2023 New York Laws › RPP - Real Property › Article 4-A - Trust Indentures and Interests Therein › 130-K - Exemptions From Restrictions on Trustees and Trust Indentures.

§   130-k.   Exemptions   from  restrictions  on  trustees  and  trust
indentures.  The provisions of sections one hundred and  twenty-six  and
one  hundred  and  twenty-seven  of  this article shall not apply to any
mortgage, deed of trust, trust indenture, or  other  similar  instrument
which  has been qualified with the United States securities and exchange
commission pursuant to the provisions of  the  trust  indenture  act  of
nineteen hundred thirty-nine, as from time to time amended and in force.
In  the  case  of  a  mortgage, deed of trust, trust indenture, or other
similar instrument which has not been so qualified,  the  provisions  of
section  one  hundred  twenty-seven  shall  not apply if such instrument
(hereinafter referred to as  the  "indenture")  contains  provisions  in
substance to the following effect:
(a)  If  the  trustee has or shall acquire any conflicting interest as
hereinafter defined,
(1) such trustee shall, within ninety days after ascertaining that  it
has   such  conflicting  interest,  either  eliminate  such  conflicting
interest or resign,  such  resignation  to  become  effective  upon  the
appointment  of  a  successor trustee and such successor's acceptance of
such appointment; and  the  obligor  upon  the  bonds,  notes  or  other
evidences  of  indebtedness  issued  under  the  indenture  (hereinafter
referred to as the "indenture securities") shall take  prompt  steps  to
have a successor appointed in the manner provided in the indenture;
(2)  in  the  event  that  such  trustee shall fail to comply with the
provisions of subparagraph (1), such  trustee  shall,  within  ten  days
after  the expiration of such ninety-day period, transmit notice of such
failure by mail (i) 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, (ii) 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  the  purpose  of receiving notices or reports to indenture security
holders, and (iii) to all holders of indenture  securities  whose  names
and  addresses  are  contained in information currently preserved by the
trustee for such purpose in accordance with provisions of the  indenture
requiring the obligor to furnish or cause to be furnished to the trustee
at stated intervals of not more than six months, and at such other times
as the 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 the
trustee to preserve, in as currrent a form as is reasonably practicable,
all such information so furnished  to  it  or  received  by  it  in  the
capacity of paying agent; and
(3)  subject to any provision of the indenture to the effect that in a
suit against the trustee (unless instituted by  a  holder  or  group  of
holders of more than ten per centum in principal amount of the indenture
securities  outstanding)  the  court  may  in  its discretion require an
undertaking  for  costs  and  may  assess  reasonable  costs,  including
reasonable  attorneys'  fees,  against  any party litigant, 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 therefor by such holder, to comply with the
provisions of subparagraph (1).
(b) For purposes of paragraph (a), the trustee shall be deemed to have
a conflicting interest if---
(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  unless  (A)  the  indenture securities are collateral trust
notes under which the only  collateral  consists  of  securities  issued
under  such other indenture, or (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 may
contain a provision excluding from the operation  of  this  subparagraph
any  other  indenture or indentures which shall have been qualified with
the United States securities and exchange  commission  pursuant  to  the
provisions  of  the trust indenture act of nineteen hundred thirty-nine,
as from time to time amended and in force;
(2) such trustee or any of its directors or executive officers  is  an
obligor  upon  the  indenture  securities  or an underwriter for such an
obligor;
(3) such trustee directly or indirectly controls  or  is  directly  or
indirectly  controlled  by or is under direct or indirect common control
with an obligor upon the indenture securities or an underwriter for such
an obligor;
(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,  and
(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  subparagraph  (1)  of this paragraph, to act as trustee,
whether under an indenture or otherwise;
(5) ten 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  twenty  per
centum  or  more  of  such  voting  securities  is  beneficially  owned,
collectively, by any two or more of such persons; or ten 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) five per centum or more of the voting securities, or ten per  centum
or more of any other class of security, of an obligor upon the indenture
securities,  not  including  indenture  securities and securities issued
under any other indenture under which such trustee is also such trustee,
or (B) ten 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,

five per centum or more of the voting securities of any person  who,  to
the  knowledge of the trustee, owns ten 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;
(8)  such  trustee  is the beneficial owner of, or holds as collateral
security for an obligation which is in default as  hereinafter  defined,
ten  per  centum  or more of any class of security of any person who, to
the knowledge of the trustee, owns fifty  per  centum  or  more  of  the
voting securities of an obligor upon the indenture securities; or
(9)  such  trustee owns, on May fifteenth in any calendar year, in the
capacity  of  executor,  administrator,  testamentary  or  inter   vivos
trustee,  guardian,  committee  or  conservator, or in any other similar
capacity, an aggregate of twenty-five 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  subparagraph  (6),  (7)  or  (8)  of  this
paragraph.  The indenture may provide, as  to  any  such  securities  of
which   the   trustee  acquired  ownership  through  becoming  executor,
administrator or testamentary trustee of an estate which included  them,
that  the  provisions  of  the preceding sentence shall not apply, for a
period of not more than two years from the date of such acquisition,  to
the  extent  that  such securities included in such estate do not exceed
twenty-five per centum of such  voting  securities  or  twenty-five  per
centum  of any such class of security.  The indenture shall provide that
promptly after May fifteenth in each calendar year,  the  trustee  shall
make  a  check  of  its  holdings  of  such  securities  in  any  of the
above-mentioned capacities as of  such  May  fifteenth.  Such  indenture
shall  also  provide  that  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  thirty  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 thirty-day period,
and after such date, notwithstanding the foregoing  provisions  of  this
subparagraph,  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
subparagraphs (6), (7) and (8) of this paragraph.
(c) The indenture shall provide that the specification of  percentages
in  subparagraphs  (5)  to (9), inclusive, of paragraph (b) 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  subparagraph
(3) or (7) of paragraph (b).
(d)  For  the  purposes  of  subparagraphs  (6),  (7),  (8) and (9) of
paragraph (b), (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 trustee shall not be deemed the owner or
holder of (i) any security which it holds  as  collateral  security  (as
trustee or otherwise) for an obligation which is not in default as above
defined,  or  (ii)  any  security  which it holds as collateral security
under the indenture, 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.
(e)  For  the  purposes  of paragraph (b), the term "underwriter" when
used with reference to an obligor upon the  indenture  securities  means
every  person  who, within three years prior to the time as of which the
determination is made, was  an  underwriter  of  any  security  of  such
obligor outstanding at such time.
(f)  When used in paragraphs (b) to (e), inclusive, unless the context
otherewise requires---
(1) 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.
(2)  The  term  "director" means any director of a corporation, or any
individual performing similar functions with respect to any organization
whether incorporated or unincorporated.
(3) 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.
(4)    The  term  "obligor",  when  used with respect to any indenture
security, means every  person  who  is  liable  thereon,  and,  if  such
security  is a certificate of interest or participation, such term means
also every person 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.
(5) 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.