Trust Indenture Act of 1939

201.01   A foreign corporation doing business in the United States proposed to sell bonds abroad to persons other than citizens of the United States in reliance on Regulation S. Under these circumstances, the Division staff confirmed that sales may be made without qualification of an indenture under the Trust Indenture Act as stated by the Commission in Release No. 33-6863 (adopting Regulation S). [March 30, 2007]

201.02   The indenture covering securities to be issued in a registration statement must be qualified at the time the registration statement relating to those securities becomes effective. The indenture may not be qualified by post-effective amendment. Under the shelf registration process adopted in Securities Act Release No. 8591, however, a well-known seasoned issuer is permitted to add securities to a shelf registration statement by means of a post-effective amendment. Because the effectiveness of an automatic shelf registration statement is deemed the time “when registration becomes effective as to such security(ies),” as that term is used in Section 309(a)(1) of the Trust Indenture Act, the issuer will satisfy Section 309(a)(1) if the indenture is included as an exhibit to the registration statement at the time that post-effective amendment becomes effective. See footnote 527 to Securities Act Release No. 8591. [March 30, 2007]

201.03   A guarantor is an “obligor” under the Trust Indenture Act. See Section 303(12) of the Act. As such, if an application on Form T-3 is filed to qualify an indenture for guaranteed debt, the primary obligor and each guarantor must file an application on Form T-3 and each entity must provide the information required by that Form. [March 30, 2007]

201.04    The following approach has been taken with respect to shelf registration statements that contemplate a series of debt offerings under Rule 415 requiring an indenture to be qualified under the Trust Indenture Act.

1. The indenture that is filed with, and qualified upon the effectiveness of, the registration statement may be “open-ended” (i.e., it may provide a generic, non-specific description of the securities, such as “unsecured debentures, notes or other evidences of indebtedness” which are to be issued in series). For automatic shelf registration statements, the “open-ended” indenture must be filed as an exhibit to the registration statement or as an exhibit to a post-effective amendment to the registration statement that registers the securities to be issued under the indenture.

2. The details of the securities to be offered in each series under the indenture (i.e., type of securities [notes, debentures, or other], interest rates, and maturities) must be disclosed both in a prospectus supplement and in a supplemental indenture at the time such series is to be offered. The supplemental indenture may be filed as an exhibit to a Form 8-K (in the same manner as specified for underwriting agreements), or in an automatically effective, exhibits-only, post-effective amendment filed pursuant to Rule 462(d). For automatic shelf registration statements, the post-effective amendment would be filed pursuant to Rule 462(e). [March 30, 2007]

201.05    A proxy solicitation will be made respecting amendments to an indenture covering bonds registered under Section 12(b) of the Exchange Act. Inasmuch as the proposed changes affect the collateral securing the bonds and accelerate the due date, a new security may be created, thus triggering the registration requirements of the Securities Act and the qualification requirements of the Trust Indenture Act. If the offering to exchange the new “changed” bonds for the old bonds is exempt from registration under the Securities Act pursuant to Section 3(a)(9), qualification of the new indenture may be accomplished by filing a Form T-3 pursuant to Section 306 of the Trust Indenture Act. Because the offering materials are required to be filed as an exhibit to the Form T-3, they may be filed in definitive form when acceleration of the Form T-3 is requested. [March 30, 2007]

202.01

[withdrawn, April 24, 2015]

203.01

[withdrawn, April 24, 2015]

204.01   When a debt security is issued with an equity security in a unit, the determination as to whether the exemption from qualification provided by Section 304(a)(8) of the Trust Indenture Act is available is based solely on the aggregate principal amount of the debt security and not the dollar amount of the equity security. If the aggregate amount of the debt security is less than $5 million, the offering is exempt from the Trust Indenture Act. See Rule 4a-1 under the Trust Indenture Act. [March 30, 2007]

205.01   Section 304(a)(9) and Rule 4a-3 under the Trust Indenture Act provide an exemption from the qualification provisions of the Act for debt securities issued under an indenture that limits the aggregate principal amount outstanding at any one time to $10 million or less during a 36-month period. The 36-month period is a “rolling period,” commencing with the initial offering under the indenture. [March 30, 2007]

205.02   The limit on the amount of securities to be issued under an indenture may not exceed $10 million under Section 304(a)(9) and Rule 4a-3, and the aggregate amount under all indentures for which this exemption is claimed may not exceed $10 million during a 36-month period. Thus, only one $10 million indenture could be used in a 36-month period if the exemption is claimed – even if the securities had been redeemed and the indenture terminated. Another indenture relating to a different offering of securities could not claim the same exemption during the same 36-month period if the first indenture was for $10 million. [March 30, 2007]

