supplement
List Of GNMA Certificates Granted To The Trustee On The Closing Date As
Security For the Bonds
(Begins on Next Page)
<PAGE> 24
SCHEDULE A: 1996A GATEWAY COLLATERAL FOR SETTLEMENT 6/27/96
<TABLE>
<CAPTION>
ISSUE MATURITY REMAINING
POOL# CUSIP COUPON DATE DATE TERM
----- ----- ------ ----- -------- ---------
<S> <C> <C> <C> <C> <C>
G2 2233 36202CPS6 7.50% 6/1/96 6/20/26 360
G2 424270c 36206XJP9 7.00% 2/1/96 1/20/26 355
G2 2202 36202CNT6 7.00% 4/1/96 4/20/26 358
G2 2136 36202CLR2 7.00% 12/1/95 12/20/25 354
G2 2184 36202CM91 7.00% 3/1/96 3/20/26 357
TOTALS
</TABLE>
<TABLE>
<CAPTION>
FACE CURRENT CURRENT BOND
POOL# AMOUNT FACTOR BALANCE VALUE
----- ------ ------- ------- -----
<S> <C> <C> <C> <C>
G2 2233 $ 5,000,000.00 1.00000000 $ 5,000,000.00 $ 4,970,796.57
G2 424270c 1,005,767.00 0.99634404 1,002,089.96 991,540.62
G2 2202 1,301,056.00 0.99623840 1,296,161.95 1,282,484.90
G2 2136 1,424,621.00 0.99068043 1,411,344.14 1,396,498.12
G2 2184 799,335.00 0.99526241 795,548.08 787,159.99
TOTALS $ 9,530,779.00 $ 9,505,144.13 $ 9,428,480.20
</TABLE>
<PAGE> 25
Exhibit A
To Series Supplement
Form of Bond
(Begins on Next Page)
<PAGE> 26
Series 1996A/Face Page 1
PRINCIPAL OF THIS BOND IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL OF THIS BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ON THE FACE HEREOF.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
GATEWAY MORTGAGE ACCEPTANCE CORPORATION
COLLATERALIZED MORTGAGE OBLIGATIONS, SERIES 1996A
DUE July 31, 2027
ACCRUAL DATE: June 27, 1996
$9,422,000 R-1 CUSIP NO. 367653 BC5
Gateway Mortgage Acceptance Corporation (the "Issuer"), a Delaware
corporation, for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of Nine Million Four Hundred Twenty-Two
Thousand and No/Dollars ($9,422,000) on or before July 31, 2027 (the "Stated
Maturity"), and to pay interest, (computed on the basis of a 360-day year of
twelve 30-day months) on the unpaid principal amount of this Bond outstanding,
from time to time from June 27, 1996 (the "Accrual Date"), or such later date
to which interest has been paid, until the principal amount of this Bond is
paid in full, at the rate of seven and five one-hundredths percent (7.05%) per
annum, such interest being payable monthly on the last day of each calendar
month in each year as set forth in (a), (b) and (c) below, commencing on August
31, 1996 (the "Interest Payment Dates"), except that thirty-four (34) days'
interest will be payable with respect to any portion of this Bond redeemed on
July 31, 1996. Principal payments on this Bond will be made in the form of
redemptions on the last day of each calendar month, commencing July 31, 1996
(the "Principal Payment Dates"). Principal payments will be made as described
on the reverse hereof.
Interest payable on this Bond on any Interest Payment Date will be
equal to the amount of interest that has accrued during the related monthly
period (each an "Interest Accrual Period") beginning on the first day of the
month preceding the month in which such Interest Payment Date occurs (or on the
Accrual Date in the case of the first Interest Payment Date) and ending on the
last
<PAGE> 27
Series 1996A/Face Page 2
day of the month preceding the month in which such Interest Payment Date
occurs. The rate of interest on this Bond at the rate and computed as
described above, is referred to herein as the "Bond Interest Rate."
The interest on this Bond (other than interest paid with respect to
the portion of this Bond that is redeemed on July 31, 1996), to the extent set
forth in the preceding paragraph, shall be due and payable in the following
manner:
(a) Thirty-four (34) days' interest at the Bond Interest
Rate shall be due and payable on August 31, 1996 for the period from
the Accrual Date through July 31, 1996;
(b) Thirty (30) days' interest at the Bond Interest Rate
shall be due and payable on the second Interest Payment Date and each
Interest Payment Date thereafter, in each case for the related
Interest Accrual Period; and
(c) Thirty (30) days' interest at the Bond Interest Rate
shall be payable on the Interest Payment Date on which this Bond
matures or (if earlier) is redeemed, on the whole or any principal
portion of this Bond that then matures or is then redeemed, from the
end of the Interest Accrual Period related to such Interest Payment
Date to such Interest Payment Date, in addition to interest then
payable as described in clauses (a) and (b) above.
The interest payable on any Interest Payment Date, other than interest
payable on this Bond (or any portion hereof) on the Interest Payment Date on
which this Bond (or such portion) matures or is redeemed, will, as provided in
the Indenture referred to on the reverse hereof, be paid to the person in whose
name this Bond is registered on the Record Date for such Interest Payment Date,
which shall be the close of business on the last business day of the month
immediately preceding the calendar month in which such Interest Payment Date
occurs (such persons being referred to herein as "Bondholders" or "Holders").
Any such interest not so punctually paid or duly provided for ("Defaulted
Interest") shall forthwith cease to be payable to the Holder as of the Record
Date, and shall be paid to the Holder of this Bond (i) as of the Special Record
Date for the payment of such Defaulted Interest to be fixed by the Trustee,
notice whereof shall be given to Bondholders not less than 10 days prior to
such Special Record Date, or (ii) at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which this
Bond may be listed, and upon such notice as may be required by such exchange,
all as more fully provided in said Indenture.
