TRUST INDENTURE ACT OF 1939

Notes to the Reader
1. This document is extracted from Committee Print 108-B of the
Committee on Financial Services of the U.S. House of Representatives,
and was prepared at the direction of that Committee.
2. Any material contained within brackets ø ¿ is not part of the
text of the law but is inserted as an aid to the reader.
3. Citations have been included to enable the reader to locate the
same material in the United States Code (U.S.C.). These citations
are not a part of the text of the law in which they appear. For
changes after the revision date of this excerpt (September 30, 2004)
to provisions of law in this publication that have citations to the
U.S. Code, see the United States Code Classification Tables published
by the Office of the Law Revision Counsel of the House of
Representatives at
http://uscode.house.gov/uscct.htm
REVISED THROUGH SEPTEMBER 30, 2004
2
TRUST INDENTURE ACT OF 1939
(References in brackets ø ¿ are to title 15, United States Code)
AN ACT To provide for the regulation of the sale of certain securities in interstate
and foreign commerce and through the mails, and the regulation of the trust indentures
under which the same are issued, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That the Act entitled
‘‘An Act to provide full and fair disclosure of the character of
securities sold in interstate and foreign commerce and through the
mails, and to prevent frauds in the sale thereof, and for other purposes’’,
approved May 27, 1933, as amended, is amended by adding
at the end thereof the following:
TITLE III
SHORT TITLE
SEC. 301. ø77aaa¿ This title, divided into sections as follows,
may be cited as the ‘‘Trust Indenture Act of 1939’’:
TABLE OF CONTENTS
TITLE III
Sec. 301. Short title.
Sec. 302. Necessity for regulation.
Sec. 303. Definitions.
Sec. 304. Exempted securities and transactions.
Sec. 305. Securities required to be registered under Securities Act.
Sec. 306. Securities not registered under Securities Act.
Sec. 307. Qualification of indentures covering securities not required to be
registered.
Sec. 308. Integration of procedure with Securities Act and other Acts.
Sec. 309. When qualification becomes effective; effect of qualification.
Sec. 310. Eligibility and disqualification of trustee.
(a) Persons eligible for appointment as trustee.
(b) Disqualification of trustee.
(c) Applicability of section.
Sec. 311. Preferential collection of claims against obligor.
Sec. 312. Bondholders’ lists.
Sec. 313. Reports by indenture trustee.
Sec. 314. Reports by obligor; evidence of compliance with indenture provisions.
(a) Periodic reports.
(b) Evidence of recording of indenture.
(c) Evidence of compliance with conditions precedent.
(d) Certificates of fair value.
(e) Recitals as to basis of certificate or opinion.
(f) Parties may provide for additional evidence.
Sec. 315. Duties and responsibility of the trustee.
(a) Duties prior to default.
(b) Notice of defaults.
(c) Duties of the trustee in case of default.
(d) Responsibility of the trustee.
3 TRUST INDENTURE ACT OF 1939 Sec. 302
(e) Undertaking for costs.
Sec. 316. Directions and waivers by bondholders; prohibition of impairment of
holder’s right to payment.
Sec. 317. Special powers of trustee; duties of paying agents.
Sec. 318. Effect of prescribed indenture provisions.
Sec. 319. Rules, regulations, and orders.
Sec. 320. Hearings by Commission.
Sec. 321. Special powers of the Commission.
Sec. 322. Court review of orders; jurisdiction of offenses and suits.
Sec. 323. Liability for misleading statements.
Sec. 324. Unlawful representations.
Sec. 325. Penalties.
Sec. 326. Effect on existing law.
Sec. 327. Contrary stipulations void.
Sec. 328. Separability of provisions.
NECESSITY FOR REGULATION
SEC. 302. ø77bbb¿ (a) Upon the basis of facts disclosed by the
reports of the Securities and Exchange Commission made to the
Congress pursuant to section 211 of the Securities Exchange Act of
1934 and otherwise disclosed and ascertained, it is hereby declared
that the national public interest and the interest of investors in
notes, bonds, debentures, evidences of indebtedness, and certificates
of interest or participation therein, which are offered to the
public, are adversely affected—
(1) when the obligor fails to provide a trustee to protect
and enforce the rights and to represent the interests of such
investors, notwithstanding the fact that (A) individual action
by such investors for the purpose of protecting and enforcing
their rights is rendered impracticable by reason of the disproportionate
expense of taking such action, and (B) concerted
action by such investors in their common interest through representatives
of their own selection is impeded by reason of the
wide dispersion of such investors through many States, and by
reason of the fact that information as to the names and
addresses of such investors generally is not available to such
investors;
(2) when the trustee does not have adequate rights and
powers, or adequate duties and responsibilities, in connection
with matters relating to the protection and enforcement of the
rights of such investors; when, notwithstanding the obstacles
to concerted action by such investors, and the general and reasonable
assumption by such investors that the trustee is under
an affirmative duty to take action for the protection and
enforcement of their rights, trust indentures (A) generally provide
that the trustee shall be under no duty to take any such
action, even in the event of default, unless it receives notice of
default, demand for action, and indemnity, from the holders of
substantial percentages of the securities outstanding thereunder,
and (B) generally relieve the trustee from liability even
for its own negligent action or failure to act;
(3) when the trustee does not have resources commensurate
with its responsibilities, or has any relationship to or connection
with the obligor or any underwriter of any securities
of the obligor, or holds, beneficially or otherwise, any interest
in the obligor, or any such underwriter, which relationship,
Sec. 303 TRUST INDENTURE ACT OF 1939 4
connection, or interest involves a material conflict with the interests
of such investors;
(4) when the obligor is not obligated to furnish to the
trustee under the indenture and to such investors adequate
current information as to its financial condition, and as to the
performance of its obligations with respect to the securities
outstanding under such indenture; or when the communication
of such information to such investors is impeded by the fact
that information as to the names and addresses of such investors
generally is not available to the trustee and to such investors;
(5) when the indenture contains provisions which are misleading
or deceptive, or when full and fair disclosure is not
made to prospective investors of the effect of important indenture
provisions; or
(6) when, by reason of the fact that trust indentures are
commonly prepared by the obligor or underwriter in advance
of the public offering of the securities to be issued thereunder,
such investors are unable to participate in the preparation
thereof, and, by reason of their lack of understanding of the
situation, such investors would in any event be unable to procure
the correction of the defects enumerated in this subsection.
(b) Practices of the character above enumerated have existed
to such an extent that, unless regulated, the public offering of
notes, bonds, debentures, evidences of indebtedness, and certificates
of interest or participation therein, by the use of means that
instruments of transportation and communication in interstate
commerce and of the mails, is injurious to the capital markets, to
investors, and to the general public; and it is hereby declared to be
the policy of this title, in accordance with which policy all the provisions
of this title shall be interpreted, to meet the problems and
eliminate the practices, enumerated in this section, connected with
such public offerings.
DEFINITIONS
SEC. 303. ø77ccc¿ When used in this title, unless the context
otherwise requires—
(1) Any term defined in section 2 of the Securities Act of
1933, and not otherwise defined in this section, shall have the
meaning assigned to such term in such section 2.
(2) The terms ‘‘sale’’, ‘‘sell’’, ‘‘offer to sell’’, ‘‘offer for sale’’,
and ‘‘offer’’ shall include all transactions included in such
terms as provided in paragraph (3) of section 2(a) of the Securities
Act of 1933, except that an offer or sale of a certificate of
interest or participation shall be deemed an offer or sale of the
security or securities in which such certificate evidences an interest
or participation if and only if such certificate gives the
holder thereof the right to convert the same into such security
or securities.
(3) The term ‘‘prospectus’’ shall have the meaning assigned
to such term in paragraph (10) of section 2(a) of the Securities
Act of 1933, except that in the case of securities which are not
registered under the Securities Act of 1933, such term shall
5 TRUST INDENTURE ACT OF 1939 Sec. 303
not include any communication (A) if it is proved that prior to
or at the same time with such communication a written statement
if any required by section 306 was sent or given to the
persons to whom the communication was made, or (B) if such
communication states from whom such statement may be obtained
(if such statement is required by rules or regulations
under paragraphs (1) or (2) of subsection (b) of section 306)
and, in addition, does no more than identify the security, state
the price thereof, state by whom orders will be executed and
contain such other information as the Commission, by rules or
regulations deemed necessary or appropriate in the public interest
or for the protection of investors, and subject to such
terms and conditions as may be prescribed therein, may permit.
(4) The term ‘‘underwriter’’ means any person who has
purchased from an issuer with a view to, or offers or sells for
an issuer in connection with, the distribution of any security,
or participates or has a direct or indirect participation in any
such undertaking, or participates or has a participation in the
direct or indirect underwriting of any such undertaking; but
such term shall not include a person whose interest is limited
to a commission from an underwriter or dealer not in excess
of the usual and customary distributors’ or sellers’ commission.
(5) The term ‘‘director’’ means any director of a corporation,
or any individual performing similar functions with respect
to any organization whether incorporated or unincorporated.
(6) The term ‘‘executive officer’’ means the president, every
vice president, every trust officer, the cashier, the secretary,
and the treasurer of a corporation, and any individual customarily
performing similar functions with respect to any organization
whether incorporated or unincorporated, but shall not
include the chairman of the board of directors.
(7) The term ‘‘indenture’’ means any mortgage, deed of
trust, trust or other indenture, or similar instrument or agreement
(including any supplement or amendment to any of the
foregoing), under which securities are outstanding or are to be
issued, whether or not any property, real or personal, is, or is
to be, pledged, mortgaged, assigned, or conveyed thereunder.
(8) The term ‘‘application’’ or ‘‘application for qualification’’
means the application provided for in section 305 or section
307, and includes any amendment thereto and any report, document,
or memorandum accompanying such application or
incorporated therein by reference.
(9) The term ‘‘indenture to be qualified’’ means (A) the
indenture under which there has been or is to be issued a security
in respect of which a particular registration statement has
been filed, or (B) the indenture in respect of which a particular
application has been filed.
(10) The term ‘‘indenture trustee’’ means each trustee
under the indenture to be qualified, and each successor
trustee.
(11) The term ‘‘indenture security’’ means any security
issued or issuable under the indenture to be qualified.
Sec. 304 TRUST INDENTURE ACT OF 1939 6
(12) The term ‘‘obligor’’, when used with respect to any
such indenture security, means every person (including a guarantor)
who is liable thereon, and, if such security is a certificate
of interest or participation, such term means also every
person (including a guarantor) who is liable upon the security
or securities in which such certificate evidences an interest or
participation; but such term shall not include the trustee
under an indenture under which certificates of interest or participation,
equipment trust certificates, or like securities are
outstanding.
(13) The term ‘‘paying agent’’, when used with respect to
any such indenture security, means any person authorized by
an obligor thereon (A) to pay the principal of or interest on
such security on behalf of such obligor, or (B) if such security
is a certificate of interest or participation, equipment trust certificate,
or like security, to make such payment on behalf of the
trustee.
(14) The term ‘‘State’’ means any State of the United
States.
(15) The term ‘‘Commission’’ means the Securities and Exchange
Commission.
(16) The term ‘‘voting security’’ means any security presently
entitling the owner or holder thereof to vote in the direction
or management of the affairs of a person, or any security
issued under or pursuant to any trust, agreement, or arrangement
whereby a trustee or trustees or agent or agents for the
owner or holder of such security are presently entitled to vote
in the direction or management of the affairs of a person; and
a specified percentage of the voting securities of a person
means such amount of the outstanding voting securities of
such person as entitles the holder or holders thereof to cast
such specified percentage of the aggregate votes which the
holders of all the outstanding voting securities of such person
are entitled to cast in the direction or management of the affairs
of such person.
(17) The terms ‘‘Securities Act of 1933’’, ‘‘Securities Exchange
Act of 1934’’, and ‘‘Public Utility Holding Company Act
of 1935’’ shall be deemed to refer, respectively, to such Acts, as
amended, whether amended prior to or after the enactment of
this title.
(18) The term ‘‘Bankruptcy Act’’ means the Act entitled
‘‘An Act to establish a uniform system of bankruptcy throughout
the United States’’, approved July 1, 1898, as amended,
whether amended prior to or after the enactment of this title.
EXEMPTED SECURITIES AND TRANSACTIONS
SEC. 304. ø77ddd¿ (a) The provisions of this title shall not
apply to any of the following securities:
(1) any security other than (A) a note, bond, debenture, or
evidence of indebtedness, whether or not secured, or (B) a certificate
of interest or participation in any such note, bond,
debenture or evidence of indebtedness, or (C) a temporary certificate
for, or guarantee of, any such note, bond, debenture,
evidence of indebtedness, or certificate;
7 TRUST INDENTURE ACT OF 1939 Sec. 304
1 See 12 U.S.C. 1707 et seq.
2 12 U.S.C. 1749aaa et seq.
(2) any certificate of interest or participation in two or
more securities having substantially different rights and privileges,
or a temporary certificate for any such certificate;
(3) øRepealed.¿
(4) (A) any security exempted from the provisions of the
Securities Act of 1933 by paragraph (2), (3), (4), (5), (6), (7), (8),
(11), or (13) of section 3(a) thereof;
(B) any security exempted from the provisions of the Securities
Act of 1933, as amended, by paragraph (2) of subsection
3(a) thereof, as amended by section 401 of the Employment
Security Amendments of 1970.
(5) any security issued under a mortgage indenture as to
