Document:

EX-4.1

 Exhibit 4.1 

ASSET PURCHASE AGREEMENT 

THIS ASSET PURCHASE AGREEMENT, dated as of July 15, 2014, is by and among CANCER GENETICS, INC., a Delaware corporation
(the “Parent” or “CGI”), GENTRIS, LLC, a Delaware limited liability company (the “Purchaser”), and GENTRIS CORPORATION, a Delaware Corporation (the “Seller” or
“GENTRIS). 
 RECITALS 

WHEREAS, the Seller is engaged in a biorepository and clinical genetic testing business (as heretofore practiced by the Seller, the
“Seller’s Business”); 
 WHEREAS, the Seller is willing to sell to the Purchaser substantially all of the
assets utilized by the Seller in operating the Seller’s Business, subject to an assumption by the Purchaser of certain specified liabilities associated with the Seller’s Business, all in accordance with the terms and conditions set forth
herein; and 
 NOW, THEREFORE, in consideration of the mutual covenants and undertakings contained herein, and subject to and
on the terms and conditions set forth herein, the parties hereto hereby agree as follows:  
 ARTICLE I 

Definitions; Interpretations 

Section 1.1 Definitions. As used in this Agreement, the following terms shall have the respective meanings set forth below: 

“Affiliate” means, with respect to any Person, any other Person who directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies
of a Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlled” and “controlling” have meanings correlative thereto. 

“Agreement” means this Asset Purchase Agreement. 

“Assumed Liabilities” means only (a) liabilities, duties, responsibilities and other obligations of the Seller arising
from and after the consummation of the Closing under the Assumed Contracts, (b) Current Liabilities as of the Closing Date incurred in the Ordinary Course of Seller’s Business; provided, however, that the Assumed Liabilities shall not
include any Excluded Liabilities, and (c) the other liabilities, duties, responsibilities and other obligations of the Seller set forth on Schedule 1.1A, which shall include, without limitation, all obligations under those certain Bonus
Agreements, each dated as of June 8, 2014, by and between the Seller and each of Pamela Prior and Amelia Warner, and the releases contemplated thereunder (the “Bonus Agreements”). 

“Balance Sheet Date” means May 31, 2014. 

 “Benefit Arrangement” means each (i) employee benefit plan, as defined in
Section 3(3) of ERISA, (ii) employment contract and (iii) bonus, deferred compensation, incentive compensation, performance compensation, stock purchase, stock option, stock appreciation, restricted stock, phantom stock, savings,
profit sharing, severance, termination pay (other than statutory or common law requirements for reasonable notice), health or other medical, salary continuation, cafeteria, dependent care, vacation, sick leave, overtime, holiday pay, fringe benefit,
reimbursement, life insurance, disability or other (whether insured or self-insured) insurance, supplementary unemployment, pension retirement, supplementary retirement, welfare or other plan, program, policy or arrangement, whether written or
unwritten, formal or informal, which any employee or consultant of the Seller’s Business participates in or is covered under, or is otherwise a party. 

“Business Day” means a day, other than a Saturday or Sunday, on which commercial banks in New York City are open for the
general transaction of business. 
 “Code” means the Internal Revenue Code of 1986, as amended. 

“Contract” means any contract, agreement, indenture, note, bond, mortgage, loan, instrument, lease, license, commitment or
other arrangement, understanding, undertaking, commitment or obligation, whether written or oral. 
 “Current Liabilities”
means current liabilities of the Seller that were incurred in the Ordinary Course of Seller’s Business and are set forth on Schedule 1.1B. 

“Earnout Period” means the period beginning on first day of the month immediately following the Closing Date and ending twelve
(12) calendar months thereafter. 
 “Environmental Laws” means any federal, state or local law, statute, ordinance,
rule, regulation, license, permit, authorization, approval, consent, court order, judgment, decree, injunction, code requirement or agreement with any Governmental Authority (x) relating to pollution (or the cleanup thereof or the filing of
information with respect thereto), human health or the protection of air, surface water, ground water, drinking water supply, land (including land surface or subsurface), plant and animal life or damages for injury or loss of natural resources, or
(y) concerning exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production or disposal of Regulated Substances, in each case as amended and as now or hereafter in effect. The
term “Environmental Laws” includes, without limitation, any common law or equitable doctrine (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose
liability or obligations for injuries or damages due to or threatened as a result of the presence of, exposure to, or ingestion of, any Regulated Substance. 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended. 

“ERISA Affiliate” means, with respect to the Seller Group, any other Person that, together with the Seller Group, would be
treated as a single employer under Section 414 of the Code. 

  
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 “Escrow Account” means the escrow account established with the Escrow Agent in
accordance with the Escrow Agreement to hold an amount equal to one third (1/3) of the Stock Consideration until December 15, 2015. 

“Escrow Agent” means Continental Stock Transfer & Trust Company, or any successor thereto acting as escrow agent
under the Escrow Agreement. 
 “Excluded Liabilities” means all liabilities and obligations of the Seller Group (whether or
not relating to the Seller’s Business or the Purchased Assets, and whether known or unknown, absolute, accrued, contingent or otherwise, or whether due or to become due, arising out of events or transactions or facts occurring on, prior to, or
after the Closing Date) other than the Assumed Liabilities, including, without limitation, the following liabilities or obligations of the Seller Group to the extent not expressly included in the Assumed Liabilities: 

(i) all liabilities and obligations of any kind existing as of the Closing Date of a nature properly characterized under GAAP as an
inter-company liability or otherwise owed or owing by the Seller’s Business to the Seller or any Stockholders, any Subsidiary or any Affiliate of the Seller or any equity holder of the Seller; 

(ii) all liabilities and obligations of any kind existing as of the Closing Date of a nature properly characterized under GAAP as a long-term
liability, including all Indebtedness properly characterized under GAAP as a long-term liability; 
 (iii) all liabilities and obligations
relating to current or former employees, agents, consultants or other independent contractors of the Seller Group, whether or not such Persons are employed by the Purchaser or its Affiliates after the Closing, relating to services performed,
benefits accrued or claims accrued or incurred prior to the Closing or with respect to Benefit Arrangements at any time before or after the Closing Date, including, but not limited to, obligations under or for any employment agreement or
arrangement, compensation arrangement, stock option plan, incentive plan, deferred compensation plan, accrued payroll, accrued vacation pay, sick leave, severance, worker’s compensation, unemployment compensation, pension or profit sharing
plans, ERISA liabilities, employee welfare or retirement benefits (including any liability or obligation of the Seller Group under any welfare plan or policy for continuing health coverage), liabilities under the Worker Adjustment and Retraining
Notification (WARN) Act and obligations or agreements to rehire or give preferential treatment to laid-off or terminated employees; 
 (iv)
all liabilities and obligations, whether absolute, accrued, contingent or otherwise, for Taxes, including, without limitation, any such liability or obligation for any income, sales, use or similar Taxes resulting from the transactions contemplated
by this Agreement with respect to any period; 
 (v) all damages, losses, liabilities, actions, claims, costs and expenses (including,
without limitation, closure costs, fines, penalties, expenses of investigation and remediation and ongoing monitoring and reasonable attorneys’ fees) directly or indirectly based upon, arising out of, resulting from or relating to (a) any
violation of any Environmental Law by the Seller Group or any Person or entity acting on behalf of the Seller Group or any Person from 

  
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or through which the Seller Group acquired title on or prior to the Closing Date (including, without limitation, any failure to obtain or comply with any permit, license or other operating
authorization under provisions of any Environmental Law), (b) any violation of any rule, regulation or promulgation of the FDA by the Seller Group or any Person or entity acting on behalf of the Seller Group or any Person from or through which
the Seller Group acquired title on or prior to the Closing Date, or (c) any act, omission, event, condition or circumstance occurring or existing, in connection with the Seller’s Business or the Purchased Assets or otherwise, as of or
prior to the consummation of the Closing relating to (X) removal, remediation, containment, cleanup or abatement of the presence of any Regulated Substance, whether on-site or off-site, or (Y) any claim by any third party, including
without limitation, tort suits for personal or bodily injury, property damage or injunctive relief; 
 (vi) all liabilities and obligations
arising out of any lawsuit, action, proceeding, inquiry, claim, order or investigation by or before any Governmental Authority arising out of events, transactions, facts, circumstances, acts or omissions which occurred prior to or on the Closing
Date, including, without limitation, personal injury or property damage, product liability or strict liability; 
 (vii) all liabilities or
obligations of the Seller Group, related to the Seller’s Business or the Purchased Assets or otherwise, not disclosed in the GAAP Financial Statements, of any kind or nature, whether known or unknown, absolute, accrued, contingent or otherwise,
or whether due or to become due, arising out of events, transactions, facts, acts or omissions which occurred prior to or on the Closing Date; 

(viii) any liabilities or obligations of the Seller Group of any kind or nature, whether known or unknown, absolute, accrued, contingent or
otherwise, arising out of events, transactions, facts, acts or omissions which occur subsequent to the Closing; 
 (ix) all liabilities,
duties, responsibilities and other obligations of the Seller arising prior to the consummation of the Closing under the Assumed Contracts; and 

(x) all liabilities that the Seller, any Subsidiary of the Seller and any Stockholder may have with respect to Sellers’ Expenses. 

“FDA” means the United States Food and Drug Administration or any successor agency performing similar functions. 

“GAAP” means generally accepted accounting principles as in effect in the United States on the date of this Agreement. 

“Governmental Authority” means any national, federal, state, provincial, county, municipal or local government, foreign or
domestic, or the government of any political subdivision of any of the foregoing, or any entity, authority, agency, ministry or other similar body exercising executive, legislative, judicial, regulatory or administrative authority or functions of or
pertaining to government, including any authority or other quasi-governmental entity established to perform any of such functions. 

  
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 “Indebtedness” means at a particular time, without duplication, (i) any
obligations under any indebtedness for borrowed money (including, without limitation, all principal, interest, premiums, penalties, fees, expenses, indemnities and breakage costs), (ii) any indebtedness evidenced by any note, bond, debenture or
other debt security, (iii) any commitment by which a Person assures a creditor against loss (including contingent reimbursement obligations with respect to letters of credit), (iv) any indebtedness pursuant to a guarantee, (v) any
obligations under capitalized leases or with respect to which a Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or with respect to which obligations a Person assures a creditor against loss, and (vi) any
indebtedness secured by a Lien on a Person’s assets. 
 “Intellectual Property” means all intellectual property rights
owned or used by any of the Persons in the Seller Group whether protected, created or arising under the laws of the United States or any other jurisdiction, including, without limitation: (i) all patents and applications therefor, including
continuations, divisionals, continuations-in-part, or reissues of patent applications and patents issuing thereon, and all similar rights arising under the Laws of any jurisdiction (collectively, “Patents”), (ii) all
trademarks, service marks, trade names, service names, brand names, corporate names, trade dress rights, logos, rights to use Internet domain names, and other general intangibles of a like nature, together with the goodwill associated with any of
the foregoing, and all applications, registrations and renewals thereof (collectively, “Marks”), (iii) copyrights and registrations and applications therefor, works of authorship and mask work rights (collectively,
“Copyrights”), (iv) discoveries, concepts, ideas, research and development, know-how, formulae, inventions, compositions, technical data, procedures, designs, drawings, specifications, databases, and other proprietary and
confidential information, including, without limitation, lists and databases of attendees, speakers, exhibitors and sponsors, customer lists, supplier lists, pricing and cost information, and business and marketing plans and proposals of the Seller
Group, in each case excluding any rights in respect of any of the foregoing that comprise or are protected by Copyrights or Patents (collectively, “Trade Secrets”), (v) all Software and Technology owned or used by the Seller
Group and (vi) all rights to any of the foregoing granted to the Seller Group pursuant to any Intellectual Property License. 

“Intellectual Property License” means (i) any grant to a third Person of any right to use any of the Intellectual
Property, and (ii) any grant to the Seller Group of a right to use a third-person’s intellectual property rights. 

“Knowledge” means the actual knowledge, after due inquiry, of each of Amelia Warner, Joe Kessler, Michael Murphy, Pamela
Prior, Scott Clark and Tim Gupton. 
 “Law” means any foreign, federal, state or local law (including common law), statute,
code, ordinance, rule, regulation or other requirement. 
 “Legal Proceeding” means any judicial, administrative or arbitral
actions, suits, investigations, proceedings or claims by or before a Governmental Authority. 
 “Lien” or
“Liens” means any mortgage, pledge, security interest, right of first refusal, option, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof), any
sale of receivables with recourse against the Seller or any of its Subsidiaries, any filing or agreement to file a financing statement as 

  
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debtor under the Uniform Commercial Code or any similar statute (other than to reflect ownership by a third party of property leased to the Seller or any of its Subsidiaries under a lease which
is not in the nature of a conditional sale or title retention agreement), any subordination arrangement in favor of another Person, or voting trusts, proxies or restrictions (other than restrictions imposed by federal or state securities laws) of
any kind. 
 “Material Adverse Effect” means a change, effect, event, occurrence or circumstance that is materially adverse
to (i) the business, assets, properties, results of operations, management, or condition (financial or otherwise) of the Seller Group, taken as a whole, (ii) to the industry in which the Seller’s Business operates or (iii) the
ability of the Seller to consummate the transactions contemplated by this Agreement or perform their respective obligations under this Agreement or the other documents contemplated hereby. 

“Order” means any order, injunction, judgment, decree, ruling, writ, assessment or arbitration award of a Governmental
Authority. 
 “Ordinary Course of Seller’s Business” means the ordinary and usual course of day-to-day operations of
the Seller’s Business through the date hereof consistent with past practice. 
 “Parent Common Stock” shall mean shares
of common stock, par value $0.001 per share, of Cancer Genetics, Inc. 
 “Parent Per Share Value” shall mean, with respect
to Parent Common Stock as of any given date, the volume weighted average price of Parent Common Stock on the Principal Trading Market for the five trading days immediately preceding such date. 

“Permits” means any approvals, authorizations, consents, licenses, permits or certificates of a Governmental Authority and any
non-governmental regulatory body licenses, certifications or accreditations. 
 “Permitted Encumbrances” means
(i) those items listed in Schedule 1.1C, (ii) liens for Taxes not yet due and payable, (iii) mechanics’, carriers’, workmen’s, repairmen’s or other like liens arising or incurred in the ordinary course of
business consistent with past practice or amounts that are not delinquent and which are not, individually or in the aggregate, material to the Seller’s Business or the Purchased Assets, (iv) easements, rights of way, zoning ordinances and
other similar encumbrances affecting Leased Real Property which are not, individually or in the aggregate, material to the Seller’s Business or the Purchased Assets, which do not prohibit or interfere with the current operation of any Leased
Real Property, and (v) liens arising under original purchase price sales contracts and equipment leases with third parties entered into in the ordinary course of business consistent with past practice which are not, individual or in the
aggregate, material to the Seller’s Business or the Purchased Assets. 
 “Person” means an individual, partnership,
corporation, limited liability company, joint stock company, unincorporated organization or association, trust or joint venture, or a governmental agency or political subdivision thereof. 

  
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 “Principal Trading Market” means the Trading Market on which the Common Stock is
primarily listed on and quoted for trading, which, as of the date of this Agreement and the Closing Date, shall be the NASDAQ Capital Market. 

“Purchased Assets” means all of the right, title and interest of the Seller Group in and to all assets used in the conduct of
the Seller’s Business, of every kind and description, wherever located, whether now owned or acquired on or after the date hereof and prior to the consummation of the Closing, whether tangible or intangible (including, without limitation,
goodwill), real, personal or mixed, but excluding the Retained Assets. The Purchased Assets include, without limitation, all of the right, title and interest of the Seller Group in and to the following assets used in the conduct of the Seller’s
Business: 
 (i) all of the Seller Group’s accounts and notes receivable outstanding as of the Closing Date (the “Accounts
Receivable”); 
 (ii) all Leased Real Property and the buildings and improvements thereto leased by the Seller Group, including
those leases listed on Schedule 1.1D; 
 (iii) all computers, computer servers, test equipment, printers and laptops and other
computer equipment (including spare parts) and Software employed in the conduct of the Seller’s Business, including those assets listed on Schedule 1.1E; 

(iv) all machinery and equipment (including spare parts), business machines, automobiles and other vehicles, furniture, fixtures, supplies,
models, capital improvements in process, tools and all other tangible personal property employed in the conduct of the Seller’s Business, including those assets listed on Schedule 1.1F; 

(v) all brochures, pamphlets, directories, signage, displays, booths, marketing, merchandising and advertising specialty items and other items
which may comprise the inventory of the Seller’s Business; 
 (vi) all easements, rights of way, servitudes, leases, permits, licenses
or options used or held by the Seller’s Business; 
 (vii) all prepaid deposits paid to the Seller Group, all prepaid deposits paid by
the Seller Group to any other Person, advances paid to the Seller Group, advances paid by the Seller Group to any other Person and other prepaid expenses associated with the Seller’s Business, including, without limitation, all deposits,
advances and rights to rebates of any type; 
 (viii) all right, title and interest of the Seller Group in mortgages, indentures, promissory
notes, evidences of indebtedness, other debt, deeds of trust, loan or credit agreements or similar agreements or instruments evidencing indebtedness of customers, other than Accounts Receivable; 

(ix) all rights and claims of the Seller Group, whether mature, contingent or otherwise, against third parties, whether in tort, contract or
otherwise, including, without limitation, causes of action, unliquidated rights and claims under or pursuant to all warranties, representations and guarantees made by manufacturers, suppliers or vendors, claims for refunds, rights of off-set and
credits of all kinds and all other general intangibles; provided, however, that such rights and claims shall not include rights and claims established by this Agreement or the other agreements contemplated hereby; 

  
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 (x) all authorizations, consents, approvals, licenses, orders, Permits and exemptions of, and
filings or registrations with, any Governmental Authority or non-governmental regulatory authority, to the extent transferable by the Seller Group; 

(xi) all of the Intellectual Property and Technology of the Seller Group; 

(xii) all rights under any executory contract related to the Seller’s Business to which the Seller Group is a party, including, without
limitation, any license agreement, security agreement, indemnity agreement, subordination agreement, mortgage, equipment lease and other lease or sublease (whether or not capitalized), conditional sale or title retention agreement and any purchase
order from any customer; 
 (xiii) the name Gentris Corporation, the names of the divisions of the Seller and any other names used by the
Seller in the Seller’s Business; 
 (xiv) the benefit of coverage provided by all current and expired insurance policies of Seller to
the extent they relate to any of the Purchased Assets or Assumed Liabilities; 
 (xv) all other assets used or useful in the conduct of the
Seller’s Business, whether or not reflected on the books and records of the Seller Group, including, without limitation, the Seller’s Business as a going concern, its goodwill and franchises, all credit balances of or inuring to the Seller
Group under any state unemployment compensation plan or fund, its employment contracts, restrictive covenants and obligations of present and former employees, agents, representatives, independent contractors and others, and all books, records, files
and papers relating to, or necessary to the conduct of, the Seller’s Business; and 
 (xvi) all equity interests of any Subsidiary. 

“Purchaser Documents” means this Agreement and each other agreement, document, instrument or certificate to be executed by the
Parent or the Purchaser in connection with the consummation of the transactions contemplated hereby. 
 “Regulated
Substances” means pollutants, contaminants, hazardous or toxic substances, compounds or related materials or chemicals, hazardous materials, hazardous waste, flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls, petroleum and petroleum products (including, but not limited to, waste petroleum and petroleum products) as regulated under applicable Environmental Laws. 

“Retained Assets” means all cash and cash equivalents (other than the Accounts Receivable), all tax returns and tax refunds
relating to any tax period ending on or before the Closing Date, all stock books and corporate organizational documents and the other assets listed on Schedule 1.1G. 

  
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 “Revenues” means all revenue received by Purchaser during the Earnout Period
directly through the operation of Seller’s Business, including revenues attributable to new or renewed contracts with Merck Sharp & Dohme Corp. or its Affiliates for biorepository services and revenue from genomic testing, but does not
include revenue from existing biorepository contracts in place at the time of the Closing Date. 
 “Seller Documents” means
this Agreement and each other agreement, document, instrument or certificate to be executed by any Person in the Seller Group in connection with the consummation of the transactions contemplated hereby. 

“Seller Group” means the Seller and each of its Subsidiaries. Unless the context expressly indicates to the contrary, each
reference herein to the Seller Group constitutes a reference to the Seller and each other Person that is part of the Seller Group both conjunctively and disjunctively. Any reference herein to a “Person in the Seller Group” shall refer to
the Seller and each of its Subsidiaries. 
 “Seller Group Product” means any product or service offering of the Seller Group
marketed, sold, licensed or distributed by the Seller Group. 
 “Seller Representative” shall mean Tim Gupton. 

“Sellers’ Expenses” means all costs and expenses incurred by the Seller and any Subsidiary of the Seller in connection
with the negotiation, preparation and execution of this Agreement and the consummation of the transactions contemplated hereby or obtaining any requisite consents or approvals of the Agreement or the transactions contemplated hereby, including any
brokerage, investment bankers or similar fees and any attorneys’ or accounting fees. 
 “Software” means any and all
(i) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code, (ii) databases and compilations, including any and all data and collections of data,
whether machine readable or otherwise, (iii) descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates,
menus, buttons and icons, and (iv) all documentation including user manuals and other training documentation related to any of the foregoing. 

“Stockholder” means an equity holder of Seller. 

“Subsidiary” means any entity (a) the accounts of which are required as of the date hereof or as of the Closing Date to
be consolidated with those of the Seller in the Seller’s consolidated financial statements pursuant to GAAP; or (b) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary
voting power or, in the case of a partnership, more than 50% of the general partnership interests or more than 50% of the profits or losses are, as of the date hereof or as of the Closing Date, owned, controlled or held by the Seller or one or more
Subsidiaries of the Seller. 
 “Tax,” “tax,” “Taxes” or “taxes” means
(i) all federal, state, local or foreign taxes, charges, fees, imposts, levies or other assessments, including, without limitation, all net income, 

  
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alternative minimum or add-on minimum tax, gross income, gross receipts, capital, paid-up capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, environmental, windfall profits, customs duties, fees, or other like assessments and charges of any kind
whatsoever, (ii) all interest, penalties, fines, additions to tax or additional amounts imposed by any Taxing Authority in connection with any item described in clause (i) and (iii) any transferee liability in respect of any items
described in clauses (i) and/or (ii) payable by reason of Contract, assumption, transferee liability, operation of Law, Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof of any analogous or similar
provision under Law) or otherwise, in each case whether or not disputed. 
 “Taxing Authority” means the Internal Revenue
Service and any other Governmental Authority responsible for the administration of any Tax. 
 “Tax Return” or “tax
return” means any return, report or statement filed or required to be filed with respect to any Tax (including any attachments thereto, and any amendment thereof) including any information return, claim for refund, amended return or
declaration of estimated Tax, and including, where permitted or required, combined, consolidated or unitary returns for any group of entities that includes any Person within the Seller Group. 

“Technology” means, collectively, (i) all designs, formulae, algorithms, procedures, methods, techniques, ideas,
know-how, research and development, technical data, programs, subroutines, tools, materials, specifications, processes, inventions (whether patentable or unpatentable and whether or not reduced to practice), apparatus, creations, improvements, works
of authorship and other similar materials, (ii) all recordings, graphs, drawings, reports, analyses, and other writings, and other tangible embodiments of any of the foregoing, in any form whether or not specifically listed herein, and
(iii) all related technology that is used in, incorporated in, embodied in, displayed by or relate to any of the foregoing or is otherwise owned or used by the Seller Group. 

“Trading Market” means whichever of the New York Stock Exchange, the NYSE Amex Equities (formerly the American Stock
Exchange), the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or the OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question. 

“Transaction Documents” means the Purchaser Documents and the Seller Documents. 

Section 1.2 Other Definitions. The following table identifies the sections in this Agreement where certain other
definitions are set forth: 
  

			
	 Defined Term
	  	 Section

	Accounts Receivable	  	Section 1.1, Definition of “Purchased Assets”
	Applicable Percentage	  	Section 2.3(a)(iv)(b)
	Arbitration Service	  	Section 8.4(c)(ii)
	Assignment and Assumption Agreement	  	Section 2.2(a)(i)
	Assumed Contracts	  	Section 3.13(c)

  
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	Balance Sheet Date	  	Section 3.9(a)
	Bill of Sale	  	Section 2.2(a)(i)
	Bonus Agreements	  	Section 1.1, Definition of “Assumed Liabilities”
	Business Consultant	  	Section 3.15(b)
	Business Employees	  	Section 3.15(a)
	Cap	  	Section 8.2(e)
	Cash Consideration	  	Section 2.3(a)(i)
	Charter Amendment	  	Section 2.2(a)(iii)
	Closing	  	Section 2.6
	Closing Date	  	Section 2.6
	COBRA Coverage	  	Section 6.8(d)
	Competitive Business	  	Section 6.6(a)
	Confidential Information	  	Section 6.6(b)
	Contingent Accounts	  	Section 2.3(a)(i)
	Copyrights	  	Section 1.1, Definition of “Intellectual Property”
	Damages	  	Section 8.2(a)
	Deductible	  	Section 8.2(e)
	Delaware Courts	  	Section 9.3(b)
	Earnout Closing Date	  	Section 2.9(b)
	Earnout Objection	  	Section 2.9(d)
	Earnout Stock	  	Section 2.4
	Employees	  	Section 6.8(a)
	Escrow Agreement	  	Section 2.4
	Escrow Period	  	Section 8.4(a)
	Exchange Act	  	Section 5.8
	Fair Market Value	  	Section 8.4(c)(i)
	GAAP Financial Statements	  	Section 3.9(a)
	Gross Exit Fees	  	Section 2.3(a)(iv)(a)
	Indemnified Party	  	Section 8.2(c)
	Indemnifying Party	  	Section 8.2(c)
	Leased Property	  	Section 3.7(a)
	Marks	  	Section 1.1, Definition of “Intellectual Property”
	Material Contracts	  	Section 3.13(a)
	Merck Exit Compensation	  	Section 2.3(a)(iv)
	Minimum Claim Amount	  	Section 8.2(e)
	Money Laundering Laws	  	Section 3.17(f)
	Monthly Report	  	Section 2.9(b)
	Off-The-Shelf Software	  	Section 3.12(d)
	Parent	  	Opening Paragraph
	Parent Notice	  	Section 8.4(b)
	Parent Indemnified Parties	  	Section 8.2(a)

  
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	Patents	  	Section 1.1, Definition of “Intellectual Property”
	Payoff Indebtedness	  	Section 2.3(a)(i)
	Purchaser Benefit Arrangements	  	Section 6.8(b)
	Securities	  	Section 2.4
	Securities Act	  	Section 2.4
	Seller	  	Opening Paragraph
	Seller’s Business	  	First Recital
	Seller Indemnified Parties	  	Section 8.2(b)
	Seller Permits	  	Section 3.17(b)
	Service Provider	  	Section 3.15(e)
	Stock Consideration	  	Section 2.3(a)(ii)
	Survival Period	  	Section 8.1(a)
	Termination Date	  	Section 8.4(a)
	Title IV Plan	  	Section 3.14(b)
	Total Consideration	  	Section 2.3(a)
	Trade Secrets	  	Section 1.1, Definition of “Intellectual Property”
	Trademark Assignment Agreement	  	Section 2.2(a)(ii)
	Transferred Contracts	  	Section 6.10

 Section 1.3 Interpretation. Unless otherwise indicated to the contrary herein by the
context or use thereof: (i) the words, “herein,” “hereto,” “hereof” and words of similar import refer to this Agreement as a whole and not to any particular Section or paragraph hereof; (ii) words importing
the masculine gender shall also include the feminine and neutral genders, and vice versa; and (iii) words importing the singular shall also include the plural, and vice versa. 

ARTICLE II 
 Purchase of
Assets; Assumption of Liabilities; Additional Covenants 
 Section 2.1 Purchase of Assets and Assumption of
Liabilities by the Purchaser. Upon the terms and subject to the conditions of this Agreement and on the basis of the representations, warranties and agreements contained herein, at the Closing (i) the Seller shall sell, assign,
transfer, convey and deliver, or, as applicable, shall cause such other Person in the Seller Group to sell, assign, transfer, convey and deliver, to the Purchaser all of the Seller Group’s right, title and interest in and to the Purchased
Assets, and (ii) the Purchaser shall assume all of the Assumed Liabilities. Upon the terms and subject to the conditions of this Agreement and on the basis of the representations, warranties and agreements contained herein, the Seller Group
shall effect such sale of assets and the Purchaser shall effect such assumption of liabilities by executing and delivering at the Closing the assignment and assumption agreement referred to herein. NOTWITHSTANDING THE FOREGOING, EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, THE PURCHASER IS NOT ASSUMING, NOR SHALL THE PURCHASER IN ANY MANNER BECOME LIABLE FOR, ANY LIABILITIES OR OBLIGATIONS OF THE SELLER GROUP OF ANY KIND OR NATURE OTHER THAN THE ASSUMED LIABILITIES.

  
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 Section 2.2 Document Deliveries at the Closing. 

(a) Document Deliveries by the Seller. Upon the terms and subject to the conditions of this Agreement and on the basis of the
representations, warranties and agreements contained herein, the Seller shall execute and deliver, or cause to be executed and delivered, as the case may be, the following documents at or prior to the Closing: 

(i) The Seller shall execute and deliver to the Purchaser an assignment and assumption agreement, in the form and substance of the assignment
and assumption agreement annexed hereto as Exhibit A (the “Assignment and Assumption Agreement”) and a bill of sale, in the form and substance of the bill of sale annexed hereto as Exhibit B (the “Bill of
Sale”). 
 (ii) The Seller shall execute and deliver to the Purchaser a trademark assignment agreement, in form and substance of
the trademark assignment agreement annexed hereto as Exhibit C (the “Trademark Assignment Agreement”), and shall complete, execute and deliver to the Purchaser all forms as the Purchaser shall reasonably determine to be
appropriate to transfer title and/or ownership to all URL’s included in the Purchased Assets to the Purchaser hereunder, in form and substance reasonably satisfactory to the Purchaser. 