The principal of, and interest on, this Bond are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the
Issuer with respect to this Bond shall be applied first to interest due and
payable on this Bond as provided above and then to the unpaid principal of this
Bond. Any installment of principal or interest which is not paid when and as
due shall bear interest at the rate of interest borne by the principal of this
Bond from the date due to the date of payment thereof, but only to the extent
that the payment of such interest shall be lawful and enforceable.
<PAGE> 28
Series 1996A/Face Page 3
No reference herein to the Indenture or Series Supplement and no
provision of this Bond or of the Indenture or Series Supplement shall alter or
impair the obligation of the Issuer, which is absolute and unconditional to
the extent permitted by applicable law, to pay the principal of, and interest
on, this Bond at the times, place and rate, and in the coin or currency,
herein prescribed.
Reference is hereby made to the further provisions of this Bond set
forth on the reverse hereof, which provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee by manual signature, this is Bond shall not be entitled to any
benefit under the Indenture or Series Supplement, or be valid or obligatory for
any purpose:
<PAGE> 29
Series 1996A/Face Page 4
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by and under its corporate seal.
Dated: June 27, 1996 GATEWAY MORTGAGE ACCEPTANCE
CORPORATION, as Issuer
[S E A L]
By:
-----------------------------------
Christopher J. Blum, Vice President
Attest:
- -----------------------------
Thomas R. Reedy, President
This is one of the Series 1996A Bonds referred to in the within-mentioned
Indenture and Series Supplement.
THE BANK OF NEW YORK,
as Trustee
By:
--------------------------
Authorized Signatory
Dated: June 27, 1996
<PAGE> 30
Series 1996A/Reverse Page 1
GATEWAY MORTGAGE ACCEPTANCE CORPORATION
COLLATERALIZED MORTGAGE OBLIGATION
This Bond is one of a duly authorized issue of Bonds of the Issuer
designated as its 7.05% Collateralized Mortgage Obligations, Series 1996A
(herein called the "Bonds"), to be issued under a Series 1996A Supplement,
dated as of June 27, 1996 (the "Series Supplement"), to the Terms Indenture,
dated as of March 29, 1989, as amended, incorporating by reference the Standard
Indenture Provisions, dated as of January 1, 1989, as amended (the Terms
Indenture and Standard Indenture Provisions are collectively referred to as the
"Indenture"), between the Issuer and The Bank of New York, as Trustee (the
"Trustee"), which term includes any successor Trustee under the Indenture), to
which Indenture, Series Supplement and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights thereunder of
the Issuer, the Trustee and the Holders of the Bonds and the terms upon which
the Bonds are to be authenticated and delivered. All terms used in this Bond
which are defined in the Indenture or Series Supplement shall have the meanings
assigned to them in the Indenture or Series Supplement, as applicable (except
that the term "Bonds" shall refer to the Bonds of this Series unless otherwise
indicated herein).
As provided in the Indenture and Series Supplement, the Bonds of this
Series are equally and ratably secured by the collateral pledged as security
therefor to the extent provided by the Series Supplement authorizing the Bonds,
and the Holders of such Series of Bonds have no rights with respect to any of
the collateral pledged as security for any other Series.
Except in the event of Book Entry Termination, beneficial ownership of
this Series of Bonds of which this Bond represents the entire issue may be held
only in book entry form (a "Book Entry Certificate") through the Holder hereof
and its participating member firms. This Bond evidences, in the aggregate, all
of the Outstanding Book Entry Bonds (as hereinafter defined), and the Holder
hereof, by its acceptance of this Bond, certifies that it is eligible to serve
as Clearing Agency under the Indenture and agrees to be bound by, and to comply
with, all of the provisions of this Bond, the Indenture, Series Supplement and
indentures supplemental thereto relating to the Book Entry Bonds (the "Book
Entry Procedures").
The aggregate amount of each installment of principal due and payable
on the Bonds on each Principal Payment Date is equal to the Principal
Distribution Amount for such Principal Payment Date. Principal payments on the
Bonds will be applied first to redemption of the Bonds at the request of
Beneficial Owners and then to mandatory redemption of the Bonds as described
below. Notwithstanding the foregoing, any amounts required to be paid as
principal of the Bonds that are in excess of an integral multiple of $1,000
shall be retained in the Collection Account until the following Principal
Payment Date. The entire unpaid principal amount of the Bonds shall be due and
payable, if not then previously paid, on the Stated Maturity.
The Book Entry Procedures, which each Holder of this Bond by its
acceptance hereof agrees to and shall be bound by, are as follows:
<PAGE> 31
Series 1996A/Reverse Page 2
(a) Beneficial ownership of an interest in this Bond by
any Person (a "Beneficial Owner") may be held through entries on the
records of brokerage firms maintaining an account of the Beneficial
Owner for such purpose. Such an interest in this Bond is hereinafter
referred to as a "Book Entry Bond." In turn, each brokerage firm's
interest in this Bond will be recorded on the records of the Clearing
Agency or of another bank or brokerage firm that participates in the
book entry system maintained by the Clearing Agency (a "Clearing
Agency Participant") and acts, as agent for such brokerage firm if the
Beneficial Owner's brokerage firm is not a Clearing Agency
Participant. In accordance with its normal procedures, the Clearing
Agency shall record the positions held by each Clearing Agency
Participant in the Book Entry Bonds, whether held for its own account
or as a nominee for another person. Neither the Trustee, the Bond
Registrar, nor the Issuer shall have any liability with respect to the
failure of the Clearing Agency, any Clearing Agency Participant or any
brokerage firm to comply with such procedures.