which a contract of insurance under the National Housing Act 1
is in effect; and any such security shall be deemed to be
exempt from the provisions of the Securities Act of 1933 to the
same extent as though such security were specifically enumerated
in section 3(a)(2) of such Act;
(6) any note, bond, debenture, or evidence of indebtedness
issued or guaranteed by a foreign government or by a subdivision,
department, municipality, agency, or instrumentality
thereof;
(7) any guarantee of any security which is exempted by
this subsection;
(8) any security which has been or is to be issued otherwise
than under an indenture, but this exemption shall not be
applied within a period of twelve consecutive months to an
aggregate principal amount of securities of the same issuer
greater than the figure stated in section 3(b) of the Securities
Act of 1933 limiting exemptions thereunder, or such lesser
amount as the Commission may establish by its rules and regulations;
(9) any security which has been or is to be issued under
an indenture which limits the aggregate principal amount of
securities at any time outstanding thereunder to $10,000,000,
or such lesser amount as the Commission may establish by its
rules and regulations, but this exemption shall not be applied
within a period of thirty-six consecutive months to more than
$10,000,000 aggregate principal amount of securities of the
same issuer, or such lesser amount as the Commission may
establish by its rules and regulations; or
(10) any security issued under a mortgage or trust deed
indenture as to which a contract of insurance under title XI of
the National Housing Act 2 is in effect; and any such security
shall be deemed to be exempt from the provisions of the Securities
Act of 1933 to the same extent as though such security
were specifically enumerated in section 3(a)(2), as amended, of
the Securities Act of 1933 (15 U.S.C. 77c(a)(2)).
In computing the aggregate principal amount of securities to which
the exemptions provided by paragraphs (8) and (9) may be applied,
securities to which the provisions of sections 305 and 306 would
Sec. 305 TRUST INDENTURE ACT OF 1939 8
3 Probably should refer to paragraph (11) of section 2(a) of such Act.
1 15 U.S.C. 661 et seq.
not have applied, irrespective of the provisions of those paragraphs,
shall be disregarded.
(b) The provisions of sections 305 and 306 shall not apply (1)
to any of the transactions exempted from the provisions of section
5 of the Securities Act of 1933 by section 4 thereof, or (2) to any
transaction which would be so exempted but for the last sentence
of paragraph (11) of section 2 3 of such Act.
(c) The Commission shall, on application by the issuer and
after opportunity for hearing thereon, by order exempt from any
one or more provisions of this title any security issued or proposed
to be issued under any indenture under which, at the time such application
is filed, securities referred to in paragraph (3) of subsection
(a) of this section are outstanding or on January 1, 1959,
such securities were outstanding, if and to the extent that the
Commission finds that compliance with such provision or provisions,
through the execution of a supplemental indenture or
otherwise—
(1) would require, by reason of the provisions of such
indenture, or the provisions of any other indenture or agreement
made prior to the enactment of this title, or the provisions
of any applicable law, the consent of the holders of securities
outstanding under any such indenture or agreement; or
(2) would impose an undue burden on the issuer, having
due regard to the public interest and the interests of investors.
(d) The Commission may, by rules or regulations upon its own
motion, or by order on application by an interested person, exempt
conditionally or unconditionally any person, registration statement,
indenture, security or transaction, or any class or classes of persons,
registration statements, indentures, securities, or transactions,
from any one or more of the provisions of this title, if and
to the extent that such exemption is necessary or appropriate in
the public interest and consistent with the protection of investors
and the purposes fairly intended by this title. The Commission
shall by rules and regulations determine the procedures under
which an exemption under this subsection shall be granted, and
may, in its sole discretion, decline to entertain any application for
an order of exemption under this subsection.
(e) The Commission may from time to time by its rules and
regulations, and subject to such terms and conditions as may be
prescribed herein, add to the securities exempted as provided in
this section any class of securities issued by a small business
investment company under the Small Business Investment Act of
1958 1 if it finds, having regard to the purposes of that Act, that
the enforcement of this Act with respect to such securities is not
necessary in the public interest and for the protection of investors.
SECURITIES REQUIRED TO BE REGISTERED UNDER SECURITIES ACT
SEC. 305. ø77eee¿ (a) Subject to the provisions of section 304,
a registration statement relating to a security shall include the following
information and documents, as though such inclusion were
9 TRUST INDENTURE ACT OF 1939 Sec. 305
required by the provisions of section 7 of the Securities Act of
1933—
(1) such information and documents as the Commission
may by rules and regulations prescribe in order to enable the
Commission to determine whether any person designated to
act as trustee under the indenture under which such security
has been or is to be issued is eligible to act as such under subsection
(a) of section 310; and
(2) an analysis of any provisions of such indenture with respect
to (A) the definition of what shall constitute a default
under such indenture, and the withholding of notice to the
indenture security holders of any such default, (B) the authentication
and delivery of the indenture securities and the application
of the proceeds thereof, (C) the release or the release
and substitution of any property subject to the lien of the
indenture, (D) the satisfaction and discharge of the indenture,
and (E) the evidence required to be furnished by the obligor
upon the indenture securities to the trustee as to compliance
with the conditions and convenants provided for in such indenture.
The information and documents required by paragraph (1) of this
subsection with respect to the person designated to act as indenture
trustee shall be contained in a separate part of such registration
statement, which part shall be signed by such person. Such
part of the registration statement shall be deemed to be a document
filed pursuant to this title, and the provisions of sections 11,
12, 17, and 24 of the Securities Act of 1933 shall not apply to statements
therein or omissions therefrom.
(b)(1) Except as may be permitted by paragraph (2) of this subsection,
the Commission shall issue an order prior to the effective
date of registration refusing to permit such a registration statement
to become effective, if it finds that—
(A) the security to which such registration statement relates
has not been or is not to be issued under an indenture;
or
(B) any person designated as trustee under such indenture
is not eligible to act as such under subsection (a) of section
310;
but no such order shall be issued except after notice and opportunity
for hearing within the periods and in the manner required
with respect to refusal orders pursuant to section 8(b) of the Securities
Act of 1933. If and when the Commission deems that the
objections on which such order was based have been met, the Commission
shall enter an order rescinding such refusal order, and the
registration shall become effective at the time provided in section
8(a) of the Securities Act of 1933, or upon the date of such rescission,
whichever shall be the later.
(2) In the case of securities registered under the Securities Act
of 1933, which securities are eligible to be issued, offered, or sold
on a delayed basis by or on behalf of the registrant, the Commission
shall not be required to issue an order pursuant to paragraph
(1) of subsection (b) of section 305 for failure to designate a trustee
eligible to act under subsection (a) of section 310 if, in accordance
with such rules and regulations as may be prescribed by the ComSec.
306 TRUST INDENTURE ACT OF 1939 10
mission, the issuer of such securities files an application for the
purpose of determining such trustee’s eligibility under subsection
(a) of section 310. The Commission shall issue an order prior to the
effective date of such application refusing to permit the application
to become effective, if it finds that any person designated as trustee
under such indenture is not eligible to act as such under subsection
(a) of section 310, but no order shall be issued except after notice
and opportunity for hearing within the periods and in the manner
required with respect to refusal orders pursuant to section 8(b) of
the Securities Act of 1933. If after notice and opportunity for hearing
the Commission issues an order under this provision, the obligor
shall within 5 calendar days appoint a trustee meeting the
requirements of subsection (a) of section 310. No such appointment
shall be effective and such refusal order shall not be rescinded by
the Commission until a person eligible to act as trustee under subsection
(a) of section 310 has been appointed. If no order is issued,
an application filed pursuant to this paragraph shall be effective
the tenth day after filing thereof or such earlier date as the Commission
may determine, having due regard to the adequacy of
information provided therein, the public interest, and the protection
of investors.
(c) A prospectus relating to any such security shall include to
the extent the Commission may prescribe by rules and regulations
as necessary and appropriate in the public interest or for the protection
of investors, as though such inclusion were required by section
10 of the Securities Act of 1933, a written statement containing
the analysis set forth in the registration statement, of any
indenture provisions with respect to the matters specified in paragraph
(2) of subsection (a) of this section, together with a supplementary
analysis, prepared by the Commission, of such provisions
and of the effect thereof, if, in the opinion of the Commission, the
inclusion of such supplementary analysis is necessary or appropriate
in the public interest or for the protection of investors, and
the Commission so declares by order after notice and, if demanded
by the issuer, opportunity for hearing thereon. Such order shall be
entered prior to the effective date of registration, except that if
opportunity for hearing thereon is demanded by the issuer such
order shall be entered within a reasonable time after such opportunity
for hearing.
(d) The provisions of sections 11, 12, 17, and 24 of the Securities
Act of 1933, and the provisions of sections 323 and 325 of this
title, shall not apply to statements in or omissions from any analysis
required under the provisions of this section or section 306 or
307.
SECURITIES NOT REGISTERED UNDER SECURITIES ACT
SEC. 306. ø77fff¿ (a) In the case of any security which is not
registered under the Securities Act of 1933 and to which this subsection
is applicable notwithstanding the provisions of section 304,
unless such security has been or is to be issued under an indenture
and an application for qualification is effective as to such indenture,
it shall be unlawful for any person, directly or indirectly—
(1) to make use of any means or instruments of transportation
or communication in interstate commerce or of the mails
11 TRUST INDENTURE ACT OF 1939 Sec. 307
to sell such security through the use or medium of any prospectus
or otherwise; or
(2) to carry or cause to be carried through the mails or in
interstate commerce, by any means or instruments of transportation,
any such security for the purpose of sale or for delivery
after sale.
(b) In the case of any security which is not registered under
the Securities Act of 1933, but which has been or is to be issued
under an indenture as to which an application for qualification is
effective, it shall be unlawful for any person, directly or
indirectly—
(1) to make use of any means or instruments of transportation
or communication in interstate commerce or of the mails
to carry or transmit any prospectus relating to any such security,
unless such prospectus, to the extent the Commission may
prescribe by rules and regulations as necessary and appropriate
in the public interest or for the protection of investors,
includes or is accompanied by a written statement that contains
the information specified in subsection (c) of section 305;
or
(2) to carry or to cause to be carried through the mails or
in interstate commerce any such security for the purpose of
sale or for delivery after sale, unless, to the extent the Commission
may prescribe by rules and regulations as necessary or
appropriate in the public interest or for the protection of investors,
accompanied or preceded by a written statement that contains
the information specified in subsection (c) of section 305.
(c) It shall be unlawful for any person, directly or indirectly,
to make use of any means or instruments of transportation or communication
in interstate commerce or of the mails to offer to sell
through the use or medium of any prospectus or otherwise any
security which is not registered under the Securities Act of 1933
and to which this subsection is applicable notwithstanding the provisions
of section 304, unless such security has been or is to be
issued under an indenture and an application for qualification has
been filed as to such indenture, or while the application is the subject
of a refusal order or stop order or (prior to qualification) any
public proceeding or examination under section 307(c).
QUALIFICATION OF INDENTURES COVERING SECURITIES NOT REQUIRED
TO BE REGISTERED
SEC. 307. ø77ggg¿ (a) In the case of any security which is not
required to be registered under the Securities Act of 1933 and to
which subsection (a) of section 306 is applicable notwithstanding
the provisions of section 304, an application for qualification of the
indenture under which such security has been or is to be issued
shall be filed with the Commission by the issuer of such security.
Each such application shall be in such form, and shall be signed
in such manner, as the Commission may by rules and regulations
prescribe as necessary or appropriate in the public interest or for
the protection of investors. Each such application shall include the
information and documents required by subsection (a) of section
305. The information and documents required by paragraph (1) of
such subsection with respect to the person designated to act as
Sec. 308 TRUST INDENTURE ACT OF 1939 12
indenture trustee shall be contained in a separate part of such application,
which part shall be signed by such person. Each such application
shall also include such of the other information and documents
which would be required to be filed in order to register such
indenture security under the Securities Act of 1933 as the Commission
may by rules and regulations prescribe as necessary or appropriate
in the public interest or for the protection of investors. An
application may be withdrawn by the applicant at any time prior
to the effective date thereof. Subject to the provisions of section
321, the information and documents contained in or filed with any
application shall be made available to the public under such regulations
as the Commission may prescribe, and copies thereof, photostatic
or otherwise, shall be furnished to every applicant therefor