(iii) The Seller shall execute and deliver to the Purchaser the certificate of amendment to the Seller’s certificate of incorporation
described in Section 6.6 (the “Charter Amendment”). 
 (iv) The Seller shall execute and deliver to the Purchaser a
certificate, in form reasonably satisfactory to the Purchaser, stating that each of the conditions set forth in Section 7.2(a), (b) and (c) has been satisfied. 

(v) The Seller shall deliver general releases from each of Amelia Warner and Pam Prior. 

(vi) The Seller shall execute and deliver to the Purchaser such other conveyancing documents as the Purchaser shall reasonably determine to be
appropriate to transfer title and/or ownership to the Purchased Assets to the Purchaser hereunder, in form and substance reasonably satisfactory to the Purchaser. 

(vii) The Seller shall deliver all Permits relating to, or necessary to the conduct of, the Seller’s Business by the Purchaser, issued in
Purchaser’s name or with all requisite transfer documents. 
 (viii) The Seller shall execute the Escrow Agreement and deliver it to
the Purchaser and the Escrow Agent. 
 (ix) The Seller shall deliver to the Purchaser, if applicable, an affidavit of non-foreign status of
the Seller dated as of the Closing Date that complies with section 1445 of the Code. 

  
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 (b) Document Deliveries by the Purchaser. Upon the terms and subject to the
conditions of this Agreement and on the basis of the representations, warranties and agreements contained herein, the Purchaser shall execute and deliver the following documents at or prior to the Closing: 

(i) The Purchaser shall execute and deliver to the Seller a certificate, in form reasonably satisfactory to the Seller, stating that each of
the conditions set forth in Section 7.3(a) has been satisfied. 
 (ii) The Purchaser shall execute the Assignment and Assumption
Agreement and deliver the Assignment and Assumption Agreement to the Seller. 
 (iii) The Purchaser shall execute the Escrow Agreement and
deliver the Escrow Agreement to the Seller and Escrow Agent. 
 Section 2.3 Consideration. 

(a) The aggregate consideration for the Purchased Assets (the “Total Consideration”) shall be: 

(i) an amount equal to the lesser of (A) $3,250,000 and (B) the “Total Obligations” outstanding as of the Closing Date
calculated as set forth in the “waterfall” shown on Schedule 2.3(A); provided however, that if (B) (the “Payoff Indebtedness”) is less than $3,250,000, fifty percent (50%) of the amount equal to $3,250,000
minus the Payoff Indebtedness shall be added to the cash consideration (the “Cash Consideration”); provided further, to the extent that any of the “Back Billings” as set forth on Schedule 2.3(B) (the
“Contingent Accounts”), are collected from the obligors under such Contingent Accounts within 120 calendar days following the Closing Date, such collections shall be paid to the Seller, but in no instance shall any such payment be
made if total Cash Consideration, including any such payment previously paid, would exceed $3,250,000. 
 (ii) shares of Parent Common Stock
equal to (x) $1,500,000 divided by (y) the Parent Per Share Value as of the Closing Date (the “Stock Consideration”). 

(iii) an additional amount of up to $1,500,000 as determined in accordance with Section 2.9 and payable in either immediately available
funds or shares of Parent Common Stock (or a combination thereof), as determined by Purchaser and Parent in their sole discretion, with the number of shares of Parent Common Stock to be issued, if any, to be based on the Parent Per Share Value as of
Earnout Closing Date (the actual amount so paid hereinafter referred to as the “Earnout Payment”). Notwithstanding the foregoing, Parent shall make the Earnout Payment in immediately available funds to the extent necessary to
prevent the aggregate number of shares of Parent Common Stock issued under this Agreement from exceeding 19.99% of the outstanding common stock of Parent immediately prior to the Closing. 

(iv) an additional amount (the “Merck Exit Compensation”) payable in immediately available funds no later than
December 15, 2015, which Merck Exit Compensation shall be related to Merck’s termination of its biorepository relationship with the Company (the “Merck Exit”) and shall be determined in accordance with the following
formula: 

  
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 Applicable Percentage x 32% x Gross Exit Fees 

Parent and Purchaser shall, and shall cause their respective Affiliates to, use their commercially reasonable efforts to maximize the Merck
Exit Compensation. For purposes of the foregoing formula: 
 (a) “Gross Exit Fees” shall mean the aggregate
gross fees, including accessioning and double coding fees, received by the Business in connection with the Merck Exit in the period commencing on the Closing Date and ending on December 31, 2014; and 

(b) “Applicable Percentage” shall mean (x) 30% if Gross Exit Fees are less than $1,000,000, (y) 40%
if Gross Exit Fees are equal to or greater than $1,000,000 and less than $1,500,000, or (z) 50% if Gross Exit Fees are greater than $1,500,000; and 

(b) Purchaser’s assumption of the Assumed Liabilities. 

Section 2.4 Payments by the Parent at Closing. Upon the terms and subject to the conditions of this Agreement and on the basis of the
representations, warranties and agreements contained herein, at the Closing, the Parent shall (i) pay, on behalf of the Seller Group, the Cash Consideration by wire transfer of immediately available funds to the accounts and in such amounts
designated on Schedule 2.3(A) and (ii) cause its transfer agent to issue the Stock Consideration in the name of the Seller and deliver (a) two thirds (2/3) of the Stock Consideration to the Seller and (b) one third
(1/3) of the Stock Consideration to the Escrow Agent, to be held and disbursed by the Escrow Agent pursuant to the terms and conditions of an escrow agreement in the form and substance of the escrow agreement annexed hereto as Exhibit D,
subject to such modifications thereof as the Escrow Agent shall reasonably request prior to the Closing and as shall be accepted by the Parent and the Seller (such acceptance not to be unreasonably denied) (as so modified, the “Escrow
Agreement”). All Stock Consideration and any shares of the Parent issued as an Earnout Payment (the “Earnout Stock” and, together with the Stock Consideration, the “Securities”) shall be issued in
compliance with exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506 promulgated thereunder. The Seller shall provide the Escrow Agent
with stock powers signed in blank. The stock certificates representing the Securities shall bear restrictive legends in substantially the following form: 

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, MORTGAGED,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”

  
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 Section 2.5 Allocation of the Consideration. Following the Closing, the Parent
shall determine the final tax allocation of the Total Consideration and shall provide the Seller with such tax allocation. The Seller shall have the opportunity to review and evaluate such allocation. Unless the Seller reasonably objects to such
allocation, the Parent and the Seller agree that such tax allocation will be binding on all parties for federal income tax purposes in connection with the purchase and sale of the Purchased Assets, and will be consistently reflected by each party on
its respective income Tax Returns. The Parent and the Seller agree to prepare and timely file all applicable Internal Revenue Service forms, including Form 8594 (Asset Acquisition Statement), and other governmental forms, to cooperate with each
other in the preparation of such forms and to furnish each other with a copy of such forms prepared in draft, within a reasonable period prior to the filing due date thereof. In the event the Seller reasonably objects to such allocation, the Parent
shall engage a third party accounting firm, which is reasonably acceptable to the Seller, to provide advice on the tax allocation. Such tax allocation will then be binding on all parties. 

Section 2.6 Closing. The closing of the transactions contemplated hereby (the “Closing”) shall take place at the
offices of Alston & Bird LLP, located at 90 Park Avenue, New York, NY 10016 at 10:00 a.m. (local time) on the date that is five (5) business days after satisfaction of all obligations under Article VII, or such other date mutually
agreeable to the parties (the “Closing Date”). 
 Section 2.7 Assets Not Assignable.  

(a) Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to transfer or assign any
asset or any claim or right or any benefit arising under or resulting from such asset if an attempted transfer or assignment thereof, without the authorization, consent, waiver, approval or other action of any third Person, would constitute a breach
or other contravention of the rights of such third Person, would be ineffective with respect to any party to an agreement concerning such asset, or would in any way adversely affect the rights of the Seller or, upon transfer or assignment, the
Purchaser with respect to such asset. If any transfer or assignment by the Seller to, or any assumption by the Purchaser of, any interest in, or liability, obligation or commitment under, any asset requires the authorization, consent, waiver,
approval or other action of a third Person, then such assignment or assumption shall be made subject to such authorization, consent, waiver, approval or other action being obtained or taken. To the extent any Assumed Contract may not be transferred
or assigned to the Purchaser by reason of the absence of any such authorization, consent, waiver, approval or other action, the Purchaser shall not be required to assume any Assumed Liabilities arising under such Assumed Contract, and the provisions
of Section 2.7(b) through (e) shall control such Assumed Contract. 
 (b) Without limiting the generality or effect of any
provision of this Agreement, to the extent that any Assumed Contract to be transferred or assigned pursuant to this Agreement is not capable of being transferred or assigned without the authorization, consent, waiver, approval or other action of a
third Person, or if such transfer or assignment transfer or attempted transfer or assignment would constitute a breach thereof or a violation of any law, nothing in this Agreement shall constitute a transfer or assignment or an attempted transfer or
assignment thereof. 

  
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 (c) Notwithstanding anything contained in this Agreement to the contrary, the Seller will not be
obligated to transfer or assign to the Purchaser any of its rights and obligations in and to any of the Assumed Contracts referred to in Section 2.7(a) without first having obtained all of the authorizations, consents, waivers, approvals or
other actions necessary for such transfers or assignments. 
 (d) To the extent that the authorizations, consents, waivers, approvals or
other actions referred to in Section 2.7(c) are not obtained by the Seller prior to the Closing, the parties will use commercially reasonable efforts to obtain such authorizations, consents, waivers, approvals or other actions subsequent to the
Closing and, if such authorizations, consents, waivers, approvals or other actions cannot be obtained, Seller will, during the term of each such Assumed Contract: (i) use reasonable efforts, with costs and expenses of the Seller related thereto
to be borne by the Seller, to provide to the Purchaser the benefits of any such Assumed Contract to the extent relating to the Seller’s Business or the Purchased Assets; (ii) cooperate in any reasonable and lawful arrangement designed to
provide such benefits to the Purchaser, without incurring any obligation to any other Person other than to provide such benefits to the Purchaser; and (iii) enforce, at the request of the Purchaser, for the account of the Purchaser any rights
of the Seller arising from any such Assumed Contract (including without limitation the right to assert and prosecute claims thereunder and otherwise enforce the rights granted thereunder and the right to elect to terminate in accordance with the
terms thereof upon the advice of the Purchaser). 
 (e) Provided (and for so long as) the Seller obtains the benefits of such Assumed
Contract for the Purchaser, the Purchaser will perform the obligations of the Seller under or in connection with any Assumed Contract referred to in this Section 2.7 (to the extent permitted thereunder) for the benefit of the other party or
parties thereto. 
 Section 2.8 Insurance. The Seller shall cause the Parent and the Purchaser to be named as an
additional insureds on all insurance policies existing as of the date of this Agreement (true and complete copies of which have been previously provided to the Parent). The Seller shall obtain prepaid “tail insurance” policies prior to the
Closing Date that will remain in effect for an aggregate period of at least six (6) years, which policies provide coverage for an aggregate period of at least six (6) years with respect to claims arising from facts or events that occurred
on or before the Closing Date. Such tail insurance policies shall provide coverage that is substantially equivalent to and in any event not less favorable in the aggregate than the Seller’s existing policies or, if substantially equivalent
insurance coverage is unavailable, the best available coverage.  
 Section 2.9 Earnout.  

(a) Calculation of Earnout Payment. The amount of the Earnout Payment shall be determined as follows: 

(i) If Revenues during the Earnout Period are equal to or greater than $4,750,000 but less than $5,750,000, then the Earnout Payment (which
shall not exceed $400,000) shall be determined in accordance with the following formula: 

  
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 $300,000 + 10% x (Revenues - $4,750,000). 

(ii) If Revenues during the Earnout Period are equal to or greater than $5,750,000 but less than $6,750,000, then the Earnout Payment (which
shall not exceed $700,000) shall be determined in accordance with the following formula: 
 $500,000 + 20% x
(Revenues - $5,750,000). 
 (iii) If Revenues during the Earnout Period are equal to or greater than $6,750,000 but less than
$7,750,000, then the Earnout Payment (which shall not exceed $1,100,000) shall be determined in accordance with the following formula: 

$800,000 + 30% x (Revenues - $6,750,000). 

(iv) If Revenues during the Earnout Period are equal to or greater than $7,750,000, then the Earnout Payment (which shall not exceed
$1,500,000) shall be determined in accordance with the following formula: 
 $1,100,000 + 50% x (Revenues - $7,750,000). 

(b) Determination of Eligibility for Earnout Payment. Purchaser shall pay to Seller any Earnout Payment not more than thirty
(30) days after the Earnout Period (the “Earnout Closing Date”), provided there is no Earnout Objection. The Earnout Payment shall be paid to Seller pursuant to Section 2.3(a)(iii) hereof. Within fifteen (15) calendar
days after the end of each calendar month during the Earnout Period, Purchaser shall provide to Seller an update with respect to the Revenues during such calendar month, together with reasonable supporting documentation and data (the
“Monthly Report”). 
 (c) Efforts. Parent and Purchaser shall, and shall cause their respective Affiliates to, use
their commercially reasonable efforts to maximize the Earnout Payment. Without limiting the generality of the foregoing, until the end of the Earnout Period, except as expressly contemplated by this Agreement, (i) Parent and Purchaser will
cause the Seller’s Business to be operated as a standalone business, except for changes that Parent and Purchaser believe in good faith when implemented will result in an improvement to the Seller’s Business’ results of operations,
(ii) each of Parent and Purchaser acknowledge and agree that the Seller’s Business will receive reasonable and appropriate levels of support from Parent and Purchaser post-Closing to enable the Seller’s Business to maximize its
operating performance post-Closing, and (iii) neither Parent, Purchaser nor any other Subsidiary of Parent will cause the Seller’s Business to take any of the following actions without the prior written consent of the Seller
Representative: (A) sell, lease or otherwise dispose of a material portion of the assets or business of the Seller’s Business or any Subsidiary through a transaction or series of related transactions; (B) enter into any line of
business not related to the Seller’s Business; (C) other than pursuant to a contractual obligation existing as of the Closing Date, acquire the stock, assets or business or another Person; (D) materially reduce the amount or quality
of the staffing resources available the Seller’s Business; or (E) require the Seller’s Business to provide services at below-market prices. 

  
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 (d) Access; Disputes. Purchaser shall provide Seller and its representatives with
reasonable access during normal business hours to the books, records (including work papers, schedules, memoranda and other documents), supporting data and employees of Purchaser and its Affiliates to the extent reasonably necessary to verify any
Monthly Report. Seller shall have thirty (30) calendar days from the final day of the Earnout Period to review the Monthly Reports and to agree or disagree as to the amount of the Earnout Payment. If Seller does not agree with the Monthly
Reports, then Seller shall, within the thirty (30) calendar day period beginning on the final day of the Earnout Period, deliver a written objection to Purchaser that shall specify in reasonable detail the basis for the objection on a line item
basis (the “Earnout Objection”). Upon Purchaser’s receipt of the Earnout Objection, Purchaser and Seller shall negotiate in good faith to resolve the Earnout Objection, but if the Earnout Objection cannot be resolved by
negotiation between Seller and Purchaser within thirty (30) calendar days after Purchaser’s receipt of the Earnout Objection, Purchaser and Seller shall submit their respective calculations, together with the supporting documentation to a
mutually agreeable accounting firm, which shall review such calculations and documentation and, based solely upon such calculations and documentation and within thirty (30) days after receipt thereof, determine whether the amount of the Earnout
Payment and notify the parties in writing of such determination, which determination shall be final, conclusive and binding on all parties. The fees and expenses of the accounting firm shall be shared by Seller, on the one hand, and Purchaser, on
the other, in inverse proportion to the amount in dispute for which each of them is successful. 
 ARTICLE III 

Representations and Warranties of the Seller 

The Seller represents and warrants to the Parent and Purchaser as follows: 

Section 3.1 Organization, Good Standing and Qualification. The Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, with full corporate power and authority to own or lease its property and assets and to carry on the Seller’s Business as presently conducted, and is duly qualified to do business as a
foreign corporation or other entity and is in good standing in each jurisdiction where the failure to be so qualified would have a Material Adverse Effect. Schedule 3.1 lists each jurisdiction in which the Seller is so
qualified. The Seller’s Business is conducted solely through Persons in the Seller Group.  
 Section 3.2
Authorization. Seller has full power and authority to execute and deliver this Agreement. Seller has full power and authority to execute and deliver each other Seller Document to be executed by Seller, and to consummate the transactions
contemplated by the Seller Documents. The execution, delivery and performance by the Seller of this Agreement and the execution, delivery and performance by the Seller of the other Seller Documents to be executed by the Seller have been duly
authorized by all necessary corporate action on behalf of the Seller. This Agreement has been, and each other Seller Document will be at or prior to the Closing, duly executed and delivered by the Seller and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each other Seller Document when so executed and delivered will constitute, a legal, valid and  

  
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binding obligation of the Seller enforceable against the Seller in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity). 
 Section 3.3 Non-contravention. Neither the execution or delivery by the Seller of this
Agreement nor the other Seller Documents referred to herein nor the performance by the Seller of its obligations hereunder and thereunder will (a) contravene any provision contained in the certificate of incorporation, by-laws or other
organizational documents of the Seller, (b) violate or result in a breach (with or without the lapse of time, the giving of notice or both) of or constitute a default under (i) any Material Contract or (ii) any judgment, order,
decree, law, rule or regulation or other restriction of any Governmental Authority, in each case to which any entity within the Seller Group is a party or by which any entity within the Seller Group is bound or to which any of the assets or
properties of any entity within the Seller Group is subject, (c) result in the creation or imposition of any Lien on any of the assets or properties of any entity within the Seller Group, or (d) result in the acceleration of, or permit any
Person to accelerate or declare due and payable prior to its stated maturity, any Assumed Liability, except in the case of clauses (b), (c) or (d) such as would not, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect. 
 Section 3.4 No Consents. Except as set forth in Schedule 3.4 or as would not
reasonably be expected to have a Material Adverse Effect, no notice to, filing with, or authorization, registration, consent or approval of, any Governmental Authority or other Person is necessary for the execution, delivery or performance of this
Agreement or any other Seller Document or the consummation of the transactions contemplated hereby or thereby by the Seller. 

Section 3.5 The Purchased Assets. The Purchased Assets constitute all of the rights, properties and assets (real, personal
or mixed, tangible or intangible) which are used or held for use in the conduct of the Seller’s Business. The documents of transfer to be executed and delivered by the Seller at the Closing will be sufficient to convey good and marketable title
to the Purchased Assets to the Purchaser, free and clear of all Liens except for Permitted Encumbrances. 
 Section 3.6
Personal Property. The Seller has made available to the Parent true, correct and complete copies of the all leases of personal property used in the Seller’s Business, together with all amendments, modifications or supplements thereto. To
the Knowledge of the Seller, each of such leases is in full force and effect and none of the Persons in the Seller Group has received or given any notice of any default or event that with notice or lapse of time, or both, would constitute a default
by any of the Persons in the Seller Group under any of such leases and, to the Knowledge of the Seller, no other party is in default thereof. To the Knowledge of the Seller, all material items of personal property used in the Seller’s Business
are in good operating condition and fit for operation in the Ordinary Course of Seller’s Business (subject to normal wear and tear) with no defects that would reasonably be expected to materially interfere with the conduct of the normal
operation of such items and are suitable for the purposes for which they are currently being used. 

  
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 Section 3.7 Real Property. 

(a) Schedule 3.7 sets forth a true, correct and complete list of all real property and interests in real property leased by the Seller
Group (a “Leased Property”) and used, held for use or intended to be used primarily in the operation or conduct of the Business as presently conducted, other than any such property or interest constituting an Excluded Asset and
identifies the landlord of any Leased Property and any material reciprocal easement or operating agreements relating and/or beneficial thereto. The Seller Group does not own any real property. 

(b) The applicable Person in the Seller Group has a valid leasehold interest in all Leased Property, in each case free and clear of all Liens,
except (i) Permitted Encumbrances (ii) any conditions that may be shown by a current, accurate American Land Title Association survey or physical inspection of any Leased Property made prior to Closing and (iii) zoning, building and
other similar restrictions. None of the items set forth in clauses (i), (ii) or (iii) above, individually or in the aggregate, could reasonably be expected materially to impair the continued use and operation of the property to which they
relate in the conduct of the Business as presently conducted. 
 (c) Seller has made available to the Purchaser true, legible and complete
copies of all title insurance policies, title reports, surveys, certificates of occupancy, appraisals, permits, Liens, title documents, leases and other documents relating to or otherwise affecting each Leased Property which are in the possession of
Seller. The copies of the leases to all Leased Properties provided by the Seller are correct and complete in all respects, and no oral understandings exist with respect to any Leased Property not reflected in the written materials supplied by
Seller. Seller is in undisturbed possession of the respective Leased Property, and has no Knowledge of any contractual or legal restrictions that preclude or restrict in any material way the ability to use any Leased Property for the purposes for
which it is currently being used. To Seller’s Knowledge, there are no material defects and there are no adverse physical conditions affecting any Leased Property or any of the facilities, buildings, structures, erections, improvements,
fixtures, fixed assets and personalty of a permanent nature annexed, affixed or attached to, located on or forming part of any Leased Property that materially interfere with the use of such Leased Property for the purposes for which it is currently
being used. To Sellers’ Knowledge, there is no material violation of any Applicable Law (including any building, planning or zoning Law) relating to any Leased Property materially affecting the current use or operation of the Business. To the
Knowledge of the Seller, all Leased Property is in material compliance with all applicable deed restrictions and covenants and all building, zoning, subdivision, health, safety and other laws, including the Americans with Disabilities Act and the
Occupational Safety and Health Act, and Seller has not received notification of any alleged violation. 
 (d) Neither the whole nor any
portion of any Leased Property is subject to any governmental decree or order to be sold nor have any Proceedings for the condemnation, expropriation or other taking of all or any portion of any Leased Property been instituted or, to the Knowledge
of the Seller, threatened by any Governmental Entity, with our without payment therefor. 

  
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 (e) Each Leased Property is occupied under a valid and current certificate of occupancy or
similar permit and, to the Knowledge of the Seller, there are no facts that would prevent such Leased Property from continuing to be occupied and used by Seller after the Closing in substantially the same manner as occupied and used by Seller
immediately prior to the Closing. 
 (f) All buildings, improvements and facilities located on each Leased Property are supplied with
utilities and other services necessary for the operation thereof (including, but not limited to, gas, electricity, water, sanitary sewer and storm sewer) and all of such services are in all material respects adequate for the current use or operation
of the Business. 
 (g) All real estate Taxes for which any Person of the Seller Group is responsible with respect to any Leased Property
(and which are not otherwise incorporated into payments made under any lease), have been paid in full, as and when due. 
 Section 3.8
Absence of Questionable Payments. No entity in the Seller Group, either directly or indirectly through its expressly authorized agents, has: (i) used any funds for unlawful contributions, payments, gifts or entertainment, or made any
unlawful expenditures relating to political activities of government officials or others, or (ii) accepted or received any unlawful contributions, payments, gifts or expenditures. 

Section 3.9 Financial Statements; Books and Records; Accounts Receivable; Funded Indebtedness. 

(a) Attached as Schedule 3.9(a) are (i) true and complete copies of the Seller’s unaudited consolidated balance sheet as of
May 31, 2014 (the “Balance Sheet Date”) and May 31, 2013 and the related unaudited consolidated statements of operations, changes in Stockholder’s deficit and cash flows for each of the five month periods then ended
and (ii) true and complete copies of the Seller’s audited balance sheet as of December 31, 2013 and December 31, 2012 and the related audited statements of operations, changes in Stockholder’s deficit and cash flows for each
of the years ended December 31, 2013 and December 31, 2012, prepared in accordance with GAAP, together with the report of Thomas, Judy & Tucker, P.A., which has served as the Seller’s auditors (such statements, including the
related notes and schedules thereto, are referred to herein as the “GAAP Financial Statements”). The GAAP Financial Statements have been prepared from, are in accordance with, and accurately reflect, the books and records of the
Seller, comply in all material respects with applicable accounting requirements in the case of the GAAP Financial Statements; fairly present in all material respects the financial position and the results of operations and cash flows (and changes in
financial position, if any) of the Seller as of the times and for the periods referred to therein (subject, in the case of unaudited statements, to normally recurring year end adjustments that are not material either individually or in the
aggregate). The GAAP Financial Statements have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as set forth in the notes thereto). 

(b) All books, records and accounts of the Seller Group are accurate and complete in all material respects and are maintained in all material
respects in accordance with good business practice and all applicable Laws. 

  
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 (c) Schedule 3.9(c) sets forth a true and complete listing of all of the Seller
Group’s Accounts Receivable as of last day of the most recently completed calendar month and an aging schedule reflecting the aggregate amount of all such Accounts Receivable outstanding (i) 30 days or less, (ii) more than 30 days but
not more than 60 days, and (iii) more than 60 days. All of the Seller Group’s Accounts Receivable have arisen in the ordinary and regular course of business, represent bona fide transactions with third parties and, to the Knowledge of the
Seller, are not subject to any counterclaims or offsets (except for those for which adequate reserves have been established in accordance with GAAP in preparing the GAAP Financial Statements) and have been billed in the Ordinary Course of
Seller’s Business. 
 (d) The Seller Group does not have any funded Indebtedness other than as set forth on Schedule 2.3(A),
which Indebtedness is being satisfied in full at Closing with the Cash Consideration. 
 Section 3.10 No Undisclosed
Liabilities. The Seller Group does not have any debt, loss, damage, adverse claim, liability or obligation which are not reflected or provided for in the balance sheet dated as of the Balance Sheet Date included within the GAAP Financial
Statements, other than (a) those incurred in the Ordinary Course of Seller’s Business since the Balance Sheet Date, (b) those obligations arising subsequent to the date hereof pursuant to the express terms of executory Contracts,
which executory Contracts (to the extent such Contracts are Material Contracts) are identified in Schedule 3.13(a), and (c) those obligations arising under the Bonus Agreements or the employment agreements with each of Amelia Warner,
Pamela Prior and Joseph Kessler. 
 Section 3.11 Taxes. 

(a) All Tax Returns with respect to the Seller’s Business and required to be filed by or on behalf of the Seller and each of its
Subsidiaries have been duly and timely filed with the appropriate Taxing Authority in all jurisdictions in which such Tax Returns are required to be filed (after giving effect to any valid extensions of time in which to make such filings), and all
such Tax Returns are true, complete and correct in all material respects. All Taxes payable by or on behalf of the Seller and each of its Subsidiaries (whether or not shown on any Tax Return) have been fully and timely paid. With respect to any
period for which Tax Returns have not yet been filed or for which Taxes are not yet due or owing, the Seller has made due and sufficient accruals for such Taxes in the GAAP Financial Statements and in its books and records. All required estimated
Tax payments sufficient to avoid any underpayment penalties or interest have been made by or on behalf of the Seller and each of its Subsidiaries. The Seller and each of its Subsidiaries has complied in all material respects with all applicable Laws
relating to the payment and withholding of Taxes in connection with amounts paid or owing to any employee, independent contractor, creditor, equity owner or other third party and has duly and timely withheld and paid over to the appropriate Taxing
Authority all amounts required to be so withheld and paid under all applicable Laws. 
 (b) The Seller made available to the Parent complete
copies of (i) all federal, state, local and foreign income or franchise Tax Returns of the Seller and each of its Subsidiaries relating to the taxable periods since January 1, 2008 and (ii) any audit report issued within the last
three years relating to any Taxes due from or with respect to the Seller and each of its 

  
 23 

 
Subsidiaries. Schedule 3.11(b) lists each such audit. There are no audits or investigations of the Seller or any of its Subsidiaries by any Taxing Authority in progress, nor has the Seller
or any of its Subsidiaries received any notice from any Taxing Authority that it intends to conduct such an audit or investigation. To Seller’s Knowledge, no claim has been made by a Taxing Authority in a jurisdiction where the Seller and its
Subsidiaries do not file Tax Returns to the effect that the Seller or any of its Subsidiaries are or may be subject to taxation by that jurisdiction. There are no Liens on any of the assets of the Seller or any of its Subsidiaries arising as a
result of any failure (or alleged failure) to pay any Tax. The Seller and each of its Subsidiaries has disclosed on their federal income Tax Returns all positions taken therein that could give rise to substantial understatement of federal income Tax
within the meaning of Section 6662 of the Code, and neither the Seller nor any of its Subsidiaries has participated in a “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4(b). 

(c) Except as set forth on Schedule 3.11(c), neither the Seller nor any of its Subsidiaries (i) requested any extension of time
within which to file any Tax Return, which Tax Return has since not been filed, (ii) granted any extension for the assessment or collection of Taxes, which Taxes have not since been paid, or (iii) granted to any Person any power of
attorney that is currently in force with respect to any Tax matter. Neither the Seller nor any of the Seller’s Subsidiaries is a foreign person within the meaning of Sections 7701(a)(1) and 7701(a)(5) of the Code. Neither the Seller nor any of
its Subsidiaries has ever been a stockholder of any consolidated, combined, affiliated or unitary group of corporations for any Tax purposes. Neither the Seller nor any of its Subsidiaries is a party to any Tax allocation or Tax sharing agreement
nor has any liability for the Taxes of any Person under Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof of any analogous or similar provision under Law), as a transferee or successor, by contract, or otherwise.

 (d) Neither the Seller nor any of its Subsidiaries has made any payments, is obligated to make any payments, or is a party to any
agreement that under certain circumstances could obligate it to make any payments that are not deductible under Section 280G of the Code. Neither Seller nor any of its Subsidiaries has been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(a)(ii) of the Code. Neither the Seller nor any of its Subsidiaries has distributed stock of another Person, or has had its
stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 of the Code or Section 361 of the Code. 