(b) Each payment of principal of and interest on this
Bond will be paid to the Clearing Agency. The Clearing Agency shall
credit the amount of such payments to the accounts of the applicable
Clearing Agency Participants in accordance with its normal procedures.
Each Clearing Agency Participant shall be responsible for disbursing
such payments to the Beneficial Owners of the Book Entry Bonds that it
represents, and to each brokerage firm for which it acts as agent.
Each such brokerage firm shall be responsible for disbursing funds to
the Beneficial Owners of the Book Entry Bonds that it represents.
(c) A Beneficial Owner of Book Entry Bonds may request
that one or more of such Beneficial Owner's Book Entry Bonds be
redeemed at the earliest opportunity subject to the limitations on the
amount of such redemption described below. A request for redemption
may be submitted to the brokerage firm that maintains such Beneficial
Owner's account in the Book Entry Bonds. That firm will in turn be
responsible for making the request to the Clearing Agency. The
Clearing Agency will time-stamp each request for redemption as
received, subject to such reasonable procedures as it may establish
with respect to determining the order of receipt of requests received
on the same day. The Clearing Agency will promptly forward such
time-stamped requests for redemption to the Trustee. A Beneficial
Owner shall be permitted to withdraw his request for redemption by
notifying the brokerage firm that maintains his account in the Book
Entry Bonds. The Clearing Agency and the Clearing Agency Participants
may require that in order for a request for redemption, or withdrawal
of any request for redemption, to be honored with respect to a
Principal Payment Date, it must be received by the Clearing Agency (in
the case of a request for redemption) and by the Trustee (in the case
of a withdrawal of a request for redemption) by the tenth day of the
month in which such Principal Payment Date occurs. On March 10 and
annually thereafter, after the initial issuance of the Bonds, the
Trustee shall contact the Clearing Agency for a list of the Clearing
Agency Participants that represent Beneficial Owners of Book Entry
Bonds. The Trustee then will notify each such Clearing Agency
Participant to attach to each request for redemption a list of the
Beneficial Owners represented by such Clearing Agency Participant, the
principal amount of Book Entry Bonds owned by each such Beneficial
Owner and, if applicable, death certificates for any deceased
<PAGE> 32
Series 1996A/Reverse Page 3
Beneficial Owners. The Trustee shall rely on such attachments for
purposes of notifying the Clearing Agency Participants that their
requests for redemption have been honored pursuant to paragraph (d)
below.
(d) If the Trustee notifies the Clearing Agency, on or
before the 20th day of the month in which any Principal Payment Date
occurs, that on such Principal Payment Date the Principal Distribution
Amount required to be distributed on this Bond is in excess of the
aggregate principal amount of the Bonds for which timely requests for
redemption have been delivered to the Trustee, the Clearing Agency
shall select Book Entry Bonds to be redeemed in accordance with its
then applicable established random lot procedures and the other
established procedures of the Clearing Agency Participants and
indirect brokerage firms representing the Beneficial Owners of the
Book Entry Bonds. Such procedures may provide for the redemption in
part of any Book Entry Bond having a denomination in excess of $1,000.
The Clearing Agency shall give notice to those Clearing Agency
Participants whose Book Entry Bonds have been so selected for
redemption.
(e) A Beneficial Owner of a Book Entry Bond shall be
entitled to transfer Beneficial Ownership of such Book Entry Bond only
upon compliance with the procedures established by the Clearing Agency
Participant representing such Beneficial Owner or the brokerage firm
representing such Beneficial Owner, if any. Each Clearing Agency
Participant shall only transfer Book Entry Bonds of Beneficial Owners
it represents, or brokerage firms for which it acts as agent, in
accordance with the Clearing Agency's normal procedures. Except in the
event of Book Entry Termination, as defined in the Indenture and
Series Supplement, no Beneficial Owner shall be entitled to receive a
Definitive Bond evidencing ownership of his Book Entry Bond.
(f) Whenever the vote or consent of the Holders of the
Bonds is solicited or may be given pursuant to the Indenture, the
Clearing Agency shall vote the percentage of the Current Principal
Amount of this Bond that evidences the Book Entry Bonds of each
Beneficial Owner in accordance with the written instructions received
by the Clearing Agency from the Clearing Agency Participant through
which each Beneficial Owner owns his Book Entry Bonds.
The above-referenced Book Entry Procedures have been included in this
Bond solely for the purpose of setting forth the rights of the Beneficial
Owners of the Book Entry Bonds with respect to the holding of each Bond by the
Clearing Agency and the Clearing Agency Participants, and the inclusion of such
Book Entry Procedures in this Bond shall in no way be construed as imposing
upon the Trustee, the Bond Registrar, or the Issuer any responsibility for
compliance with such Book Entry Procedures by the Clearing Agency or any
Clearing Agency Participant of the Clearing Agency.