at such reasonable charge as the Commission may prescribe.
(b) The filing with the Commission of an application, or of an
amendment to an application, shall be deemed to have taken place
upon the receipt thereof by the Commission.
(c) The provisions of section 8 of the Securities Act of 1933 and
the provisions of subsection (b) of section 305 of this title shall
apply with respect to every such application, as though such application
were a registration statement filed pursuant to the provisions
of such Act.
INTEGRATION OF PROCEDURE WITH SECURITIES ACT AND OTHER ACTS
SEC. 308. ø77hhh¿ (a) The Commission, by such rules and regulations
or orders as it deems necessary or appropriate in the public
interest or for the protection of investors, shall authorize the filing
of any information or documents required to be filed with the
Commission under this title, or under the Securities Act of 1933,
the Securities Exchange Act of 1934, or the Public Utility Holding
Company Act of 1935, by incorporating by reference any information
or documents on file with the Commission under this title or
under any such Act.
(b) The Commission, by such rules and regulations or orders as
it deems necessary or appropriate in the public interest or for the
protection of investors, shall provide for the consolidation of applications,
reports, and proceedings under this title with registration
statements, applications, reports, and proceedings under the Securities
Act of 1933, the Securities Exchange Act of 1934, or the Public
Utility Holding Company Act of 1935.
WHEN QUALIFICATION BECOMES EFFECTIVE; EFFECT OF
QUALIFICATION
SEC. 309. ø77iii¿ (a) The indenture under which a security has
been or is to be issued shall be deemed to have been qualified
under this title—
(1) when registration becomes effective as to such security;
or
(2) when an application for the qualification of such indenture
becomes effective, pursuant to section 307.
(b) After qualification has become effective as to the indenture
under which a security has been or is to be issued, no stop order
shall be issued pursuant to section 8(d) of the Securities Act of
13 TRUST INDENTURE ACT OF 1939 Sec. 310
1933, suspending the effectiveness of the registration statement relating
to such security or of the application for qualification of such
indenture, except on one or more of the grounds specified in section
8 of such Act, or the failure of the issuer to file an application as
provided for by section 305(b)(2).
(c) The making, amendment, or rescission of a rule, regulation,
or order under the provisions of this title (except to the extent
authorized by subsection (a) of section 314 with respect to rules
and regulations prescribed pursuant to such subsection) shall not
affect the qualification, form, or interpretation of any indenture as
to which qualification became effective prior to the making, amendment,
or rescission of such rule, regulation, or order.
(d) No trustee under an indenture which has been qualified
under this title shall be subject to any liability because of any failure
of such indenture to comply with any of the provisions of this
title, or any rule, regulation, or order thereunder.
(e) Nothing in this title shall be construed as empowering the
Commission to conduct an investigation or other proceeding for the
purpose of determining whether the provisions of an indenture
which has been qualified under this title are being complied with,
or to enforce such provisions.
ELIGIBILITY AND DISQUALIFICATION OF TRUSTEE
Persons Eligible for Appointment as Trustee
SEC. 310. ø77jjj¿ (a)(1) There shall at all times be one or more
trustees under every indenture qualified or to be qualified pursuant
to this title, at least one of whom shall at all times be a corporation
organized and doing business under the laws of the
United States or of any State or Territory or of the District of Columbia
or a corporation or other person permitted to act as trustee
by the Commission (referred to in this title as the institutional
trustee), which (A) is authorized under such laws to exercise corporate
trust powers, and (B) is subject to supervision or examination
by Federal, State, Territorial, or District of Columbia authority.
The Commission may, pursuant to such rules and regulations
as it may prescribe, or by order on application, permit a corporation
or other person organized and doing business under the laws
of a foreign government to act as sole trustee under an indenture
qualified or to be qualified pursuant to this title, if such corporation
or other person (i) is authorized under such laws to exercise
corporate trust powers, and (ii) is subject to supervision or examination
by authority of such foreign government or a political subdivision
thereof substantially equivalent to supervision or examination
applicable to United States institutional trustees. In prescribing
such rules and regulations or making such order, the Commission
shall consider whether under such laws, a United States
institutional trustee is eligible to act as sole trustee under an
indenture relating to securities sold within the jurisdiction of such
foreign government.
(2) Such institutional trustee shall have at all times a combined
capital and surplus of a specified minimum amount, which
shall not be less than $150,000. If such institutional trustee publishes
reports of condition at least annually, pursuant to law or to
Sec. 310 TRUST INDENTURE ACT OF 1939 14
the requirements of said supervising or examining authority, the
indenture may provide that, for the purposes of this paragraph, the
combined capital and surplus of such trustee shall be deemed to be
its combined capital and surplus as set forth in its most recent report
of condition so published.
(3) If the indenture to be qualified requires or permits the
appointment of one or more co-trustees in addition to such institutional
trustee, the rights, powers, duties, and obligations conferred
or imposed upon the trustees or any of them shall be conferred or
imposed upon and exercised or performed by such institutional
trustee, or such institutional trustee and such co-trustees jointly,
except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed, such institutional
trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties, and obligations
shall be exercised and performed by such co-trustees.
(4) In the case of certificates of interest or participation, the
indenture trustee or trustees shall have the legal power to exercise
all of the rights, powers, and privileges of a holder of the security
or securities in which such certificates evidence an interest or participation.
(5) No obligor upon the indenture securities or person directly
or indirectly controlling, controlled by, or under common control
with such obligor shall serve as trustee upon such indenture securities.
(b) If any indenture trustee has or shall acquire any conflicting
interest as hereinafter defined—
(i) then, within 90 days after ascertaining that it has such
conflicting interest, and if the default (as defined in the next
sentence) to which such conflicting interest relates has not
been cured or duly waived or otherwise eliminated before the
end of such 90-day period, such trustee shall either eliminate
such conflicting interest or, except as otherwise provided below
in this subsection, resign, and the obligor upon the indenture
securities shall take prompt steps to have a successor appointed
in the manner provided in the indenture;
(ii) in the event that such trustee shall fail to comply with
the provisions of clause (i) of this subsection, such trustee
shall, within 10 days after the expiration of such 90-day period,
transmit notice of such failure to the indenture security
holders in the manner and to the extent provided in subsection
(c) of section 313; and
(iii) subject to the provisions of subsection (e) of section
315, unless such trustee’s duty to resign is stayed as provided
below in this subsection, any security holder who has been a
bona fide holder of indenture securities for at least six months
may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of
such trustee, and the appointment of a successor, if such
trustee fails, after written request thereof by such holder to
comply with the provisions of clause (i) of this subsection.
For the purposes of this subsection, an indenture trustee shall
be deemed to have a conflicting interest if the indenture securities
15 TRUST INDENTURE ACT OF 1939 Sec. 310
are in default (as such term is defined in such indenture, but exclusive
of any period of grace or requirement of notice) and—
(1) such trustee is trustee under another indenture under
which any other securities, or certificates of interest or participation
in any other securities, of an obligor upon the indenture
securities are outstanding or is trustee for more than one outstanding
series of securities, as hereafter defined, under a single
indenture of an obligor, unless—
(A) the indenture securities are collateral trust notes
under which the only collateral consists of securities issued
under such other indenture,
(B) such other indenture is a collateral trust indenture
under which the only collateral consists of indenture securities,
or
(C) such obligor has no substantial unmortgaged assets
and is engaged primarily in the business of owning,
or of owning and developing and/or operating, real estate,
and the indenture to be qualified and such other indenture
are secured by wholly separate and distinct parcels of real
estate:
Provided, That the indenture to be qualified shall automatically
be deemed (unless it is expressly provided therein that
such provision is excluded) to contain a provision excluding
from the operation of this paragraph other series under such
indenture, and any other indenture or indentures under which
other securities, or certificates of interest or participation in
other securities, of such an obligor are outstanding, if—
(i) the indenture to be qualified and any such other
indenture or indentures (and all series of securities
issuable thereunder) are wholly unsecured and rank
equally, and such other indenture or indentures (and such
series) are specifically described in the indenture to be
qualified or are thereafter qualified under this title, unless
the Commission shall have found and declared by order
pursuant to subsection (b) of section 305 or subsection (c)
of section 307 that differences exist between the provisions
of the indenture (or such series) to be qualified and the
provisions of such other indenture or indentures (or such
series) which are so likely to involve a material conflict of
interest as to make it necessary in the public interest or
for the protection of investors to disqualify such trustee
from acting as such under one of such indentures, or
(ii) the issuer shall have sustained the burden of proving,
on application to the Commission and after opportunity
for hearing thereon, that trusteeship under the
indenture to be qualified and such other indenture or
under more than one outstanding series under a single
indenture is not so likely to involve a material conflict of
interest as to make it necessary in the public interest or
for the protection of investors to disqualify such trustee
from acting as such under one of such indentures or with
respect to such series;
(2) such trustee or any of its directors or executive officers
is an underwriter for an obligor upon the indenture securities;
Sec. 310 TRUST INDENTURE ACT OF 1939 16
(3) such trustee directly or indirectly controls or is directly
or indirectly controlled by or is under direct or indirect common
control with an underwriter for an obligor upon the indenture
securities;
(4) such trustee or any of its directors or executive officers
is a director, officer, partner, employee, appointee, or representative
of an obligor upon the indenture securities, or of an
underwriter (other than the trustee itself) for such an obligor
who is currently engaged in the business of underwriting, except
that—
(A) one individual may be a director and/or an executive
officer of the trustee and a director and/or an executive
officer of such obligor, but may not be at the same
time an executive officer of both the trustee and of such
obligor,
(B) if and so long as the number of directors of the
trustee in office is more than nine, one additional individual
may be a director and/or an executive officer of the
trustee and a director of such obligor, and
(C) such trustee may be designated by any such obligor
or by any underwriter for any such obligor, to act in
the capacity of transfer agent, registrar, custodian, paying
agent, fiscal agent, escrow agent, or depositary, or in any
other similar capacity, or, subject to the provisions of paragraph
(1) of this subsection, to act as trustee, whether
under an indenture or otherwise;
(5) 10 per centum or more of the voting securities of such
trustee is beneficially owned either by an obligor upon the
indenture securities or by any director, partner or executive officer
thereof, or 20 per centum or more of such voting securities
is beneficially owned, collectively by any two or more of
such persons; or 10 per centum or more of the voting securities
of such trustee is beneficially owned either by an underwriter
for any such obligor or by any director, partner, or executive
officer thereof, or is beneficially owned, collectively, by any two
or more such persons;
(6) such trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default as hereinafter
defined—
(A) 5 per centum or more of the voting securities, or
10 per centum or more of any other class of security, of an
obligor upon the indenture securities, not including indentures
securities and securities issued under any other
indenture under which such trustee is also trustee, or
(B) 10 per centum or more of any class of security of
an underwriter for any such obligor;
(7) such trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default as hereinafter
defined, 5 per centum or more of the voting securities of
any person who, to the knowledge of the trustee, owns 10 per
centum or more of the voting securities of, or controls directly
or indirectly or is under direct or indirect common control with,
an obligor upon the indenture securities;
17 TRUST INDENTURE ACT OF 1939 Sec. 310
(8) such trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default as hereinafter
defined, 10 per centum or more of any class of security
of any person who, to the knowledge of the trustee, owns 50
per centum or more of the voting securities of an obligor upon
the indenture securities;
(9) such trustee owns, on the date of default upon the
indenture securities (as such term is defined in such indenture
but exclusive of any period of grace or requirement of notice)
or any anniversary of such default while such default upon the
indenture securities remains outstanding, in the capacity of executor,
administrator, testamentary or inter vivos trustee,
guardian, committee or conservator, or in any other similar capacity,
an aggregate of 25 per centum or more of the voting
securities, or of any class of security, of any person, the beneficial
ownership of a specified percentage of which would have
constituted a conflicting interest under paragraph (6), (7), or
(8) of this subsection. As to any such securities of which the
indenture trustee acquired ownership through becoming executor,
administrator or testamentary trustee of an estate which
include them, the provisions of the preceding sentence shall
not apply for a period of not more than 2 years from the date
of such acquisition, to the extent that such securities included
in such estate do not exceed 25 per centum of such voting securities
or 25 per centum of any such class of security. Promptly
