§ 77nnn. — Reports by obligor; evidence of compliance with indenture provisions.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC77nnn]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2A--SECURITIES AND TRUST INDENTURES
SUBCHAPTER III--TRUST INDENTURES
Sec. 77nnn. Reports by obligor; evidence of compliance with
indenture provisions
(a) Periodic reports
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 78m or 78o(d) of this title;
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 78m of this title, 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 certificate or opinion shall be required as
to any matter specified in clauses (A), (B), or (C) of paragraph (3)
of subsection (c) of this section;
(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 77mmm of this title, 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 subchapter, 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.
(b) Evidence of recording of indenture
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, re-
recording, 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.
(c) Evidence of compliance with conditions precedent
The obligor upon the indenture securities shall furnish to the
indenture trustee evidence of compliance with the conditions 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) of this section, or (C) the adequacy of depreciation,
maintenance, or repairs.
(d) Certificates of fair value
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 further 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 d`te 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
(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.
(e) Recitals as to basis of certificate or opinion
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.
(f) Parties may provide for additional evidence
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.
(May 27, 1933, ch. 38, title III, Sec. 314, as added Aug. 3, 1939, ch.
411, 53 Stat. 1167; amended Pub. L. 101-550, title IV, Sec. 413, Nov.
15, 1990, 104 Stat. 2729.)
Amendments
1990--Subsec. (a). Pub. L. 101-550, Sec. 413(1)-(6), in introductory
provision substituted ``Each'' for ``The indenture to be qualified shall
contain provisions requiring each'' and inserted ``shall'' after
``thereby'' and in pars. (1) to (3) struck out ``to'' after the
paragraph designation, and directed the addition of par. (4) at the end
which was executed by inserting par. (4) after par. (3) to reflect the
probable intent of Congress.
Subsec. (b). Pub. L. 101-550, Sec. 413(7), (8), struck out ``such
indenture shall contain provisions requiring'' before ``the obligor''
and substituted ``securities shall furnish'' for ``securities to
furnish''.
Subsec. (c). Pub. L. 101-550, Sec. 413(9), (10), substituted ``The
obligor'' for ``The indenture to be qualified shall contain provisions
requiring the obligor'' and ``securities shall furnish'' for
``securities to furnish''.
Subsec. (d). Pub. L. 101-550, Sec. 413(11), (13), (14), substituted
``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'' for ``such indenture shall contain
provisions'' in introductory provisions and ``The indenture to be
qualified shall automatically be deemed (unless it is expressly provided
therein that such provision is excluded) to provide that'' for ``If the
indenture to be qualified so provides,'' and ``duly authorized to make
such certificate or opinion by the obligor from time to time'' for
``specified in the indenture'' in penultimate sentence.
Subsec. (d)(1) to (3). Pub. L. 101-550, Sec. 413(12), which directed
that ``requiring the obligor upon the indenture securities to furnish to
the indenture trustee a certificate or opinion of an engineer, appraiser
or other expert as to the fair value'' be struck out after the paragraph
designations in pars. (1) to (3), was executed by striking out
``requiring the obligor upon the indenture securities to furnish to the
indenture trustee a certificate or opinion of an engineer, appraiser, or
other expert as to the fair value'', as the probable intent of Congress.
Subsec. (e). Pub. L. 101-550, Sec. 413(15), inserted ``(other than
certificates provided pursuant to subsection (a)(4) of this section)''
after ``indenture''.
Transfer of Functions
For transfer of functions of Securities and Exchange Commission,
with certain exceptions, to Chairman of such Commission, see Reorg. Plan
No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat.
1265, set out under section 78d of this title.
Section Referred to in Other Sections
This section is referred to in sections 77iii, 77mmm, 77ooo, 77rrr
of this title.