If the aggregate principal amount of the Bonds for which timely
requests for redemption have been submitted exceeds the Principal Distribution
Amount for any Principal Payment Date, principal payments allocated to the
Bonds will be allocated on such Principal Payment Date by the Trustee
<PAGE> 33
Series 1996A/Reverse Page 4
as follows: first, to Clearing Agency Participants on behalf of Deceased
Holders in the order that such Deceased Holders' time-stamped requests for such
redemption have been received by the Clearing Agency until each Deceased Holder
requesting redemption through a Clearing Agency Participant has received an
initial priority principal distribution of up to $100,000 with respect to the
Bonds held by such Deceased Holder; second, to Clearing Agency Participants on
behalf of other Beneficial Owners in the order that such Beneficial Owners'
requests for redemption have been received until each Beneficial Owner
requesting redemption through a Clearing Agency Participant has received an
initial priority principal distribution of up to $10,000 with respect to such
Beneficial Owner's Bonds; third, to Clearing Agency Participants on behalf of
Deceased Holders in excess of such $100,000 limitation in the order that such
time-stamped requests for redemption have been received by the Clearing Agency
and without limitation as to the principal amount which may be so redeemed; and
fourth, to Clearing Agency Participants on behalf of other Beneficial Owners in
excess of such $10,000 limitation in the order that such time-stamped requests
for redemption have been received by the Clearing Agency and without limitation
as to the principal amount which may be so redeemed. A Bond held by tenants by
the entirety, joint tenants or tenants in common, may be deemed to be held by a
single Beneficial Owner for purposes of all redemption requests. However, a
Bond held by a trustee is considered to be held by each beneficiary of the
trust to the extent of such beneficiary's beneficial interest therein. Also,
the death of a tenant by the entirety, joint tenant or tenant in common will be
deemed to be the death of the Holder of the Bond and the entire principal
amount of the Bond so held will be subject to priority in redemption, and the
death of a beneficiary of a trust will be deemed to be the death of the Holder
of a Bond held by the trustee of the trust to the extent of such beneficiary's
beneficial interest in such Bond. Such beneficial interest will be deemed to
exist in typical cases of street name or nominee ownership, ownership by a
trustee, ownership under the Uniform Gifts to Minors Act and community property
or other joint ownership arrangements between a husband and wife and in trust
arrangements and certain other arrangements where a person has substantially
all of the beneficial ownership interest in the Bond during his or her
lifetime. Beneficial interests shall include the power to sell, transfer or
otherwise dispose of a Bond and the right to receive the proceeds therefrom, as
well as interest and principal payable with respect thereto.
Payment of the then remaining unpaid principal amount of this Bond on
the Stated Maturity of its final installment of principal or on such earlier
date as the Issuer shall be required to apply payments received with respect to
the GNMA Certificates securing the Bonds to payment of the then remaining
unpaid principal amount of this Bond, or to payment of the Redemption Price
payable on any date as of which this Bond has been called for redemption in
full, shall be made upon presentation of this Bond to the office or agency of
the Issuer maintained for such purpose. Payments of interest on this Bond due
and payable on each Interest Payment Date, together with any installment of
principal of this Bond due and payable on each Interest Payment Date which is
also a Principal Payment Date for this Bond to the extent not in full payment
of this Bond, shall be made by check mailed to the Person whose name appears as
the registered Holder of this Bond (or one or more Predecessor Bonds) on the
Bond Register as of the last day of the month preceding such Payment Date
(each, a "Record Date").
<PAGE> 34
Series 1996A/Reverse Page 5
Checks for amounts which include installments of principal due on this
Bond shall be mailed to the Person entitled thereto at the address of such
Person as it appears on the Bond Register as of the applicable Record Date
without requiring that this Bond be submitted for notation of payment and
checks returned undelivered will be held for payment to the Person entitled
thereto, subject to the terms of the Indenture and Series Supplement, at the
office or agency in the United States of America designated by the Issuer for
such purpose pursuant to the Indenture and Series Supplement. Any reduction in
the principal amount of this Bond (or any one or more Predecessor Bonds)
effected by any payments made on any Principal Payment Date shall be binding
upon all Holders of this Bond and of any Bond issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not noted
hereon.
Notwithstanding the foregoing, so long as this Bond is registered in
the name of the Clearing Agency or its nominee, as the representative of the
Beneficial Owners, if so requested by the Clearing Agency, the principal of and
interest on this Bond shall be payable by wire transfer of federal funds to the
Clearing Agency or its nominee, except for the final payment due on Stated
Maturity of this Bond, which as described below shall be made only upon
presentation and surrender of this Bond at the office or agency of the Issuer
maintained for that purpose.
If funds are expected to be available, as provided in the Indenture
and Series Supplement, for payment in full of the then remaining unpaid
principal amount of this Bond on a Principal Payment Date which is prior to the
Stated Maturity of the final installment of principal hereof, then the Trustee,
on behalf of the Issuer, will notify the Person who was the registered Holder
hereof on the tenth Business day prior to such Principal Payment Date, by
notice mailed no later than the fifth Business Day prior to such Principal
Payment Date, and the amount then due and payable shall, if sufficient funds
therefor are available, be payable only upon presentation of this Bond to the
office or agency of the Issuer maintained for such purpose.
Any portion of any payment of principal or interest which was due but
was not paid or duly provided for on a Payment Date shall forthwith cease to be
payable to the Person who was the registered Holder of this Bond on the
applicable Record Date, and shall be paid, in whole or in part, to the extent
funds are available for such payment, on each Special Payment Date thereafter
until all such overdue amounts are paid or duly provided for, to the Person in
whose name this Bond (or one or more Predecessor Bonds) is registered on the
Special Record Date applicable to each such Special Payment Date or at any
other time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Bonds may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in the
Indenture and Series Supplement.
If an Event of Default as defined in the Indenture shall occur and be
continuing with respect to the Bonds, the Bonds may become or be declared due
and payable in the manner and with the effect provided in the Indenture. If
any such acceleration of maturity occurs prior to the Stated Maturity of the
final installment of principal of this Bond, the amount payable to the Holder
of this Bond will be equal to the aggregate unpaid principal amount of this
Bond on the date this Bond becomes so due and payable, together with accrued
interest on such unpaid principal amount from the last day to which interest
has been paid to the date of payment thereof. The Indenture provides
<PAGE> 35
Series 1996A/Reverse Page 6
that, notwithstanding the acceleration of the maturity of the Bonds, under
certain circumstances specified therein all amounts collected as proceeds of
the collateral securing the Bonds, or otherwise, shall continue to be applied
to payments of principal of and interest on the Bonds as if they had not been
declared due and payable. In all other circumstances, following the
acceleration of the maturity of the Bonds, all amounts collected as proceeds of
the collateral securing the Bonds or otherwise shall be applied, pro-rata among
all Bonds of this Series, without preference or priority, first to the payment
of interest and then to the payment of amounts due with respect to principal.