after the dates of any such default upon the indenture securities
and annually in each succeeding year that the indenture
securities remain in default the trustee shall make a check of
its holding of such securities in any of the above-mentioned
capacities as of such dates. If the obligor upon the indenture
securities fails to make payment in full of principal or interest
under such indenture when and as the same becomes due and
payable, and such failure continues for 30 days thereafter, the
trustee shall make a prompt check of its holdings of such securities
in any of the above-mentioned capacities as of the date
of the expiration of such 30-day period, and after such date,
notwithstanding the foregoing provisions of this paragraph, all
such securities so held by the trustee, with sole or joint control
over such securities vested in it, shall be considered as though
beneficially owned by such trustee, for the purposes of paragraphs
(6), (7), and (8) of this subsection; or
(10) except under the circumstances described in paragraphs
(1), (3), (4), (5) or (6) of section 311(b) of this title, the
trustee shall be or shall become a creditor of the obligor.
For purposes of paragraph (1) of this subsection, and of section
316(a) of this title, the term ‘‘series of securities’’ or ‘‘series’’ means
a series, class or group of securities issuable under an indenture
pursuant to whose terms holders of one such series may vote to direct
the indenture trustee, or otherwise take action pursuant to a
vote of such holders, separately from holders of another such series:
Provided, That ‘‘series of securities’’ or ‘‘series’’ shall not include
any series of securities issuable under an indenture if all
such series rank equally and are wholly unsecured.
Sec. 310 TRUST INDENTURE ACT OF 1939 18
The specification of percentages in paragraphs (5) to (9), inclusive,
of this subsection shall not be construed as indicating that the
ownership of such percentages of the securities of a person is or is
not necessary or sufficient to constitute direct or indirect control for
the purposes of paragraph (3) or (7) of this subsection.
For the purposes of paragraphs (6), (7), (8), and (9) of this
subsection—
(A) the terms ‘‘security’’ and ‘‘securities’’ shall include only
such securities as are generally known as corporate securities,
but shall not include any note or other evidence of indebtedness
issued to evidence an obligation to repay moneys lent to
a person by one or more banks, trust companies, or banking
firms, or any certificate of interest or participation in any such
note or evidence of indebtedness;
(B) an obligation shall be deemed to be in default when a
default in payment of principal shall have continued for thirty
days or more, and shall not have been cured; and
(C) the indenture trustee shall not be deemed the owner
or holder of (i) any security which it holds as collateral security
(as trustee or otherwise) for any obligation which is not in default
as above defined, or (ii) any security which it holds as collateral
security under the indenture to be qualified, irrespective
of any default thereunder, or (iii) any security which it
holds as agent for collection, or as custodian, escrow agent or
depositary, or in any similar representative capacity.
For the purposes of this subsection, the term ‘‘underwriter’’
when used with reference to an obligor upon the indenture securities
means every person who, within one year prior to the time as
of which the determination is made, was an underwriter of any
security of such obligor outstanding at the time of the determination.
Except in the case of a default in the payment of the principal
of or interest on any indenture security, or in the payment of any
sinking or purchase fund installment, the indenture trustee shall
not be required to resign as provided by this subsection if such
trustee shall have sustained the burden of proving, on application
to the Commission and after opportunity for hearing thereon,
that—
(i) the default under the indenture may be cured or waived
during a reasonable period and under the procedures described
in such application, and
(ii) a stay of the trustee’s duty to resign will not be inconsistent
with the interests of holders of the indenture securities.
The filing of such an application shall automatically stay the
performance of the duty to resign until the Commission orders
otherwise.
Any resignation of an indenture trustee shall become effective
only upon the appointment of a successor trustee and such successor’s
acceptance of such an appointment.
Applicability of Section
(c) The Public Utility Holding Company Act of 1935 shall not
be held to establish or authorize the establishment of any stand19
TRUST INDENTURE ACT OF 1939 Sec. 311
ards regarding the eligibility and qualifications of any trustee or
prospective trustee under an indenture to be qualified under this
title, or regarding the provisions to be included in any such indenture
with respect to the eligibility and qualifications of the trustee
thereunder, other than those established by the provisions of this
section.
PREFERENTIAL COLLECTION OF CLAIMS AGAINST OBLIGOR
SEC. 311. ø77kkk¿ (a) Subject to the provisions of subsection
(b) of this section, if the indenture trustee shall be, or shall become,
a creditor, directly or indirectly, secured or unsecured, of an obligor
upon the indenture securities, within three months prior to a default
as defined in the last paragraph of this subsection, or subsequent
to such a default, then, unless and until such default shall
be cured, such trustee shall set apart and hold in a special account
for the benefit of the trustee individually and the indenture security
holders—
(1) an amount equal to any and all reductions in the
amount due and owing upon any claim as such creditor in respect
of principal or interest, effected after the beginning of
such three months’ period and valid as against such obligor
and its other creditors, except any such reduction resulting
from the receipt or disposition of any property described in
paragraph (2) of this subsection, or from the exercise of any
right of set-off which the trustee could have exercised if a petition
in bankruptcy had been filed by or against such obligor
upon the date of such default; and
(2) all property received in respect of any claim as such
creditor, either as security therefor, or in satisfaction or composition
thereof, or otherwise, after the beginning of such three
months’ period, or an amount equal to the proceeds of any such
property, if disposed of, subject, however, to the rights, if any,
of such obligor and its other creditors in such property or such
proceeds.
Nothing herein contained shall affect the right of the indenture
trustee—
(A) to retain for its own account (i) payments made on account
of any such claim by any person (other than such obligor)
who is liable thereon, and (ii) the proceeds of the bona fide
sale of any such claim by the trustee to a third person, and (iii)
distributions made in cash, securities, or other property in respect
of claims filed against such obligor in bankruptcy or receivership
or in proceedings for reorganization pursuant to the
Bankruptcy Act or applicable State law;
(B) to realize, for its own account, upon any property held
by it as security for any such claim, if such property was so
held prior to the beginning of such three months’ period;
(C) to realize, for its own account, but only to the extent
of the claim hereinafter mentioned, upon any property held by
it as security for any such claim, if such claim was created
after the beginning of such three months’ period and such
property was received as security therefor simultaneously with
the creation thereof, and if the trustee shall sustain the burden
of proving that at the time such property was so received the
Sec. 311 TRUST INDENTURE ACT OF 1939 20
trustee had no reasonable cause to believe that a default as defined
in the last paragraph of this subsection would occur
within three months; or
(D) to receive payment on any claim referred to in paragraph
(B) or (C), against the release of any property held as
security for such claim as provided in paragraph (B) or (C), as
the case may be, to the extent of the fair value of such property.
For the purposes of paragraphs (B), (C), and (D), property substituted
after the beginning of such three months’ period for property
held as security at the time of such substitution shall, to the
extent of the fair value of the property released, have the same status
as the property released, and, to the extent that any claim referred
to in any of such paragraphs is created in renewal of or in
substitution for or for the purpose of repaying or refunding any
preexisting claim of the indenture trustee as such creditor, such
claim shall have the same status as such preexisting claim.
If the trustee shall be required to account, the funds and property
held in such special account and the proceeds thereof shall be
apportioned between the trustee and the indenture security holders
in such manner that the trustee and indenture security holders realize,
as a result of payments from such special account and payments
of dividends on claims filed against such obligor in bankruptcy
or receivership or in the proceedings for reorganization pursuant
to the Bankruptcy Act or applicable State law, the same percentage
of their respective claims, figured before crediting to the
claim of the trustee anything on account of the receipt by it from
such obligor of the funds and property in such special account and
before crediting to the respective claims of the trustee and the
indenture security holders dividends on claims filed against such
obligor in bankruptcy or receivership or in proceedings for reorganization
pursuant to the Bankruptcy Act or applicable State law,
but after crediting thereon receipts on account of the indebtedness
represented by their respective claims from all sources other than
from such dividends and from the funds and property so held in
such special account. As used in this paragraph, with respect to
any claim, the term ‘‘dividends’’ shall include any distribution with
respect to such claim, in bankruptcy or receivership or in proceedings
for reorganization pursuant to the Bankruptcy Act or applicable
State law, whether such distribution is made in cash, securities,
or other property, but shall not include any such distribution
with respect to the secured portion, if any, of such claim. The court
in which such bankruptcy, receivership, or proceeding for reorganization
is pending shall have jurisdiction (i) to apportion between
the indenture trustee and the indenture security holders, in accordance
with the provisions of this paragraph, the funds and property
held in such special account and the proceeds thereof, or (ii) in lieu
of such apportionment, in whole or in part, to give to the provisions
of this paragraph due consideration in determining the fairness of
the distributions to be made to the indenture trustee and the
indenture security holders with respect to their respective claims,
in which event it shall not be necessary to liquidate or to appraise
the value of any securities or other property held in such special
account or as security for any such claim, or to make a specific allo21
TRUST INDENTURE ACT OF 1939 Sec. 311
cation of such distributions as between the secured and unsecured
portions of such claims, or otherwise to apply the provisions of this
paragraph as a mathematical formula.
Any indenture trustee who has resigned or been removed after
the beginning of such three months’ period shall be subject to the
provisions of this subsection as though such resignation or removal
had not occurred. Any indenture trustee who has resigned or been
removed prior to the beginning of such three months’ period shall
be subject to the provisions of this subsection if and only if the following
conditions exist—
(i) the receipt of property or reduction of claim which
would have given rise to the obligation to account, if such
indenture trustee had continued as trustee, occurred after the
beginning of such three months’ period; and
(ii) such receipt of property or reduction of claim occurred
within three months after such resignation or removal.
As used in this subsection, the term ‘‘default’’ means any failure
to make payment in full of principal or interest, when and as
the same becomes due and payable, under any indenture which has
been qualified under this title, and under which the indenture
trustee is trustee and the person of whom the indenture trustee is
directly or indirectly a creditor is an obligor; and the term ‘‘indenture
security holder’’ means all holders of securities outstanding
under any such indenture under which any such default exists. In
any case commenced under the Bankruptcy Act of July 1, 1898, or
any amendment thereto enacted prior to November 6, 1978, all references
to periods of three months shall be deemed to be references
to periods of four months.
(b) The indenture to be qualified shall automatically be deemed
(unless it is expressly provided therein that any such provision is
excluded) to contain provisions excluding from the operation of subsection
(a) of this section a creditor relationship arising from—
(1) the ownership or acquisition of securities issued under
any indenture, or any security or securities having a maturity
of one year or more at the time of acquisition by the indenture
trustee;
(2) advances authorized by a receivership or bankruptcy
court of competent jurisdiction, or by the indenture, for the
purpose of preserving the property subject to the lien of the
indenture or of discharging tax liens or other prior liens or
encumbrances on the trust estate, if notice of such advance and
of the circumstances surrounding the making thereof is given
to the indenture security holders, at the time and in the manner
provided in the indenture;
(3) disbursements made in the ordinary course of business
in the capacity of trustee under an indenture, transfer agent,
registrar, custodian, paying agent, fiscal agent or depositary, or
other similar capacity;
(4) an indebtedness created as a result of services rendered
or premises rented; or an indebtedness created as a result of
goods or securities sold in a cash transaction as defined in the
indenture;
(5) the ownership of stock or of other securities of a corporation
organized under the provisions of section 25(a) of the
Sec. 312 TRUST INDENTURE ACT OF 1939 22
1 12 U.S.C. 611.
Federal Reserve Act, as amended,1 which is directly or indirectly
a creditor of an obligor upon the indenture securities; or
(6) the acquisition, ownership, acceptance, or negotiation of
any drafts, bills of exchange, acceptances, or obligations which
fall within the classification of self-liquidating paper as defined
in the indenture.
(c) In the exercise by the Commission of any jurisdiction under
the Public Utility Holding Company Act of 1935 regarding the
issue or sale, by any registered holding company or a subsidiary
company thereof, of any security of such issuer or seller or of any
other company to a person which is trustee under an indenture or
indentures of such issuer or seller or other company, or of a subsidiary
or associate company or affiliate of such issuer or seller or
other company (whether or not such indenture or indentures are
qualified or to be qualified under this title), the fact that such
trustee will thereby become a creditor, directly or indirectly, of any
of the foregoing shall not constitute a ground for the Commission
taking adverse action with respect to any application or declaration,
or limiting the scope of any rule or regulation which would
otherwise permit such transaction to take effect; but in any case