(e) None of the Seller’s Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) change in accounting method (including but not limited to any adjustments pursuant to Section 481(a) of the Code or any corresponding
provision of any other Tax Law), (ii) closing agreement pursuant to Section 7121 of the Code or any similar provision of Law, (iii) intercompany transaction or any excess loss account described in Treasury Regulations under Code
Section 1502 (or any corresponding or similar provision of state, local, or foreign income Tax Law); (iv) installment sale or open transaction disposition made on or prior to the Closing Date; or (v) prepaid amount received on or
prior to the Closing Date. 

  
 24 

 Section 3.12 Intellectual Property. 

(a) Schedule 3.12(a) sets forth an accurate and complete list of: (i) all Patents, Marks and Copyrights owned by the Seller Group
that have been issued or registered in any jurisdiction, or for which an application to issue or register the rights in such Intellectual Property has been filed in any jurisdiction, (ii) all Marks owned by the Seller Group that are material to
the Business but that are not registered or subject to an application to register and (iii) all Software that is owned exclusively by the Seller Group that is material to the operation of the Seller’s Business as presently conducted and
presently proposed to be conducted by the Seller Group. Schedule 3.12(a) lists the jurisdictions in which each such item of Intellectual Property has been issued or registered or in which any such application for such issuance and
registration has been filed, and the name of the owner of each such registration or application. 
 (b) The Seller owns or possesses adequate
rights to use all patents, patent applications, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks,
trademark registrations, service marks, service mark registrations, trade names, mask work rights and other intellectual property necessary to carry on the Seller’s Business. The Seller has taken all steps necessary to perfect its ownership of
and interest in its Intellectual Property. 
 (c) The Seller Group’s products and services, and the conduct of the Seller Group’s
business as presently conducted do not infringe, violate or constitute an unauthorized use or misappropriation of any patent, copyright, trademark, trade secret or other similar right, or any contractual right, of any Person. 

(d) Except with respect to licenses of generally available, commercial, off-the-shelf Software licensed pursuant to standardized end-user or
enterprise licenses for Software in object code format available for a license fee of no more than $10,000 (collectively, “Off-The-Shelf Software”), and except pursuant to the Intellectual Property Licenses listed in Schedule
3.12(d), none of the Persons in the Seller Group is under any liability whatsoever to make any payments or provide any other consideration, to any Person with respect to the Seller Group’s use of any Intellectual Property in connection with
the conduct of the Seller’s Business as presently conducted. 
 (e) Schedule 3.12(e) sets forth a complete and accurate list of
all Material Contracts to which the Persons in the Seller Group are a party (other than licenses to the Seller Group of Off-The-Shelf-Software or other Contracts not in excess of $10,000) that (i) grant any Intellectual Property Licenses to or
from the Seller Group, (ii) contain a covenant not to compete or otherwise limit the Seller Group’s ability to use or exploit fully any of the Intellectual Property, or (iii) contain an agreement by any of the Persons in the Seller
Group to indemnify any other Person against any claim of infringement of, violation, misappropriation or unauthorized use of any intellectual property rights of any third Person. The Seller made available to the Parent true, correct and complete
copies of each Contract set forth on Schedule 3.12(e), together with all amendments, modifications or supplements thereto. 

  
 25 

 (f) The Seller Group has taken all commercially reasonable steps to protect the secrecy and
confidentiality of all Trade Secrets of the Seller Group. 
 (g) None of the Persons in the Seller Group is, or has been at any time during
the two (2) years prior to the date hereof, the subject of any pending or, to the Knowledge of the Seller, threatened Legal Proceedings which involve a claim of infringement, misappropriation, unauthorized use or violation of any intellectual
property rights of any Person, or challenging the Seller Group’s ownership, use, validity or enforceability of any Intellectual Property. None of the Persons in the Seller Group has received written notice of any such threatened claim and to
the Knowledge of the Seller, there are no facts or circumstances that would form the basis for any such claim. All of the Seller Group’s rights in and to Intellectual Property are valid and enforceable in all material respects. 

(h) To the Knowledge of the Seller, no Person is infringing, violating, misusing or misappropriating any Intellectual Property, and no claims
of such infringements, violations, misuse or misappropriations have been made against any Person by any of the Persons in the Seller Group. 

(i) No present or former employee of the Seller Group has any right, title, or interest, directly or indirectly, in whole or in part, in any
Intellectual Property owned or used by any of the Persons in the Seller Group. To the Knowledge of the Seller, no employee, consultant or independent contractor of any of the Persons in the Seller Group is, as a result of or in the course of such
employee’s, consultant’s or independent contractor’s engagement by any of the Persons in the Seller Group, in default or breach of any material term relating to Intellectual Property of any employment agreement, non-disclosure
agreement, assignment of invention agreement or similar agreement. 
 (j) To the Knowledge of the Seller, each Person in the Seller Group has
at all times complied with all applicable Laws, as well as their own rules, policies, and procedures, relating to privacy, data protection, and the collection and use of personal information collected, used, or held for use by the Seller Group in
the conduct of the Seller’s Business. Except as set forth on Schedule 3.12(j), no claims have been asserted or, to the Knowledge of the Seller, threatened against any Person in the Seller Group alleging a violation of any
Person’s privacy or personal information or data rights and the consummation of the transactions contemplated hereby will not breach or otherwise cause any violation of any Law or rule, policy, or procedure related to privacy, data protection,
or the collection and use of personal information collected, used, or held for use by the Seller Group in the conduct of the Seller’s Business. Each Person in the Seller Group takes reasonable measures to ensure that such information is
protected against unauthorized access, use, modification, or other misuse. 
 Section 3.13 Material Contracts. 

(a) Schedule 3.13(a) sets forth all of the following Contracts to which any of the Persons in the Seller Group is a party or by which
any of them or their respective assets or properties are bound and which, as of the Closing Date, are in full force and effect (collectively, the “Material Contracts”): 

  
 26 

 (i) Contracts for the sale of any of the assets in excess of $50,000 of any of the Persons in
the Seller Group other than in the Ordinary Course of Seller’s Business; 
 (ii) Contracts in excess of $50,000 for joint ventures,
strategic alliances, partnerships, licensing arrangements or sharing of profits or proprietary information; 
 (iii) Contracts containing
covenants of any Person in the Seller Group not to compete in any line of business or with any Person in any geographical area or not to solicit or hire any individual with respect to employment or covenants of any other Person not to compete with
any of the Persons in the Seller Group in any line of business or in any geographical area or not to solicit or hire any Person with respect to employment; 

(iv) Contracts relating to the acquisition (by merger, purchase of stock or assets or otherwise) by any Person in the Seller Group of any
operating business or material assets or the capital stock or other equity interests of any other Person; 
 (v) Contracts relating to the
incurrence, assumption or guarantee of any Indebtedness in excess of $50,000 or imposing a Lien on any assets in excess of $50,000 of the Seller Group, including indentures, guarantees, loan or credit agreements, purchase money obligations incurred
in connection with the acquisition of property, pledge agreements and security agreements; 
 (vi) Contracts entered into outside of the
Ordinary Course of Seller’s Business in excess of $50,000 providing for the license of Seller Group Products or the provision of services by any Person in the Seller Group; 

(vii) Contracts providing for severance, retention, change in control or other similar payments; 

(viii) Contracts for the employment of any individual on a full-time, part-time or other basis; 

(ix) Outstanding agreements of guaranty or surety in excess of $50,000, direct or indirect, by any of the Persons in the Seller Group; 

(x) Contracts providing for indemnification by any of the Persons in the Seller Group arising out of or in connection with any Seller Group
Product or service provided by any of the Persons in the Seller Group; 
 (xi) Contracts (or group of related contracts) which involve the
expenditure or receipt of more than $50,000 annually or which require performance by any party more than one year from the date hereof; 

(xii) Contracts for the lease of Leased Property; 

(xiii) Contracts in excess of $50,000 pursuant to which any Person in the Seller Group provides services to any third party related to the
conduct of Seller’s Business, including all customer or client Contracts; 

  
 27 

 (xiv) Contracts with any Person that require the Seller to deal exclusively with such Person or
that require the Seller to transact a minimum amount of business with such Person (or provide for negative consequences if the Seller fails to do either of the foregoing); and 

(xv) Powers of attorney given by any Person within the Seller Group. 

(b) Each of the Material Contracts is in full force and effect and is the legal, valid and binding obligation of the Person in the Seller Group
signatory thereto, enforceable against them in accordance with its terms. None of the Persons in the Seller Group is in material default under any Material Contract, nor, to the Knowledge of the Seller, is any other party to any Material Contract in
material default thereunder, and no event has occurred that with the lapse of time or the giving of notice or both would constitute a material default thereunder. No party to any of the Material Contracts has exercised any termination rights with
respect thereto, and no party has given notice of any significant dispute with respect to any Material Contract. The Seller has made available to the Parent true, correct and complete copies of all of the Material Contracts, together with all
amendments, modifications or supplements thereto. 
 (c) Schedule 3.13(c) contains a list of the Contracts which the Purchaser shall
assume as of the consummation of the Closing (the “Assumed Contracts”), provided that it is understood that the Purchaser shall only assume those liabilities under the Assumed Contracts that arise after the consummation of the
Closing or under the Assumed Liabilities. The parties hereto acknowledge and agree that the Purchaser will not assume any obligations under any Contract other than obligations arising after the Closing pursuant to the Assumed Contracts listed in
Schedule 3.13(c) or under the Assumed Liabilities listed in Schedule 1.1A. 
 Section 3.14 Employee Benefits Plans.

 (a) Except as disclosed on Schedule 3.14(a), the Seller Group does not maintain or sponsor any Benefit Arrangement. The
Seller has made available to the Parent true and complete copies of: (i) each written Benefit Arrangement document and a description of each unwritten Benefit Arrangement, and (ii) each summary plan description (SPD), as applicable,
relating to any Benefit Arrangement subject to ERISA. The Seller Group has no obligation or commitment to establish, maintain, operate or administer any new employee benefit arrangement or to amend any Benefit Arrangement so as to increase benefits
thereunder or otherwise. Except as disclosed on Schedule 3.14(a), no Benefit Arrangement has terms requiring assumption by the Purchaser or its affiliates. 

(b) Neither the Seller Group nor any of its ERISA Affiliates has or has ever had any liability with respect to any employee benefit plan that
is or was subject to Title IV of ERISA (a “Title IV Plan”), including a “multiemployer plan”, as defined in Section 3(37) of ERISA, or a “single employer plan” within the meaning of Section 4001(a)(15)
of ERISA. 

  
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 (c) Except as would not have a Material Adverse Effect, each Benefit Arrangement (i) has
been maintained and operated in compliance with its terms and all applicable Laws, including ERISA, the Code, and any other applicable Laws, including the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993 and the
Health Insurance Portability and Accountability Act of 1996, (ii) with respect to each Benefit Arrangement, all reports, returns, notices and other documentation that are required to have been filed with or furnished to the IRS, the DOL or any
other Governmental Authority, or to the participants or beneficiaries of such Benefit Arrangement, have been filed or furnished on a timely basis, and (iii) each Benefit Arrangement that is intended to be qualified within the meaning of
Section 401(a) of the Code has received a favorable determination letter from the IRS, or with respect to a prototype plan, can rely on an opinion letter from the IRS to the prototype plan sponsors, to the effect that the Benefit Arrangement
satisfies the requirements of Section 401(a) of the Code taking into account all changes in qualification requirements under Section 401(a) for which the applicable “remedial amendment period” under Section 401(b) of the
Code has expired, and, to the Knowledge of the Seller, no facts or circumstances exist or have occurred that could cause the loss of such qualification or the imposition of any Liability, penalty or tax under ERISA, the Code or any other applicable
Laws. 
 (d) There are no actions or claims existing or pending (other than routine claims for benefits) or, to Knowledge of Seller,
threatened with respect to any Benefit Arrangement that could have an effect on this transaction, and neither the Seller Group nor any of its ERISA Affiliates have been notified of any audit or investigation of a Benefit Arrangement by any
Governmental Authority that could effect this transaction, result in a material liability to the Purchaser or result in the imposition of a lien or other claim against any of the Purchased Assets. Seller Group has paid and discharged promptly when
due all liabilities and obligations arising under ERISA, the Code or any Benefit Arrangement of a character which if unpaid or unperformed could result in the imposition of a lien or any other claim against any of the Purchased Assets. 

(e) Except as set forth in Schedule 3.14(e), or as would not have a Material Adverse Effect, neither the execution and delivery
of this Agreement, the termination of any Benefit Arrangement nor the consummation of the transactions contemplated hereby will (either alone or in combination with another event) (i) result in any payment or benefit becoming due, or increase
the amount of any compensation due, to any employee or consultant of Seller Group or any of its ERISA Affiliates, (ii) increase any benefits otherwise payable under any Benefit Arrangement, or (iii) result in the acceleration of the time
of payment or vesting of any such compensation or benefits; no such payment or benefit will be characterized as an “excess parachute payment,” as such term is defined in Section 280G of the Code. The Seller Group or any of its ERISA
Affiliates are not a party to any contract, arrangement or plan pursuant to which it is bound to compensate any person for any excise or other additional taxes under Section 409A or 4999 of the Code or any similar provision of state, local or
foreign law.  
 (f) No Benefit Arrangement is maintained in a jurisdiction outside of the United States or for employees outside of
the United States. 
 (g) Neither Seller nor Purchaser will incur any material liability with respect to the termination of any Benefit
Arrangement apart from regular insurance premiums or similar fees or amounts due in the normal course through the date of termination. 

  
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 (h) The representations and warranties set forth in this Section 3.14 are Seller’s sole
and exclusive representations and warranties regarding employee benefits in general and the Benefit Arrangements specifically. 

Section 3.15 Labor. 

(a) Schedule 3.15(a) contains an accurate and complete list of the names of all of the employees engaged in the Seller’s Business
(“Business Employees”), together with each such Business Employee’s annual rate of salary or hourly wage rate. 
 (b)
Schedule 3.15(b) contains an accurate and complete list of the names of each consultant or independent contractor who currently provides, or who has within the prior twelve month period provided, material services to the Seller’s
Business (each, a “Business Consultant”). 
 (c) All Business Employees are actively at work (or on vacation) and no
Business Employee is currently on a leave of absence, layoff, suspension, sick leave, workers compensation, short or long term disability, family leave, military leave, or otherwise not actively performing his or her work during all normally
scheduled business hours (other than vacation). 
 (d) The Seller has made available to the Parent a copy of each employment, consulting or
independent contractor agreement, confidentiality/assignment of inventions agreement and/or non-competition agreement entered into with a Business Employee or Business Consultant and all personnel policies, manuals, employee handbooks and similar
materials pertaining to the Business. 
 (e) With respect to current and former employees and service providers of the Business, except as
disclosed on Schedule 3.15(e) (each a “Service Provider”): 
 (i) the Seller Group is and has been in compliance in
all material respects with all applicable Laws respecting employment and employment practices, terms and conditions of employment and wages and hours, including any Laws respecting minimum wage and overtime payments, employment discrimination,
workers’ compensation, family and medical leave, immigration, and occupational safety and health requirements, and has not and is not engaged in any unfair labor practice; 

(ii) there is not now, nor within the past six years has there been, any actions, suits, claims, labor disputes or grievances pending, or, to
the Seller’s Knowledge, threatened or reasonably anticipated relating to any labor, safety or discrimination matters involving any Service Provider, including charges of unfair labor practices or discrimination complaints; 

(iii) no collective bargaining agreement is binding and in force against the Seller Group or currently being negotiated by the Seller Group,
and to the Knowledge of the Seller, no union organization campaign is in progress with respect to any of the Service Providers, and no question concerning representation exists respecting such Service Providers; and 

  
 30 

 (iv) the Seller Group does not have any liability for any payment to any trust or other fund
governed by or maintained by or on behalf of any Governmental Authority with respect to unemployment compensation benefits, social security or other benefits or obligations for Service Providers (other than routine payments to be made in the normal
course of business and consistent with past practice). 
 (f) No “mass layoff,” “plant closing” or similar event as
defined by the Worker Adjustment and Retraining Notification Act with respect to the Seller Group has occurred. 
 Section 3.16
Litigation. Except as set forth in Schedule 3.16, there is no Legal Proceeding pending or, to the Knowledge of the Seller, threatened against any of the Persons in the Seller Group (or to the Knowledge of the Seller,
pending or threatened against any employees of any of the Persons in the Seller Group with respect to their business activities on behalf of the Seller Group), or to which any of the Persons in the Seller Group is otherwise a party, before any
Governmental Authority; nor to the Knowledge of the Seller is there any reasonable basis for any such Legal Proceeding. None of the Persons in the Seller Group is subject to any Order. There are no Legal Proceedings pending or, to the Knowledge of
the Seller, threatened that are reasonably likely to prohibit or restrain the ability of the Seller to perform its obligations under this Agreement or consummate the transactions contemplated hereby. 

Section 3.17 Compliance with Laws; Orders; Permits.  

(a) Each of the persons in the Seller Group is in compliance in all material respects with all Laws of each Governmental Authority applicable
to its business, operations or assets, including without limitation all FDA rules and regulations, comparable state laws, regulations governing current Good Tissue Practice (cGTP), the federal Clinical Laboratory Improvement Act of 1988, as amended
(CLIA), the Stark Law and state equivalents, escheat laws, abandoned property laws, laws relating to employment and compensation and marketing laws and other laws relating to privacy and internet communications. Since January 1, 2004, none of
the Persons in the Seller Group has received any notice of or been charged with the violation of any material Law by any Governmental Authority. To the Knowledge of the Seller, none of the Persons in the Seller Group is or since January 1,
2004, has been, under investigation with respect to the violation of any Law and to the Knowledge of the Seller, there are no facts or circumstances which could reasonably form the basis for any such violation other than violations which would have
an immaterial effect upon the Seller’s Business. 
 (b) Schedule 3.17(b) is a true and complete listing of all Permits which are
required for the operation of the business of the Seller Group as presently conducted (“Seller Permits”). The Persons in the Seller Group currently have all Permits which are required for the operation of their respective businesses
as presently conducted and has the right to transfer the Seller Permits to the Purchaser at Closing. Each issued Permit currently is in full force and effect. None of the Persons in the Seller Group is in default or violation, and no event has
occurred which, with notice or the lapse of time or both, would constitute a default or violation, in any material respect of any term, condition or provision of any Seller Permit, and to the Knowledge of the Seller, there are no facts or
circumstances which form the basis for any such 

  
 31 

 
default or violation. No Person in the Seller Group has received notification of any revocation or modification of any Permit. The Seller has completed all necessary registration of its
establishments and facilities with all Governmental Authorities that are necessary for the Seller to conduct its business in the manner and to the extent now conducted. Each registration is current and up to date. None of the Seller Permits will be
impaired or in any way affected by the consummation of the transactions contemplated by this Agreement. Purchaser will be entitled to obtain a transfer of all Seller Permits from Seller or a new Permit in its own name. 

(c) Neither the Seller nor to the Knowledge of the Seller, any employee or agent of the Company has made any contribution or other payment to
any official of, or candidate for, any federal, state, local or foreign office in violation of any law (including the Foreign Corrupt Practices Act of 1977, as amended. 

(d) No Person of the Seller Group, nor any manager, director, agent, employee or any other person acting for or on behalf of Seller, has
directly or indirectly made any unlawful contribution, gift, bribe, payoff, influence payment, kickback, or any other fraudulent payment in any form, whether in money, property, or services to any person, including but not limited to any staff
Stockholder at any hospital or any government officer (i) to obtain favorable treatment in securing business for Seller, (ii) to pay for favorable treatment for business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of any Person in the Seller Group, or (iv) in violation of any applicable anti-corruption law. 

(e) No Person in the Seller Group nor any manager, director, agent, employee or any other person acting for or on behalf of Seller, has
established or maintained any fund or assets in which Seller has proprietary rights that have not been recorded in the books and records of Seller. Each transaction is properly and accurately recorded in all material respects on the books and
records of Seller, and each document upon which entries such books and records are based is complete and accurate in all material respects. Seller maintains a system of internal accounting controls reasonably designed to insure that there is no
maintain no off-the-books accounts and its assets are used only in accordance with its corporate management directives. 
 (f) The operations
of the Seller are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes
and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Seller
with respect to the Money Laundering Laws is pending, or to the best Knowledge of the Seller, threatened. 
 (g) Neither the Seller nor, to
the Knowledge of the Seller, any director, officer, agent, or employee of the Seller, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department. 

Section 3.18 Insurance. The Seller Group has insurance policies in full force and effect for such amounts as are sufficient
for all requirements of Law and all agreements to which each of the Persons in the Seller Group is a party or by which such Persons are bound and which provide reasonable levels of insurance comparable to others in the Seller’s Business. No
event  

  
 32 

 
has occurred, including, without limitation, the failure by any of the Persons in the Seller Group to give any notice or information or any of the Persons in the Seller Group giving any
inaccurate or erroneous notice or information, which limits or impairs the rights of any of the Seller Group under any such insurance policies. 

Section 3.19 Suppliers and Customers. Schedule 3.19 sets forth a list identifying (i) each
supplier to the Seller during the Seller’s current fiscal year (through May 31, 2014) and each of the two preceding fiscal years, showing the approximate total purchases by the Seller from each such supplier during each such period and
(ii) each customer of the Seller during the Seller’s current fiscal year (through May 31, 2014) and each of the two preceding fiscal years, showing the approximately revenue generated from each such customer during each such period.
Notwithstanding the foregoing, suppliers who have charged the Seller less than $50,000 per year and customers who have generated less than $50,000 per year in revenue for the Seller need not be included on such list. Since December 31, 2011, no
supplier or customer listed on Schedule 3.19, except for Merck Sharp & Dohme Corp. and its Affiliates, has terminated its relationship with any of the Persons in the Seller Group or materially increased, decreased or
changed the pricing, the volume of business or other terms of its business with any of the Persons in the Seller Group and, to the Knowledge of the Seller, no supplier or customer listed on Schedule 3.19 has notified any of the
Persons in the Seller Group that it intends to terminate or materially increase, decrease or change the pricing, the volume of business or other terms of its business with the Seller Group. 

Section 3.20 Financial Advisors. Except as set forth in Schedule 3.20, no Person has acted, directly
or indirectly, as a broker, finder or financial advisor for the Seller Group in connection with the transactions contemplated by this Agreement and no Person is or will be entitled to any fee or commission or like payment in respect thereof. 

 Section 3.21 Environmental Matters. Each Person in the Seller Group is in compliance with all Environmental Laws
and the requirements of all permits issued under such Environmental Laws with respect to the Seller’s Business in all material respects. There are no pending or, to the Knowledge of the Seller, threatened Environmental Legal Proceedings against
the Seller.  
 Section 3.22 Change of Control Payments. Except as set forth on Schedule
3.22, the consummation of the Closing will not cause any acceleration of any benefits under any Benefit Arrangements or any payments to be made under any Benefit Arrangement or otherwise. 

ARTICLE IV 

Intentionally Omitted 

ARTICLE V 

Representations and Warranties of the Parent and Purchaser 

The Parent and Purchaser jointly and severally represents and warrant to the Seller as follows: 

  
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 Section 5.1 Organization and Good Standing. The Purchaser is a limited
liability company, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to own, lease and operate its properties and to carry on its business. Parent is a corporation, validly
existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to own, lease and operate its properties and to carry on its business. 

Section 5.2 Authorization. Each of the Parent and Purchaser has full power and authority to execute and deliver this Agreement and
each other Purchaser Document, to the extent applicable, and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by each of the Parent and Purchaser of this Agreement and each other Purchaser
Document, to the extent applicable, have been duly authorized by all necessary action on behalf of the each of the Parent and the Purchaser. This Agreement has been, and each other Purchaser Document will be at or prior to the Closing, duly executed
and delivered by the Parent and/or Purchaser, to the extent applicable, and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each other Purchaser Document when so
executed and delivered will constitute, the legal, valid and binding obligation of the Parent and/or Purchaser, to the extent applicable, enforceable against the Parent or Purchaser, to the extent applicable, in accordance with its respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity). 

Section 5.3 Conflicts; Consents of Third Parties. 

(a) Neither the execution or delivery by the Parent or Purchaser of this Agreement or any of the other Purchaser Documents, nor the performance
by the Parent or Purchaser of its obligations hereunder and thereunder will (i) contravene any provision contained in the organizational and governing documents of the Parent or Purchaser or (ii) conflict with, violate or result in a
breach (with or without the lapse of time, the giving of notice or both) of or constitute a default under any judgment, order, decree, law, rule or regulation or other restriction of any Governmental Authority, in each case to which the Parent or
Purchaser is a party or by which the Parent or Purchaser is bound or to which any of its assets or properties are subject. 
 (b) No notice
to, filing with, or authorization, registration, consent or approval of, any Governmental Authority or other Person is necessary for the execution, delivery or performance of this Agreement or any other Purchaser Document or the consummation of the
transactions contemplated hereby or thereby by the Parent and Purchaser other than as described in Section 9.9. 

Section 5.4 Litigation. There are no Legal Proceedings pending or, to the knowledge of the Parent or Purchaser, threatened
that are reasonably likely to prohibit or restrain the ability of the Parent or Purchaser to perform its obligations under this Agreement or consummate the transactions contemplated hereby. 

  
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 Section 5.5 Financial Advisors. Except as set forth in Schedule
5.5, no Person has acted, directly or indirectly, as a broker, finder or financial advisor for the Parent or the Purchaser in connection with the transactions contemplated by this Agreement and no Person is or will be entitled to any
fee or commission or like payment in respect thereof. 
 Section 5.6 Issuance of the Securities. The Securities have
been duly authorized and, when issued and paid for in accordance with the terms of the Transaction Documents, will be duly and validly issued, free and clear of all Liens, other than restrictions on transfer provided for in the Transaction Documents
or imposed by applicable securities laws, and shall not be subject to preemptive or similar rights of stockholders. The Securities will be issued in compliance with all applicable federal and state securities laws.  

Section 5.7 Private Placement. No registration under the Securities Act is required for the issuance of the Securities by the
Parent to the Seller under the Transaction Documents. 
 Section 5.8 Listing and Maintenance Requirements. The Parent Common
Stock is registered pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder (the “Exchange Act”), and the Parent has
taken no action designed to terminate the registration of the Parent Common Stock under the Exchange Act nor has the Parent received any notification that the Commission is contemplating terminating such registration. The Parent has not, in the
twelve (12) months preceding the date hereof, received written notice from any Trading Market on which the Common Stock is listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such
Trading Market. The Company is in compliance in all material respects with all listing and maintenance requirements of the Principal Trading Market on the date hereof. 

ARTICLE VI 
 Covenants
and Agreements 
 Section 6.1 Access and Information. No investigation of the Seller, its Subsidiaries or the
Seller’s Business by the Parent heretofore shall modify or otherwise affect any representations and warranties of the Seller, which shall survive any such investigation, or the conditions to the obligation of the Parent and Purchaser to
consummate the transactions contemplated hereby.  
 Section 6.2 Access to Records after the Closing. Solely for
tax purposes, until the seventh anniversary of the Closing, or the purpose of responding to any Legal Proceedings arising from the employment of individuals employed by the Seller on or before the Closing Date, until the third anniversary of the
Closing, upon request, the Seller and its representatives shall be permitted reasonable access, during normal business hours to make inspection of, the books and records of the Seller transferred to the Purchaser hereunder, so long as such records
are then maintained by the Purchaser in accordance with its customary records retention policy and to make copies thereof as is reasonably necessary to allow the Seller to obtain information in the Purchaser’s possession (but excluding attorney
work product or other privileged communications). The Seller shall pay the Parent’s or Purchaser’s out-of-pocket costs and expenses in connection with satisfying such requests. 

  
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 Section 6.3 Accounts Receivable. From and after the Closing Date, the
Purchaser shall have the right and authority to collect for its own account, except the Contingent Accounts, all Accounts Receivable of the Seller and other related items that are included in the Purchased Assets and to endorse with the name of the
Seller any checks or drafts received with respect to any Accounts Receivable or such other related items. From and after the Closing Date, neither the Seller nor any Person acting on behalf of the Seller shall have the right to collect for the
Seller’s account the Accounts Receivable of the Seller without the prior written consent of the Purchaser. The Seller shall promptly deliver to the Purchaser any cash or other property received directly or indirectly by it with respect to the
Accounts Receivables and such other related items. The Seller shall, at the request of the Purchaser, execute and deliver to the Purchaser such additional instruments, documents and agreements as the Purchaser may reasonably request to assist the
Purchaser in the collection of the Accounts Receivable of the Seller and such other related items. The Purchaser shall use its commercially reasonable efforts to collect the Contingent Accounts, and pay Seller any amounts collected on the Contingent
Accounts in accordance with Section 2.3(a)(i). 
 Section 6.4 Transfer and Property Taxes. 

(a) The Seller shall pay any transfer, sales, purchase, use or similar Tax under the Laws of any Governmental Authority arising out of or
resulting from the transfer of the Purchased Assets and the assumption of the Assumed Liabilities. The Seller shall prepare and file the required Tax Returns and other required documents with respect to the Taxes and fees required to be paid by the
Seller pursuant to the preceding sentence and shall promptly provide the Parent with evidence of the payment of such Taxes and fees. 
 (b)
The Parent shall pay stock transfer and/or stamp taxes, if any, payable upon the transfer of the Securities from the Parent to the Seller. 

(c) The Seller shall (i) prepare and file all Tax Returns reporting the income attributable to the Purchased Assets or the operation of
the Seller’s Business for all periods ending prior to or on the Closing Date, (ii) prepare and file all income tax returns reporting the income of the Seller arising on the Closing Date from the transfer to the Purchaser of the Purchased
Assets and the assumption by the Purchaser of the Assumed Liabilities, (iii) be responsible for the conduct of all Tax examinations relating to the Tax Returns referred to in (i) and (ii) above, and (iv) pay all Taxes
attributable to the Purchased Assets or the operation of the Seller’s Business due with respect to the Tax Returns referred to in (i) and (ii) above. The Purchaser shall prepare and file all Tax Returns reporting the income
attributable to the ownership of the Purchased Assets and the operation of the Seller’s Business for all periods beginning after the Closing. 