An Event of Default with respect to the Bonds of any other Series
issued under the Indenture, including any failure to make any payment of
principal or interest with respect thereto when and as due, will not be an
Event of Default with respect to the Bonds of this Series.
As provided in the Indenture and Series Supplement and only under the
circumstances specified therein, the Bonds may be redeemed at the option of the
Issuer, in whole or in part, on any Principal Payment Date, on or after the
earlier of (i) the fourth anniversary of their issuance, or (ii) the date on
which the aggregate principal amount of the Bonds then outstanding is less than
20% of their initial aggregate principal amount, at a price equal to 100% of
the unpaid principal amount of the Bonds so redeemed, together with accrued and
unpaid interest to the optional redemption date.
If provision is made for the redemption and payment of this Bond in
accordance with the Indenture and Series Supplement, the portion of the
principal amount of this Bond so redeemed shall thereupon cease to bear
interest from and after the date set for such redemption.
As provided in the Indenture and Series Supplement and subject to
certain limitations therein set forth (including without limitation the
requirement that the transferee be eligible to serve as Clearing Agency), the
transfer of this Bond may be registered on the Bond Register of the Issuer,
upon surrender of this Bond for registration of transfer at the office or
agency designated by the Issuer pursuant to the Indenture and Series
Supplement, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon a single new
Bond representing the entire Aggregate Current Principal Amount of the Bonds,
will be issued to the designated transferee or transferees.
Prior to the due presentment for registration of transfer of this
Bond, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the person in whose name this Bond is registered (i) on any Record Date
or Special Record Date, for purposes of making payments, and (ii) on any other
date for any other purpose, as the owner hereof, whether or not this Bond be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Bonds under the Indenture at any
time by the Issuer with the consent of the Holders of Bonds representing
two-thirds of the Aggregate Current Principal Amount of all Bonds at the time
Outstanding of all Series, in case Outstanding Bonds of all Series are to be
affected, or with the
<PAGE> 36
Series 1996A/Reverse Page 7
consent of the Holders of two-thirds of the Aggregate Current Principal Amount
of all the Bonds at the time Outstanding of each Series to be affected, in case
one or more, but less than all, of the Series of Bonds then Outstanding are to
be affected. The Indenture also contains provisions permitting the Holders of
Bonds representing specified percentages of the Aggregate Current Principal
Amount of the Bonds of a Series at the time Outstanding on behalf of the
Holders of all the Bonds of such Series, to waive compliance by the Issuer with
certain provisions of the Indenture and Series Supplement and certain past
Defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder, at the time of the giving thereof, of this Bond (or any
one or more Predecessor Bonds) shall be conclusive and binding upon such Holder
and upon all future Holders of this Bond and of any Bond issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such consent or waiver is made upon this Bond. The
Indenture also permits the Trustee and the Issuer to amend or waive certain
terms and conditions set forth in the Indenture or a related Series Supplement
without the consent of Holders of the Bonds of any Series issued thereunder.
Beneficial ownership interests in the Bonds (which are issuable in
registered form only to the Clearing Agency in a denomination representing the
entire aggregate Current Principal Amount of the Bonds of this Series) may be
held by Beneficial Owners only in registered Book Entry form, in each case in
denominations as provided in the Series Supplement creating this Series of
Bonds and subject to certain limitations therein set forth. The Bonds of this
Series are exchangeable for a like aggregate initial principal amount of Bonds
of such Series of different authorized denominations, as requested by the
Holder surrendering same.
As provided in the Indenture, this Bond, the Indenture and the Series
Supplement creating the Bonds of which this Bond is a part shall be construed
in accordance with, and governed by, the laws of the State of Texas applicable
to agreements made and to be performed therein.
<PAGE> 37
Series 1996A/Reverse Page 8
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants in common
- Custodian
------------------ ----------------------
(Cust) (Minor)
under Uniform Gifts to Minors Act
-------------------------------------------------
(State)
Additional abbreviations may also be used
though not in the above list.
--------------
FOR VALUE RECEIVED the undersigned hereby
sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE
-----------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
Please print or typewrite name and address
including postal zip code of assignee
- --------------------------------------------------------------------------------
the within Bond and all rights thereunder, hereby irrevocably constituting and
appointing attorney to transfer said Bond on the books
of the Issuer, with full power in the premises.
Dated:
--------------------- --------------------------------------------------
NOTICE: The signature to this assignment must
correspond with the name as written upon the
face of the within instrument in every particular,
without alteration or enlargement or any change
whatsoever.