in which such trustee is trustee under an indenture of the company
of which it will thereby become a creditor, or of any subsidiary
company thereof, this subsection shall not prevent the Commission
from requiring (if such requirement would be authorized under the
provisions of the Public Utility Holding Company Act of 1935) that
such trustee, as such, shall effectively and irrevocably agree in
writing, for the benefit of the holders from time to time of the securities
from time to time outstanding under such indenture, to be
bound by the provisions of this section, subsection (c) of section
315, and, in case of default (as such term is defined in such indenture),
subsection (d) of section 315, as fully as though such provisions
were included in such indenture. For the purposes of this
subsection the terms ‘‘registered holding company’’, ‘‘subsidiary
company’’, ‘‘associate company’’, and ‘‘affiliate’’ shall have the
respective meanings assigned to such terms in section 2(a) of the
Public Utility Holding Company Act of 1935.
BONDHOLDERS LISTS
SEC. 312. ø77lll¿ (a) Each obligor upon the indenture securities
shall furnish or cause to be furnished to the institutional trustee
thereunder at stated intervals of not more than six months, and at
such other times as such trustee may request in writing, all information
in the possession or control of such obligor, or of any of its
paying agents, as to the names and addresses of the indenture
security holders, and requiring such trustee to preserve, in as current
a form as is reasonably practicable, all such information so
furnished to it or received by it in the capacity of paying agent.
(b) Within five business days after the receipt by the institutional
trustee of a written application by any three or more indenture
security holders stating that the applicants desire to communicate
with other indenture security holders with respect to their
rights under such indenture or under the indenture securities, and
23 TRUST INDENTURE ACT OF 1939 Sec. 313
accompanied by a copy of the form of proxy or other communication
which such applicants propose to transmit, and by reasonable proof
that each such applicant has owned an indenture security for a period
of at least six months preceding the date of such application,
such institutional trustee shall, at its election, either—
(1) afford to such applicants access to all information so
furnished to or received by such trustee; or
(2) inform such applicants as to the approximate number
of indenture security holders according to the most recent
information so furnished to or received by such trustee, and as
to the approximate cost of mailing to such indenture security
holders the form of proxy or other communication, if any, specified
in such application.
If such trustee shall elect not to afford to such applicants access
to such information, such trustee shall, upon the written request
of such applicants, mail to all such indenture security holders copies
of the form of proxy or other communication which is specified
in such request, with reasonable promptness after a tender to such
trustee of the material to be mailed and of payment, or provision
for the payment, of the reasonable expenses of such mailing, unless
within five days after such tender, such trustee shall mail to such
applicants, and file with the Commission together with a copy of
the material to be mailed, a written statement to the effect that,
in the opinion of such trustee, such mailing would be contrary to
the best interests of the indenture security holders or would be in
violation of applicable law. Such written statement shall specify
the basis of such opinion. After opportunity for hearing upon the
objections specified in the written statement so filed, the Commission
may, and if demanded by such trustee or by such applicants
shall, enter an order either sustaining one or more of such objections
or refusing to sustain any of them. If the Commission shall
enter an order refusing to sustain any of such objections, or if, after
the entry of an order sustaining one or more of such objections, the
Commission shall find, after notice and opportunity for hearing,
that all objections so sustained have been met, and shall enter an
order so declaring, such trustee shall mail copies of such material
to all such indenture security holders with reasonable promptness
after the entry of such order and the renewal of such tender.
(c) The disclosure of any such information as to the names and
addresses of the indenture security holders in accordance with the
provisions of this section, regardless of the source from which such
information was derived, shall not be deemed to be a violation of
any existing law, or of any law hereafter enacted which does not
specifically refer to this section, nor shall such trustee be held
accountable by reason of mailing any material pursuant to a request
made under subsection (b) of this section.
REPORTS BY INDENTURE TRUSTEE
SEC. 313. ø77mmm¿ (a) The indenture trustee shall transmit
to the indenture security holders as hereinafter provided, at stated
intervals of not more than 12 months, a brief report with respect
to any of the following events which may have occurred within the
previous 12 months (but if no such event has occurred within such
period no report need be transmitted):—
Sec. 313 TRUST INDENTURE ACT OF 1939 24
1 So in law. Probably should read ‘‘subsection (b) of section 311’’.
(1) any change to its eligibility and its qualifications under
section 310;
(2) the creation of or any material change to a relationship
specified in paragraph (1) through (10) of section 310(b);
(3) the character and amount of any advances made by it,
as indenture trustee, which remain unpaid on the date of such
report, and for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the indenture securities,
on the trust estate or on property or funds held or collected by
it as such trustee, if such advances so remaining unpaid aggregate
more than one-half of 1 per centum of the principal
amount of the indenture securities outstanding on such date;
(4) any change to the amount, interest rate, and maturity
date of all other indebtedness owing to it in its individual capacity,
on the date of such report, by the obligor upon the
indenture securities, with a brief description of any property
held as collateral security therefor, except an indebtedness
based upon a creditor relationship arising in any manner described
in paragraphs (2), (3), (4), or (6) of subsection 311 1;
(5) any change to the property and funds physically in its
possession as indenture trustee on the date of such report;
(6) any release, or release and substitution, of property
subject to the lien of the indenture (and the consideration
therefor, if any) which it has not previously reported;
(7) any additional issue of indenture securities which it
has not previously reported; and
(8) any action taken by it in the performance of its duties
under the indenture which it has not previously reported and
which in its opinion materially affects the indenture securities
or the trust estate, except action in respect of a default, notice
of which has been or is to be withheld by it in accordance with
an indenture provision authorized by subsection (b) of section
315.
(b) The indenture trustee shall transmit to the indenture security
holders as hereinafter provided, within the times hereinafter
specified, a brief report with respect to—
(1) the release, or release and substitution, of property
subject to the lien of the indenture (and the consideration
therefor, if any) unless the fair value of such property, as set
forth in the certificate or opinion required by paragraph (1) of
subsection (d) of section 314, is less than 10 per centum of the
principal amount of indenture securities outstanding at the
time of such release, or such release and substitution, such report
to be so transmitted within 90 days after such time; and
(2) the character and amount of any advances made by it
as such since the date of the last report transmitted pursuant
to the provisions of subsection (a) (or if no such report has yet
been so transmitted, since the date of execution of the indenture),
for the reimbursement of which it claims or may claim
a lien or charge, prior to that of the indenture securities, on
the trust estate or on property or funds held or collected by it
as such trustee, and which it has not previously reported pur25
TRUST INDENTURE ACT OF 1939 Sec. 314
suant to this paragraph, if such advances remaining unpaid at
any time aggregate more than 10 per centum of the principal
amount of indenture securities outstanding at such time, such
report to be so transmitted within 90 days after such time.
(c) Reports pursuant to this section shall be transmitted by
mail—
(1) to all registered holders of indenture securities, as the
names and addresses of such holders appear upon the registration
books of the obligor upon the indenture securities;
(2) to such holders of indenture securities as have, within
the two years preceding such transmission, filed their names
and addresses with the indenture trustee for that purpose; and
(3) except in the case of reports pursuant to subsection (b)
of this section, to all holders of indenture securities whose
names and addresses have been furnished to or received by the
indenture trustee pursuant to section 312.
(d) A copy of each such report shall, at the time of such transmission
to indenture security holders, be filed with each stock exchange
upon which the indenture securities are listed, and also
with the Commission.
REPORTS BY OBLIGOR; EVIDENCE OF COMPLIANCE WITH INDENTURE
PROVISIONS
Periodic Reports
SEC. 314. ø77nnn¿ (a) Each person who, as set forth in the registration
statement or application, is or is to be an obligor upon the
indenture securities covered thereby shall—
(1) file with the indenture trustee copies of the annual reports
and of the information, documents, and other reports (or
copies of such portions of any of the foregoing as the Commission
may by rules and regulations prescribe) which such obligor
is required to file with the Commission pursuant to section
13 or section 15(d) of the Securities Exchange Act of 1934; or,
if the obligor is not required to file information, documents, or
reports pursuant to either of such sections, then to file with
the indenture trustee and the Commission, in accordance with
rules and regulations prescribed by the Commission, such of
the supplementary and periodic information, documents, and
reports which may be required pursuant to section 13 of the
Securities Exchange Act of 1934, in respect of a security listed
and registered on a national securities exchange as may be
prescribed in such rules and regulations;
(2) file with the indenture trustee and the Commission, in
accordance with rules and regulations prescribed by the Commission,
such additional information, documents, and reports
with respect to compliance by such obligor with the conditions
and covenants provided for in the indenture, as may be required
by such rules and regulations, including, in the case of
annual reports, if required by such rules and regulations, certificates
or opinions of independent public accountants, conforming
to the requirements of subsection (e) of this section, as
to compliance with conditions or covenants, compliance with
which is subject to verification by accountants, but no such cerSec.
314 TRUST INDENTURE ACT OF 1939 26
tificate or opinion shall be required as to any matter specified
in clauses (A), (B), or (C) of paragraph (3) of subsection (c);
(3) transmit to the holders of the indenture securities upon
which such person is an obligor, in the manner and to the extent
provided in subsection (c) of section 313, such summaries
of any information, documents, and reports required to be filed
by such obligor pursuant to the provisions of paragraph (1) or
(2) of this subsection as may be required by rules and regulations
prescribed by the Commission; and
(4) furnish to the indenture trustee, not less often than annually,
a brief certificate from the principal executive officer,
principal financial officer or principal accounting officer as to
his or her knowledge of such obligor’s compliance with all conditions
and covenants under the indenture. For purposes of
this paragraph, such compliance shall be determined without
regard to any period of grace or requirement of notice provided
under the indenture.
The rules and regulations prescribed under this subsection shall be
such as are necessary or appropriate in the public interest or for
the protection of investors, having due regard to the types of indentures,
and the nature of the business of the class of obligors affected
thereby, and the amount of indenture securities outstanding
under such indentures, and, in the case of any such rules and regulations
prescribed after the indentures to which they apply have
been qualified under this title, the additional expense, if any, of
complying with such rules and regulations. Such rules and regulations
may be prescribed either before or after qualification becomes
effective as to any such indenture.
Evidence of Recording of Indenture
(b) If the indenture to be qualified is or is to be secured by the
mortgage or pledge of property, the obligor upon the indenture
securities shall furnish to the indenture trustee—
(1) promptly after the execution and delivery of the indenture,
an opinion of counsel (who may be of counsel for such obligor)
either stating that in the opinion of such counsel the
indenture has been properly recorded and filed so as to make
effective the lien intended to be created thereby, and reciting
the details of such action, or stating that in the opinion of such
counsel no such action is necessary to make such lien effective;
and
(2) at least annually after the execution and delivery of the
indenture, an opinion of counsel (who may be of counsel for
such obligor) either stating that in the opinion of such counsel
such action has been taken with respect to the recording, filing,
rerecording, and refiling of the indenture as is necessary
to maintain the lien of such indenture, and reciting the details
of such action, or stating that in the opinion of such counsel
no such action is necessary to maintain such lien.
Evidence of Compliance With Conditions Precedent
(c) The obligor upon the indenture securities shall furnish to
the indenture trustee evidence of compliance with the conditions
27 TRUST INDENTURE ACT OF 1939 Sec. 314
precedent, if any, provided for in the indenture (including any covenants
compliance with which constitutes a condition precedent)
which relate to the authentication and delivery of the indenture
securities, to the release or the release and substitution of property
subject to the lien of the indenture, to the satisfaction and discharge
of the indenture, or to any other action to be taken by the
indenture trustee at the request or upon the application of such obligor.
Such evidence shall consist of the following:
(1) certificates or opinions made by officers of such obligor
who are specified in the indenture, stating that such conditions
precedent have been complied with;
(2) an opinion of counsel (who may be of counsel for such
obligor) stating that in his opinion such conditions precedent
have been complied with; and
(3) in the case of conditions precedent compliance with
which is subject to verification by accountants (such as conditions
with respect to the preservation of specified ratios, the
amount of net quick assets, negative-pledge clauses, and other
similar specific conditions), a certificate or opinion of an
accountant, who, in the case of any such conditions precedent
to the authentication and delivery of indenture securities, and