(d) The Seller shall bear all property and ad valorem Tax liability with respect to the Purchased Assets if the lien or assessment date arises
prior to the Closing Date, irrespective of the reporting and payment dates of such Taxes. All other real property Taxes, personal property Taxes, or ad valorem obligations and similar recurring Taxes and fees on the Purchased Assets
for taxable periods beginning before, and ending after, the Closing Date, shall be prorated between the Purchaser and the Seller based on the number of days of such taxable period up to and including the Closing Date (which shall be for the account
of the Seller) and the 

  
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number of days of such taxable period after the Closing Date (which shall be for the account of the Purchaser). With respect to Taxes described in this Section 6.4(d), the Seller shall
timely file all Tax Returns due before the Closing Date with respect to such Taxes and the Purchaser shall prepare and timely file all Tax Returns due after the Closing Date with respect to such Taxes. If one party remits to the appropriate Taxing
Authority payment for Taxes which are subject to proration under this Section 6.4(d) and such payment includes the other party’s share of such Taxes, such other party shall reimburse the remitting party for its share of such Taxes within
five (5) Business Days of notice of payment. 
 Section 6.5 Change of Name. As soon as practicable after the
Closing, the Seller shall change its name to a new name bearing no resemblance to its present name and not containing the word “GENTRIS” or any combination or variation thereof or name similar thereto. After the Closing, the Seller shall
not, and shall cause each of its Subsidiaries not to, use any such names or any name similar thereto or which, is reasonably believed by the Purchaser to be confused with any such names or the Seller’s Business. At the Closing, the Seller shall
deliver to the Purchaser a duly adopted and executed certificate of amendment to the Seller’s certificate of formation effectuating such name change, such document to be in form and substance satisfactory to the Purchaser, and the Seller hereby
appoints the Purchaser as its agent to effect the filing of such certificate of amendment with the appropriate Governmental Authorities at the Seller’s sole cost and expense. From and after the Closing, the Seller consents to the use by the
Purchaser of the corporate names and any assumed names, fictitious names, trade names or other similar names of the Seller, each of which is and shall be included in the Purchased Assets. 

Section 6.6 Non-Competition and Confidentiality Agreement. 

(a) For a period of two (2) years after the Closing Date, the Seller will not (i) directly or indirectly, anywhere in the United
States or in the People’s Republic of China, engage in any manner (including, without limitation, by owning any interest in, managing, controlling, participating in (whether as an officer, director, employee, partner, agent, representative,
consultant or otherwise), rendering services to, organizing, planning to organize, providing funding) in a business that is competitive in any respect with the Seller’s Business as conducted as of the Closing Date (a “Competitive
Business”); or (ii) directly or indirectly employ, engage, contract for or solicit the services in any capacity of any Person who is, or within the immediately preceding twelve (12) months has been, employed by or providing
services to the Seller Group in the operation of the Seller’s Business on the date hereof. 
 (b) For a period of two (2) years
after the Closing Date, the Seller will not use for its or his own benefit or divulge or convey to any third party, any Confidential Information (as hereinafter defined) relating to the Seller’s Business, unless the Confidential Information
becomes of public knowledge or enters the public domain (other than through such party’s direct or indirect act or omission), or the disclosure of which is required by Law and reasonable written notice has been provided to the Parent sufficient
to enable the Parent to contest the disclosure. For purposes of this Agreement, “Confidential Information” consists of all information, knowledge or data relating to the Seller’s Business including, without limitation, contacts
in the Seller’s databases, customer and supplier lists, formulae, trade know-how, processes, secrets and trade secrets, consultant contracts, pricing information, marketing plans, product development plans, business acquisition plans and all
other information relating to the operation of the Seller’s Business not in the public domain or otherwise publicly available. 

  
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 (c) The Seller acknowledges that the restrictions contained in this Section 6.6 are
reasonable and necessary to protect the legitimate interests of the Parent and that any breach the Seller of any provision hereof will result in irreparable injury to the Parent. The Seller acknowledges that, in addition to all remedies available at
law, the Parent shall be entitled to seek equitable relief, including injunctive relief, and an equitable accounting of all earnings, profits or other benefits arising from such breach and shall be entitled to receive such other damages, direct or
consequential, as may be appropriate. The Parent shall not be required to post any bond or other security in connection with any proceeding to enforce the provisions of this Section 6.6. Without limiting the generality of Section 9.4, the
provisions of this Section 6.6 shall inure to the benefit of any subsequent transferee of the Seller’s Business or any substantial portion thereof, whether or not this Agreement is assigned to such transferee. In the event that the Seller
(i) dissolves, liquidates or winds up its affairs, (ii) sells the equity interests of the Seller, (iii) merges, consolidates or otherwise combines the Seller with any other entity, or (iv) otherwise leases, transfers, sells or
disposes of all or any substantial portion of the remaining assets of the Seller and its Subsidiaries, taken as a whole, whether in one transaction or a series of related transactions, then as a condition to such transaction or transactions, there
shall be procured from any successor to the Seller or any Parent or other transferee of all or any substantial portion of the Seller’ remaining assets, as the case may be, a written agreement (which written agreement shall expressly make the
Parent and their respective successors and assigns a third-party beneficiary thereof) to comply with the provisions of this Section 6.6 as if such successor, Parent or other transferee were a party hereto. The provisions of this
Section 6.6 shall survive the Closing. For the avoidance of doubt, nothing in this Section 6.6 shall be construed to impose any obligation on any officer, director or employee of Seller. 

Section 6.7 Commercially Reasonable Efforts; Further Assurances. Subject to the terms and conditions herein provided, each
of the parties hereto shall use commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement. Each of the parties hereto will use their respective commercially reasonable efforts to obtain the consents of all Governmental Authorities and third parties necessary to the
consummation of the transactions contemplated by this Agreement. Without limiting the generality of the foregoing, the parties will, as promptly as practicable, apply for and diligently prosecute all applications for, and will use their commercially
reasonable efforts promptly to: (a) effect all necessary registrations and filings, (b) defend any lawsuits or other legal proceedings, whether judicial or administrative, whether brought derivatively or on behalf of third parties
(including Governmental Authorities or officials), challenging this Agreement or the consummation of the transactions contemplated hereby and (c) furnish to each other such information and assistance and to consult with respect to the terms of
any registration, filing, application or undertaking as reasonably may be requested in connection with the foregoing. Seller will also furnish the Parent and the Purchaser with all financial statements and other information required by the Parent
and the Purchaser to satisfy all regulatory requirements, including information required to satisfy Parent’s filing requirements with the SEC. The provisions of this Section 6.7 shall survive the Closing. 

  
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 Section 6.8 Employment Matters. 

(a) Immediately prior to the consummation of the Closing, the Seller and its Subsidiaries shall terminate the employment of all of the Business
Employees. Effective upon Closing, the Purchaser shall offer employment to the Business Employees set forth on Schedule 6.8(a) (collectively, the “Employees”). The terms and conditions of employment for the Employees,
including, but not limited to compensation, incentive compensation and benefits, shall be substantially the same as those available to the other similarly situated employees of the Purchaser at the time of the Closing. For avoidance of doubt, the
Purchaser’s use of the Seller’s Employment Identification Number and/or any of the Seller’s bank or other financial institution accounts for the payment of any amounts due and owing to any Business Employees arising from such Business
Employee’s employment after the Closing shall in no way obligate the Seller or make the Seller responsible or liable for such amounts, or otherwise establish any liability of any kind of the Seller with respect to such Business Employee’s
employment after the Closing, and the Parent agrees to indemnify the Seller for any and all Damages arising out of, resulting from or incurred in connection with such Business Employee’s employment after the Closing. Nothing in the foregoing
sentence shall be deemed to apply to in any respect to the Bonus Agreements or the employment agreements with each of Amelia Warner, Pamela Prior and Joseph Kessler. 

(b) With respect to any employee benefit arrangement maintained by Purchaser or an Affiliate of Purchaser (collectively, “Purchaser
Benefit Arrangements”) for the benefit of any Employees, effective as of the Closing, Purchaser shall, or shall cause its Affiliate to, recognize all service of the Employees with Seller, as if such service were with Purchaser, for vesting,
eligibility and accrual purposes; provided, however, such service shall not be recognized to the extent that (x) such recognition would result in a duplication of benefits or (y) such service was not recognized under the corresponding
Benefit Arrangement of the Seller. 
 (c) The Seller shall, at its expense, terminate each Benefit Arrangement immediately prior to the
Closing Date (including any severance benefits or plans), and take such further actions after the Closing Date as may be necessary, appropriate or advisable to distribute all benefits accrued or payable thereunder and to otherwise satisfy all
obligations arising thereunder. 
 (d) The Purchaser shall permit former employees of the Seller Group (and their eligible dependents) who
were receiving, or who are eligible as of the Closing Date to elect continuation coverage under the Seller Group’s group health plan pursuant to the requirements of Section 4980B of the Code and Sections 601 through 608, inclusive, of
ERISA, which provisions are hereinafter referred to collectively as “COBRA Coverage”, or similar provisions of state Law, as a result of a “qualifying event” (as defined by the Code and ERISA) occurring on or before the
Closing Date, to continue COBRA Coverage under the Purchaser’s group health plan, or elect COBRA Coverage under the Purchaser’s group health plan, for the remainder of the applicable COBRA Coverage period, if any. The Seller represents and
warrants to the Parent and Purchaser that attached hereto as Schedule 6.8(d) is a true and complete list of all employees of the Seller Group (and their eligible dependents) who are eligible for COBRA Coverage as a result of a qualifying
event occurring on or prior to the Closing Date, together with all such additional information as the Parent and Purchaser may reasonably require in order to carry out its obligations under this Section 6.8(d). 

  
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 (e) The Seller shall indemnify the Parent and Purchaser for all amounts payable under any
severance program of the Seller Group with respect to any employee, whether as a result of the transactions contemplated hereby or for any other reason, other than with respect to obligations expressly included in the Assumed Liabilities. 

Section 6.9 Permits. Each Person in the Seller Group shall cooperate with the Purchaser and use best efforts to assure that
Purchaser obtains all Permits required by it to operate Seller’s Business, whether by way of transfer of Permits held by Persons in the Seller Group or through obtaining its own Permits. 

Section 6.10 Consents. In the event that the Seller Group is unable to obtain a required consent with respect to any Contract to
be included in the Purchased Assets (the “Transferred Contracts”) prior to the Closing, the parties shall use commercially reasonable efforts to cause such consent to be obtained after the Closing, and in the event such consent
cannot be obtained, (i) provide or cause to be provided to Purchaser the benefits of the Transferred Contract (to the extent Purchaser performs or pays all executory obligations and liabilities under such Transferred Contracts),
(ii) cooperate in any arrangement, reasonable and lawful as to the parties, designed to provide such benefits to Purchaser, and (iii) enforce for the account of Purchaser any rights of Seller Group arising from such Transferred Contract in
accordance with the terms thereof. If and when any such consent shall be obtained or such Transferred Contract shall otherwise become assignable, Seller Group shall, at Purchaser’s request, promptly assign all of its rights and obligations
thereunder to Purchaser without the payment of further consideration and Purchaser shall, without the payment of further consideration therefor, assume such rights and obligations. 

Section 6.11 Bonus Agreements. Notwithstanding the Purchaser’s assumption of the Bonus Agreements and all obligations
thereunder as provided herein, the Seller hereby agrees that the Seller shall make all payments that are due and payable pursuant to the terms and conditions of the Bonus Agreements and the employment agreements with each of Amelia Warner, Pamela
Prior and Joseph Kessler, and that such payments shall be made out of the Cash Consideration payable to the Seller pursuant to this Agreement. For the avoidance of doubt, the Parent Indemnified Parties shall be entitled to indemnification pursuant
to Section 8.2 if, and to the extent, the Seller fails to perform the foregoing covenant. 
 ARTICLE VII 

Conditions to Closing 

Section 7.1 Mutual Conditions. The obligation of the Parent, the Purchaser, and the Seller to consummate the transactions
contemplated hereby is subject to the satisfaction as of the Closing of the following conditions unless waived (to the extent that such conditions can be waived) in writing by the Parent, the Purchaser, and the Seller: 

(a) Laws. There shall not be any Law in effect that would prevent the consummation of the transactions contemplated by the Transaction
Documents. 

  
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 (b) Absence of Litigation. There shall not be (i) any Order of any nature issued by a
Governmental Authority with competent jurisdiction directing that the transactions provided for in the Transaction Documents or any material aspect of them not be consummated as provided herein or therein, or (ii) any Legal Proceeding pending
wherein an unfavorable Order would prevent the performance of any of the Transaction Documents or the consummation of any material aspect of the transactions contemplated hereby or thereby, declare unlawful any material aspect of the transactions
contemplated by the Transaction Documents or cause any material aspect of the transactions contemplated by the Transaction Documents to be rescinded. 

(c) Government Approvals. All authorizations, consents, Orders or approvals of, or declarations or filings with or expiration of waiting
periods imposed by, applicable Law necessary for the consummation of the transactions contemplated hereby shall have been obtained or made or shall have occurred. 

(d) Escrow Agreement. The Escrow Agent shall have executed the Escrow Agreement. 

(e) Stockholder Approval. The requisite percentage of Stockholders of the Seller shall have approved this Agreement, the sale of assets
hereunder and the Charter Amendment. 
 Section 7.2 Conditions to the Obligations of the Parent and Purchaser. The obligations of the
Parent and Purchaser to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment prior to or at Closing of each of the following conditions: 

(a) Representations and Warranties; Performance of Covenants. Except for those representations and warranties which are made as of a
particular date, the representations and warranties of the Seller contained in this Agreement shall be true and correct in all material respects (except with respect to those representations and warranties which are qualified as to materiality,
which shall be true and correct in all respects) on the Closing Date. The representations and warranties of the Seller contained in this Agreement which are made as of a particular date shall be true and correct in all material respects (except with
respect to those representations and warranties which are qualified as to materiality, which shall be true and correct in all respects) as of such date. The Seller shall have performed in all material respects the agreements, covenants and
obligations to be performed by them prior to the consummation of the Closing. 
 (b) No Material Events. Since the date hereof, there
shall have been (i) no material damage, destruction or loss to the Purchased Assets or the Seller’s Business, regardless of insurance coverage, and (ii) no other Material Adverse Effect. 

(c) Consents. All authorizations, consents, waivers, approvals or other actions legally required in connection with the execution,
delivery and performance by the Seller of this Agreement and the instruments of transfer contemplated hereby and the consummation by the Seller of the transactions contemplated hereby and thereby shall have been obtained and shall be in full force
and effect; without limiting the foregoing, the Seller shall have obtained any authorizations, consents, waivers, approvals or other actions required to prevent a breach or default by any Person in the Seller Group under any Contract to which any
Person in the Seller 

  
 41 

 
Group is a party or required for the continuation of any agreement to which any Person in the Seller Group is a party and which relates to the Purchased Assets or the Seller’s Business,
including without limitation all authorizations, consents, waivers, approvals, licenses, Seller Permits or other actions necessary to permit the Purchaser to operate the Seller’s Business in compliance with all applicable Laws immediately after
the Closing. Notwithstanding the foregoing or anything else in this Agreement to the contrary, the parties acknowledge and agree that certain consents related to the Assumed Contracts will not have been obtained prior to Closing. Such failure to
obtain any such consent shall not constitute a breach of any provision of this Agreement, and, pursuant to Section 6.10, the parties shall use commercially reasonable efforts to cause such consents to be obtained subsequent to Closing. 

(d) Payoff Letters. Seller shall deliver pay-off letters with respect to funded Indebtedness set forth on Schedule 2.3(A) in form
and substance reasonably satisfactory to the Parent and Purchaser, which pay-off letters shall include the release of any and all liens on the Purchased Assets. 

(e) Secretary’s Certificate. The Seller shall have delivered to the Parent a certificate of the Secretary or Assistant Secretary of
the Seller, in form and substance satisfactory to the Parent, certifying (i) resolutions or written consents of the Board of Directors and Stockholders of the Seller approving this Agreement, the other Seller Documents and the transactions
contemplated hereby and thereby and (ii) the organizational documents of the Seller, as amended, and setting forth (A) such good standing certificates as the Parent shall reasonably request, (B) a certified copy of the Seller’s
certificate of incorporation, as amended, and (C) an incumbency certificate with respect to all officers of the Seller and its Subsidiaries executing this Agreement, the other Seller Documents and/or any instrument or document contemplated
hereby or thereby. 
 (f) Employment or Consulting Agreements. The following individuals shall have entered into employment or
consulting agreements with Purchaser (which agreements may, in the discretion of the Parent, include customary non-competition, non-solicitation and non-disclosure provisions) on terms acceptable to Parent and Purchaser: Michael Murphy,
Dr. Scott Clark, and Dr. Howard McLeod. 
 (g) Escrow Agreement. Seller shall have delivered to Parent the Escrow Agreement.

 (h) Notices to Customers and Suppliers. Seller shall have provided Purchaser with evidence of delivery by them of a notice to
suppliers and customers of the transaction and, if applicable, Purchaser’s assumption of the business relationship (as may be required under any agreements with such suppliers or customers or as Purchaser otherwise deems desirable). 

(i) Other Documents. The Seller shall have executed and delivered to the Parent the documents set forth in Section 2.2(a) and such
other documents or instruments as the Parent reasonably requests to effect the transactions contemplated by this Agreement and the other Seller Documents. 

  
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 Section 7.3 Conditions to the Obligations of the Seller. The obligations of
the Seller to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment at or prior to the Closing of each of the following conditions: 

(a) Representations and Warranties; Performance of Covenants. Except for those representations and warranties which are made as of a
particular date, the representations and warranties of the Parent and Purchaser contained in this Agreement shall be true and correct in all material respects (except with respect to those representations and warranties which are qualified as to
materiality, which shall be true and correct in all respects) on the Closing Date. The representations and warranties of the Parent and Purchaser contained in this Agreement which are made as of a particular date shall be true and correct in all
material respects (except with respect to those representations and warranties which are qualified as to materiality, which shall be true and correct in all respects) as of such date. The Parent and Purchaser shall have performed in all material
respects the agreements, covenants and obligations to be performed by it prior to the consummation of the Closing. 
 (b) Secretary’s
Certificates. Prior to or at the Closing, the Parent shall have delivered an executed certificate of the Secretary or Assistant Secretary of the Parent, in form and substance satisfactory to the Seller, certifying resolutions of the governing
body of the Parent approving this Agreement and setting forth an incumbency certificate with respect to all officers of the Parent executing this Agreement and any other Purchaser Document and/or any instrument or document contemplated hereby or
thereby. 
 (c) Listing of Additional Shares. The Parent shall have submitted a Listing of Additional Shares Notification form to the
NASDAQ Capital Market with respect to the transactions contemplated by this Agreement and the issuance of the Securities in the time and manner required by applicable NASDAQ rules, and shall have received written notification from the NASDAQ Capital
Market that it has completed its review of such form. 
 (d) Other Documents. The Parent or Purchaser, as applicable, shall have
executed and delivered to the Seller the documents set forth in Section 2.2(b) and such other documents or instruments as the Seller reasonably requests to effect the transactions contemplated by this Agreement or any other Purchaser Document.

 ARTICLE VIII 

Survival of Representations and Warranties; Survival of Covenants; Indemnification 

Section 8.1 Survival of Representations, Warranties and Covenants. 

(a) Except as set forth in the immediately succeeding sentences, the representations and warranties provided for in this Agreement shall
survive the Closing until December 15, 2015. The representations and warranties provided for in Section 3.1 (Organization, Good Standing and Qualification), Section 3.2 (Authorization), Section 5.1 (Organization and Good
Standing) and Section 5.2 (Authorization) shall survive the Closing and remain in full force and effect indefinitely. The representations and warranties provided for in Section 3.11 (Taxes) shall survive the Closing and continue until
ninety days after the 

  
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termination of the applicable statute of limitations. The representations and warranties provided for in Section 3.14 (Employee Benefit Plans) and Section 3.21 (Environmental Matters)
shall survive the Closing for three years from the Closing Date. The survival period of each representation or warranty as provided in this Section 8.1 is hereinafter referred to as the “Survival Period.” 

(b) The covenants contained in this Agreement shall survive the Closing until they are otherwise terminated by their respective terms. 

(c) Any representation, warranty, covenant or other agreement in respect of which indemnity may be sought under this Article VIII, and the
indemnity with respect thereto, shall survive the time at which it would otherwise terminate pursuant to this Section 8.1 if written notice of the claim giving rise to such right or potential right of indemnity shall have been given to the
party against whom such indemnity may be sought prior to such time and, in any such case, such representation, warranty, covenant or other agreement shall survive until any claim for indemnity related to such inaccuracy or breach or potential
inaccuracy or breach is settled or resolved, provided in each case that the claim is asserted by the Parent in good faith. 
 (d) The
representations, warranties and covenants contained in this Agreement or in any certificate or other writing delivered in connection with this Agreement shall survive for the periods set forth in this Section 8.1 and shall in no event be
affected by any investigation, inquiry or examination made for or on behalf of any party, or the knowledge of any party’s representatives or the acceptance by any party of any certificate or opinion hereunder. 

Section 8.2 Indemnification. 

(a) The Seller shall indemnify and hold harmless the Parent, the Purchaser, its Affiliates, and their officers, directors, employees, agents
and representatives, and any Person claiming by or through any of them (the “Parent Indemnified Parties”), against and in respect of any and all claims, costs, expenses, damages, liabilities, losses or deficiencies (including,
without limitation, counsel’s fees and other costs and expenses incident to any suit, action or proceeding) (the “Damages”) arising out of, resulting from or incurred in connection with (i) failure of any representation or
warranty of Seller to be true and correct in all respects or the breach of any warranty made by the Seller in this Agreement, (ii) the breach by the Seller of any covenant or agreement to be performed by them hereunder, (iii) any Taxes
relating to the Seller’s Business with respect to any time prior to the Closing Date, (iv) any Excluded Liability, (v) any liability arising from the operation of the Seller’s Business or services provided by any Person in the
Seller Group with respect to any time prior to the Closing Date, (vi) any claim by any Person relating to any equity interest, or option, warrant or other right exercisable, convertible or exchangeable into or for any equity interest of the
Seller, and (vii) any product liability claim by any Person relating to the Seller’s Business with respect to any time prior to the Closing Date. The Parent Indemnified Parties shall not be entitled to recover Damages from the Seller for
any claim for indemnification pursuant to Section 8.2(a)(i) first made after the expiration of the applicable Survival Period. 

  
 44 

 (b) The Parent shall indemnify and hold harmless the Seller, the Stockholders, their Affiliates,
and their officers, directors, partners, Stockholders, managers, employees, agents and representatives (the “Seller Indemnified Parties”), and any Person claiming by or through any of them, against and in respect of any and all
Damages arising out of, resulting from or incurred in connection with (i) failure of any representation or warranty of Parent to be true and correct in all respects or the breach of any warranty made by the Parent and Purchaser in this
Agreement, (ii) the breach by the Parent or Purchaser of any covenant or agreement to be performed by such party hereunder and (iii) any Assumed Liability. The Seller Indemnified Parties shall not be entitled to recover Damages from the
Parent for any claim for indemnification pursuant to Section 8.2(b)(i) first made after the expiration of the applicable Survival Period. The Parent’s indemnification obligations set forth in Section 8.2(b)(ii)-(iii) shall
continue in full force and effect until December 15, 2015. 
 (c) Any Person providing indemnification pursuant to the provisions of
this Section 8.2 is hereinafter referred to as an “Indemnifying Party” and any Person entitled to be indemnified pursuant to the provisions of this Section 8.2 is hereinafter referred to as an “Indemnified
Party.” 
 (d) The Parent Indemnified Parties shall proceed first against the Stock Consideration held in the escrow established
pursuant to the Escrow Agreement and shall not make any claim against the Seller directly for indemnification until such time as no Stock Consideration continues to be held in escrow pursuant to the Escrow Agreement. For the avoidance of doubt, in
the event a claim for Damages arises after the Stock Consideration has been released from the Escrow Account pursuant to the Escrow Agreement, the Parent Indemnified Parties shall make claims directly against the Seller. 

(e) Seller shall not be liable to the Parent Indemnified Parties for indemnification under Section 8.2(a) (i) for any individual
Damages that do not exceed $5,000 (the “Minimum Claim Amount”), and (ii) until the aggregate amount of Damages under Section 8.2(a), which Damages individually exceed the Minimum Claim Amount, exceeds $50,000 (the
“Deductible”), in which event Seller shall be required to pay or be liable for all such Damages in excess of the Deductible. The aggregate amount of all Damages for which Seller shall be liable pursuant to Section 8.2(a) shall
not exceed the Parent Per Share Value as of the date such indemnification is sought multiplied by the number of shares of Parent Stock issued as Stock Consideration (the “Cap”). 

(f) Parent shall not be liable to the Seller Indemnified Parties for indemnification under Section 8.2(b) (i) for any individual
Damages that do not exceed the Minimum Claim Amount, and (ii) until the aggregate amount of Damages under Section 8.2(b), which Damages individually exceed the Minimum Claim Amount, exceed the Deductible, in which event Parent shall be
required to pay or be liable for all such Damages in excess of the Deductible. The aggregate amount of all Damages for which Parent shall be liable pursuant to Section 8.2(b) shall not exceed the Cap. 

(g) Notwithstanding any provision herein to the contrary, no limitation on a party’s liability provided for herein shall apply in the
event of the fraudulent conduct, willful breach or intentional misrepresentation of such party. 

  
 45 

 (h) If and to the extent any provision of Section 8.2(a) is unenforceable for any reason,
the Seller agrees to make the maximum contribution to the payment and satisfaction of any Damages for which indemnification is provided for in Section 8.2(a) which is permissible under applicable Laws, such amount not to exceed the amount
otherwise available under this Agreement if such provision were enforceable. If and to the extent any provision of Section 8.2(b) is unenforceable for any reason, the Parent and Purchaser hereby jointly and severally agree to make the maximum
contribution to the payment and satisfaction of any Damages for which indemnification is provided for in Section 8.2(b) which is permissible under applicable Laws, such amount not to exceed the amount otherwise available under this Agreement if
such provision were enforceable. 
 (i) For the purposes of determining the amount of any Damages related to a breach of any representation
or warranty, the representations and warranties set forth in this Agreement shall be considered without regard to any “material,” “Material Adverse Effect”, or similar qualifications set forth therein. 

Section 8.3 Procedures for Third Party Claims. In the case of any claim for indemnification arising from a claim of a third
party, an Indemnified Party shall give prompt written notice, following such Indemnified Party’s receipt of such claim or demand, to the Indemnifying Party of any claim or demand of which such Indemnified Party has knowledge and as to which it
may request indemnification hereunder; provided, however, that failure to give such notice will not affect such Indemnified Party’s rights furnished hereunder unless, and then solely to the extent that, the rights of the parties
from whom indemnity is sought are materially prejudiced as a result of such failure. The Indemnifying Party shall have the right to defend and to direct the defense against any such claim or demand, in its name or in the name of the Indemnified
Party, as the case may be, at the expense of the Indemnifying Party, and with counsel selected by the Indemnifying Party provided that the Indemnifying Party shall have provided the Indemnified Party with the prior written assumption, in form and
substance reasonably acceptable to the Indemnified Party, by the Indemnifying Party of any and all liability with respect to the matter in controversy, unless (a) such claim or demand seeks an order, injunction or other equitable relief against
the Indemnified Party, or (b) the Indemnified Party shall have reasonably concluded that (i) there is a conflict of interest between the Indemnified Party and the Indemnifying Party in the conduct of the defense of such claim or demand or
(ii) the Indemnified Party has one or more defenses not available to the Indemnifying Party. Notwithstanding anything in this Agreement to the contrary, the Indemnified Party shall, at the expense of the Indemnifying Party, cooperate with the
Indemnifying Party, and keep the Indemnifying Party fully informed, in the defense of such claim or demand. The Indemnified Party shall have the right to participate in the defense of any claim or demand with counsel employed at its own expense;
provided, however, that, in the case of any claim or demand described in clause (a) or (b) of the second preceding sentence or as to which the Indemnifying Party shall not in fact have employed counsel to assume the defense of such claim
or demand, the reasonable fees and disbursements of such counsel shall be at the expense of the Indemnifying Party. The Indemnifying Party shall have no indemnification obligations with respect to any such claim or demand which shall be settled by
the Indemnified Party without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed. The Indemnifying Party shall not settle any such claim without the prior written consent of the
Indemnified Party, unless such claim solely involves a claim for monetary Damages and such settlement is accompanied by a document releasing the Indemnified Party from all liability with respect to the matter in controversy. 

  
 46 

 Section 8.4 Escrow Account.  

(a) Escrow Period; Release of Escrow Account. The Escrow Account shall commence on the date hereof and terminate on December 15,
2015 (the “Termination Date” and the period commencing on the Closing Date and ending on the Termination Date, the “Escrow Period”). On the Termination Date, all shares of Parent Common Stock then remaining in the
Escrow Account shall be released to the Seller, which may then distribute such shares of Parent Common Stock to the Stockholders; provided that Common Stock representing the amount of any claim made pursuant to Article VIII during the Escrow Period
shall be withheld and remain in the Escrow Account pending resolution of such claim; provided, further, that the Parent Common Stock in the Escrow Account which is necessary to satisfy any unsatisfied claims specified in any Parent Notice
theretofore delivered to the Escrow Agent prior to the termination of the Escrow Period with respect to facts and circumstances existing prior to the expiration of the Escrow Period, shall remain in the Escrow Account until such claims have been
resolved. Any portion of the Escrow Account at the Termination Date for which there is no claim pending pursuant to this Article VIII shall be promptly delivered by the Escrow Agent to the Seller. 