<PAGE> 38
Series 1996A/Reverse Page 9
Exhibit B
To Series Supplement
Form of Letter of Representations
(Begins on Next Page)
<PAGE> 39
[DTC LETTERHEAD]
BOOK-ENTRY-ONLY COLLATERALIZED MORTGAGE OBLIGATIONS (CMOs)--
WITH OWNER OPTION TO REDEEM
LETTER OF REPRESENTATIONS
[To be Completed by Issuer and Trustee]
Gateway Mortgage Acceptance Corporation
------------------------------------------------------------
[Name of Issuer]
The Bank of New York, as Trustee
------------------------------------------------------------
[Name of Trustee]
June 27, 1996
-------------
[Date]
Attention: General Counsel's Office
THE DEPOSITORY TRUST COMPANY
55 Water Street; 49th Floor
New York, NY 10041-0099
Re: Gateway Mortgage Acceptance Corporation
--------------------------------------------------------------------
Collateralized Mortgage Obligations [Issue Description]
--------------------------------------------------------------------
Series 1996A
--------------------------------------------------------------------
Ladies and Gentlemen:
This letter sets forth our understanding with respect to certain
matters relating to the above-referenced issue (the "Securities"). Trustee
will act as trustee with respect to the Securities pursuant to a Terms
Indenture dated as of March 29, 1989, as amended, incorporating by reference
the Issuer's Standard Indenture Provisions, dated as of January 1, 1989, as
amended, and as supplemented by a Series 1996A Supplement, dated as of June 27,
1996 relating to the Securities (the Indenture and Series 1996A Supplement are
referred to collectively as the "Document"). Pursuant to an Underwriting
Agreement dated October 15, 1990, as amended (the "Underwriting Agreement") by
and between the Issuer and EVEREN Securities, Inc., as representative (the
"Representative") of the Underwriters (as defined below) and a Terms Agreement
dated June 18, 1996 (the "Terms Agreement") between the Issuer and the
Representative on behalf of the underwriters named therein (collectively, the
"Underwriters"), the Underwriters have agreed to purchase, and the Issuer has
agreed to issue, the Securities. The Underwriters are distributing the
Securities through The Depository Trust Company ("DTC").
To induce DTC to accept the Securities as eligible for deposit at DTC,
and to act in accordance with its Rules with respect to the Securities, Issuer
and Trustee make the following representations to DTC:
1. Prior to closing on the Securities on June 27, 1996, there
shall be deposited with DTC one Security certificate registered in the
name of DTC's nominee, Cede & Co., for each stated maturity of the Securities
in the face amounts set forth on Schedule A hereto, the total of
<PAGE> 40
which represents 100% of the principal amount of such Securities. If, however,
the aggregate principal amount of any maturity exceeds $200 million, one
certificate will be issued with respect to each $200 million of principal
amount and an additional certificate will be issued with respect to any
remaining principal amount. Each Security certificate shall bear the following
legend:
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to Issuer or its agent for registration of transfer,
exchange, or payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede &
Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
2. In the event of any solicitation of consents from or voting by
holders of the Securities, Issuer or Trustee shall establish a record date for
such purposes (with no provision for revocation of consents or votes by
subsequent holders) and shall, to the extent possible, send notice of such
record date to DTC not less than 15 calendar days in advance of such record
date. Notices to DTC pursuant to this Paragraph by telecopy shall be sent to
DTC's Reorganization Department at (212) 709-6896 or (212) 709-6897, and receipt
of such notices shall be confirmed by telephoning (212) 709-6870. Notices to
DTC pursuant to this Paragraph by mail or by any other means shall be sent to
DTC's Reorganization Department as indicated in Paragraph 3.
3. The Issuer will not disseminate invitations to beneficial
owners of Securities to tender their Securities. However, beneficial owners
may request redemption of their Securities as described in paragraphs 9 and 10
hereof and the Issuer may redeem Securities as described in paragraph 13
hereof.
4. All notices and payment advices sent to DTC shall contain the
CUSIP number of the Securities.
5. Trustee shall send DTC written notice with respect to the
dollar amount per $1,000 original face value (or other minimum authorized
denomination if less than $1,000 face value) payable on each payment date
allocated as to the interest and principal portions thereof preferably five,
but not less than two, business days prior to such payment date. Such notices,
which shall also contain the current pool factor, any special adjustments to
principal/interest rates (e.g., adjustments due to
- 2 -
<PAGE> 41
deferred interest or shortfall), and Trustee contact's name and telephone
number, shall be sent by telecopy to DTC's Dividend Department at (212)
709-1723, or if by mail or by any other means to:
Manager; Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square; 22nd Floor
New York, 10004-2695
6. Interest on the Securities will be payable monthly on the last
day of each month, or the immediately succeeding business day (each, a "Payment
Date"), with respect to interest accrued on the Securities during the previous
calendar month. Such monthly interest payments to be made on each respective
Payment Date will be made to holders of record of the Securities as of the
close of business on the last business day of the month preceding the month in
which such Payment Date occurs (each, a "Record Date"). Interest payable on
the initial Interest Payment Date, August 31, 1996, will be with respect to 34
days' interest accrued from June 27, 1996 through July 31, 1996.
7. Trustee must provide DTC, no later than noon (Eastern Time) on
the payment date, CUSIP numbers for each issue for which payment is being sent,
as well as the dollar amount of the payment for each issue. Notification of
payment details should be sent using automated communications.
8. Interest payments shall be received by Cede & Co., as nominee
of DTC, or its registered assigns in same-day funds, no later than 2:30 p.m.
(Eastern Time) on each payment date (in accordance with existing arrangements
between Issuer or Trustee and DTC). Absent any other arrangements between
Issuer or Trustee and DTC, such funds shall be wired as follows:
Chemical Bank
ABA 021000128
For credit to A/C The Depository Trust Company
Dividend Deposit Account 066-026776
Issuer or Trustee shall provide interest payment information to a standard
announcement service subscribed to by DTC. In the unlikely event that no such
service exists, Issuer or Trustee shall provide interest payment information
directly to DTC in advance of the interest payment date as soon as the
information is available. This information should be conveyed directly to DTC
electronically. If electronic transmission is not available, absent any other
arrangements between Trustee and DTC, such information should be sent by
telecopy to DTC's Dividend Department at (212) 709-1723 or (212) 709-1686, and
receipt of such notices shall be confirmed by telephoning (212) 709-1270.
Notices to DTC pursuant to the above by mail or by any other means shall be
sent to:
Manager, Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square; 22nd Floor
New York, NY 10004-2695
9. DTC shall receive maturity and redemption payments allocated
with respect to each CUSIP number on the payable date in same-day funds by 2:30
p.m. (Eastern Time). Absent any other arrangements between Trustee and DTC,
such payments shall be wired as follows:
Chemical Bank
ABA 021000128
For credit to A/C The Depository Trust Company
Redemption Account 066-027306
in accordance with existing SDFS payment procedures in the manner set forth in
DTC's SDFS Paying Agent Operating Procedures, a copy of which has previously
been furnished to Trustee.