not otherwise, shall be an independent public accountant selected
or approved by the indenture trustee in the exercise of
reasonable care, if the aggregate principal amount of such
indenture securities and of other indenture securities authenticated
and delivered since the commencement of the then current
calendar year (other than those with respect to which a
certificate or opinion of an accountant is not required, or with
respect to which a certificate or opinion of an independent public
accountant has previously been furnished) is 10 per centum
or more of the aggregate amount of the indenture securities at
the time outstanding; but no certificate or opinion need be
made by any person other than an officer or employee of such
obligor who is specified in the indenture, as to (A) dates or periods
not covered by annual reports required to be filed by the
obligor, in the case of conditions precedent which depend upon
a state of facts as of a date or dates or for a period or periods
different from that required to be covered by such annual reports,
or (B) the amount and value of property additions, except
as provided in paragraph (3) of subsection (d), or (C) the
adequacy of depreciation, maintenance, or repairs.
Certificates of Fair Value
(d) If the indenture to be qualified is or is to be secured by the
mortgage or pledge of property or securities, the obligor upon the
indenture securities shall furnish to the indenture trustee a certificate
or opinion of an engineer, appraiser, or other expert as to the
fair value—
(1) of any property or securities to be released from the
lien of the indenture, which certificate or opinion shall state
that in the opinion of the person making the same the proposed
release will not impair the security under such indenture
in contravention of the provisions thereof, and requiring furSec.
314 TRUST INDENTURE ACT OF 1939 28
ther that such certificate or opinion shall be made by an independent
engineer, appraiser, or other expert, if the fair value
of such property or securities and of all other property or securities
released since the commencement of the then current calendar
year, as set forth in the certificates or opinions required
by this paragraph, is 10 per centum or more of the aggregate
principal amount of the indenture securities at the time outstanding;
but such a certificate or opinion of an independent
engineer, appraiser, or other expert shall not be required in
the case of any release of property or securities, if the fair
value thereof as set forth in the certificate or opinion required
by this paragraph is less than $25,000 or less than 1 per centum
of the aggregate principal amount of the indenture securities
at the time outstanding;
(2) to such obligor of any securities (other than indenture
securities and securities secured by a lien prior to the lien of
the indenture upon property subject to the lien of the indenture),
the deposit of which with the trustee is to be made the
basis for the authentication and delivery of indenture securities,
the withdrawal of cash constituting a part of the trust estate
or the release of property or securities subject to the lien
of the indenture, and requiring further that if the fair value to
such obligor of such securities and of all other such securities
made the basis of any such authentication and delivery, withdrawal,
or release since the commencement of the then current
calendar year, as set forth in the certificates or opinions required
by this paragraph, is 10 per centum or more of the
aggregate principal amount of the indenture securities at the
time outstanding, such certificate or opinion shall be made by
an independent engineer, appraiser, or other expert and, in the
case of the authentication and delivery of indenture securities,
shall cover the fair value to such obligor of all other such securities
so deposited since the commencement of the current calendar
year as to which a certificate or opinion of an independent
engineer, appraiser, or other expert has not previously
been furnished; but such a certificate of an independent engineer,
appraiser, or other expert shall not be required with respect
to any securities so deposited, if the fair value thereof to
such obligor as set forth in the certificate or opinion required
by this paragraph is less than $25,000 or less than 1 per centum
of the aggregate principal amount of the indenture securities
at the time outstanding; and
(3) to such obligor of any property the subjection of which
to the lien of the indenture is to be made the basis for the
authentication and delivery of indenture securities, the withdrawal
of cash constituting a part of the trust estate, or the
release of property or securities subject to the lien of the indenture,
and requiring further that if—
(A) within six months prior to the date of acquisition
thereof by such obligor, such property has been used or
operated, by a person or persons other than such obligor,
in a business similar to that in which it has been or is to
be used or operated by such obligor, and
29 TRUST INDENTURE ACT OF 1939 Sec. 315
(B) the fair value to such obligor of such property as
set forth in such certificate or opinion is not less than
$25,000 and not less than 1 per centum of the aggregate
principal amount of the indenture securities at the time
outstanding,
such certificate or opinion shall be made by an independent
engineer, appraiser, or other expert and, in the case of the
authentication and delivery of indenture securities, shall cover
the fair value to the obligor of any property so used or operated
which has been so subjected to the lien of the indenture since
the commencement of the then current calendar year, and as
to which a certificate or opinion of an independent engineer,
appraiser, or other expert has not previously been furnished.
The indenture to be qualified shall automatically be deemed (unless
it is expressly provided therein that such provision is excluded)
to provide that any such certificate or opinion may be made by an
officer or employee of the obligor upon the indenture securities who
is duly authorized to make such certificate or opinion by the obligor
from time to time, except in cases in which this subsection requires
that such certificate or opinion be made by an independent person.
In such cases, such certificate or opinion shall be made by an independent
engineer, appraiser, or other expert selected or approved
by the indenture trustee in the exercise of reasonable care.
Recitals as to Basis of Certificate or Opinion
(e) Each certificate or opinion with respect to compliance with
a condition or covenant provided for in the indenture (other than
certificates provided pursuant to subsection (a)(4) of this section)
shall include (1) a statement that the person making such certificate
or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such
certificate or opinion are based; (3) a statement that, in the opinion
of such person, he has made such examination or investigation as
is necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been complied with;
and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Parties May Provide for Additional Evidence
(f) Nothing in this section shall be construed either as requiring
the inclusion in the indenture to be qualified of provisions that
the obligor upon the indenture securities shall furnish to the indenture
trustee any other evidence of compliance with the conditions
and covenants provided for in the indenture than the evidence
specified in this section, or as preventing the inclusion of such provisions
in such indenture, if the parties so agree.
DUTIES AND RESPONSIBILITY OF THE TRUSTEE
Duties Prior to Default
SEC. 315. ø77ooo¿ (a) The indenture to be qualified shall automatically
be deemed (unless it is expressly provided therein that
Sec. 315 TRUST INDENTURE ACT OF 1939 30
any such provision is excluded) to provide that, prior to default (as
such term is defined in such indenture)—
(1) the indenture trustee shall not be liable except for the
performance of such duties as are specifically set out in such
indenture; and
(2) the indenture trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, in the absence of bad faith on the part of such
trustee, upon certificates or opinions conforming to the requirements
of the indenture;
but the indenture trustee shall examine the evidence furnished to
it pursuant to section 314 to determine whether or not such evidence
conforms to the requirements of the indenture.
Notice of Defaults
(b) The indenture trustee shall give to the indenture security
holders, in the manner and to the extent provided in subsection (c)
of section 313, notice of all defaults known to the trustee, within
ninety days after the occurrence thereof: Provided, That such
indenture shall automatically be deemed (unless it is expressly provided
therein that such provision is excluded) to provide that, except
in the case of default in the payment of the principal of or interest
on any indenture security, or in the payment of any sinking
or purchase fund installment, the trustee shall be protected in
withholding such notice if and so long as the board of directors, the
executive committee, or a trust committee of directors and/or
responsible officers, of the trustee in good faith determine that the
withholding of such notice is in the interests of the indenture security
holders.
Duties of the Trustee in Case of Default
(c) The indenture trustee shall exercise in case of default (as
such term is defined in such indenture) such of the rights and powers
vested in it by such indenture, and to use the same degree of
care and skill in their exercise, as a prudent man would exercise
or use under the circumstances in the conduct of his own affairs.
Responsibility of the Trustee
(d) The indenture to be qualified shall not contain any provisions
relieving the indenture trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct,
except that—
(1) such indenture shall automatically be deemed (unless
it is expressly provided therein that any such provision is excluded)
to contain the provisions authorized by paragraphs (1)
and (2) of subsection (a) of this section;
(2) such indenture shall automatically be deemed (unless
it is expressly provided therein that any such provision is excluded)
to contain provisions protecting the indenture trustee
from liability for any error of judgment made in good faith by
a responsible officer or officers of such trustee, unless it shall
be proved that such trustee was negligent in ascertaining the
pertinent facts; and
31 TRUST INDENTURE ACT OF 1939 Sec. 316
(3) such indenture shall automatically be deemed (unless
it is expressly provided therein that any such provision is excluded)
to contain provisions protecting the indenture trustee
with respect to any action taken or omitted to be taken by it
in good faith in accordance with the direction of the holders of
not less than a majority in principal amount of the indenture
securities at the time outstanding (determined as provided in
subsection (a) of section 316) relating to the time, method, and
place of conducting any proceeding for any remedy available to
such trustee, or exercising any trust or power conferred upon
such trustee, under such indenture.
Undertaking for Costs
(e) The indenture to be qualified shall automatically be deemed
(unless it is expressly provided therein that any such provision is
excluded) to contain provisions to the effect that all parties thereto,
including the indenture security holders, agree that the court may
in its discretion require, in any suit for the enforcement of any
right or remedy under such indenture, or in any suit against the
trustee for any action taken or omitted by it as trustee, the filing
by any party litigant in such suit of an undertaking to pay the
costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys’ fees, against any
party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant:
Provided, That the provisions of this subsection shall not apply to
any suit instituted by such trustee, to any suit instituted by any
indenture security holder, or group of indenture security holders,
holding in the aggregate more than 10 per centum in principal
amount of the indenture securities outstanding, or to any suit instituted
by any indenture security holder for the enforcement of the
payment of the principal of or interest on any indenture security,
on or after the respective due dates expressed in such indenture
security.
DIRECTIONS AND WAIVERS BY BONDHOLDERS; PROHIBITION OF
IMPAIRMENT OF HOLDER’S RIGHT TO PAYMENT
SEC. 316. ø77ppp¿ (a) The indenture to be qualified—
(1) shall automatically be deemed (unless it is expressly
provided therein that any such provision is excluded) to contain
provisions authorizing the holders of not less than a majority
in principal amount of the indenture securities or if expressly
specified in such indenture, of any series of securities
at the time outstanding (A) to direct the time, method, and
place of conducting any proceeding for any remedy available to
such trustee, or exercising any trust or power conferred upon
such trustee, under such indenture, or (B) on behalf of the
holders of all such indenture securities, to consent to the
waiver of any past default and its consequences; or
(2) may contain provisions authorizing the holders of not
less than 75 per centum in principal amount of the indenture
securities or if expressly specified in such indenture, of any series
of securities at the time outstanding to consent on behalf
Sec. 317 TRUST INDENTURE ACT OF 1939 32
1 So in law. The comma probably should be striken.
of the holders of all such indenture securities to the postponement
of any interest payment for a period not exceeding three
years from its due date.
For the purposes of this subsection and paragraph (3) of subsection
(d) of section 315, in determining whether the holders of the required
principal amount of indenture securities have concurred in
any such direction or consent, indenture securities owned by any
obligor upon the indenture securities, or by any person directly or
indirectly controlling or controlled by or under direct or indirect
common control with any such obligor, shall be disregarded, except
that for the purposes of determining whether the indenture trustee
shall be protected in relying on any such direction or consent, only
indenture securities which such trustee knows are so owned shall
be so disregarded.
(b) Notwithstanding any other provision of the indenture to be
qualified, the right of any holder of any indenture security to receive
payment of the principal of and interest on such indenture
security, on or after the respective due dates expressed in such
indenture security, or to institute suit for the enforcement of any
such payment on or after such respective dates, shall not be impaired
or affected without the consent of such holder, except as to
a postponement of an interest payment consented to as provided in
paragraph (2) of subsection (a), and except that such indenture
may contain provisions limiting or denying the right of any such
holder to institute any such suit, if and to the extent that the institution
or prosecution thereof or the entry of judgment therein
would, under applicable law, result in the surrender, impairment,
waiver, or loss of the lien of such indenture upon any property subject
to such lien.
(c) The obligor upon any indenture qualified under this title
may set a record date for purposes of determining the identity of
indenture security holders entitled to vote or consent to any action
by vote or consent authorized or permitted by subsection (a) of this
section. Unless the indenture provides otherwise, such record date
shall be the later of 30 days prior to the first solicitation of such