(b) Claims Upon Escrow Account. Subject to the provisions of this Section 8.4, the Parent or the Purchaser may make claims upon the
Escrow Account by delivering to the Escrow Agent and the Seller Representative on or before the last day of the Escrow Period a notice signed by a representative of Parent or Purchaser (a “Parent Notice”) specifying in reasonable
detail the individual items of Damages for which indemnification is being sought. 
 (c) Objections to Claims. 

(i) If the Seller Representative shall deliver a written objection to a Parent Notice to Parent and the Escrow Agent within the seven
(7) calendar day period after Parent or Purchaser’s delivery thereof, then Parent and the Seller Representative shall use their good faith efforts to resolve such dispute. If Parent and the Seller Representative resolve such dispute, the
parties shall deliver a written notice to the Escrow Agent directing the delivery to Parent of the number of shares of Parent Common Stock in the Escrow Account having a Fair Market value equal to the mutually agreed Damages. For purposes of this
Agreement and the Escrow Agreement, the “Fair Market Value” of one share of Parent Common Stock shall equal the Parent Per Share Value as of the date immediately preceding the applicable Parent Notice. In the event that no objection
is made by the Seller Representative as provided herein, the Seller Representative, and the Seller shall have irrevocably waived any right to object to such Parent Notice, and the Escrow Agent shall deliver to Parent the number of shares of Parent
Common Stock in the Escrow Account having a Fair Market value equal to the Damages requested in the Parent Notice. 
 (ii) If timely notice
of such an objection is given and Parent and the Seller Representative are unable to resolve the applicable dispute within thirty (30) days after the Seller Representative objects to such Parent Notice, either Parent or the Seller
Representative may, by written notice to the other and the Escrow Agent, demand arbitration of such dispute. 

  
 47 

 
Any such arbitration shall be conducted by JAMS/Endispute, Inc. or such other alternative dispute service (“Arbitration Service”) as shall be reasonably acceptable to Parent and
the Seller Representative. The Arbitration Service shall select one (1) arbitrator reasonably acceptable to both Parent and the Seller Representative who shall be expert in the area in dispute. The decision by the arbitrator shall be binding
and conclusive and, notwithstanding any other provisions of this Section 8.4, the Escrow Agent shall be entitled to act in accordance with such decisions and make delivery of the Escrow Fund in accordance therewith. The arbitration shall be
held in New York, New York. The costs of any such arbitration shall be borne one-half for the account of Parent and one-half by the Seller (out of the Escrow Fund to the extent available after all claims have been satisfied and shares released).
Judgment upon any award rendered by the arbitrator may be entered in any court of competent jurisdiction. 
 Section 8.5 Seller
Representative. 
 (a) The Seller Representative is hereby appointed to act as the representative of the Seller to carry out the
duties set forth in this Agreement and the Escrow Agreement; to give and receive notices and communications for and on behalf of the Seller; to cause to be delivered to the parties hereto and/or the Escrow Agent, the amount escrowed hereunder, such
delivery to be in accordance with the terms of this Agreement and the Escrow Agreement; to prosecute and defend litigation and claims for indemnification under this Agreement; to settle disputes; to agree to, negotiate, enter into settlements and
compromises of, and demand and pursue arbitration and comply with orders of courts and awards of arbitrators with respect to claims; and to take all actions necessary or appropriate in the judgment of the Seller Representative for the accomplishment
of the foregoing to effectuate and carry out the terms and purposes of the transactions contemplated by this Agreement. The Seller Representative will be entitled to receive a fee aggregating $25,000 from the Seller, such fee to be paid in six
quarterly installments of approximately $4,167, for providing the services described herein. 
 (b) Notwithstanding any other provision
herein to the contrary, the Parent shall be able to rely conclusively on the instructions and decisions of the Seller Representative as to any matter requiring action or decision by the Seller under this Agreement or the Escrow Agreement, and the
Seller shall not have any cause of action against the Parent for any action taken by the Parent in reliance upon the instructions or decisions of the Seller Representative. All actions, decisions and instructions of the Seller Representative shall
be conclusive and binding upon the Seller and, in the absence of fraud or intentional misconduct, the Seller shall not have any right to object, dissent, protest or otherwise contest the same or have any cause of action against the Seller
Representative for any action taken, decision made or instruction given by the Seller Representative under this Agreement, the Escrow Agreement or any other agreement contemplated hereby. The Seller shall indemnify the Seller Representative against
any Damages incurred by the Seller Representative arising from, or in connection with, the performance of the Seller Representative’s duties under this Agreement, provided that such Damages to not arise from fraud or intentional misconduct by
the Seller Representative. 

  
 48 

 ARTICLE IX 

Miscellaneous 
 Section
9.1 Notices. All notices and other communications hereunder will be in writing and will be deemed received (a) on the date of delivery if delivered personally or by telecopy or facsimile, (b) on the first Business Day following the
date of dispatch if delivered by a recognized next-day courier service, or (c) on the fifth Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices
hereunder must be delivered as set forth below, or pursuant to instructions as may be designated in writing by the party to receive such notice: 
  

			
	If to the Parent or the Purchaser:	  	Cancer Genetics, Inc.
		  	Meadows Office Complex
		  	201 Route 17 North, 2nd Floor
		  	Rutherford, NJ 07070
		  	Telephone: 201-529-9200
		  	Facsimile: 201-528-9201
		  	Attention: Panna Sharma
		  	                  President
		
	With a copy to:	  	Alston & Bird LLP
		  	90 Park Avenue
		  	New York, NY 10016
		  	Telephone: 212-210-9400
		  	 Attention: James H. Sullivan, Esq. and Mark

McElreath, Esq.

		
	If to the Seller or the Seller	  	
	Representative:	  	Hughes Pittman & Gupton, LLP
		  	1500 Sunday Drive, Suite 300
		  	Raleigh, NC 27607
		  	Telephone: 919-232-5900
		  	Facsimile: 919-232-5901
		  	Attention: Tim C. Gupton
		
	With a copy to:	  	Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P.
		  	150 Fayetteville Street, Suite 2300
		  	Raleigh, NC 27601
		  	Telephone: 919-821-6733
		  	Facsimile: 919-821-6800
		  	Attention: Merrill M. Mason, Esq.

  
 49 

			
	If to the Escrow Agent:	  	Continental Stock Transfer & Trust Company
		  	17 Battery Place, 8th Floor
		  	New York, NY 10004
		  	Telephone:212-509-4000

 Section 9.2 Expenses. Regardless of whether the transactions provided for in this Agreement are
consummated, except as otherwise provided herein, each party hereto shall pay its own expenses incident to this Agreement and the transactions contemplated hereby. None of the Sellers’ Expenses shall be assumed or paid by the Parent (except to
the extent included in the Cash Consideration).  
 Section 9.3 Governing Law; Consent to Jurisdiction; Arbitration. 

(a) This Agreement will be governed in all respects, including but not limited to, as to validity, interpretation and effect, by the internal
laws of the State of Delaware, without giving effect to its principles or rules of conflict of laws (to the extent such principles or rules are not mandatorily applicable by statute and would require or permit the application of the laws of another
jurisdiction). 
 (b) Notwithstanding anything to the contrary set forth herein or elsewhere, the parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties will be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any state court located in the State of Delaware (the “Delaware Courts”), including the Delaware Court of Chancery in and
for New Castle County, this being in addition to any other remedy to which they are entitled at law or in equity. Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction
of Delaware Courts, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby or for recognition or enforcement of any judgment relating thereto, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such Delaware Courts. Each of the parties hereto agrees that a final judgment in any such action or proceeding will be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. 
 (c) Each party to
this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.1. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by Law.

 Section 9.4 Assignment; Successors and Assigns; No Third Party Rights. Except as otherwise provided herein, this Agreement may
not be assigned, and any attempted assignment shall be null and void. The Parent may assign all of its rights under this Agreement to any Affiliate of the Parent or any third party that acquires all or substantially all of the assets of the Parent,
or more than 50% of the outstanding stock of the Parent, whether by sale, consolidation, merger or otherwise; provided that the assignee assumes all of the obligations of the Parent hereunder. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns and legal representatives. This Agreement shall be for the sole benefit of the parties to this Agreement and their respective successors, assigns and legal

  
 50 

 
representatives and is not intended, nor shall be construed, to give any Person, other than the parties hereto and their respective successors, assigns and legal representatives, any legal or
equitable right, remedy or claim hereunder; provided, however, that Article VIII shall also be for the benefit of the Parent Indemnified Parties and the Seller Indemnified Parties. 

Section 9.5 Counterparts; Facsimile. This Agreement may be executed in one or more counterparts, by facsimile or otherwise.
Each such counterpart shall be deemed an original agreement, but all of which together shall constitute one and the same instrument. 

Section 9.6 Headings. The headings in this Agreement are for reference purposes only, and shall not in any way affect the
meaning or interpretation of this Agreement. 
 Section 9.7 Entire Agreement. This Agreement, including the
Schedules and Exhibits attached thereto, constitutes the entire agreement among the parties with respect to the matters covered hereby and supersedes all previous written, oral or implied understandings among them with respect to such matters.

 Section 9.8 Amendment and Modification. This Agreement may only be amended or modified in a writing signed by the
party against whom enforcement of such amendment or modification is sought. 
 Section 9.9 Public Announcement.
Except for the current report on Form 8-K that the Parent will file with the U.S. Securities and Exchange Commission within four business days following the date of this Agreement and except as may otherwise be required by Law or requirements of any
national securities exchange on which the Parent Common Stock is quoted or listed, prior to the Closing, neither the Parent, nor the Seller shall issue any press release or otherwise make any public disclosures regarding this Agreement or the
transactions contemplated hereby or any dealings between or among the parties in connection with the subject matter hereof without the prior written approval of the other party. In the event that any such press release or other public disclosure
shall be required by Law, the Seller shall consult in good faith with the Parent with respect to the form and substance of such release or other disclosure prior to the public dissemination thereof if time permits and if such consultation is
permitted by Law.  
 Section 9.10 Waiver. Any of the terms or conditions of this Agreement may be waived at any
time by the party or parties entitled to the benefit thereof, but only by a writing signed by the party or parties waiving such terms or conditions. 

Section 9.11 Severability. The invalidity of any portion hereof shall not affect the validity, force or effect of the
remaining portions hereof. If it is ever held that any restriction hereunder is too broad to permit enforcement of such restriction to its fullest extent, such restriction shall be enforced to the maximum extent permitted by Law. 

Section 9.12 Joint Negotiation and Drafting. The parties hereto have participated jointly in the negotiation and drafting
of this Agreement and the agreements ancillary hereto and, in the event that an ambiguity or question of intent or interpretation arises, this Agreement and the agreements ancillary hereto shall be construed as jointly drafted by the parties hereto
or thereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement or of any of the agreements ancillary hereto. 

  
 51 

 Section 9.13 Risk of Loss. Prior to the consummation of the Closing, the risk
of loss with respect to the Purchased Assets shall remain with the Seller. In the event of any material casualty prior to the consummation of the Closing, in addition to any other rights the Parent may have hereunder, the Parent shall have the right
to terminate this Agreement upon giving written notice of its election to terminate to the Seller.  
 Section 9.14
Schedules. All references herein to Schedules refer to the disclosure schedules delivered by the Seller to the Parent contemporaneous with the execution of this Agreement. 

Section 9.15 Waiver of Trial by Jury. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS
AGREEMENT OR ANY AGREEMENT EXECUTED PURSUANT TO THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY AGREEMENT EXECUTED PURSUANT TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) IT UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVER, (iii) IT MAKES SUCH WAIVER VOLUNTARILY, AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.15. 

[Signature Page Follows] 

  
 52 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as
of the date first above written. 
  

			
	CANCER GENETICS, INC.
		
	By:	 	 /s/ Edward J. Sitar

		 	Name: Edward J. Sitar
		 	Title: CFO
	
	GENTRIS CORPORATION
		
	By:	 	 /s/ Amelia W. Warner

		 	Name: Amelia W. Warner
		 	Title: CEO
	
	GENTRIS, LLC
		
	By:	 	 /s/ Edward J. Sitar

		 	Name: Edward J. Sitar
		 	Title: CFO

  
 53 

 LIST OF EXHIBITS 
  

			
	Exhibit A	  	Assignment and Assumption Agreement
	Exhibit B	  	Bill of Sale
	Exhibit C	  	Patent and Trademark Assignment Agreement
	Exhibit D	  	Form of Escrow Agreement

  
 54Exhibit 4.1

 

INDENTURE

 

by and between

 

CONSUMERS 2014 SECURITIZATION FUNDING LLC,

 

Issuer

 

and

 

THE BANK OF NEW YORK MELLON,

 

Indenture Trustee and Securities Intermediary

 

Dated as of July 22, 2014

 

 

TABLE OF CONTENTS

 

	
 
    	
Page
    
	
 
    	
 
    
	
ARTICLE I DEFINITIONS AND RULES OF   CONSTRUCTION; INCORPORATION BY REFERENCE
    	
2
    
	
SECTION 1.01.
    	
Definitions and Rules of Construction
    	
2
    
	
SECTION 1.02.
    	
Incorporation by Reference of Trust Indenture Act
    	
2
    
	
 
    	
 
    
	
ARTICLE II THE SECURITIZATION BONDS
    	
2
    
	
SECTION 2.01.
    	
Form
    	
2
    
	
SECTION 2.02.
    	
Denominations of Securitization Bonds
    	
3
    
	
SECTION 2.03.
    	
Execution, Authentication and Delivery
    	
4
    
	
SECTION 2.04.
    	
Temporary Securitization Bonds
    	
4
    
	
SECTION 2.05.
    	
Registration; Registration of Transfer and Exchange   of Securitization Bonds
    	
5
    
	
SECTION 2.06.
    	
Mutilated, Destroyed, Lost or Stolen   Securitization Bonds
    	
6
    
	
SECTION 2.07.
    	
Persons Deemed Owner
    	
7
    
	
SECTION 2.08.
    	
Payment of Principal, Premium, if any, and   Interest; Interest on Overdue Principal; Principal, Premium, if any, and   Interest Rights Preserved
    	
7
    
	
SECTION 2.09.
    	
Cancellation
    	
8
    
	
SECTION 2.10.
    	
Outstanding Amount; Authentication and Delivery of   Securitization Bonds
    	
9
    
	
SECTION 2.11.
    	
Book-Entry Securitization Bonds
    	
12
    
	
SECTION 2.12.
    	
Notices to Clearing Agency
    	
13
    
	
SECTION 2.13.
    	
Definitive Securitization Bonds
    	
13
    
	
SECTION 2.14.
    	
CUSIP Number
    	
13
    
	
SECTION 2.15.
    	
Letter of Representations
    	
14
    
	
SECTION 2.16.
    	
Tax Treatment
    	
14
    
	
SECTION 2.17.
    	
State Pledge
    	
14
    
	
SECTION 2.18.
    	
Security Interests
    	
14
    
	
 
    	
 
    
	
ARTICLE III COVENANTS
    	
16
    
	
SECTION 3.01.
    	
Payment   of Principal, Premium, if any, and Interest
    	
16
    
	
SECTION 3.02.
    	
Maintenance   of Office or Agency
    	
16
    
	
SECTION 3.03.
    	
Money   for Payments To Be Held in Trust
    	
16
    
	
SECTION 3.04.
    	
Existence
    	
17
    
	
SECTION 3.05.
    	
Protection   of Securitization Bond Collateral
    	
18
    
	
SECTION 3.06.
    	
Opinions   as to Securitization Bond Collateral
    	
18
    
	
SECTION 3.07.
    	
Performance   of Obligations; Servicing; SEC Filings
    	
19
    
	
SECTION 3.08.
    	
Certain   Negative Covenants
    	
22
    
	
SECTION 3.09.
    	
Annual   Statement as to Compliance
    	
23
    
	
SECTION 3.10.
    	
Issuer   May Consolidate, etc., Only on Certain Terms
    	
23
    
	
SECTION 3.11.
    	
Successor   or Transferee
    	
25
    
	
SECTION 3.12.
    	
No   Other Business
    	
26
    
	
SECTION 3.13.
    	
No   Borrowing
    	
26
    
	
SECTION 3.14.
    	
Servicer’s   Obligations
    	
26
    

 

i

 

	
SECTION 3.15.
    	
Guarantees,   Loans, Advances and Other Liabilities
    	
26
    
	
SECTION 3.16.
    	
Capital   Expenditures
    	
26
    
	
SECTION 3.17.
    	
Restricted   Payments
    	
26
    
	
SECTION 3.18.
    	
Notice   of Events of Default
    	
26
    
	
SECTION 3.19.
    	
Further   Instruments and Acts
    	
27
    
	
SECTION 3.20.
    	
Inspection
    	
27
    
	
SECTION 3.21.
    	
Sale Agreement, Servicing   Agreement, Intercreditor Agreement and Administration Agreement   Covenants
    	
27
    
	
SECTION 3.22.
    	
Taxes
    	
29
    
	
SECTION 3.23.
    	
Notices   from Holders
    	
29
    
	
 
    	
 
    
	
ARTICLE IV SATISFACTION AND DISCHARGE;   DEFEASANCE
    	
29
    
	
SECTION 4.01.
    	
Satisfaction   and Discharge of Indenture; Defeasance
    	
29
    
	
SECTION 4.02.
    	
Conditions   to Defeasance
    	
31
    
	
SECTION 4.03.
    	
Application   of Trust Money
    	
33
    
	
SECTION 4.04.
    	
Repayment   of Moneys Held by Paying Agent
    	
33
    
	
 
    	
 
    
	
ARTICLE V REMEDIES
    	
33
    
	
SECTION 5.01.
    	
Events   of Default
    	
33
    
	
SECTION 5.02.
    	
Acceleration   of Maturity; Rescission and Annulment
    	
35
    
	
SECTION 5.03.
    	
Collection   of Indebtedness and Suits for Enforcement by Indenture Trustee
    	
35
    
	
SECTION 5.04.
    	
Remedies;   Priorities
    	
37
    
	
SECTION 5.05.
    	
Optional   Preservation of the Securitization Bond Collateral
    	
39
    
	
SECTION 5.06.
    	
Limitation   of Suits
    	
39
    
	
SECTION 5.07.
    	
Unconditional   Rights of Holders To Receive Principal, Premium, if any, and Interest
    	
40
    
	
SECTION 5.08.
    	
Restoration   of Rights and Remedies
    	
40
    
	
SECTION 5.09.
    	
Rights   and Remedies Cumulative
    	
40
    
	
SECTION 5.10.
    	
Delay   or Omission Not a Waiver
    	
40
    
	
SECTION 5.11.
    	
Control   by Holders
    	
40
    
	
SECTION 5.12.
    	
Waiver   of Past Defaults
    	
41
    
	
SECTION 5.13.
    	
Undertaking   for Costs
    	
41
    
	
SECTION 5.14.
    	
Waiver   of Stay or Extension Laws
    	
42
    
	
SECTION 5.15.
    	
Action   on Securitization Bonds
    	
42
    
	
 
    	
 
    
	
ARTICLE VI THE INDENTURE TRUSTEE
    	
42
    
	
SECTION 6.01.
    	
Duties   of Indenture Trustee
    	
42
    
	
SECTION 6.02.
    	
Rights   of Indenture Trustee
    	
44
    
	
SECTION 6.03.
    	
Individual   Rights of Indenture Trustee
    	
46
    
	
SECTION 6.04.
    	
Indenture   Trustee’s Disclaimer
    	
46
    
	
SECTION 6.05.
    	
Notice   of Defaults
    	
46
    
	
SECTION 6.06.
    	
Reports   by Indenture Trustee to Holders
    	
47
    
	
SECTION 6.07.
    	
Compensation   and Indemnity
    	
48
    
	
SECTION 6.08.
    	
Replacement   of Indenture Trustee and Securities Intermediary
    	
48
    
	
SECTION 6.09.
    	
Successor   Indenture Trustee by Merger
    	
50
    
	
SECTION 6.10.
    	
Appointment   of Co-Trustee or Separate Trustee
    	
50
    
	
SECTION 6.11.
    	
Eligibility;   Disqualification
    	
51
    

 

ii

 

	
SECTION 6.12.
    	
Preferential   Collection of Claims Against Issuer
    	
51
    
	
SECTION 6.13.
    	
Representations   and Warranties of Indenture Trustee
    	
52
    
	
SECTION 6.14.
    	
Annual   Report by Independent Registered Public Accountants
    	
52
    
	
SECTION 6.15.
    	
Custody   of Securitization Bond Collateral
    	
52
    
	
 
    	
 
    
	
ARTICLE VII HOLDERS’ LISTS AND REPORTS
    	
53
    
	
SECTION 7.01.
    	
Issuer   To Furnish Indenture Trustee Names and Addresses of Holders
    	
53
    
	
SECTION 7.02.
    	
Preservation   of Information; Communications to Holders
    	
53
    
	
SECTION 7.03.
    	
Reports   by Issuer
    	
53
    
	
SECTION 7.04.
    	
Reports   by Indenture Trustee
    	
54
    
	
 
    	
 
    
	
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND   RELEASES
    	
54
    
	
SECTION 8.01.
    	
Collection   of Money
    	
54
    
	
SECTION 8.02.
    	
Collection   Account
    	
55
    
	
SECTION 8.03.
    	
General   Provisions Regarding the Collection Account
    	
58
    
	
SECTION 8.04.
    	
Release   of Securitization Bond Collateral
    	
59
    
	
SECTION 8.05.
    	
Opinion   of Counsel
    	
60
    
	
SECTION 8.06.
    	
Reports   by Independent Registered Public Accountants
    	
60
    
	
 
    	
 
    
	
ARTICLE IX SUPPLEMENTAL INDENTURES
    	
60
    
	
SECTION 9.01.
    	
Supplemental   Indentures Without Consent of Holders
    	
60
    
	
SECTION 9.02.
    	
Supplemental   Indentures with Consent of Holders
    	
62
    
	
SECTION 9.03.
    	
Execution   of Supplemental Indentures
    	
63
    
	
SECTION 9.04.
    	
Effect   of Supplemental Indenture
    	
64
    
	
SECTION 9.05.
    	
Conformity   with Trust Indenture Act
    	
64
    
	
SECTION 9.06.
    	
Reference   in Securitization Bonds to Supplemental Indentures
    	
64
    
	
 
    	
 
    
	
ARTICLE X MISCELLANEOUS
    	
64
    
	
SECTION 10.01.
    	
Compliance   Certificates and Opinions, etc.
    	
64
    
	
SECTION 10.02.
    	
Form of   Documents Delivered to Indenture Trustee
    	
66
    
	
SECTION 10.03.
    	
Acts   of Holders
    	
67
    
	
SECTION 10.04.
    	
Notices, etc.,   to Indenture Trustee, Issuer and Rating Agencies
    	
67
    
	
SECTION 10.05.
    	
Notices   to Holders; Waiver
    	
68
    
	
SECTION 10.06.
    	
Conflict   with Trust Indenture Act
    	
68
    
	
SECTION 10.07.
    	
Successors   and Assigns
    	
68
    
	
SECTION 10.08.
    	
Severability
    	
69
    
	
SECTION 10.09.
    	
Benefits   of Indenture
    	
69
    
	
SECTION 10.10.
    	
Legal   Holidays
    	
69
    
	
SECTION 10.11.
    	
GOVERNING   LAW
    	
69
    
	
SECTION 10.12.
    	
Counterparts
    	
69
    
	
SECTION 10.13.
    	
Recording   of Indenture
    	
69
    
	
SECTION 10.14.
    	
No   Recourse to Issuer
    	
69
    
	
SECTION 10.15.
    	
Basic   Documents
    	
70
    
	
SECTION 10.16.
    	
No   Petition
    	
70
    
	
SECTION 10.17.
    	
Securities   Intermediary
    	
71
    
	
SECTION 10.18.
    	
Rule 17g-5   Compliance
    	
71
    
	
SECTION 10.19.
    	
Submission   to Non-Exclusive Jurisdiction; Waiver of Jury Trial
    	
71
    
	
SECTION 10.20.
    	
Certain   Tax Laws
    	
71
    

 

iii

 

EXHIBITS

 

Exhibit A                                             Form of Securitization Bonds

Exhibit B                                             Form of Series Supplement

Exhibit C                                             Servicing Criteria to be Addressed by Indenture Trustee in Assessment of Compliance

 

APPENDIX

 

Appendix A          Definitions and Rules of Construction

 

iv

 

TRUST INDENTURE ACT CROSS REFERENCE TABLE

 

	
TRUST INDENTURE ACT
   SECTION
    	
 
    	
INDENTURE SECTION
    
	
310
    	
 
    	
(a)(1)
    	
 
    	
6.11
    
	
 
    	
 
    	
(a)(2)
    	
 
    	
6.11
    
	
 
    	
 
    	
(a)(3)
    	
 
    	
6.10(b)(i)
    
	
 
    	
 
    	
(a)(4)
    	
 
    	
Not applicable
    
	
 
    	
 
    	
(a)(5)
    	
 
    	
6.11
    
	
 
    	
 
    	
(b)
    	
 
    	
6.11
    
	
311
    	
 
    	
(a)
    	
 
    	
6.12
    
	
 
    	
 
    	
(b)
    	
 
    	
6.12
    
	
312
    	
 
    	
(a)
    	
 
    	
7.01 and 7.02
    
	
 
    	
 
    	
(b)
    	
 
    	
7.02(b)
    
	
 
    	
 
    	
(c)
    	
 
    	
7.02(c)
    
	
313
    	
 
    	
(a)
    	
 
    	
7.04
    
	
 
    	
 
    	
(b)(1)
    	
 
    	
7.04
    
	
 
    	
 
    	
(b)(2)
    	
 
    	
7.04
    
	
 
    	
 
    	
(c)
    	
 
    	
7.03(a) and 7.04
    
	
 
    	
 
    	
(d)
    	
 
    	
Not applicable
    
	
314
    	
 
    	
(a)
    	
 
    	
3.09, 4.01 and 7.03(a)
    
	
 
    	
 
    	
(b)
    	
 
    	
3.06 and 4.01
    
	
 
    	
 
    	
(c)(1)
    	
 
    	
2.10, 4.01, 8.04(b) and 10.01(a)
    
	
 
    	
 
    	
(c)(2)
    	
 
    	
2.10, 4.01, 8.04(b) and 10.01(a)
    
	
 
    	
 
    	
(c)(3)
    	
 
    	
2.10, 4.01 and 10.01(a)
    
	
 
    	
 
    	
(d)
    	
 
    	
2.10, 8.04(b) and 10.01
    
	
 
    	
 
    	
(e)
    	
 
    	
10.01(a)
    
	
 
    	
 
    	
(f)
    	
 
    	
10.01(a)
    
	
315
    	
 
    	
(a)
    	
 
    	
6.01(b)(i) and 6.01(b)(ii)
    

 

v

 

	
TRUST INDENTURE ACT
   SECTION
    	
 
    	
INDENTURE SECTION
    
	
 
    	
 
    	
(b)
    	
 
    	
6.05
    
	
 
    	
 
    	
(c)
    	
 
    	
6.01(a)
    
	
 
    	
 
    	
(d)
    	
 
    	
6.01(c)(i), 6.01(c)(ii) and 6.01(c)(iii)
    
	
 
    	
 
    	
(e)
    	
 
    	
5.13
    
	
316
    	
 
    	
(a) (last sentence)
    	
 
    	
Appendix A — definition of “Outstanding”
    
	
 
    	
 
    	
(a)(1)(A)
    	
 
    	
5.11
    
	
 
    	
 
    	
(a)(1)(B)
    	
 
    	
5.12
    
	
 
    	
 
    	
(a)(2)
    	
 
    	
Not applicable
    
	
 
    	
 
    	
(b)
    	
 
    	
5.07
    
	
 
    	
 
    	
(c)
    	
 
    	
Appendix A — definition of “Record Date”
    
	
317
    	
 
    	
(a)(1)
    	
 
    	
5.03(a)
    
	
 
    	
 
    	
(a)(2)
    	
 
    	
5.03(c)(iv)
    
	
 
    	
 
    	
(b)
    	
 
    	
3.03
    
	
318
    	
 
    	
(a)
    	
 
    	
10.06
    
	
 
    	
 
    	
(b)
    	
 
    	
10.06
    
	
 
    	
 
    	
(c)
    	
 
    	
10.06
    

 

THIS CROSS REFERENCE TABLE SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO BE PART OF THIS INDENTURE.

 

vi

 

This INDENTURE, dated as of July 22, 2014, is by and between CONSUMERS 2014 SECURITIZATION FUNDING LLC, a Delaware limited liability company, and THE BANK OF NEW YORK MELLON, a New York banking corporation, in its capacity as trustee for the benefit of the Secured Parties and in its separate capacity as a securities intermediary.

 

In consideration of the mutual agreements herein contained, each party hereto agrees as follows for the benefit of the other party hereto and each of the Holders:

 

RECITALS OF THE ISSUER

 

The Issuer has duly authorized the execution and delivery of this Indenture and the creation and issuance of the Securitization Bonds issuable hereunder, which will be of substantially the tenor set forth herein and in the Series Supplement.

 

The Securitization Bonds shall be non-recourse obligations and shall be secured by and payable solely out of the proceeds of the Securitization Property and the other Securitization Bond Collateral as provided herein. If and to the extent that such proceeds of the Securitization Property and the other Securitization Bond Collateral are insufficient to pay all amounts owing with respect to the Securitization Bonds, then, except as otherwise expressly provided hereunder, the Holders shall have no Claim in respect of such insufficiency against the Issuer or the Indenture Trustee, and the Holders, by their acceptance of the Securitization Bonds, waive any such Claim.

 

All things necessary to (a) make the Securitization Bonds, when executed by the Issuer and authenticated and delivered by the Indenture Trustee hereunder and duly issued by the Issuer, valid obligations, and (b) make this Indenture a valid agreement of the Issuer, in each case, in accordance with their respective terms, have been done.