-3-
<PAGE> 42
10. DTC shall receive all reorganization payments and CUSIP-level
detail resulting from corporate actions (such as tender offers, remarketings,
or mergers) on the first payable date in same-day funds by 2:30 p.m. (Eastern
Time). Absent any other arrangements between Trustee and DTC, such payments
shall be wired as follows:
Chemical Bank
ABA 021000128
For credit to A/C The Depository Trust Company
Reorganization Account 066-027608
11. To allow beneficial owners to tender for payment Securities
pursuant to the Document, DTC will accept tender requests by means of Voluntary
Offering Instructions via DTC's Participant Terminal System ("PTS") from
Participants. DTC will accept such Instructions from the 1st through the 10th
day of each month. DTC will electronically time-stamp all Instructions that it
receives during such period. Participants that have submitted Instructions may
withdraw such Instructions by sending electronic notice directly to Trustee by
means of Voluntary Offering Withdrawal Instructions via PTS) All such
Withdrawal Instructions must be received by Trustee on or prior to the last
business day of the window period listed above of the month preceding the month
in which the payment occurs.
12. In the event of a payment, Trustee shall select Securities to
be repaid from Instructions previously transmitted to it by DTC in the order
that such Instructions were received by DTC (as evidenced by DTC's electronic
time-stamp on such Instructions) or as selected by lot. Trustee, using DTC's
automated put (APUT) program, shall notify DTC and those Participants whose
Instructions have been accepted for payment of the aggregate principal amount
of Securities to be repaid on behalf of each such Participant, and the name and
account number of each beneficial owner whose Securities have been accepted for
redemption. Such information must be received by DTC 7 business days prior to
the redemption date (2 business days prior if electronic). In the event that
the aggregate principal amount of Securities required under the Document to be
redeemed exceeds the aggregate principal amount of Securities for which
Instructions have been submitted (as evidenced by the Instructions held by
Trustee), Trustee shall notify DTC of the amount of such excess to the extent
possible prior to the 10th business day preceding the redemption date, but in
no event later than the 18th calendar day of the month in which such redemption
date occurs. DTC will allocate such excess in accordance with its "Called
Securities Procedures" (as described in DTC's Procedures) among the holdings of
its Participants as of the close of business on the day prior to the date of
such notification based upon the assumption that each Participant holds
individual $1,000 Security units aggregating the full principal amount of that
Participant's holdings. If such method of selection of Securities to be
redeemed is necessary, DTC will notify those of its Participants whose holdings
have been so selected for redemption on the forthcoming redemption date by the
23rd day of the month in which such redemption date occurs. DTC will process
such redemptions in accordance with its current Rules and procedures, subject
to change from time to time.
13. Notices to DTC pursuant to Paragraph 11 shall be sent to DTC's
Reorganization Department at (212) 709-6896 or (212) 709-6897, and receipt of
such notices shall be confirmed by telephoning (212) 709-6870. Notices to DTC
pursuant to Paragraph 12 shall be sent to DTC's Reorganization Department at
(212) 709-6895 and receipt of such notices shall be confirmed by telephoning
(212) 709-1470. Notices to DTC pursuant to Paragraphs 11 and 12 by mail or by
any other means shall be sent to Supervisor; Puts Security Section;
Reorganization Department, at the address set forth in Paragraph 3.
14. DTC may direct Issuer, Trustee, or Tender Agent to use any
other number or address as the number or address to which notices or payments
of interest or principal may be sent.
-4-
<PAGE> 43
15. In the event of a mandatory redemption or a redemption at the
option of beneficial owner necessitating a reduction in the aggregate principal
amount of Securities outstanding, DTC, in its discretion: (a) may request
Trustee to issue and authenticate a new Security certificate; or (b) shall make
an appropriate notation on the Security certificate indicating the date and
amount of such reduction in principal after notifying the Trustee thereof and
obtaining the concurrence of the Trustee to such amount (which amount shall be
binding upon the Trustee, the Issuer, DTC and all Participants and beneficial
owners), except in the case of final or full redemption, in which case the
certificate will be presented to Issuer or Trustee prior to payment, if
required.
16. The Document provides that Issuer may at its option redeem
all of the Securities under certain circumstances set forth in the
Document. In the event of an optional redemption by Issuer, Trustee shall
notify DTC at least 15 days prior to the Issuer redemption date. Upon receipt,
DTC will forward such notice to its Participants at least 12 days prior to such
redemption date.
In the case of a partial redemption of the Securities at the option of
the Issuer, DTC shall allocate the amount of principal so redeemed by random
lot in accordance with its "Called Securities Procedures" among the holdings of
its Participants as of the close of business on such date based upon the
assumption that each Participant holds individual $1,000 Securities aggregating
the full principal amount of the Participant's holdings. Notices to DTC
pursuant to this Paragraph by telecopy shall be sent to DTC's Call Notification
Department at (516) 227-4039 or (516) 227-4190. If the party sending the
notice does not receive a telecopy receipt from DTC confirming that the notice
has been received, such party shall telephone (516) 227-4070. Notices to DTC
pursuant to this Paragraph by mail or by any other means shall be sent to:
Manager; Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, NY 11530-4719
17. Trustee shall send to Participants semi-annually an outline of
the procedures to be utilized by Participants with respect to requests for
redemption and withdrawal of such requests on behalf of beneficial owners of
Securities.