consent or the date of the most recent list of holders furnished to
the trustee pursuant to section 312 of this title prior to such solicitation.
SPECIAL POWERS OF TRUSTEE; DUTIES OF PAYING AGENTS
SEC. 317. ø77qqq¿ (a) The indenture trustee shall be
authorized—
(1), 1 in the case of a default in payment of the principal
of any indenture security, when and as the same shall become
due and payable, or in the case of a default in payment of the
interest on any such security, when and as the same shall become
due and payable and the continuance of such default for
such period as may be prescribed in such indenture, to recover
judgment, in its own name and as trustee of an express trust,
against the obligor upon the indenture securities for the whole
amount of such principal and interest remaining unpaid; and
33 TRUST INDENTURE ACT OF 1939 Sec. 319
(2) to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the
claims of such trustee and of the indenture security holders allowed
in any judicial proceedings relative to the obligor upon
the indenture securities, its creditors, or its property.
(b) Each paying agent shall hold in trust for the benefit of the
indenture security holders or the indenture trustee all sums held
by such paying agent for the payment of the principal of or interest
on the indenture securities, and shall give to such trustee notice of
any default by any obligor upon the indenture securities in the
making of any such payment.
EFFECT OF PRESCRIBED INDENTURE PROVISIONS
SEC. 318. ø77rrr¿ (a) If any provision of the indenture to be
qualified limits, qualifies, or conflicts with the duties imposed by
operation of subsection (c) of this section, the imposed duties shall
control.
(b) The indenture to be qualified may contain, in addition to
provisions specifically authorized under this title to be included
therein, any other provisions the inclusion of which is not in contravention
of any provision of this title.
(c) The provisions of sections 310 to and including 317 that impose
duties on any person (including provisions automatically
deemed included in an indenture unless the indenture provides
that such provisions are excluded) are a part of and govern every
qualified indenture, whether or not physically contained therein,
shall be deemed retroactively to govern each indenture heretofore
qualified, and prospectively to govern each indenture hereafter
qualified under this title and shall be deemed retroactively to
amend and supersede inconsistent provisions in each such indenture
heretofore qualified. The foregoing provisions of this subsection
shall not be deemed to effect the inclusion (by retroactive
amendment or otherwise) in the text of any indenture heretofore
qualified of any of the optional provisions contemplated by section
310(b)(1), 311(b), 314(d), 315(a), 315(b), 315(d), 315(e), or 316(a)(1).
RULES, REGULATIONS, AND ORDERS
SEC. 319. ø77sss¿ (a) The Commission shall have authority
from time to time to make, issue, amend, and rescind such rules
and regulations and such orders as it may deem necessary or
appropriate in the public interest or for the protection of investors
to carry out the provisions of this title, including rules and regulations
defining accounting, technical, and trade terms used in this
title. Among other things, the Commission shall have authority, (1)
by rules and regulations, to prescribe for the purposes of section
310(b) the method (to be fixed in indentures to be qualified under
this title) of calculating percentages of voting securities and other
securities; (2) by rules and regulations, to prescribe the definitions
of the terms ‘‘cash transaction’’ and ‘‘self-liquidating paper’’ which
shall be included in indentures to be qualified under this title,
which definitions shall include such of the creditor relationships referred
to in paragraphs (4) and (6) of subsection (b) of section 311
as to which the Commission determines that the application of subSec.
320 TRUST INDENTURE ACT OF 1939 34
section (a) of such section is not necessary in the public interest or
for the protection of investors, having due regard for the purposes
of such subsection; and (3) for the purposes of this title, to prescribe
the form or forms in which information required in any
statement, application, report, or other document filed with the
Commission shall be set forth. For the purpose of its rules or regulations
the Commission may classify persons, securities, indentures,
and other matters within its jurisdiction and prescribe different
requirements for different classes of persons, securities,
indentures, or matters.
(b) Subject to the provisions of chapter 15 of title 44, United
States Code, and regulations prescribed under the authority
thereof, the rules and regulations of the Commission under this
title shall be effective upon publication in the manner which the
Commission shall prescribe, or upon such later date as may be provided
in such rules and regulations.
(c) No provision of this title imposing any liability shall apply
to any act done or omitted in good faith in conformity with any
rule, regulation, or order of the Commission, notwithstanding that
such rule, regulation, or order may, after such act or omission, be
amended or rescinded or be determined by judicial or other authority
to be invalid for any reason.
HEARINGS BY COMMISSION
SEC. 320. ø77ttt¿ Hearings may be public and may be held before
the Commission, any member or members thereof, or any officer
or officers of the Commission designated by it, and appropriate
records thereof shall be kept.
SPECIAL POWERS OF THE COMMISSION
SEC. 321. ø77uuu¿ (a) For the purpose of any investigation or
any other proceeding which, in the opinion of the Commission, is
necessary and proper for the enforcement of this title, any member
of the Commission, or any officer thereof designated by it, is
empowered to administer oaths and affirmations, subpena witnesses,
compel their attendance, take evidence, and require the
production of any books, papers, correspondence, memoranda, contracts,
agreements, or other records which the Commission deems
relevant or material to the inquiry. Such attendance of witnesses
and the production of any such books, papers, correspondence,
memoranda, contracts, agreements, or other records may be required
from any place in the United States or in any Territory at
any designated place of investigation or hearing. In addition, the
Commission shall have the powers with respect to investigations
and hearings, and with respect to the enforcement of, and offenses
and violations under, this title and rules and regulations and orders
prescribed under the authority thereof, provided in sections
20, 22(b), and 22(c) of the Securities Act of 1933.
(b) The Treasury Department, the Comptroller of the Currency,
the Board of Governors of the Federal Reserve System, the Federal
Reserve Banks, and the Federal Deposit Insurance Corporation are
hereby authorized, under such conditions as they may prescribe, to
make available to the Commission such reports, records, or other
35 TRUST INDENTURE ACT OF 1939 Sec. 321
information as they may have available with respect to trustees or
prospective trustees under indentures qualified or to be qualified
under this title, and to make through their examiners or other employees
for the use of the Commission, examinations of such trustees
or prospective trustees. Every such trustee or prospective
trustee shall, as a condition precedent to qualification of such
indenture, consent that reports of examinations by Federal, State,
Territorial, or District authorities may be furnished by such
authorities to the Commission upon request therefor.
Notwithstanding any provision of this title, no report, record,
or other information made available to the Commission under this
subsection, no report of an examination made under this subsection
for the use of the Commission, no report of an examination made
of any trustee or prospective trustee by any Federal, State, Territorial,
or District authority having jurisdiction to examine or supervise
such trustee, no report made by any such trustee or prospective
trustee to any such authority, and no correspondence between
any such authority and any such trustee or prospective trustee,
shall be divulged or made known or available by the Commission
or any member, officer, agent, or employee thereof, to any person
other than a member, officer, agent, or employee of the Commission:
Provided, That the Commission may make available to the
Attorney General of the United States, in confidence, any information
obtained from such records, reports of examination, other reports,
or correspondence, and deemed necessary by the Commission,
or requested by him, for the purpose of enabling him to perform
his duties under this title.
(c) Any investigation of a prospective trustee, or any proceeding
or requirement for the purpose of obtaining information regarding
a prospective trustee, under any provision of this title,
shall be limited—
(1) to determining whether such prospective trustee is
qualified to act as trustee under the provisions of subsection
(b) of section 310;
(2) to requiring the inclusion in the registration statement
or application of information with respect to the eligibility of
such prospective trustee under paragraph (1) of subsection (a)
of such section 310; and
(3) to requiring the inclusion in the registration statement
or application of the most recent published report of condition
of such prospective trustee, as described in paragraph (2) of
such subsection (a), or, if the indenture does not contain the
provision with respect to combined capital and surplus authorized
by the last sentence of paragraph (2) of subsection (a) of
such section 310, to determining whether such prospective
trustee is eligible to act as such under such paragraph (2).
(d) The provisions section 4(b)) of the Securities Exchange Act
of 1934 shall be applicable with respect to the power of the
Commission—
(1) to appoint and fix the compensation of such employees
as may be necessary for carrying out its functions under this
title, and
(2) to lease and allocate such real property as may be necessary
for carrying out its functions under this title.
Sec. 322 TRUST INDENTURE ACT OF 1939 36
COURT REVIEW OF ORDERS; JURISDICTION OF OFFENSES AND SUITS
SEC. 322. ø77vvv¿ (a) Orders of the Commission under this
title (including orders pursuant to the provisions of sections 305(b)
and 307(c)) shall be subject to review in the same manner, upon
the same conditions, and to the same extent, as provided in section
9 of the Securities Act of 1933, with respect to orders of the Commission
under such Act.
(b) Jurisdiction of offenses and violations under, and jurisdiction
and venue of suits and actions brought to enforce any liability
or duty created by, this title, or any rules or regulations or orders
prescribed under the authority thereof, shall be as provided in section
22(a) of the Securities Act of 1933.
LIABILITY FOR MISLEADING STATEMENTS
SEC. 323. ø77www¿ (a) Any person who shall make or cause
to be made any statement in any application, report, or document
filed with the Commission pursuant to any provisions of this title,
or any rule, regulation, or order thereunder, which statement was
at the time and in the light of the circumstances under which it
was made false or misleading with respect to any material fact, or
who shall omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading,
shall be liable to any person (not knowing that such statement
was false or misleading or of such omission) who, in reliance
upon such statement or omission, shall have purchased or sold a
security issued under the indenture to which such application, report,
or document relates, for damages caused by such reliance, unless
the person sued shall prove that he acted in good faith and
had no knowledge that such statement was false or misleading or
of such omission. A person seeking to enforce such liability may sue
at law or in equity in any court of competent jurisdiction. In any
such suit the court may, in its discretion, require an undertaking
for the payment of the costs of such suit and assess reasonable
costs, including reasonable attorneys’ fees, against either party litigant,
having due regard to the merits and good faith of the suit or
defense. No action shall be maintained to enforce any liability created
under this section unless brought within one year after the
discovery of the facts constituting the cause of action and within
three years after such cause of action accrued.
(b) The rights and remedies provided by this title shall be in
addition to any and all other rights and remedies that may exist
under the Securities Act of 1933, or the Securities Exchange Act
of 1934, or the Public Utility Holding Company Act of 1935, or otherwise
at law or in equity; but no person permitted to maintain a
suit for damages under the provisions of this title shall recover,
through satisfaction of judgment in one or more actions, a total
amount in excess of his actual damages on account of the act complained
of.
UNLAWFUL REPRESENTATIONS
SEC. 324. ø77xxx¿ It shall be unlawful for any person in offering,
selling, or issuing any security to represent or imply in any
manner whatsoever that any action or failure to act by the Com37
TRUST INDENTURE ACT OF 1939 Sec. 328
1 See also 18 U.S.C. 3623. [Printed in appendix to this volume.]
mission in the administration of this title means that the Commission
has in any way passed upon the merits of, or given approval
to, any trustee, indenture or security, or any transaction or transactions
therein, or that any such action or failure to act with regard
to any statement or report filed with or examined by the Commission
pursuant to this title or any rule, regulation, or order
thereunder, has the effect of a finding by the Commission that such
statement or report is true and accurate on its face or that it is not
false or misleading.
PENALTIES 1
SEC. 325. ø77yyy¿ Any person who willfully violates any provision
of this title or any rule, regulation, or order thereunder, or any
person who willfully, in any application, report, or document filed
or required to be filed under the provisions of this title or any rule,
regulation, or order thereunder, makes any untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, shall upon conviction be fined not more than $10,000
or imprisoned not more than five years, or both.
EFFECT ON EXISTING LAW
SEC. 326. ø77zzz¿ Except as otherwise expressly provided,
nothing in this title shall affect (1) the jurisdiction of the Commission
under the Securities Act of 1933, or the Securities Exchange
Act of 1934, or the Public Utility Holding Company Act of 1935,
over any person, security, or contract, or (2) the rights, obligations,
duties, or liabilities of any person under such Acts; nor shall anything
in this title affect the jurisdiction of any other commission,
board, agency, or officer of the United States or of any State or
political subdivision of any State, over any person or security,
insofar as such jurisdiction does not conflict with any provision of
this title or any rule, regulation, or order thereunder.
CONTRARY STIPULATIONS VOID
SEC. 327. ø77aaaa¿ Any condition, stipulation, or provision
binding any person to waive compliance with any provision of this
title or with any rule, regulation, or order thereunder shall be void.
SEPARABILITY OF PROVISIONS
SEC. 328. ø77bbbb¿ If any provision of this title or the application
of such provision to any person or circumstance shall be held
invalid, the remainder of the title and the application of such provision
to persons or circumstances other than those as to which it is
held invalid shall not be affected thereby.