206.01   When debt securities registered under the Securities Act are eligible to be offered or sold on a delayed basis by or on behalf of the registrant pursuant to Securities Act Rule 415(a)(1)(x), Section 305(b)(2) of the Trust Indenture Act permits the trustee to be designated on a delayed basis. Companies that rely on Section 305(b)(2) to designate the trustee on a delayed basis must separately file the Form T-1 under the electronic form type “305B2.” In this situation, companies should not file the Form T-1 in a post-effective amendment to the registration statement or in a Form 8-K that is incorporated by reference into the registration statement. See Release No. 33-7122 (Dec. 19, 1994). [March 30, 2007]

207.01   Section 306 of the Trust Indenture Act does not apply to exchange offers that are exempt from Securities Act registration pursuant to Section 3(a)(9) where the offering does not exceed $5 million and Section 304(a)(8) and Rule 4a-1 under the Trust Indenture Act otherwise are available. [March 30, 2007]

208.01   A trustee possessing a security interest in the indenture securities arising from a loan by the trustee to the owner of the securities would not be disqualified as trustee under Section 310(b) of the Trust Indenture Act unless the indenture securities were in default, there was a default on the loan, and the trustee acquired the securities through foreclosure in amounts exceeding those specified in Sections 310(b)(6), (7), and (8) of the Act. [March 30, 2007]

208.02   If there is a default on the indenture securities, Section 310(b)(1) of the Trust Indenture Act prohibits, with certain exceptions, the trustee from serving as trustee under more than one indenture of the same obligor. Applications filed under Section 310(b)(1)(ii) of the Trust Indenture Act for a Commission order that a proposed trusteeship would not involve a conflict of interest should be filed in the manner specified in Rule 7a-3 under the Trust Indenture Act for Form T-3 filings because there are no procedures set forth in the rules specifically applicable to these types of Section 310(b)(1)(ii) applications. [March 30, 2007]

208.03   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, Section 310(b) permits the trustee to apply to the Commission for a stay of the duty to resign. This subsection operates to prevent unnecessary resignations of the indenture trustee for curable technical defaults. The filing of this type of application automatically stays the duty to resign until the Commission orders otherwise. [March 30, 2007]

209.01   In general, Section 310(b)(1) provides that a trustee shall be deemed to have an impermissible, conflicting interest if (1) the indenture securities are in default and (2) the trustee serves as trustee under more than one indenture of the obligor. Section 310(b)(1)(i) provides a self-executing exclusion from the conflict of interest provisions if the securities under the indentures at issue are wholly unsecured and rank equally, and the indenture to be qualified either specifically describes the previous indentures or is qualified at some later date. The staff is of the view that if Section 310(b)(1)(i) is otherwise satisfied, the technical omission of references to earlier indentures does not prevent reliance on this self-executing exclusion from the conflict of interest provision of the Trust Indenture Act. Therefore, in those situations in which the securities under the indentures at issue are wholly unsecured and rank equally, the trustee may serve as trustee under the multiple indentures without an order from the Commission declaring that no conflict exists. In those situations in which the securities are not wholly unsecured and do not rank equally, and the trustee is unable to avail itself of the other exclusions contained in Section 310(b)(1), the staff will continue to consider applications for exemptive relief under section 310(b)(1)(ii). [March 30, 2007]

210.01   A trustee for the profit sharing plan of an obligor is not disqualified from serving as trustee under an indenture in the event of default simply because it holds more than 5% of the obligor’s voting stock as trustee, assuming it does not have the power to vote the shares. Ownership in a representative capacity, i.e., as executor, trustee, or in a similar capacity, is given separate and more liberal treatment in paragraph (9) than paragraph (6) of Section 310(b), on the theory that such ownership does not involve as direct a conflict as beneficial ownership. [March 30, 2007]

211.01   An obligor upon indenture securities issued debentures convertible, at the option of the holder upon the occurrence of certain events, into the common stock of a subsidiary of the obligor. Pursuant to the indenture, sufficient shares of the subsidiary’s stock to satisfy any conversion obligation were pledged to the indenture trustee. While the obligor and subsidiary had a common board of directors, the trustee would still not be disqualified under Section 310(b)(7), ab initio or upon a default upon the indenture securities. Even if the subsidiary’s shares constituted “collateral security” the trustee is deemed not to be the “holder” of a security held as collateral security under the indenture, irrespective of any default. This provision is contained in the definitional subsection of Section 310(b). [March 30, 2007]

212.01   A trustee for the profit sharing plan of an obligor is not disqualified from serving as trustee under an indenture in the event of default simply because it holds more than 5% of the obligor’s voting stock as trustee, assuming it does not have the power to vote the shares. Ownership in a representative capacity, i.e., as executor, trustee, or in a similar capacity, is given separate and more liberal treatment in paragraph (9) than paragraph (6) of Section 310(b), on the theory that such ownership does not involve as direct a conflict as beneficial ownership. [March 30, 2007]