 

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

 

That the Issuer, in consideration of the premises herein contained and of the purchase of the Securitization Bonds by the Holders and of other good and lawful consideration, the receipt and sufficiency of which are hereby acknowledged, and to secure, equally and ratably without prejudice, priority or distinction, except as specifically otherwise set forth in this Indenture, the payment of the Securitization Bonds, the payment of all other amounts due under or in connection with this Indenture (including all fees, expenses, counsel fees and other amounts due and owing to the Indenture Trustee) and the performance and observance of all of the covenants and conditions contained herein or in the Securitization Bonds, has hereby executed and delivered this Indenture and by these presents does hereby and by the Series Supplement will convey, grant, assign, transfer and pledge, in each case, in and unto the Indenture Trustee, its successors and assigns forever, for the benefit of the Secured Parties, all and singular the property described in the Series Supplement (such property herein referred to as the “Securitization Bond Collateral”). The Series Supplement will more particularly describe the obligations of the Issuer secured by the Securitization Bond Collateral.

 

AND IT IS HEREBY COVENANTED, DECLARED AND AGREED between the parties hereto that all Securitization Bonds are to be issued, countersigned and delivered and

 

 

that all of the Securitization Bond Collateral is to be held and applied, subject to the further covenants, conditions, releases, uses and trusts hereinafter set forth, and the Issuer, for itself and any successor, does hereby covenant and agree to and with the Indenture Trustee and its successors in said trust, for the benefit of the Secured Parties, as follows:

 

ARTICLE I

 

DEFINITIONS AND RULES OF CONSTRUCTION; INCORPORATION BY REFERENCE

 

SECTION 1.01.  Definitions and Rules of Construction. Capitalized terms used but not otherwise defined in this Indenture shall have the respective meanings given to such terms in Appendix A, which is hereby incorporated by reference into this Indenture as if set forth fully in this Indenture. Not all terms defined in Appendix A are used in this Indenture. The rules of construction set forth in Appendix A shall apply to this Indenture and are hereby incorporated by reference into this Indenture as if set forth fully in this Indenture.

 

SECTION 1.02.  Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the Trust Indenture Act, that provision is incorporated by reference in and made a part of this Indenture. The following Trust Indenture Act terms used in this Indenture have the following meanings:

 

“indenture securities” means the Securitization Bonds.

 

“indenture security holder” means a Holder.

 

“indenture to be qualified” means this Indenture.

 

“indenture trustee” or “institutional trustee” means the Indenture Trustee.

 

“obligor” on the indenture securities means the Issuer and any other obligor on the indenture securities.

 

All other Trust Indenture Act terms used in this Indenture that are defined by the Trust Indenture Act, defined by Trust Indenture Act reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions.

 

ARTICLE II

 

THE SECURITIZATION BONDS

 

SECTION 2.01.  Form. The Securitization Bonds and the Indenture Trustee’s certificate of authentication shall be in substantially the forms set forth in Exhibit A, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture or by the Series Supplement and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may, consistently herewith, be determined by the officers executing the Securitization Bonds, as evidenced by their execution of the Securitization Bonds.

 

2

 

The Securitization Bonds shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods (with or without steel engraved borders), all as determined by the officers executing the Securitization Bonds, as evidenced by their execution of the Securitization Bonds.

 

Each Securitization Bond shall be dated the date of its authentication. The terms of the Securitization Bonds set forth in Exhibit A are part of the terms of this Indenture.

 

SECTION 2.02.  Denominations of Securitization Bonds. The Securitization Bonds shall be issuable in the Authorized Denominations specified in the Series Supplement.

 

The Securitization Bonds may, at the election of and as authorized by a Responsible Officer of the Issuer, be issued in one or more Tranches, and shall be designated generally as the “Senior Secured Securitization Bonds, Series 2014A” of the Issuer, with such further particular designations added or incorporated in such title for the Securitization Bonds of any particular Tranche as a Responsible Officer of the Issuer may determine. Each Securitization Bond shall bear the designation so selected for the Tranche to which it belongs. All Securitization Bonds shall be identical in all respects except for the denominations thereof, the Holder thereof, the numbering thereon and the legends thereon, unless the Securitization Bonds are comprised of one or more Tranches, in which case all Securitization Bonds of the same Tranche shall be identical in all respects except for the denominations thereof, the Holder thereof, the numbering thereon, the legends thereon and the CUSIP number thereon. All Securitization Bonds of a particular Tranche shall be in all respects equally and ratably entitled to the benefits hereof without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Indenture.

 

The Securitization Bonds shall be created by the Series Supplement authorized by a Responsible Officer of the Issuer, which Series Supplement shall specify and establish the terms and provisions thereof, including the following (which terms and provisions may differ as between Tranches):

 

(a)           designation of any Tranches thereof;

 

(b)           the principal amount (and, if more than one Tranche is issued, the respective principal amounts of such Tranches);

 

(c)           the Bond Interest Rate;

 

(d)           the Payment Dates;

 

(e)           the Scheduled Payment Dates;

 

(f)            the Scheduled Final Payment Date(s);

 

(g)           the Final Maturity Date(s);

 

(h)           the issuance date;

 

3

 

(i)            the Authorized Denominations;

 

(j)            the Expected Amortization Schedule(s);

 

(k)           the place or places for the payment of interest, principal and premium, if any;

 

(l)            any additional Secured Parties;

 

(m)          the identity of the Indenture Trustee;

 

(n)           the Securitization Charges and the Securitization Bond Collateral;

 

(o)           whether or not the Securitization Bonds are to be Book-Entry Securitization Bonds and the extent to which Section 2.11 should apply; and

 

(p)           any other terms of the Securitization Bonds (or Tranches thereof) that are not inconsistent with the provisions of this Indenture and as to which the Rating Agency Condition is satisfied.

 

SECTION 2.03.  Execution, Authentication and Delivery. The Securitization Bonds shall be executed on behalf of the Issuer by any of its Responsible Officers. The signature of any such Responsible Officer on the Securitization Bonds may be manual or facsimile.

 

Securitization Bonds bearing the manual or facsimile signature of individuals who were at any time Responsible Officers of the Issuer shall bind the Issuer, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of the Securitization Bonds or did not hold such offices at the date of the Securitization Bonds.

 

At any time and from time to time after the execution and delivery of this Indenture, the Issuer may deliver Securitization Bonds executed by the Issuer to the Indenture Trustee pursuant to an Issuer Order for authentication; and the Indenture Trustee shall authenticate and deliver the Securitization Bonds as in this Indenture provided and not otherwise.

 

No Securitization Bond shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Securitization Bond a certificate of authentication substantially in the form provided for therein executed by the Indenture Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Securitization Bond shall be conclusive evidence, and the only evidence, that such Securitization Bond has been duly authenticated and delivered hereunder.

 

SECTION 2.04.  Temporary Securitization Bonds. Pending the preparation of Definitive Securitization Bonds pursuant to Section 2.13, the Issuer may execute, and upon receipt of an Issuer Order the Indenture Trustee shall authenticate and deliver, Temporary Securitization Bonds that are printed, lithographed, typewritten, mimeographed or otherwise produced, of the tenor of the Definitive Securitization Bonds in lieu of which they are issued and with such variations not inconsistent with the terms of this Indenture as the officers executing the 

 

4

 

Securitization Bonds may determine, as evidenced by their execution of the Securitization Bonds.

 

If Temporary Securitization Bonds are issued, the Issuer will cause Definitive Securitization Bonds to be prepared without unreasonable delay. After the preparation of Definitive Securitization Bonds, the Temporary Securitization Bonds shall be exchangeable for Definitive Securitization Bonds upon surrender of the Temporary Securitization Bonds at the office or agency of the Issuer to be maintained as provided in Section 3.02, without charge to the Holder. Upon surrender for cancellation of any one or more Temporary Securitization Bonds, the Issuer shall execute and the Indenture Trustee shall authenticate and deliver in exchange therefor a like principal amount of Definitive Securitization Bonds of authorized denominations. Until so delivered in exchange, the Temporary Securitization Bonds shall in all respects be entitled to the same benefits under this Indenture as Definitive Securitization Bonds.

 

SECTION 2.05.  Registration; Registration of Transfer and Exchange of Securitization Bonds. The Issuer shall cause to be kept a register (the “Securitization Bond Register”) in which, subject to such reasonable regulations as it may prescribe, the Issuer shall provide for the registration of Securitization Bonds and the registration of transfers of Securitization Bonds. The Indenture Trustee shall be “Securitization Bond Registrar” for the purpose of registering the Securitization Bonds and transfers of Securitization Bonds as herein provided. Upon any resignation of any Securitization Bond Registrar, the Issuer shall promptly appoint a successor or, if it elects not to make such an appointment, assume the duties of Securitization Bond Registrar.

 

If a Person other than the Indenture Trustee is appointed by the Issuer as Securitization Bond Registrar, the Issuer will give the Indenture Trustee prompt written notice of the appointment of such Securitization Bond Registrar and of the location, and any change in the location, of the Securitization Bond Register, and the Indenture Trustee shall have the right to inspect the Securitization Bond Register at all reasonable times and to obtain copies thereof, and the Indenture Trustee shall have the right to rely conclusively upon a certificate executed on behalf of the Securitization Bond Registrar by a Responsible Officer thereof as to the names and addresses of the Holders and the principal amounts and number of the Securitization Bonds (separately stated by Tranche).

 

Upon surrender for registration of transfer of any Securitization Bond at the office or agency of the Issuer to be maintained as provided in Section 3.02, provided that the requirements of Section 8-401 of the UCC are met, the Issuer shall execute, and the Indenture Trustee shall authenticate and the Holder shall obtain from the Indenture Trustee, in the name of the designated transferee or transferees, one or more new Securitization Bonds in any Authorized Denominations, of the same Tranche and aggregate principal amount.

 

At the option of the Holder, Securitization Bonds may be exchanged for other Securitization Bonds in any Authorized Denominations, of the same Tranche and aggregate principal amount, upon surrender of the Securitization Bonds to be exchanged at such office or agency as provided in Section 3.02. Whenever any Securitization Bonds are so surrendered for exchange, the Issuer shall, provided that the requirements of Section 8-401 of the UCC are met, execute, and, upon any such execution, the Indenture Trustee shall authenticate and the Holder 

 

5

 

shall obtain from the Indenture Trustee, the Securitization Bonds that the Holder making the exchange is entitled to receive.

 

All Securitization Bonds issued upon any registration of transfer or exchange of other Securitization Bonds shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securitization Bonds surrendered upon such registration of transfer or exchange.

 

Every Securitization Bond presented or surrendered for registration of transfer or exchange shall be duly endorsed by, or be accompanied by: (a) a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by an institution that is a member of: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) such other signature guaranty program acceptable to the Indenture Trustee; and (b) such other documents as the Indenture Trustee may require.

 

No service charge shall be made to a Holder for any registration of transfer or exchange of Securitization Bonds, but the Issuer or the Indenture Trustee may require payment of a sum sufficient to cover any tax or other governmental charge or any fees or expenses of the Indenture Trustee that may be imposed in connection with any registration of transfer or exchange of Securitization Bonds, other than exchanges pursuant to Section 2.04 or Section 2.06 not involving any transfer.

 

The preceding provisions of this Section 2.05 notwithstanding, the Issuer shall not be required to make, and the Securitization Bond Registrar need not register, transfers or exchanges of any Securitization Bond that has been submitted within 15 days preceding the due date for any payment with respect to such Securitization Bond until after such due date has occurred.

 

SECTION 2.06.  Mutilated, Destroyed, Lost or Stolen Securitization Bonds. If (a) any mutilated Securitization Bond is surrendered to the Indenture Trustee or the Indenture Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Securitization Bond and (b) there is delivered to the Indenture Trustee such security or indemnity as may be required by it to hold the Issuer and the Indenture Trustee harmless, then, in the absence of notice to the Issuer, the Securitization Bond Registrar or the Indenture Trustee that such Securitization Bond has been acquired by a Protected Purchaser, the Issuer shall, provided that the requirements of Section 8-401 of the UCC are met, execute, and, upon the Issuer’s written request, the Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Securitization Bond, a replacement Securitization Bond of like Tranche, tenor and principal amount, bearing a number not contemporaneously outstanding; provided, however, that, if any such destroyed, lost or stolen Securitization Bond, but not a mutilated Securitization Bond, shall have become or within seven days shall be due and payable, instead of issuing a replacement Securitization Bond, the Issuer may pay such destroyed, lost or stolen Securitization Bond when so due or payable without surrender thereof. If, after the delivery of such replacement Securitization Bond or payment of a destroyed, lost or stolen Securitization Bond pursuant to the proviso to the preceding sentence, a Protected

 

6

 

Purchaser of the original Securitization Bond in lieu of which such replacement Securitization Bond was issued presents for payment such original Securitization Bond, the Issuer and the Indenture Trustee shall be entitled to recover such replacement Securitization Bond (or such payment) from the Person to whom it was delivered or any Person taking such replacement Securitization Bond from such Person to whom such replacement Securitization Bond was delivered or any assignee of such Person, except a Protected Purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuer or the Indenture Trustee in connection therewith.

 

Upon the issuance of any replacement Securitization Bond under this Section 2.06, the Issuer and/or the Indenture Trustee may require the payment by the Holder of such Securitization Bond of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Indenture Trustee and the Securitization Bond Registrar) in connection therewith.

 

Every replacement Securitization Bond issued pursuant to this Section 2.06 in replacement of any mutilated, destroyed, lost or stolen Securitization Bond shall constitute an original additional contractual obligation of the Issuer, whether or not the mutilated, destroyed, lost or stolen Securitization Bond shall be found at any time or enforced by any Person, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securitization Bonds duly issued hereunder.

 

The provisions of this Section 2.06 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securitization Bonds.

 

SECTION 2.07.  Persons Deemed Owner. Prior to due presentment for registration of transfer of any Securitization Bond, the Issuer, the Indenture Trustee, the Securitization Bond Registrar and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name any Securitization Bond is registered (as of the day of determination) as the owner of such Securitization Bond for the purpose of receiving payments of principal of and premium, if any, and interest on such Securitization Bond and for all other purposes whatsoever, whether or not such Securitization Bond be overdue, and none of the Issuer, the Indenture Trustee or any agent of the Issuer or the Indenture Trustee shall be affected by notice to the contrary.

 

SECTION 2.08.  Payment of Principal, Premium, if any, and Interest; Interest on Overdue Principal; Principal, Premium, if any, and Interest Rights Preserved.

 

(a)           The Securitization Bonds shall accrue interest as provided in the Series Supplement at the applicable Bond Interest Rate, and such interest shall be payable on each applicable Payment Date. Any installment of interest, principal or premium, if any, payable on any Securitization Bond that is punctually paid or duly provided for on the applicable Payment Date shall be paid to the Person in whose name such Securitization Bond (or one or more Predecessor Securitization Bonds) is registered on the Record Date for such Payment Date by wire transfer to an account maintained by such Holder in accordance with payment instructions 

 

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delivered to the Indenture Trustee by such Holder, and, with respect to Book-Entry Securitization Bonds, payments will be made by wire transfer in immediately available funds to the account designated by the Holder of the applicable Global Securitization Bond unless and until such Global Securitization Bond is exchanged for Definitive Securitization Bonds (in which event payments shall be made as provided above) and except for the final installment of principal and premium, if any, payable with respect to such Securitization Bond on a Payment Date, which shall be payable as provided below.

 

(b)           The principal of each Securitization Bond of each Tranche shall be paid, to the extent funds are available therefor in the Collection Account, in installments on each Payment Date specified in the Series Supplement; provided, that installments of principal not paid when scheduled to be paid in accordance with the Expected Amortization Schedule shall be paid upon receipt of money available for such purpose, in the order set forth in the Expected Amortization Schedule. Failure to pay principal in accordance with such Expected Amortization Schedule because moneys are not available pursuant to Section 8.02 to make such payments shall not constitute a Default or Event of Default under this Indenture; provided, however, that failure to pay the entire unpaid principal amount of the Securitization Bonds of a Tranche upon the Final Maturity Date for the Securitization Bonds of such Tranche shall constitute an Event of Default under this Indenture as set forth in Section 5.01. Notwithstanding the foregoing, the entire unpaid principal amount of the Securitization Bonds shall be due and payable, if not previously paid, on the date on which an Event of Default shall have occurred and be continuing, if the Indenture Trustee or the Holders of the Securitization Bonds representing a majority of the Outstanding Amount of the Securitization Bonds have declared the Securitization Bonds to be immediately due and payable in the manner provided in Section 5.02. All payments of principal and premium, if any, on the Securitization Bonds shall be made pro rata to the Holders entitled thereto unless otherwise provided in the Series Supplement. The Indenture Trustee shall notify the Person in whose name a Securitization Bond is registered at the close of business on the Record Date preceding the Payment Date on which the Issuer expects that the final installment of principal of and premium, if any, and interest on such Securitization Bond will be paid. Such notice shall be mailed no later than five days prior to such final Payment Date and shall specify that such final installment will be payable only upon presentation and surrender of such Securitization Bond and shall specify the place where such Securitization Bond may be presented and surrendered for payment of such installment.

 

(c)           If interest on the Securitization Bonds is not paid when due, such defaulted interest shall be paid (plus interest on such defaulted interest at the applicable Bond Interest Rate to the extent lawful) to the Persons who are Holders on a subsequent Special Record Date, which date shall be at least 15 Business Days prior to the Special Payment Date. The Issuer shall fix or cause to be fixed any such Special Record Date and Special Payment Date, and, at least ten days before any such Special Record Date, the Issuer shall mail to each affected Holder a notice that states the Special Record Date, the Special Payment Date and the amount of defaulted interest (plus interest on such defaulted interest) to be paid.

 

SECTION 2.09.  Cancellation. All Securitization Bonds surrendered for payment, registration of transfer or exchange shall, if surrendered to any Person other than the Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly canceled by the Indenture Trustee. The Issuer may at any time deliver to the Indenture Trustee for cancellation any 

 

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Securitization Bonds previously authenticated and delivered hereunder that the Issuer may have acquired in any manner whatsoever, and all Securitization Bonds so delivered shall be promptly canceled by the Indenture Trustee. No Securitization Bonds shall be authenticated in lieu of or in exchange for any Securitization Bonds canceled as provided in this Section 2.09, except as expressly permitted by this Indenture. All canceled Securitization Bonds may be held or disposed of by the Indenture Trustee in accordance with its standard retention or disposal policy as in effect at the time.

 

SECTION 2.10.  Outstanding Amount; Authentication and Delivery of Securitization Bonds. The aggregate Outstanding Amount of Securitization Bonds that may be authenticated and delivered under this Indenture shall not exceed the aggregate of the amounts of Securitization Bonds that are authorized in the Financing Order but otherwise shall be unlimited.

 

Securitization Bonds created and established by the Series Supplement may at any time be executed by the Issuer and delivered to the Indenture Trustee for authentication and thereupon the same shall be authenticated and delivered by the Indenture Trustee upon Issuer Request and upon delivery by the Issuer to the Indenture Trustee, and receipt by the Indenture Trustee, or the causing to occur by the Issuer, of the following; provided, however, that compliance with such conditions and delivery of such documents shall only be required in connection with the original issuance of the Securitization Bonds:

 

(a)           Issuer Action. An Issuer Order authorizing and directing the authentication and delivery of the Securitization Bonds by the Indenture Trustee and specifying the principal amount of Securitization Bonds to be authenticated.

 

(b)           Authorizations. Copies of (i) the Financing Order, which shall be in full force and effect and be Final, (ii) certified resolutions of the Managers or Member of the Issuer authorizing the execution and delivery of the Series Supplement and the execution, authentication and delivery of the Securitization Bonds and (iii) a Series Supplement duly executed by the Issuer.

 

(c)           Opinions. An opinion or opinions, portions of which may be delivered by one or more counsel for the Issuer, portions of which may be delivered by one or more counsel for the Servicer, and portions of which may be delivered by one or more counsel for the Seller, dated the Closing Date, in each case subject to the customary exceptions, qualifications and assumptions contained therein, to the collective effect, that (i) all conditions precedent provided for in this Indenture relating to (A) the authentication and delivery of the Issuer’s Securitization Bonds and (B) the execution of the Series Supplement to this Indenture dated as of the date of this Indenture have been complied with and (ii) the execution of the Series Supplement to this Indenture dated as of the date of this Indenture is permitted by this Indenture, together with the other Opinions of Counsel described in Sections 9(d) through 9(o) of the Underwriting Agreement (other than Sections 9(f)(i) and 9(h) thereof) relating to the Issuer’s Securitization Bonds.

 

(d)           Authorizing Certificate. An Officer’s Certificate, dated the Closing Date, of the Issuer certifying that (i) the Issuer has duly authorized the execution and delivery of this Indenture and the Series Supplement and the execution and delivery of the Securitization Bonds 

 

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and (ii) the Series Supplement is in the form attached thereto and complies with the requirements of Section 2.02.

 

(e)           The Securitization Bond Collateral. The Issuer shall have made or caused to be made all filings with the Commission and the Michigan Department of State pursuant to the Financing Order and the Securitization Law and all other filings necessary to perfect the Grant of the Securitization Bond Collateral to the Indenture Trustee and the Lien of this Indenture.

 

(f)            Certificates of the Issuer and the Seller.

 

(i)  An Officer’s Certificate from the Issuer, dated as of the Closing Date:

 

(A)          to the effect that (1) the Issuer is not in Default under this Indenture and that the issuance of the Securitization Bonds will not result in any Default or in any breach of any of the terms, conditions or provisions of or constitute a default under the Financing Order or any indenture, mortgage, deed of trust or other agreement or instrument to which the Issuer is a party or by which it or its property is bound or any order of any court or administrative agency entered in any Proceeding to which the Issuer is a party or by which it or its property may be bound or to which it or its property may be subject and (2) all conditions precedent provided in this Indenture relating to the execution, authentication and delivery of the Securitization Bonds have been complied with;

 

(B)          to the effect that: the Issuer has not assigned any interest or participation in the Securitization Bond Collateral except for the Grant contained in this Indenture and the Series Supplement; the Issuer has the power and right to Grant the Securitization Bond Collateral to the Indenture Trustee as security hereunder and thereunder; and the Issuer, subject to the terms of this Indenture, has Granted to the Indenture Trustee a first priority perfected security interest in all of its right, title and interest in and to such Securitization Bond Collateral free and clear of any Lien arising as a result of actions of the Issuer or through the Issuer, except Permitted Liens;

 

(C)          to the effect that the Issuer has appointed the firm of Independent registered public accountants as contemplated in Section 8.06;

 

(D)          to the effect that the Sale Agreement, the Servicing Agreement, the Administration Agreement and the Intercreditor Agreement are, to the knowledge of the Issuer (and assuming such agreements are enforceable against all parties thereto other than the 

 

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Issuer and Consumers Energy), in full force and effect and, to the knowledge of the Issuer, that no party is in default of its obligations under such agreements; and

 

(E)           certifying that the Securitization Bonds have received the ratings from the Rating Agencies required by the Underwriting Agreement as a condition to the issuance of the Securitization Bonds.

 

(ii)  An officer’s certificate from the Seller, dated as of the Closing Date, to the effect that:

 

(A)          in the case of the Securitization Property identified in the Bill of Sale, immediately prior to the conveyance thereof to the Issuer pursuant to the Sale Agreement: the Seller was the original and the sole owner of such Securitization Property, free and clear of any Lien; the Seller had not assigned any interest or participation in such Securitization Property and the proceeds thereof other than to the Issuer pursuant to the Sale Agreement; the Seller has the power, authority and right to own, sell and assign such Securitization Property and the proceeds thereof to the Issuer; the Seller has its chief executive office in the State of Michigan; and the Seller, subject to the terms of the Sale Agreement, has validly sold and assigned to the Issuer all of its right, title and interest in and to such Securitization Property and the proceeds thereof, free and clear of any Lien (other than Permitted Liens) and such sale and assignment is absolute and irrevocable and has been perfected;

 

(B)          in the case of the Securitization Property identified in the Bill of Sale, immediately prior to the conveyance thereof to the Issuer pursuant to the Sale Agreement, the attached copy of the Financing Order creating such Securitization Property is true and complete and is in full force and effect; and

 

(C)          the Required Capital Level has been deposited or caused to be deposited by the Seller with the Trustee for crediting to the Capital Subaccount.

 

(g)           Accountant’s Certificate or Letter. One or more certificates or letters, addressed to the Issuer, of a firm of Independent registered public accountants of recognized national reputation to the effect that (i) such accountants are Independent with respect to the Issuer within the meaning of this Indenture and are independent public accountants within the meaning of the standards of the Public Company Accounting Oversight Board and (ii) with respect to the Securitization Bond Collateral, they have applied such procedures as instructed by the addressees of such certificate or letter.

 

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(h)           Requirements of Series Supplement. Such other funds, accounts, documents, certificates, agreements, instruments or opinions as may be required by the terms of the Series Supplement.

 

(i)            Other Requirements. Such other documents, certificates, agreements, instruments or opinions as the Indenture Trustee may reasonably require.

 

SECTION 2.11.  Book-Entry Securitization Bonds. Unless the Series Supplement provides otherwise, all of the Securitization Bonds shall be issued in Book-Entry Form, and the Issuer shall execute and the Indenture Trustee shall, in accordance with this Section 2.11 and the Issuer Order, authenticate and deliver one or more Global Securitization Bonds, evidencing the Securitization Bonds, which (a) shall be an aggregate original principal amount equal to the aggregate original principal amount of the Securitization Bonds to be issued pursuant to the Issuer Order, (b) shall be registered in the name of the Clearing Agency therefor or its nominee, which shall initially be Cede & Co., as nominee for The Depository Trust Company, the initial Clearing Agency, (c) shall be delivered by the Indenture Trustee pursuant to such Clearing Agency’s or such nominee’s instructions and (d) shall bear a legend substantially to the effect set forth in Exhibit A.

 

Each Clearing Agency designated pursuant to this Section 2.11 must, at the time of its designation and at all times while it serves as Clearing Agency hereunder, be a “clearing agency” registered under the Exchange Act and any other applicable statute or regulation.

 

No Holder of Securitization Bonds issued in Book-Entry Form shall receive a Definitive Securitization Bond representing such Holder’s interest in any of the Securitization Bonds, except as provided in Section 2.13. Unless (and until) certificated, fully registered Securitization Bonds (the “Definitive Securitization Bonds”) have been issued to the Holders pursuant to Section 2.13 or pursuant to the Series Supplement relating thereto:

 

(i)  the provisions of this Section 2.11 shall be in full force and effect;

 

(ii)  the Issuer, the Servicer, the Paying Agent, the Securitization Bond Registrar and the Indenture Trustee may deal with the Clearing Agency for all purposes (including the making of distributions on the Securitization Bonds and the giving of instructions or directions hereunder) as the authorized representative of the Holders;

 

(iii)  to the extent that the provisions of this Section 2.11 conflict with any other provisions of this Indenture, the provisions of this Section 2.11 shall control;

 

(iv)  the rights of Holders shall be exercised only through the Clearing Agency and the Clearing Agency Participants and shall be limited to those established by law and agreements between such Holders and the Clearing Agency and/or the Clearing Agency Participants. Pursuant to the Letter of Representations, unless and until Definitive Securitization Bonds are issued pursuant to Section 2.13, the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit 

 

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distributions of principal of and interest on the Book-Entry Securitization Bonds to such Clearing Agency Participants; and

 

(v)  whenever this Indenture requires or permits actions to be taken based upon instruction or directions of the Holders evidencing a specified percentage of the Outstanding Amount of Securitization Bonds, the Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from the Holders and/or the Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in the Securitization Bonds and has delivered such instructions to a Responsible Officer of the Indenture Trustee.

 

SECTION 2.12.  Notices to Clearing Agency. Unless and until Definitive Securitization Bonds shall have been issued to Holders pursuant to Section 2.13, whenever notice, payment or other communications to the holders of Book-Entry Securitization Bonds is required under this Indenture, the Indenture Trustee, the Servicer and the Paying Agent, as applicable, shall give all such notices and communications specified herein to be given to Holders to the Clearing Agency.

 

SECTION 2.13.  Definitive Securitization Bonds. If (a) (i) the Issuer advises the Indenture Trustee in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities under any Letter of Representations and (ii) the Issuer is unable to locate a qualified successor Clearing Agency, (b) the Issuer, at its option, advises the Indenture Trustee in writing that it elects to terminate the book-entry system through the Clearing Agency or (c) after the occurrence of an Event of Default hereunder, Holders holding Securitization Bonds aggregating a majority of the aggregate Outstanding Amount of Securitization Bonds maintained as Book-Entry Securitization Bonds advise the Indenture Trustee, the Issuer and the Clearing Agency (through the Clearing Agency Participants) in writing that the continuation of a book-entry system through the Clearing Agency is no longer in the best interests of the Holders, the Issuer shall notify the Clearing Agency, the Indenture Trustee and all such Holders in writing of the occurrence of any such event and of the availability of Definitive Securitization Bonds to the Holders requesting the same. Upon surrender to the Indenture Trustee of the Global Securitization Bonds by the Clearing Agency accompanied by registration instructions from such Clearing Agency for registration, the Issuer shall execute, and the Indenture Trustee shall authenticate and deliver, Definitive Securitization Bonds in accordance with the instructions of the Clearing Agency. None of the Issuer, the Securitization Bond Registrar, the Paying Agent or the Indenture Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions. Upon the issuance of Definitive Securitization Bonds, the Indenture Trustee shall recognize the Holders of the Definitive Securitization Bonds as Holders hereunder.

 

Definitive Securitization Bonds will be transferable and exchangeable at the offices of the Securitization Bond Registrar.

 

SECTION 2.14.  CUSIP Number. The Issuer in issuing any Securitization Bonds may use a “CUSIP” number and, if so used, the Indenture Trustee shall use the CUSIP number provided to it by the Issuer in any notices to the Holders thereof as a convenience to such 

 

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Holders; provided, that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP number printed in the notice or on the Securitization Bonds and that reliance may be placed only on the other identification numbers printed on the Securitization Bonds. The Issuer shall promptly notify the Indenture Trustee in writing of any change in the CUSIP number with respect to any Securitization Bond.