18. In the event that Issuer determines that beneficial owners of
Securities shall be able to obtain certificated Securities, Issuer or Trustee
shall notify DTC of the availability of certificates. In such event, Issuer or
Trustee shall issue, transfer, and exchange certificates in appropriate
amounts, as required by DTC and others.
19. DTC may discontinue providing its services as securities
depository with respect to the Securities at any time by giving reasonable
notice to Issuer or Trustee (at which time DTC will confirm with Issuer or
Trustee the aggregate principal amount of Securities outstanding). Under such
circumstances, at DTC's request Issuer and Trustee shall cooperate fully with
DTC by taking appropriate action to make available one or more separate
certificates evidencing Securities to any DTC Participant having Securities
credited to its DTC accounts.
20. Issuer: (a) understands that DTC has no obligation to, and
will not, communicate to its Participants or to any person having an interest
in the Securities any information contained in the Security certificate(s); and
(b) acknowledges that neither DTC's Participants nor any person having an
interest in the Securities shall be deemed to have notice of the provisions of
the Security certificate(s) by virtue of submission of such certificate(s) to
DTC.
21. Nothing herein shall be deemed to require Trustee to advance
funds on behalf of Issuer.
-5-
<PAGE> 44
<TABLE>
<CAPTION>
Notes: Very truly yours,
<S> <C>
A. If there is a Trustee (as defined in this Gateway Mortgage Acceptance Corporation
Letter of Representations), Trustee as well as ---------------------------------------
Issuer must sign this Letter. If there is no [Issuer]
Trustee, in signing this Letter Issuer itself
undertakes to perform all of the obligations set By: /s/ CHRISTOPHER J. BLUM
forth herein. -----------------------------------
(Authorized Officer's Signature)
B. Schedule B contains statements that DTC
believes accurately describe DTC, the method of The Bank of New York, as Trustee
effecting book-entry transfers of securities ---------------------------------------
distributed through DTC, and certain related [Trustee]
matters.
By: /s/ RICHARD COSTANTINO
-----------------------------------
(Authorized Officer's Signature)
Received and Accepted:
THE DEPOSITORY TRUST COMPANY RICHARD COSTANTINO
Vice President
By:/s/ Richard B. Wesson
---------------------
cc: Underwriter
Underwriter's Counsel
</TABLE>
<PAGE> 45
SCHEDULE A
Gateway Mortgage Acceptance Corporation
-------------------------------------------------------
Collateralized Mortgage Obligations, Series 1996A
-------------------------------------------------------
(Describe Issue)
CUSIP Number Principal Amount Maturity Date Interest Rate
- ------------ ---------------- ------------- -------------
367653 BC5 $9,422,000 July 31, 2027 7.05%
<PAGE> 46
SCHEDULE B
SAMPLE OFFERING DOCUMENT LANGUAGE
DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
(PREPARED BY DTC - BRACKETED MATERIAL MAY BE APPLICABLE ONLY TO CERTAIN ISSUES)
1. The Depository Trust Company ("DTC"), New York, NY, will act as
securities depository for the securities (the "Securities"). The Securities
will be issued as fully-registered securities registered in the name of Cede &
Co. (DTC's partnership nominee). One fully-registered Security certificate will
be issued for [each issue of] the Securities, [each] in the aggregate principal
amount of such issue, and will be deposited with DTC. [If, however, the
aggregate principal amount of [any] issue exceeds $200 million, one certificate
will be issued with respect to each $200 million of principal amount and an
additional certificate will be issued with respect to any remaining principal
amount of such issue.]
2. DTC is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly ("Indirect Participants").
The Rules applicable to DTC and its Participants are on file with the
Securities and Exchange Commission.
3. Purchases of Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Securities on
DTC's records. The ownership interest of each actual purchaser of each Security
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership
interests in the Securities are to be accomplished by entries made on the books
of Participants acting on behalf of Beneficial Owners. Beneficial Owners will
not receive certificates representing their ownership interests in Securities,
except in the event that use of the book-entry system for the Securities is
discontinued.
4. To facilitate subsequent transfers, all Securities deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Securities with DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Securities; DTC's records
reflect only the identity of the Direct Participants to whose accounts such
Securities are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
[6. Redemption notices shall be sent to Cede & Co. If less than all of
the Securities within an issue are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct Participant in such
issue to be redeemed.]
-i-
<PAGE> 47
7. Neither DTC nor Cede & Co. will consent or vote with respect to
Securities. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as
soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts the
Securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy).
8. Principal and interest payments on the Securities will be made to
DTC. DTC's practice is to credit Direct Participants' accounts on payable date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payment on payable date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such Participant and not of DTC, Trustee, or
Issuer, subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of principal and interest to DTC is the
responsibility of Issuer or Trustee, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.
[9. A Beneficial Owner shall give notice to elect to have its
Securities purchased or tendered, through its Participant, to Trustee [or
Tender/Remarketing Agent], and shall effect delivery of such Securities by
causing the Direct Participant to transfer the Participant's interest in the
Securities, on DTC's records, to Trustee [or Tender/Remarketing Agent]. The
requirement for physical delivery of Securities in connection with an optional
tender or a mandatory purchase will be deemed satisfied when the ownership
rights in the Securities are transferred by Direct Participants on DTC's
records and followed by a book-entry credit of tendered Securities to Trustee's
[or Tender/Remarketing Agent's] DTC account.]
10. DTC may discontinue providing its services as securities
depository with respect to the Securities at any time by giving reasonable
notice to Issuer or Trustee. Under such circumstances, in the event that a
successor securities depository is not obtained, Security certificates are
required to be printed and delivered.
11. Issuer may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Security certificates will be printed and delivered.
12. The information in this section concerning DTC and DTC's
book-entry system has been obtained from sources that Issuer believes to be
reliable, but Issuer takes no responsibility for the accuracy thereof.
-ii-