213.01   Section 311(a) of the Trust Indenture Act requires a trustee who is also a creditor of the issuer to set aside for the benefit of the security holders any payments or property received in its capacity as creditor within 3 months of the issuer’s bankruptcy. This provision is intended to reach preferential transfers occurring after the start of the 3-month period and continue until the funds have been allocated by a court. [March 30, 2007]

214.01   A parent guaranteeing indebtedness of a subsidiary is deemed an “obligor” under the indenture and therefore must file with the trustee the reports required of obligors by Section 314(a) of the Trust Indenture Act. [March 30, 2007]

215.01   The Trust Indenture Act provides a required procedure for calculating votes for proposals permitted by Section 315(d)(3) and Section 316(a). Securities owned by the obligor or an affiliate of the obligor must be disregarded for purposes of calculating the vote required to approve such proposals. If the vote concerns actions outside of Section 315(d)(3) or Section 316(a), such as a vote to permit the substitution of collateral, the mandatory calculation procedure would not apply. [March 30, 2007]

216.01   The Trust Indenture Act provides a required procedure for calculating votes for proposals permitted by Section 315(d)(3) and Section 316(a). Securities owned by the obligor or an affiliate of the obligor must be disregarded for purposes of calculating the vote required to approve such proposals. If the vote concerns actions outside of Section 315(d)(3) or Section 316(a), such as a vote to permit the substitution of collateral, the mandatory calculation procedure would not apply. [March 30, 2007]

217.01   When a debt security is issued with an equity security in a unit, the determination as to whether the exemption from qualification provided by Section 304(a)(8) of the Trust Indenture Act is available is based solely on the aggregate principal amount of the debt security and not the dollar amount of the equity security. If the aggregate amount of the debt security is less than $5 million, the offering is exempt from the Trust Indenture Act. See Rule 4a-1 under the Trust Indenture Act. [March 30, 2007]

218.01   Section 304(a)(9) and Rule 4a-3 under the Trust Indenture Act provide an exemption from the qualification provisions of the Act for debt securities issued under an indenture that limits the aggregate principal amount outstanding at any one time to $10 million or less during a 36-month period. The 36-month period is a “rolling period,” commencing with the initial offering under the indenture. [March 30, 2007]

218.02   The limit on the amount of securities to be issued under an indenture may not exceed $10 million under Section 304(a)(9) and Rule 4a-3, and the aggregate amount under all indentures for which this exemption is claimed may not exceed $10 million during a 36-month period. Thus, only one $10 million indenture could be used in a 36-month period if the exemption is claimed – even if the securities had been redeemed and the indenture terminated. Another indenture relating to a different offering of securities could not claim the same exemption during the same 36-month period if the first indenture was for $10 million. [March 30, 2007]

219.01   Where a single trustee is serving as trustee under two indentures, and both indentures are being qualified with the same registration statement, only one Form T-1 need be filed. But reference should be made in appropriate places, (e.g., the cover page of the Form T-1) to the fact that there are two indentures. [March 30, 2007]

219.02   Form T-1 requires a copy of the latest report of financial condition of the trustee published pursuant to law or requirements of the supervising authority to be filed as an exhibit. Where publication of such report is not required by law or the supervising authority, the trustee is not disqualified from serving, but the unpublished report filed with the supervising authority should be filed as an exhibit to the Form T-1. [March 30, 2007]

219.03   Form T-1, the statement of an indenture trustee’s eligibility and qualification under the Trust Indenture Act, should be filed electronically as an exhibit to the related registration statement as required by Item 101(a)(1)(ii) of Regulation S-T, unless the issuer obtains a hardship exemption. Item 601(b)(25)(ii) of Regulation S-K provides that the requirement to bind separately the Form T-1 from other exhibits (1939 Act Rule 5a-3(d)) does not apply to electronic filings. [March 30, 2007]

220.01   When debt securities registered under the Securities Act of 1933 are eligible to be issued, offered or sold on a delayed basis by or on behalf of the registrant pursuant to Securities Act Rule 415(a)(1)(x), Section 305(b)(2) of the Trust Indenture Act permits the trustee to be designated on a delayed basis. Companies that rely on Section 305(b)(2) to designate the trustee on a delayed basis must separately file the Form T-1 under the electronic form type “305B2.” In this situation, companies should not file the Form T-1 in a post-effective amendment to the registration statement or in a Form 8-K that is incorporated by reference into the registration statement. See Release No. 33-7122 (Dec. 19, 1994). [March 30, 2007]