 

SECTION 2.15.  Letter of Representations. The Issuer shall comply with the terms of each Letter of Representations applicable to the Issuer.

 

SECTION 2.16.  Tax Treatment. The Issuer and the Indenture Trustee, by entering into this Indenture, and the Holders and any Persons holding a beneficial interest in any Securitization Bond, by acquiring any Securitization Bond or interest therein, (a) express their intention that, solely for the purposes of U.S. federal taxes and, to the extent consistent with applicable state, local and other tax law, solely for the purposes of state, local and other taxes, the Securitization Bonds qualify under applicable tax law as indebtedness of the Member secured by the Securitization Bond Collateral and (b) solely for the purposes of U.S. federal taxes and, to the extent consistent with applicable state, local and other tax law, solely for purposes of state, local and other taxes, so long as any of the Securitization Bonds are outstanding, agree to treat the Securitization Bonds as indebtedness of the Member secured by the Securitization Bond Collateral unless otherwise required by appropriate taxing authorities.

 

SECTION 2.17.  State Pledge. Under the laws of the State of Michigan in effect on the Closing Date, pursuant to Section 10n(2) of the Securitization Law, the State of Michigan has pledged for the benefit and protection of the Holders, the Indenture Trustee, other Persons acting for the benefit of the Holders and Consumers Energy that the State of Michigan will not take or permit any action that would impair the value of Securitization Property, reduce or alter, except as allowed under Section 10k(3) of the Securitization Law, or impair the Securitization Charges to be imposed, collected and remitted to the Holders, the Indenture Trustee and other Persons acting for the benefit of the Holders until the principal, interest and premium, and any other charges incurred and contracts to be performed in connection with the Securitization Bonds have been paid and performed in full.

 

The Issuer hereby acknowledges that the purchase of any Securitization Bond by a Holder or the purchase of any beneficial interest in a Securitization Bond by any Person and the Indenture Trustee’s obligations to perform hereunder are made in reliance on such agreement and pledge by the State of Michigan.

 

SECTION 2.18.  Security Interests. The Issuer hereby makes the following representations and warranties. Other than the security interests granted to the Indenture Trustee pursuant to this Indenture, the Issuer has not pledged, granted, sold, conveyed or otherwise assigned any interests or security interests in the Securitization Bond Collateral and no security agreement, financing statement or equivalent security or Lien instrument listing the Issuer as debtor covering all or any part of the Securitization Bond Collateral is on file or of record in any jurisdiction, except such as may have been filed, recorded or made by the Issuer in favor of the Indenture Trustee on behalf of the Secured Parties in connection with this Indenture. This Indenture constitutes a valid and continuing lien on, and first priority perfected security interest in, the Securitization Bond Collateral in favor of the Indenture Trustee on behalf of the Secured 

 

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Parties, which lien and security interest is prior to all other Liens and is enforceable as such as against creditors of and purchasers from the Issuer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights generally or by general equitable principles, whether considered in a proceeding at law or in equity and by an implied covenant of good faith and fair dealing. With respect to all Securitization Bond Collateral, this Indenture, together with the Series Supplement, creates a valid and continuing first priority perfected security interest (as defined in the UCC) in such Securitization Bond Collateral, which security interest is prior to all other Liens and is enforceable as such as against creditors of and purchasers from the Issuer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights generally or by general equitable principles, whether considered in a proceeding at law or in equity and by an implied covenant of good faith and fair dealing. The Issuer has good and marketable title to the Securitization Bond Collateral free and clear of any Lien of any Person other than Permitted Liens. All of the Securitization Bond Collateral constitutes Securitization Property or accounts, deposit accounts, investment property or general intangibles (as each such term is defined in the UCC), except that proceeds of the Securitization Bond Collateral may also take the form of instruments. The Issuer has taken, or caused the Servicer to take, all action necessary to perfect the security interest in the Securitization Bond Collateral granted to the Indenture Trustee, for the benefit of the Secured Parties. The Issuer has filed (or has caused the Servicer to file) all appropriate financing statements in the proper filing offices in the appropriate jurisdictions under applicable law in order to perfect the security interest in the Securitization Bond Collateral granted to the Indenture Trustee. The Issuer has not authorized the filing of and is not aware, after due inquiry, of any financing statements against the Issuer that include a description of the Securitization Bond Collateral other than those filed in favor of the Indenture Trustee. The Issuer is not aware of any judgment or tax lien filings against the Issuer. The Collection Account (including all subaccounts thereof) constitutes a “securities account” within the meaning of the UCC. The Issuer has taken all steps necessary to cause the Securities Intermediary of each such securities account to identify in its records the Indenture Trustee as the Person having a security entitlement against the Securities Intermediary in such securities account, no Collection Account is in the name of any Person other than the Indenture Trustee, and the Issuer has not consented to the Securities Intermediary of the Collection Account to comply with entitlement orders of any Person other than the Indenture Trustee. All of the Securitization Bond Collateral constituting investment property has been and will have been credited to the Collection Account or a subaccount thereof, and the Securities Intermediary for the Collection Account has agreed to treat all assets credited to the Collection Account as “financial assets” within the meaning of the UCC. Accordingly, the Indenture Trustee has a first priority perfected security interest in the Collection Account, all funds and financial assets on deposit therein, and all securities entitlements relating thereto. The representations and warranties set forth in this Section 2.18 shall survive the execution and delivery of this Indenture and the issuance of any Securitization Bonds, shall be deemed re-made on each date on which any funds in the Collection Account are distributed to the Issuer or otherwise released from the Lien of the Indenture and may not be waived by any party hereto except pursuant to a supplemental indenture executed in accordance with Article IX and as to which the Rating Agency Condition has been satisfied.

 

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ARTICLE III

 

COVENANTS

 

SECTION 3.01.  Payment of Principal, Premium, if any, and Interest. The principal of and premium, if any, and interest on the Securitization Bonds shall be duly and punctually paid by the Issuer, or the Servicer on behalf of the Issuer, in accordance with the terms of the Securitization Bonds and this Indenture; provided, that, except on a Final Maturity Date or upon the acceleration of the Securitization Bonds following the occurrence of an Event of Default, the Issuer shall only be obligated to pay the principal of the Securitization Bonds on each Payment Date therefor to the extent moneys are available for such payment pursuant to Section 8.02. Amounts properly withheld under the Code, the Treasury regulations promulgated thereunder or other tax laws by any Person from a payment to any Holder of interest or principal or premium, if any, shall be considered as having been paid by the Issuer to such Holder for all purposes of this Indenture.

 

SECTION 3.02.  Maintenance of Office or Agency. The Issuer shall initially maintain in Dallas, Texas an office or agency where Securitization Bonds may be surrendered for registration of transfer or exchange. The Issuer shall give prompt written notice to the Indenture Trustee of the location, and of any change in the location, of any such office or agency. The Issuer hereby initially appoints the Indenture Trustee to serve as its agent for the foregoing purposes, and the Corporate Trust Office of the Indenture Trustee shall serve as the offices provided above in this Section 3.02. If at any time the Issuer shall fail to maintain any such office or agency or shall fail to furnish the Indenture Trustee with the address thereof, such surrenders may be made at the office of the Indenture Trustee located at the Corporate Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent to receive all such surrenders.

 

SECTION 3.03.  Money for Payments To Be Held in Trust. As provided in Section 8.02(a), all payments of amounts due and payable with respect to any Securitization Bonds that are to be made from amounts withdrawn from the Collection Account pursuant to Section 8.02(d) shall be made on behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no amounts so withdrawn from the Collection Account for payments with respect to any Securitization Bonds shall be paid over to the Issuer except as provided in this Section 3.03 and Section 8.02.

 

Each Paying Agent shall meet the eligibility criteria set forth for any Indenture Trustee under Section 6.11. The Issuer will cause each Paying Agent other than the Indenture Trustee to execute and deliver to the Indenture Trustee an instrument in which such Paying Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of this Section 3.03, that such Paying Agent will:

 

(a)           hold all sums held by it for the payment of amounts due with respect to the Securitization Bonds in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided and pay such sums to such Persons as herein provided;

 

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(b)                                 give the Indenture Trustee and the Rating Agencies written notice of any Default by the Issuer of which it has actual knowledge in the making of any payment required to be made with respect to the Securitization Bonds;

 

(c)                                  at any time during the continuance of any such Default, upon the written request of the Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held in trust by such Paying Agent;

 

(d)                                 immediately, with notice to the Rating Agencies, resign as a Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in trust for the payment of Securitization Bonds if at any time the Paying Agent determines that it has ceased to meet the standards required to be met by a Paying Agent at the time of such determination; and

 

(e)                                  comply with all requirements of the Code, the Treasury regulations promulgated thereunder and other tax laws with respect to the withholding from any payments made by it on any Securitization Bonds of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith.

 

The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, by Issuer Order direct any Paying Agent to pay to the Indenture Trustee all sums held in trust by such Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts as those upon which the sums were held by such Paying Agent; and, upon such payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be released from all further liability with respect to such money.

 

Subject to applicable laws with respect to escheat of funds, any money held by the Indenture Trustee or any Paying Agent in trust for the payment of any amount due with respect to any Securitization Bond and remaining unclaimed for two years after such amount has become due and payable shall be discharged from such trust and be paid to the Issuer on an Issuer Request; and, subject to Section 10.14, the Holder of such Securitization Bond shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof (but only to the extent of the amounts so paid to the Issuer), and all liability of the Indenture Trustee or such Paying Agent with respect to such trust money shall thereupon cease; provided, however, that the Indenture Trustee or such Paying Agent, before being required to make any such repayment, may, at the expense of the Issuer, cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Issuer. The Indenture Trustee may also adopt and employ, at the expense of the Issuer, any other reasonable means of notification of such repayment (including mailing notice of such repayment to Holders whose right to or interest in moneys due and payable but not claimed is determinable from the records of the Indenture Trustee or of any Paying Agent, at the last address of record for each such Holder).

 

SECTION 3.04.  Existence. The Issuer shall keep in full effect its existence, rights and franchises as a limited liability company under the laws of the State of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes, organized under the laws of any other

 

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State or of the United States of America, in which case the Issuer will keep in full effect its existence, rights and franchises under the laws of such other jurisdiction) and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Indenture, the other Basic Documents, the Securitization Bonds, the Securitization Bond Collateral and each other instrument or agreement referenced herein or therein.

 

SECTION 3.05.  Protection of Securitization Bond Collateral. The Issuer shall from time to time execute and deliver all such supplements and amendments hereto and all filings with the Commission, the Secretary of State of the State of Delaware or the Michigan Department of State pursuant to the Financing Order or to the Securitization Law and all financing statements, continuation statements, instruments of further assurance and other instruments, and shall take such other action necessary or advisable, to:

 

(a)                                 maintain or preserve the Lien (and the priority thereof) of this Indenture and the Series Supplement or carry out more effectively the purposes hereof;

 

(b)                                 perfect, publish notice of or protect the validity of any Grant made or to be made by this Indenture;

 

(c)                                  enforce any of the Securitization Bond Collateral;

 

(d)                                 preserve and defend title to the Securitization Bond Collateral and the rights of the Indenture Trustee and the Holders in such Securitization Bond Collateral against the Claims of all Persons, including the challenge by any party to the validity or enforceability of the Financing Order, the Securitization Property or any proceeding relating thereto and institute any action or proceeding necessary to compel performance by the Commission or the State of Michigan of any of its obligations or duties under the Securitization Law, the State Pledge, or the Financing Order; or

 

(e)                                  pay any and all taxes levied or assessed upon all or any part of the Securitization Bond Collateral.

 

The Indenture Trustee is specifically authorized to file financing statements covering the Securitization Bond Collateral, including financing statements that describe the Securitization Bond Collateral as “all assets” or “all personal property” of the Issuer and/or reflecting Section 10m(9) of the Securitization Law, it being understood that in no event shall the Indenture Trustee be responsible for filing any such financing statements.

 

SECTION 3.06.  Opinions as to Securitization Bond Collateral.

 

(a)                                 On the Closing Date, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer either stating that, in the opinion of such counsel, such action has been taken with respect to the recording and filing of this Indenture, any indentures supplemental hereto and any other requisite documents, and with respect to the execution and filing of any filings with the Commission, the Secretary of State of the State of Delaware or the Michigan Department of State pursuant to the Securitization Law and the Financing Order, financing statements and continuation statements, as are necessary to perfect

 

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and make effective the Lien and the perfected security interest created by this Indenture and the Series Supplement, and, based on a review of a current report of a search of the appropriate governmental filing office, no other Lien that can be perfected solely by the filing of financing statements under the applicable Uniform Commercial Code ranks equal or prior to the Lien of the Indenture Trustee in the Securitization Bond Collateral, and reciting the details of such action, or stating that, in the opinion of such counsel, no such action is necessary to make effective such Lien.

 

(b)                                 Within 90 days after the beginning of each calendar year beginning with the calendar year beginning January 1, 2015, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel of the Issuer 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 this Indenture, any indentures supplemental hereto and any other requisite documents, and with respect to the execution and filing of any filings with the Commission, the Secretary of State of the State of Delaware or the Michigan Department of State pursuant to the Securitization Law and the Financing Order, financing statements and continuation statements, as are necessary to maintain the Lien and the perfected security interest created by this Indenture and the Series Supplement 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. Such Opinion of Counsel shall also describe the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents and the execution and filing of any filings with the Commission, the Secretary of State of the State of Delaware or the Michigan Department of State, financing statements and continuation statements that will, in the opinion of such counsel, be required within the 12-month period following the date of such opinion to maintain the Lien and the perfected security interest created by this Indenture and the Series Supplement.

 

(c)                                  Prior to the effectiveness of any amendment to the Sale Agreement or the Servicing Agreement, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer either (i) stating that, in the opinion of such counsel, all filings, including UCC financing statements and other filings with the Commission, the Secretary of State of the State of Delaware or the Michigan Department of State pursuant to the Securitization Law or the Financing Order have been executed and filed that are necessary fully to preserve and protect the Lien of the Issuer and the Indenture Trustee in the Securitization Property and the Securitization Bond Collateral, respectively, and the proceeds thereof, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (ii) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such Lien.

 

SECTION 3.07.  Performance of Obligations; Servicing; SEC Filings.

 

(a)                                 The Issuer (i) shall diligently pursue any and all actions to enforce its rights under each instrument or agreement included in the Securitization Bond Collateral and (ii) shall not take any action and shall use its best efforts not to permit any action to be taken by others that would release any Person from any of such Person’s covenants or obligations under any such instrument or agreement or that would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any such instrument or agreement, except, in each case, as expressly provided in this Indenture, the Series

 

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Supplement, the Sale Agreement, the Servicing Agreement, the Intercreditor Agreement or such other instrument or agreement.

 

(b)                                 The Issuer may contract with other Persons to assist it in performing its duties under this Indenture, and any performance of such duties by a Person identified to the Indenture Trustee herein or in an Officer’s Certificate shall be deemed to be action taken by the Issuer. Initially, the Issuer has contracted with the Servicer to assist the Issuer in performing its duties under this Indenture.

 

(c)                                  The Issuer shall punctually perform and observe all of its obligations and agreements contained in this Indenture, the Series Supplement, the other Basic Documents and the instruments and agreements included in the Securitization Bond Collateral, including filing or causing to be filed all filings with the Commission, the Secretary of State of the State of Delaware or the Michigan Department of State pursuant to the Securitization Law or the Financing Order, all UCC financing statements and all continuation statements required to be filed by it by the terms of this Indenture, the Series Supplement, the Sale Agreement and the Servicing Agreement in accordance with and within the time periods provided for herein and therein.

 

(d)                                 If the Issuer shall have knowledge of the occurrence of a Servicer Default under the Servicing Agreement, the Issuer shall promptly give written notice thereof to the Indenture Trustee and the Rating Agencies and shall specify in such notice the response or action, if any, the Issuer has taken or is taking with respect to such Servicer Default. If a Servicer Default shall arise from the failure of the Servicer to perform any of its duties or obligations under the Servicing Agreement with respect to the Securitization Property, the Securitization Bond Collateral or the Securitization Charges, the Issuer shall take all reasonable steps available to it to remedy such failure.

 

(e)                                  As promptly as possible after the giving of notice of termination to the Servicer and the Rating Agencies of the Servicer’s rights and powers pursuant to Section 7.01 of the Servicing Agreement, the Indenture Trustee may and shall, at the written direction of the Holders evidencing a majority of the Outstanding Amount of the Securitization Bonds, appoint a successor Servicer (the “Successor Servicer”), and such Successor Servicer shall accept its appointment by a written assumption in a form acceptable to the Issuer and the Indenture Trustee. A Person shall qualify as a Successor Servicer only if such Person satisfies the requirements of the Servicing Agreement and the Intercreditor Agreement. If, within 30 days after the delivery of the notice referred to above, a new Servicer shall not have been appointed, the Indenture Trustee may petition the Commission or a court of competent jurisdiction to appoint a Successor Servicer. In connection with any such appointment, Consumers Energy may make such arrangements for the compensation of such Successor Servicer as it and such successor shall agree, subject to the limitations set forth in Section 8.02 and in the Servicing Agreement.

 

(f)                                   Upon any termination of the Servicer’s rights and powers pursuant to the Servicing Agreement, the Indenture Trustee shall promptly notify the Issuer, the Holders and the Rating Agencies. As soon as a Successor Servicer is appointed, the Indenture Trustee shall notify

 

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the Issuer, the Holders and the Rating Agencies of such appointment, specifying in such notice the name and address of such Successor Servicer.

 

(g)                                  The Issuer shall (or shall cause the Sponsor to) post on its website (which for this purpose may be the website of any direct or indirect parent company of the Issuer) and, to the extent consistent with the Issuer’s and the Sponsor’s obligations under applicable law, file with or furnish to the SEC in periodic reports and other reports as are required from time to time under Section 13 or Section 15(d) of the Exchange Act, the following information (other than any such information filed with the SEC and publicly available to investors unless the Issuer specifically requests such items to be posted) with respect to the Outstanding Securitization Bonds, in each case to the extent such information is reasonably available to the Issuer:

 

(i)                                     statements of any remittances of Securitization Charges made to the Indenture Trustee (to be included in a Form 10-D or Form 10-K, or successor forms thereto);

 

(ii)                                  the Semi-Annual Servicer’s Certificate as required to be submitted pursuant to the Servicing Agreement (to be filed with a Form 10-D, Form 10-K or Form 8-K, or successor forms thereto);

 

(iii)                               the Monthly Servicer’s Certificate as required to be submitted pursuant to the Servicing Agreement;

 

(iv)                              the text (or a link to the website where a reader can find the text) of each filing of a True-Up Adjustment and the results of each such filing;

 

(v)                                 any change in the long-term or short-term credit ratings of the Servicer assigned by the Rating Agencies;

 

(vi)                              material legislative or regulatory developments directly relevant to the Outstanding Securitization Bonds (to be filed or furnished in a Form 8-K); and

 

(vii)                           any reports and other information that the Issuer is required to file with the SEC under the Exchange Act.

 

Notwithstanding the foregoing, nothing herein shall preclude the Issuer from voluntarily suspending or terminating its filing obligations as Issuer with the SEC to the extent permitted by applicable law. Any such reports or information delivered to the Indenture Trustee for purposes of this Section 3.07(g) is for informational purposes only, and the Indenture Trustee’s receipt of such reports or information shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuer’s compliance with any of its covenants hereunder (as to which the Indenture Trustee is entitled to conclusively rely on an Officer’s Certificate).

 

(h)                                 The Issuer shall direct the Indenture Trustee to post on the Indenture Trustee’s website for investors (based solely on information set forth in the Semi-Annual Servicer’s Certificate) with respect to the Outstanding Securitization Bonds, to the extent such information is set forth in the Semi-Annual Servicer’s Certificate, a statement showing the

 

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balance of Outstanding Securitization Bonds that reflects the actual payments made on the Securitization Bonds during the applicable period.

 

The address of the Indenture Trustee’s website for investors is https://gctinvestorreporting.bnymellon.com. The Indenture Trustee shall immediately notify the Issuer, the Holders and the Rating Agencies of any change to the address of the website for investors.

 

(i)                                     The Issuer shall make all filings required under the Securitization Law relating to the transfer of the ownership or security interest in the Securitization Property other than those required to be made by the Seller or the Servicer pursuant to the Basic Documents.

 

SECTION 3.08.  Certain Negative Covenants. So long as any Securitization Bonds are Outstanding, the Issuer shall not:

 

(a)                                 except as expressly permitted by this Indenture and the other Basic Documents, sell, transfer, convey, exchange or otherwise dispose of any of the properties or assets of the Issuer, including those included in the Securitization Bond Collateral, unless in accordance with Article V;

 

(b)                                 claim any credit on, or make any deduction from the principal or premium, if any, or interest payable in respect of, the Securitization Bonds (other than amounts properly withheld from such payments under the Code, the Treasury regulations promulgated thereunder or other tax laws) or assert any claim against any present or former Holder by reason of the payment of the taxes levied or assessed upon any part of the Securitization Bond Collateral;

 

(c)                                  terminate its existence or dissolve or liquidate in whole or in part, except in a transaction permitted by Section 3.10;

 

(d)                                 (i) permit the validity or effectiveness of this Indenture or the other Basic Documents to be impaired, or permit the Lien of this Indenture and the Series Supplement to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to the Securitization Bonds under this Indenture except as may be expressly permitted hereby, (ii) permit any Lien (other than the Lien of this Indenture or the Series Supplement) to be created on or extend to or otherwise arise upon or burden the Securitization Bond Collateral or any part thereof or any interest therein or the proceeds thereof (other than tax liens arising by operation of law with respect to amounts not yet due) or (iii) permit the Lien of the Series Supplement not to constitute a valid first priority perfected security interest in the Securitization Bond Collateral;

 

(e)                                  enter into any swap, hedge or similar financial instrument;

 

(f)                                   elect to be classified as an association taxable as a corporation for U.S. federal income tax purposes or otherwise take any action, file any tax return or make any election inconsistent with the treatment of the Issuer, for U.S. federal income tax purposes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes, as a disregarded entity that is not separate from the sole owner of the Issuer;

 

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(g)                                  change its name, identity or structure or the location of its chief executive office, unless at least ten Business Days prior to the effective date of any such change the Issuer delivers to the Indenture Trustee (with copies to the Rating Agencies) such documents, instruments or agreements, executed by the Issuer, as are necessary to reflect such change and to continue the perfection of the security interest of this Indenture and the Series Supplement;

 

(h)                                 take any action that is subject to a Rating Agency Condition without satisfying the Rating Agency Condition;

 

(i)                                     except to the extent permitted by applicable law, voluntarily suspend or terminate its filing obligations with the SEC as described in Section 3.07(g); or

 

(j)                                    issue any securitization bonds (as defined for this purpose in the Securitization Law) under the Securitization Law (other than the Securitization Bonds) or issue any other debt obligations.

 

SECTION 3.09.  Annual Statement as to Compliance. The Issuer will deliver to the Indenture Trustee and the Rating Agencies not later than March 31 of each year (commencing with March 31, 2015), an Officer’s Certificate stating, as to the Responsible Officer signing such Officer’s Certificate, that:

 

(a)                                 a review of the activities of the Issuer during the preceding 12 months ended December 31 (or, in the case of the first such Officer’s Certificate, since the Closing Date) and of performance under this Indenture has been made; and

 

(b)                                 to the best of such Responsible Officer’s knowledge, based on such review, the Issuer has in all material respects complied with all conditions and covenants under this Indenture throughout such 12-month period (or such shorter period in the case of the first such Officer’s Certificate), or, if there has been a default in the compliance of any such condition or covenant, specifying each such default known to such Responsible Officer and the nature and status thereof.

 

SECTION 3.10.  Issuer May Consolidate, etc., Only on Certain Terms.

 

(a)                                 The Issuer shall not consolidate or merge with or into any other Person, unless:

 

(i)                                     the Person (if other than the Issuer) formed by or surviving such consolidation or merger shall (A) be a Person organized and existing under the laws of the United States of America or any State, (B) expressly assume, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form and substance satisfactory to the Indenture Trustee, the performance or observance of every agreement and covenant of this Indenture and the Series Supplement on the part of the Issuer to be performed or observed, all as provided herein and in the Series Supplement, and (C) assume all obligations and succeed to all rights of the Issuer under the Sale Agreement, the Servicing Agreement and each other Basic Document to which the Issuer is a party;

 

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(ii)                                  immediately after giving effect to such merger or consolidation, no Default, Event of Default or Servicer Default shall have occurred and be continuing;

 

(iii)                               the Rating Agency Condition shall have been satisfied with respect to such merger or consolidation;

 

(iv)                              the Issuer shall have delivered to Consumers Energy, the Indenture Trustee and the Rating Agencies an opinion or opinions of outside tax counsel (as selected by the Issuer, in form and substance reasonably satisfactory to Consumers Energy and the Indenture Trustee, and which may be based on a ruling from the Internal Revenue Service (unless the Internal Revenue Service has announced that it will not rule on the issues described in this paragraph)) to the effect that the consolidation or merger will not result in a material adverse U.S. federal or state income tax consequence to the Issuer, Consumers Energy, the Indenture Trustee or the then-existing Holders;

 

(v)                                 any action as is necessary to maintain the Lien and the perfected security interest in the Securitization Bond Collateral created by this Indenture and the Series Supplement shall have been taken as evidenced by an Opinion of Counsel of external counsel of the Issuer delivered to the Indenture Trustee; and

 

(vi)                              the Issuer shall have delivered to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel of the Issuer each stating that such consolidation or merger and such supplemental indenture comply with this Indenture and the Series Supplement and that all conditions precedent herein provided for in this Section 3.10(a) with respect to such transaction have been complied with (including any filing required by the Exchange Act).

 

(b)                                 Except as specifically provided herein, the Issuer shall not sell, convey, exchange, transfer or otherwise dispose of any of its properties or assets included in the Securitization Bond Collateral, to any Person, unless:

 

(i)                                     the Person that acquires the properties and assets of the Issuer, the conveyance or transfer of which is hereby restricted, (A) shall be a United States citizen or a Person organized and existing under the laws of the United States of America or any State, (B) expressly assumes, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form and substance satisfactory to the Indenture Trustee, the performance or observance of every agreement and covenant of this Indenture on the part of the Issuer to be performed or observed, all as provided herein and in the Series Supplement, (C) expressly agrees by means of such supplemental indenture that all right, title and interest so sold, conveyed, exchanged, transferred or otherwise disposed of shall be subject and subordinate to the rights of Holders, (D) unless otherwise provided in the supplemental indenture referred to in Section 3.10(b)(i)(B), expressly agrees to indemnify, defend and hold harmless the Issuer and the Indenture Trustee against and from any loss, liability or expense arising under or related to this Indenture, the Series Supplement and the Securitization Bonds, (E) expressly agrees by means of such supplemental indenture that such Person (or if a group of Persons, then one specified Person) shall make all filings with the SEC (and any other appropriate Person)

 

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required by the Exchange Act in connection with the Securitization Bonds and (F) if such sale, conveyance, exchange, transfer or disposal relates to the Issuer’s rights and obligations under the Sale Agreement or the Servicing Agreement, assumes all obligations and succeeds to all rights of the Issuer under the Sale Agreement and the Servicing Agreement, as applicable;

 

(ii)                                  immediately after giving effect to such transaction, no Default, Event of Default or Servicer Default shall have occurred and be continuing;

 

(iii)                               the Rating Agency Condition shall have been satisfied with respect to such transaction;

 

(iv)                              the Issuer shall have delivered to Consumers Energy, the Indenture Trustee and the Rating Agencies an opinion or opinions of outside tax counsel (as selected by the Issuer, in form and substance reasonably satisfactory to Consumers Energy and the Indenture Trustee, and which may be based on a ruling from the Internal Revenue Service) to the effect that the disposition will not result in a material adverse U.S. federal or state income tax consequence to the Issuer, Consumers Energy, the Indenture Trustee or the then-existing Holders;

 

(v)                                 any action as is necessary to maintain the Lien and the perfected security interest in the Securitization Bond Collateral created by this Indenture and the Series Supplement shall have been taken as evidenced by an Opinion of Counsel of external counsel of the Issuer delivered to the Indenture Trustee; and

 

(vi)                              the Issuer shall have delivered to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel of the Issuer each stating that such sale, conveyance, exchange, transfer or other disposition and such supplemental indenture comply with this Indenture and the Series Supplement and that all conditions precedent herein provided for in this Section 3.10(b) with respect to such transaction have been complied with (including any filing required by the Exchange Act).

 

SECTION 3.11.  Successor or Transferee.

 

(a)                                 Upon any consolidation or merger of the Issuer in accordance with Section 3.10(a), the Person formed by or surviving such consolidation or merger (if other than the Issuer) shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under this Indenture with the same effect as if such Person had been named as the Issuer herein.

 

(b)                                 Except as set forth in Section 6.07, upon a sale, conveyance, exchange, transfer or other disposition of all the assets and properties of the Issuer in accordance with Section 3.10(b), the Issuer will be released from every covenant and agreement of this Indenture and the other Basic Documents to be observed or performed on the part of the Issuer with respect to the Securitization Bonds and the Securitization Property immediately following the consummation of such acquisition upon the delivery of written notice to the Indenture Trustee from the Person acquiring such assets and properties stating that the Issuer is to be so released.

 

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SECTION 3.12.  No Other Business. The Issuer shall not engage in any business other than financing, purchasing, owning, administering, managing and servicing the Securitization Property and the other Securitization Bond Collateral and the issuance of the Securitization Bonds in the manner contemplated by the Financing Order and this Indenture and the other Basic Documents and activities incidental thereto.

 

SECTION 3.13.  No Borrowing. The Issuer shall not issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for any indebtedness except for the Securitization Bonds and any other indebtedness expressly permitted by or arising under the Basic Documents.