http://www.lawupdates.com/pdf/resources/securities/tia39.pdf

http://www.law.cornell.edu/uscode/15/usc_sec_15_00000077-kkk000-.html

TITLE 15 > CHAPTER 2A > SUBCHAPTER III > § 77kkk
Prev | Next
§ 77kkk. Preferential collection of claims against obligor
How Current is This?
(a) Trustee as creditor of obligor
Subject to the provisions of subsection (b) of this section, if the indenture trustee shall be, or shall become, a creditor, directly or indirectly, secured or unsecured, of an obligor upon the indenture securities, within three months prior to a default as defined in the last paragraph of this subsection, or subsequent to such a default, then, unless and until such default shall be cured, such trustee shall set apart and hold in a special account for the benefit of the trustee individually and the indenture security holders—
(1) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such three months’ period and valid as against such obligor and its other creditors, except any such reduction resulting from the receipt or disposition of any property described in paragraph (2) of this subsection, or from the exercise of any right of setoff which the trustee could have exercised if a petition in bankruptcy had been filed by or against such obligor upon the date of such default; and
(2) all property received in respect of any claim as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such three months’ period, or an amount equal to the proceeds of any such property, if disposed of, subject, however, to the rights, if any, of such obligor and its other creditors in such property or such proceeds.
Nothing herein contained shall affect the right of the indenture trustee—
(A) to retain for its own account
(i) payments made on account of any such claim by any person (other than such obligor) who is liable thereon, and
(ii) the proceeds of the bona fide sale of any such claim by the trustee to a third person, and
(iii) distributions made in cash, securities, or other property in respect of claims filed against such obligor in bankruptcy or receivership or in proceedings for reorganization pursuant to the Bankruptcy Act or applicable State law;
(B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such three months’ period;
(C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such three months’ period and such property was received as security therefor simultaneously with the creation thereof, and if the trustee shall sustain the burden of proving that at the time such property was so received the trustee had no reasonable cause to believe that a default as defined in the last paragraph of this subsection would occur within three months; or
(D) to receive payment on any claim referred to in paragraph (B) or (C) of this ­subsection, against the release of any property held as security for such claim as provided in said paragraph (B) or (C), as the case may be, to the extent of the fair value of such property.
For the purposes of paragraphs (B), (C), and (D) of this subsection, property substituted after the beginning of such three months’ period for property held as security at the time of such substitution shall, to the extent of the fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of such paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any preexisting claim of the indenture trustee as such creditor, such claim shall have the same status as such preexisting claim.
If the trustee shall be required to account, the funds and property held in such special account and the proceeds thereof shall be apportioned between the trustee and the indenture security holders in such manner that the trustee and the indenture security holders realize, as a result of payments from such special account and payments of dividends on claims filed against such obligor in bankruptcy or receivership or in proceedings for reorganization pursuant to the Bankruptcy Act or applicable State law, the same percentage of their respective claims, figured before crediting to the claim of the trustee anything on account of the receipt by it from such obligor of the funds and property in such special account and before crediting to the respective claims of the trustee and the indenture security holders dividends on claims filed against such obligor in bankruptcy or receivership or in proceedings for reorganization pursuant to the Bankruptcy Act or applicable State law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term “dividends” shall include any distribution with respect to such claim, in bankruptcy or receivership or in proceedings for reorganization pursuant to the Bankruptcy Act or applicable State law, whether such distribution is made in cash, securities, or other property, but shall not include any such distribution with respect to the secured portion, if any, of such claim. The court in which such bankruptcy, receivership, or proceeding for reorganization is pending shall have jurisdiction
(i) to apportion between the indenture trustee and the indenture security holders, in accordance with the provisions of this paragraph, the funds and property held in such special account and the proceeds thereof, or
(ii) in lieu of such apportionment, in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the indenture trustee and the indenture security holders with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claims, or otherwise to apply the provisions of this paragraph as a mathematical formula.
Any indenture trustee who has resigned or been removed after the beginning of such three months’ period shall be subject to the provisions of this subsection as though such resignation or removal had not occurred. Any indenture trustee who has resigned or been removed prior to the beginning of such three months’ period shall be subject to the provisions of this subsection if and only if the following conditions exist—
(i) the receipt of property or reduction of claim which would have given rise to the obligation to account, if such indenture trustee had continued as trustee, occurred after the beginning of such three months’ period; and
(ii) such receipt of property or reduction of claim occurred within three months after such resignation or removal.
As used in this subsection, the term “default” means any failure to make payment in full of principal or interest, when and as the same becomes due and payable, under any indenture which has been qualified under this subchapter, and under which the indenture trustee is trustee and the person of whom the indenture trustee is directly or indirectly a creditor is an obligor; and the term “indenture security holder” means all holders of securities outstanding under any such indenture under which any such default exists. In any case commenced under the Bankruptcy Act of July 1, 1898, or any amendment thereto enacted prior to November 6, 1978, all references to periods of three months shall be deemed to be references to periods of four months.
(b) Exclusion of creditor relationship arising from specified classes
The indenture to be qualified shall automatically be deemed (unless it is expressly provided therein that any such provision is excluded) to contain provisions excluding from the operation of subsection (a) of this section a creditor relationship arising from—
(1) the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one year or more at the time of acquisition by the indenture trustee;
(2) advances authorized by a receivership or bankruptcy court of competent jurisdiction, or by the indenture, for the purpose of preserving the property subject to the lien of the indenture or of discharging tax liens or other prior liens or encumbrances on the trust estate, if notice of such advance and of the circumstances surrounding the making thereof is given to the indenture security holders, at the time and in the manner provided in the indenture;
(3) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, fiscal agent or depositary, or other similar capacity;
(4) an indebtedness created as a result of services rendered or premises rented; or an indebtedness created as a result of goods or securities sold in a cash transaction as defined in the indenture;
(5) the ownership of stock or of other securities of a corporation organized under the provisions of section 25(a) [1] of the Federal Reserve Act, as amended [12 U.S.C. 611 et seq.], which is directly or indirectly a creditor of an obligor upon the indenture securities; or
(6) the acquisition, ownership, acceptance, or negotiation of any drafts, bills of exchange, acceptances, or obligations which fall within the classification of self-liquidating paper as defined in the indenture.
(c) Issue or sale of securities by registered holding company
In the exercise by the Commission of any jurisdiction under the Public Utility Holding Company Act of 1935 [1] regarding the issue or sale, by any registered holding company or a subsidiary company thereof, of any security of such issuer or seller or of any other company to a person which is trustee under an indenture or indentures of such issuer or seller or other company, or of a subsidiary or associate company or affiliate of such issuer or seller or other company (whether or not such indenture or indentures are qualified or to be qualified under this subchapter), the fact that such trustee will thereby become a creditor, directly or indirectly, of any of the foregoing shall not constitute a ground for the Commission taking adverse action with respect to any application or declaration, or limiting the scope of any rule or regulation which would otherwise permit such transaction to take effect; but in any case in which such trustee is trustee under an indenture of the company of which it will thereby become a creditor, or of any subsidiary company thereof, this subsection shall not prevent the Commission from requiring (if such requirement would be authorized under the provisions of the Public Utility Holding Company Act of 1935) [1] that such trustee, as such, shall effectively and irrevocably agree in writing, for the benefit of the holders from time to time of the securities from time to time outstanding under such indenture, to be bound by the provisions of this section, subsection (c) of section 77ooo of this title, and, in case of default (as such term is defined in such indenture), subsection (d) of section 77ooo of this title, as fully as though such provisions were included in such indenture. For the purposes of this subsection the terms “registered holding company”, “subsidiary company”, “associate company”, and “affiliate” shall have the respective meanings assigned to such terms in section 2(a) of the Public Utility Holding Company Act of 1935.[1]

Corporation
Finance Home

What’s New

Contact Us

Statutes, Rules & Forms

Compliance & Disclosure Interpretations

Accounting & Financial Reporting

Division Financial Reporting Manual

No-Action, Interpretive & Exemptive Letters

Roundtables

Division Speeches & Statements

Foreign Issuer Info

Info for Small Businesses

Frequently Requested Materials

Archives

EDGAR
http://www.sec.gov/divisions/corpfin/forms/trustact.shtml
Trust Indenture Act Forms
Form T-1 Statement of eligibility under the Trust Indenture Act of a corporation designated to act as trustee
Form T-2 Statement of eligibility under the Trust Indenture Act of an individual designated to act as trustee
Form T-3 Application for qualification of indenture under the Trust Indenture Act
Form T-4 Facing sheet
Form T-6 Application under Section 310(a)(1) of the Trust Indenture Act for determination of eligibility of a foreign person to act as institutional trustee

http://www.sec.gov/divisions/corpfin/forms/trustact.shtm

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s