 

SECTION 3.14.  Servicer’s Obligations. The Issuer shall enforce the Servicer’s compliance with and performance of all of the Servicer’s material obligations under the Servicing Agreement.

 

SECTION 3.15.  Guarantees, Loans, Advances and Other Liabilities. Except as otherwise contemplated by the Sale Agreement, the Servicing Agreement or this Indenture, the Issuer shall not make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuring another’s payment or performance on any obligation or capability of so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other Person.

 

SECTION 3.16.  Capital Expenditures. Other than the purchase of Securitization Property from the Seller on the Closing Date, the Issuer shall not make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty).

 

SECTION 3.17.  Restricted Payments. Except as provided in Section 8.04(c), the Issuer shall not, directly or indirectly, (a) pay any dividend or make any distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, to any owner of an interest in the Issuer or otherwise with respect to any ownership or equity interest or similar security in or of the Issuer, (b) redeem, purchase, retire or otherwise acquire for value any such ownership or equity interest or similar security or (c) set aside or otherwise segregate any amounts for any such purpose; provided, however, that, if no Event of Default shall have occurred and be continuing or would be caused thereby, the Issuer may make, or cause to be made, any such distributions to any owner of an interest in the Issuer or otherwise with respect to any ownership or equity interest or similar security in or of the Issuer using funds distributed to the Issuer pursuant to Section 8.02(e)(x) to the extent that such distributions would not cause the balance of the Capital Subaccount to decline below the Required Capital Level. The Issuer will not, directly or indirectly, make payments to or distributions from the Collection Account except in accordance with this Indenture and the other Basic Documents.

 

SECTION 3.18.  Notice of Events of Default. The Issuer agrees to give the Indenture Trustee and the Rating Agencies prompt written notice of each Default or Event of Default hereunder as provided in Section 5.01, and each default on the part of the Seller or the Servicer of its obligations under the Sale Agreement or the Servicing Agreement, respectively.

 

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SECTION 3.19.  Further Instruments and Acts. Upon request of the Indenture Trustee, the Issuer shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture and to maintain the first priority perfected security interest of the Indenture Trustee in the Securitization Bond Collateral.

 

SECTION 3.20.  Inspection. The Issuer agrees that, on reasonable prior notice, it will permit any representative of the Indenture Trustee, during the Issuer’s normal business hours, to examine all the books of account, records, reports and other papers of the Issuer, to make copies and extracts therefrom, to cause such books to be audited annually by Independent registered public accountants, and to discuss the Issuer’s affairs, finances and accounts with the Issuer’s officers, employees and Independent registered public accountants, all at such reasonable times and as often as may be reasonably requested. The Indenture Trustee shall and shall cause its representatives to hold in confidence all such information except to the extent disclosure may be required by law (and all reasonable applications for confidential treatment are unavailing) and except to the extent that the Indenture Trustee may reasonably determine that such disclosure is consistent with its obligations hereunder. Notwithstanding anything herein to the contrary, the preceding sentence shall not be construed to prohibit (a) disclosure of any and all information that is or becomes publicly known, or information obtained by the Indenture Trustee from sources other than the Issuer, provided such parties are rightfully in possession of such information, (b) disclosure of any and all information (i) if required to do so by any applicable statute, law, rule or regulation, (ii) pursuant to any subpoena, civil investigative demand or similar demand or request of any court or regulatory authority exercising its proper jurisdiction, (iii) in any preliminary or final prospectus, registration statement or other document a copy of which has been filed with the SEC, (iv) to any affiliate, independent or internal auditor, agent, employee or attorney of the Indenture Trustee having a need to know the same, provided that such parties agree to be bound by the confidentiality provisions contained in this Section 3.20, or (v) to any Rating Agency or (c) any other disclosure authorized by the Issuer.

 

SECTION 3.21.  Sale Agreement, Servicing Agreement, Intercreditor Agreement and Administration Agreement Covenants.

 

(a)                                 The Issuer agrees to take all such lawful actions to enforce its rights under the Sale Agreement, the Servicing Agreement, the Intercreditor Agreement, the Administration Agreement and the other Basic Documents, and to compel or secure the performance and observance by the Seller, the Servicer, the Administrator and Consumers Energy of each of their respective obligations to the Issuer under or in connection with the Sale Agreement, the Servicing Agreement, the Intercreditor Agreement, the Administration Agreement and the other Basic Documents in accordance with the terms thereof. So long as no Event of Default occurs and is continuing, but subject to Section 3.21(f), the Issuer may exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with the Sale Agreement, the Servicing Agreement, the Intercreditor Agreement and the Administration Agreement; provided, that such action shall not adversely affect the interests of the Holders in any material respect.

 

(b)                                 If an Event of Default occurs and is continuing, the Indenture Trustee may, and at the direction (which direction shall be in writing) of Holders of a majority of the

 

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Outstanding Amount of the Securitization Bonds of all Tranches affected thereby shall, exercise all rights, remedies, powers, privileges and claims of the Issuer against the Seller, Consumers Energy, the Administrator and the Servicer, as the case may be, under or in connection with the Sale Agreement, the Servicing Agreement, the Intercreditor Agreement and the Administration Agreement, including the right or power to take any action to compel or secure performance or observance by the Seller, Consumers Energy, the Administrator or the Servicer of each of their obligations to the Issuer thereunder and to give any consent, request, notice, direction, approval, extension or waiver under the Sale Agreement, the Servicing Agreement, the Intercreditor Agreement and the Administration Agreement, and any right of the Issuer to take such action shall be suspended.

 

(c)                                  Except as set forth in Section 3.21(d), the Administration Agreement, the Sale Agreement, the Servicing Agreement and the Intercreditor Agreement may be amended in accordance with the provisions thereof, so long as the Rating Agency Condition is satisfied in connection therewith, at any time and from time to time, without the consent of the Holders of the Securitization Bonds, but with the consent of the Trustee; provided, that the Trustee shall provide such consent upon receipt of an Officer’s Certificate of the Issuer evidencing satisfaction of such Rating Agency Condition and an Opinion of Counsel of external counsel of the Issuer evidencing that such amendment is in accordance with the provisions of such Basic Document.

 

(d)                                 Except as set forth in Section 3.21(e), if the Issuer, the Seller, Consumers Energy, the Administrator, the Servicer or any other party to the respective agreement proposes to amend, modify, waive, supplement, terminate or surrender, or agree to any amendment, modification, waiver, supplement, termination or surrender of, the terms of the Sale Agreement, the Administration Agreement, the Servicing Agreement or the Intercreditor Agreement, or waive timely performance or observance by the Seller, Consumers Energy, the Administrator, the Servicer or any other party under the Sale Agreement, the Administration Agreement, the Servicing Agreement or the Intercreditor Agreement, in each case in such a way as would materially and adversely affect the interests of any Holder of Securitization Bonds, the Issuer shall first notify the Rating Agencies of the proposed amendment, modification, waiver, supplement, termination or surrender and shall promptly notify the Indenture Trustee and the Holders of the Securitization Bonds in writing of the proposed amendment, modification, waiver, supplement, termination or surrender and whether the Rating Agency Condition has been satisfied with respect thereto (or, pursuant to an Issuer Request, the Indenture Trustee shall so notify the Holders of the Securitization Bonds on the Issuer’s behalf). The Indenture Trustee shall consent to such proposed amendment, modification, waiver, supplement, termination or surrender only if the Rating Agency Condition is satisfied and only with the prior written consent of the Holders of a majority of the Outstanding Amount of Securitization Bonds of the Tranches materially and adversely affected thereby. If any such amendment, modification, waiver, supplement, termination or surrender shall be so consented to by the Indenture Trustee or such Holders, the Issuer agrees to execute and deliver, in its own name and at its own expense, such agreements, instruments, consents and other documents as shall be necessary or appropriate in the circumstances.

 

(e)                                  If the Issuer or the Servicer proposes to amend, modify, waive, supplement, terminate or surrender, or to agree to any amendment, modification, supplement, termination, waiver or surrender of, the process for True-Up Adjustments, the Issuer shall notify

 

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the Indenture Trustee and the Holders of the Securitization Bonds and, when required, the Commission in writing of such proposal (or, pursuant to an Issuer Request, the Indenture Trustee shall so notify the Holders of the Securitization Bonds on the Issuer’s behalf) and the Indenture Trustee shall consent thereto only with the prior written consent of the Holders of a majority of the Outstanding Amount of Securitization Bonds of the Tranches affected thereby and only if the Rating Agency Condition has been satisfied with respect thereto.

 

(f)                                   Promptly following a default by the Seller under the Sale Agreement, by the Administrator under the Administration Agreement or by any party under the Intercreditor Agreement, or the occurrence of a Servicer Default under the Servicing Agreement, and at the Issuer’s expense, the Issuer agrees to take all such lawful actions as the Indenture Trustee may request to compel or secure the performance and observance by each of the Seller, the Administrator or the Servicer, and by such party to the Intercreditor Agreement, of their obligations under and in accordance with the Sale Agreement, the Servicing Agreement, the Administration Agreement and the Intercreditor Agreement, as the case may be, in accordance with the terms thereof, and to exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with such agreements to the extent and in the manner directed by the Indenture Trustee, including the transmission of notices of any default by the Seller, the Administrator or the Servicer, respectively, thereunder and the institution of legal or administrative actions or Proceedings to compel or secure performance of their obligations under the Sale Agreement, the Servicing Agreement, the Administration Agreement or the Intercreditor Agreement, as applicable.

 

SECTION 3.22.  Taxes. So long as any of the Securitization Bonds are Outstanding, the Issuer shall pay all taxes, assessments and governmental charges imposed upon it or any of its properties or assets or with respect to any of its franchises, business, income or property before any penalty accrues thereon if the failure to pay any such taxes, assessments and governmental charges would, after any applicable grace periods, notices or other similar requirements, result in a Lien on the Securitization Bond Collateral; provided, that no such tax need be paid if the Issuer is contesting the same in good faith by appropriate proceedings promptly instituted and diligently conducted and if the Issuer has established appropriate reserves as shall be required in conformity with generally accepted accounting principles.

 

SECTION 3.23.  Notices from Holders. The Issuer shall promptly transmit any notice received by it from the Holders to the Indenture Trustee.

 

ARTICLE IV

 

SATISFACTION AND DISCHARGE; DEFEASANCE

 

SECTION 4.01.  Satisfaction and Discharge of Indenture; Defeasance.

 

(a)                                 This Indenture shall cease to be of further effect with respect to the Securitization Bonds, and the Indenture Trustee, on reasonable written demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to the Securitization Bonds, when:

 

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(i)                                     Either:

 

(A)                               all Securitization Bonds theretofore authenticated and delivered (other than (1) Securitization Bonds that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.06 and (2) Securitization Bonds for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust, as provided in the last paragraph of Section 3.03) have been delivered to the Indenture Trustee for cancellation; or

 

(B)                               either (1) the Scheduled Final Payment Date has occurred with respect to all Securitization Bonds not theretofore delivered to the Indenture Trustee for cancellation or (2) the Securitization Bonds will be due and payable on their respective Scheduled Final Payment Dates within one year, and, in any such case, the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations that through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Securitization Bonds not theretofore delivered to the Indenture Trustee for cancellation, Ongoing Other Qualified Costs and all other sums payable hereunder by the Issuer with respect to the Securitization Bonds when scheduled to be paid and to discharge the entire indebtedness on the Securitization Bonds when due;

 

(ii)                                  the Issuer has paid or caused to be paid all other sums payable hereunder by the Issuer; and

 

(iii)                               the Issuer has delivered to the Indenture Trustee an Officer’s Certificate, an Opinion of Counsel of external counsel of the Issuer and (if required by the Trust Indenture Act or the Indenture Trustee) an Independent Certificate from a firm of registered public accountants, each meeting the applicable requirements of Section 10.01(a) and each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture with respect to the Securitization Bonds have been complied with.

 

(b)                                 Subject to Section 4.01(c) and Section 4.02, the Issuer at any time may terminate (i) all its obligations under this Indenture with respect to the Securitization Bonds (“Legal Defeasance Option”) or (ii) its obligations under Section 3.04, Section 3.05, Section 3.06, Section 3.07, Section 3.08, Section 3.09, Section 3.10, Section 3.12, Section 3.13, Section 3.14, Section 3.15, Section 3.16, Section 3.17, Section 3.18 and Section 3.19 and the operation of Section 5.01(c) with respect to the Securitization Bonds (“Covenant Defeasance Option”). The Issuer may exercise the Legal Defeasance Option with respect to the Securitization Bonds notwithstanding its prior exercise of the Covenant Defeasance Option.

 

If the Issuer exercises the Legal Defeasance Option, the maturity of the Securitization Bonds may not be accelerated because of an Event of Default. If the Issuer

 

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exercises the Covenant Defeasance Option, the maturity of the Securitization Bonds may not be accelerated because of an Event of Default specified in Section 5.01(c).

 

Upon satisfaction of the conditions set forth herein to the exercise of the Legal Defeasance Option or the Covenant Defeasance Option with respect to the Securitization Bonds, the Indenture Trustee, on reasonable written demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of the obligations that are terminated pursuant to such exercise.

 

(c)                                  Notwithstanding Section 4.01(a) and Section 4.01(b), (i) rights of registration of transfer and exchange, (ii) substitution of mutilated, destroyed, lost or stolen Securitization Bonds, (iii) rights of Holders to receive payments of principal, premium, if any, and interest, (iv) Section 4.03 and Section 4.04, (v) the rights, obligations and immunities of the Indenture Trustee hereunder (including the rights of the Indenture Trustee under Section 6.07 and the obligations of the Indenture Trustee under Section 4.03) and (vi) the rights of Holders as beneficiaries hereof with respect to the property deposited with the Indenture Trustee payable to all or any of them, each shall survive until this Indenture or certain obligations hereunder have been satisfied and discharged pursuant to Section 4.01(a) or Section 4.01(b). Thereafter the obligations in Section 6.07 and Section 4.04 shall survive.

 

SECTION 4.02.  Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to the Securitization Bonds only if:

 

(a)                                 the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations that through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Securitization Bonds not therefore delivered to the Indenture Trustee for cancellation and Ongoing Other Qualified Costs and all other sums payable hereunder by the Issuer with respect to the Securitization Bonds when scheduled to be paid and to discharge the entire indebtedness on the Securitization Bonds when due;

 

(b)                                 the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal of and interest on the deposited U.S. Government Obligations when due and without reinvestment plus any deposited cash will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Securitization Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) Ongoing Other Qualified Costs and all other sums payable hereunder by the Issuer with respect to the Securitization Bonds;

 

(c)                                  in the case of the Legal Defeasance Option, 95 days pass after the deposit is made and during the 95-day period no Default specified in Section 5.01(e) or Section 5.01(f) occurs that is continuing at the end of the period;

 

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(d)                                 no Default has occurred and is continuing on the day of such deposit and after giving effect thereto;

 

(e)                                  in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Securitization Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred;

 

(f)                                   in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Securitization Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred;

 

(g)                                  the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent to the Legal Defeasance Option or the Covenant Defeasance Option, as applicable, have been complied with as required by this Article IV;

 

(h)                                 the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that: (i) in a case under the Bankruptcy Code in which Consumers Energy (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of Consumers Energy (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event Consumers Energy (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of Consumers Energy (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of Consumers Energy or such other Affiliate; and

 

(i)                                     the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option.

 

Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Securitization Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

 

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SECTION 4.03.  Application of Trust Money. All moneys or U.S. Government Obligations deposited with the Indenture Trustee pursuant to Section 4.01 or Section 4.02 shall be held in trust and applied by it, in accordance with the provisions of the Securitization Bonds and this Indenture, to the payment, either directly or through any Paying Agent, as the Indenture Trustee may determine, to the Holders of the particular Securitization Bonds for the payment of which such moneys have been deposited with the Indenture Trustee, of all sums due and to become due thereon for principal, premium, if any, and interest; but such moneys need not be segregated from other funds except to the extent required herein or in the Servicing Agreement or required by law. Notwithstanding anything to the contrary in this Article IV, the Indenture Trustee shall deliver or pay to the Issuer from time to time upon Issuer Request any moneys or U.S. Government Obligations held by it pursuant to Section 4.02 that, in the opinion of a nationally recognized firm of Independent registered public accountants expressed in a written certification thereof delivered to the Indenture Trustee (and not at the cost or expense of the Indenture Trustee), are in excess of the amount thereof that would be required to be deposited for the purpose for which such moneys or U.S. Government Obligations were deposited; provided, that any such payment shall be subject to the satisfaction of the Rating Agency Condition.

 

SECTION 4.04.  Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture or the Covenant Defeasance Option or Legal Defeasance Option with respect to the Securitization Bonds, all moneys then held by any Paying Agent other than the Indenture Trustee under the provisions of this Indenture shall, upon demand of the Issuer, be paid to the Indenture Trustee to be held and applied according to Section 3.03 and thereupon such Paying Agent shall be released from all further liability with respect to such moneys.

 

ARTICLE V

 

REMEDIES

 

SECTION 5.01.  Events of Default. “Event of Default” means any one or more of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

 

(a)                                 default in the payment of any interest on any Securitization Bond when the same becomes due and payable (whether such failure to pay interest is caused by a shortfall in Securitization Charges received or otherwise), and such default shall continue for a period of five Business Days;

 

(b)                                 default in the payment of the then unpaid principal of any Securitization Bond of any Tranche on the Final Maturity Date for such Tranche;

 

(c)                                  default in the observance or performance of any covenant or agreement of the Issuer made in this Indenture (other than defaults specified in Section 5.01(a) or Section 5.01(b)), and such default shall continue or not be cured, for a period of 30 days after the earlier of (i) the date that there shall have been given, by registered or certified mail, to the Issuer by the

 

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Indenture Trustee or to the Issuer and the Indenture Trustee by the Holders of at least 25 percent of the Outstanding Amount of the Securitization Bonds, a written notice specifying such default and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder or (ii) the date that the Issuer has actual knowledge of the default;

 

(d)                                 any representation or warranty of the Issuer made in this Indenture or in any certificate or other writing delivered pursuant hereto or in connection herewith proving to have been incorrect in any material respect as of the time when the same shall have been made, and the circumstance or condition in respect of which such representation or warranty was incorrect shall not have been eliminated or otherwise cured, within 30 days after the earlier of (i) the date that there shall have been given, by registered or certified mail, to the Issuer by the Indenture Trustee or to the Issuer and the Indenture Trustee by the Holders of at least twenty-five (25) percent of the Outstanding Amount of the Securitization Bonds, a written notice specifying such incorrect representation or warranty and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder or (ii) the date the Issuer has actual knowledge of the default;

 

(e)                                  the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of the Issuer or any substantial part of the Securitization Bond Collateral in an involuntary case or proceeding under any applicable U.S. federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the Securitization Bond Collateral, or ordering the winding-up or liquidation of the Issuer’s affairs, and such decree or order shall remain unstayed and in effect for a period of 90 consecutive days;

 

(f)                                   the commencement by the Issuer of a voluntary case under any applicable U.S. federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by the Issuer to the entry of an order for relief in an involuntary case or proceeding under any such law, or the consent by the Issuer to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the Securitization Bond Collateral, or the making by the Issuer of any general assignment for the benefit of creditors, or the failure by the Issuer generally to pay its debts as such debts become due, or the taking of action by the Issuer in furtherance of any of the foregoing;

 

(g)                                  any act or failure to act by the State of Michigan or any of its agencies (including the Commission), officers or employees that violates the State Pledge or is not in accordance with the State Pledge; or

 

(h)                                 any other event designated as such in the Series Supplement.

 

The Issuer shall deliver to a Responsible Officer of the Indenture Trustee and to the Rating Agencies, within five days after a Responsible Officer of the Issuer has knowledge of the occurrence thereof, written notice in the form of an Officer’s Certificate of any event (i) that is an Event of Default under Section 5.01(a), Section 5.01(b), Section 5.01(f), Section 5.01(g) or Section 5.01(h) or (ii) that with the giving of notice, the lapse of time, or both, would become an

 

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Event of Default under Section 5.01(c), Section 5.01(d) or Section 5.01(e), including, in each case, the status of such Default or Event of Default and what action the Issuer is taking or proposes to take with respect thereto.

 

SECTION 5.02.  Acceleration of Maturity; Rescission and Annulment. If an Event of Default (other than an Event of Default under Section 5.01(g)) should occur and be continuing, then and in every such case the Indenture Trustee or the Holders representing a majority of the Outstanding Amount of the Securitization Bonds may declare the Securitization Bonds to be immediately due and payable, by a notice in writing to the Issuer (and to the Indenture Trustee if given by Holders), and upon any such declaration the unpaid principal amount of the Securitization Bonds, together with accrued and unpaid interest thereon through the date of acceleration, shall become immediately due and payable.

 

At any time after such declaration of acceleration of maturity has been made and before a judgment or decree for payment of the money due has been obtained by the Indenture Trustee as hereinafter in this Article V provided, the Holders representing a majority of the Outstanding Amount of the Securitization Bonds, by written notice to the Issuer and the Indenture Trustee, may rescind and annul such declaration and its consequences if:

 

(a)                                 the Issuer has paid or deposited with the Indenture Trustee a sum sufficient to pay:

 

(i)                                     all payments of principal of and premium, if any, and interest on all Securitization Bonds due and owing at such time as if such Event of Default had not occurred and was not continuing and all other amounts that would then be due hereunder or upon the Securitization Bonds if the Event of Default giving rise to such acceleration had not occurred; and

 

(ii)  all sums paid or advanced by the Indenture Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel; and

 

(b)                                 all Events of Default, other than the nonpayment of the principal of the Securitization Bonds that has become due solely by such acceleration, have been cured or waived as provided in Section 5.12.

 

No such rescission shall affect any subsequent default or impair any right consequent thereto.

 

SECTION 5.03.  Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.

 

(a)                                 If an Event of Default under Section 5.01(a) or Section 5.01(b) has occurred and is continuing, subject to Section 10.16, the Indenture Trustee, in its own name and as trustee of an express trust, may institute a Proceeding for the collection of the sums so due and unpaid, and may prosecute such Proceeding to judgment or final decree, and, subject to the limitations on recourse set forth herein, may enforce the same against the Issuer or other obligor upon the Securitization Bonds and collect in the manner provided by law out of the property of

 

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the Issuer or other obligor upon the Securitization Bonds wherever situated the moneys payable, or the Securitization Bond Collateral and the proceeds thereof, the whole amount then due and payable on the Securitization Bonds for principal, premium, if any, and interest, with interest upon the overdue principal and premium, if any, and, to the extent payment at such rate of interest shall be legally enforceable, upon overdue installments of interest, at the respective rate borne by the Securitization Bonds or the applicable Tranche and in addition thereto such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel.

 

(b)                                 If an Event of Default (other than Event of Default under Section 5.01(g)) occurs and is continuing, the Indenture Trustee shall, as more particularly provided in Section 5.04, proceed to protect and enforce its rights and the rights of the Holders, by such appropriate Proceedings as the Indenture Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy or legal or equitable right vested in the Indenture Trustee by this Indenture and the Series Supplement or by law, including foreclosing or otherwise enforcing the Lien of the Securitization Bond Collateral securing the Securitization Bonds or applying to a court of competent jurisdiction for sequestration of revenues arising with respect to the Securitization Property.

 

(c)                                  If an Event of Default under Section 5.01(e) or Section 5.01(f) has occurred and is continuing, the Indenture Trustee, irrespective of whether the principal of any Securitization Bonds shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand pursuant to the provisions of this Section 5.03, shall be entitled and empowered, by intervention in any Proceedings related to such Event of Default or otherwise:

 

(i)                                     to file and prove a claim or claims for the whole amount of principal, premium, if any, and interest owing and unpaid in respect of the Securitization Bonds and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for reasonable compensation to the Indenture Trustee and each predecessor Indenture Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee, except as a result of negligence or bad faith) and of the Holders allowed in such Proceedings;

 

(ii)                                  unless prohibited by applicable law and regulations, to vote on behalf of the Holders in any election of a trustee in bankruptcy, a standby trustee or Person performing similar functions in any such Proceedings;

 

(iii)                               to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute all amounts received with respect to the claims of the Holders and of the Indenture Trustee on their behalf; and

 

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(iv)                              to file such proofs of claim and other papers and documents as may be necessary or advisable in order to have the claims of the Indenture Trustee or the Holders allowed in any judicial proceeding relative to the Issuer, its creditors and its property;

 

and any trustee, receiver, liquidator, custodian or other similar official in any such Proceeding is hereby authorized by each of such Holders to make payments to the Indenture Trustee, and, in the event that the Indenture Trustee shall consent to the making of payments directly to such Holders, to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture Trustee, each predecessor Indenture Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence or bad faith.

 

(d)                                 Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securitization Bonds or the rights of any Holder thereof or to authorize the Indenture Trustee to vote in respect of the claim of any Holder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person.

 

(e)                                  All rights of action and of asserting claims under this Indenture, or under any of the Securitization Bonds, may be enforced by the Indenture Trustee without the possession of any of the Securitization Bonds or the production thereof in any trial or other Proceedings relative thereto, and any such action or proceedings instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each predecessor Indenture Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Securitization Bonds.

 

(f)                                   In any Proceedings brought by the Indenture Trustee (and also any Proceedings involving the interpretation of any provision of this Indenture to which the Indenture Trustee shall be a party), the Indenture Trustee shall be held to represent all the Holders of the Securitization Bonds, and it shall not be necessary to make any Holder a party to any such Proceedings.

 

SECTION 5.04.  Remedies; Priorities.

 

(a)                                 If an Event of Default (other than an Event of Default under Section 5.01(g)) shall have occurred and be continuing, the Indenture Trustee may do one or more of the following (subject to Section 5.05):

 

(i)                                     institute Proceedings in its own name and as trustee of an express trust for the collection of all amounts then payable on the Securitization Bonds or under this Indenture with respect thereto, whether by declaration of acceleration or otherwise, and, subject to the limitations on recovery set forth herein, enforce any judgment obtained, and collect from the Issuer or any other obligor moneys adjudged due, upon the Securitization Bonds;

 

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(ii)                                  institute Proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to the Securitization Bond Collateral;

 

(iii)                               exercise any remedies of a secured party under the UCC, the Securitization Law or any other applicable law and take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee and the Holders of the Securitization Bonds;

 

(iv)                              at the written direction of the Holders of a majority of the Outstanding Amount of the Securitization Bonds, either sell the Securitization Bond Collateral or any portion thereof or rights or interest therein, at one or more public or private sales called and conducted in any manner permitted by law, or elect that the Issuer maintain possession of all or a portion of the Securitization Bond Collateral pursuant to Section 5.05 and continue to apply the Securitization Charge Collection as if there had been no declaration of acceleration; and

 

(v)                                 exercise all rights, remedies, powers, privileges and claims of the Issuer against the Seller, the Administrator or the Servicer under or in connection with, and pursuant to the terms of, the Sale Agreement, the Administration Agreement or the Servicing Agreement;

 

provided, however, that the Indenture Trustee may not sell or otherwise liquidate any portion of the Securitization Bond Collateral following such an Event of Default, other than an Event of Default described in Section 5.01(a) or Section 5.01(b), unless (A) the Holders of 100 percent of the Outstanding Amount of the Securitization Bonds consent thereto, (B) the proceeds of such sale or liquidation distributable to the Holders are sufficient to discharge in full all amounts then due and unpaid upon the Securitization Bonds for principal, premium, if any, and interest after taking into account payment of all amounts due prior thereto pursuant to the priorities set forth in Section 8.02(e) or (C) the Indenture Trustee determines that the Securitization Bond Collateral will not continue to provide sufficient funds for all payments on the Securitization Bonds as they would have become due if the Securitization Bonds had not been declared due and payable, and the Indenture Trustee obtains the written consent of Holders of at least two-thirds of the Outstanding Amount of the Securitization Bonds. In determining such sufficiency or insufficiency with respect to clause (B) above and clause (C) above, the Indenture Trustee may, but need not, obtain and conclusively rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Securitization Bond Collateral for such purpose.

 

(b)                                 If an Event of Default under Section 5.01(g) shall have occurred and be continuing, the Indenture Trustee, for the benefit of the Secured Parties, shall be entitled and empowered, to the extent permitted by applicable law, to institute or participate in Proceedings necessary to compel performance of or to enforce the State Pledge and to collect any monetary damages incurred by the Holders or the Indenture Trustee as a result of any such Event of Default, and may prosecute any such Proceeding to final judgment or decree. Such remedy shall be the only remedy that the Indenture Trustee may exercise if the only Event of Default that has occurred and is continuing is an Event of Default under Section 5.01(g).

 

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(c)                                  If the Indenture Trustee collects any money pursuant to this Article V, it shall pay out such money in accordance with the priorities set forth in Section 8.02(e).

 

SECTION 5.05.  Optional Preservation of the Securitization Bond Collateral. If the Securitization Bonds have been declared to be due and payable under Section 5.02 following an Event of Default and such declaration and its consequences have not been rescinded and annulled, the Indenture Trustee may, but need not, elect to maintain possession of all or a portion of the Securitization Bond Collateral. It is the desire of the parties hereto and the Holders that there be at all times sufficient funds for the payment of principal of and premium, if any, and interest on the Securitization Bonds, and the Indenture Trustee shall take such desire into account when determining whether or not to maintain possession of the Securitization Bond Collateral. In determining whether to maintain possession of the Securitization Bond Collateral or sell or liquidate the same, the Indenture Trustee may, but need not, obtain and conclusively rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Securitization Bond Collateral for such purpose.

 

SECTION 5.06.  Limitation of Suits. No Holder of any Securitization Bond shall have any right to institute any Proceeding, judicial or otherwise, to avail itself of any remedies provided in the Securitization Law or to avail itself of the right to foreclose on the Securitization Bond Collateral or otherwise enforce the Lien and the security interest on the Securitization Bond Collateral with respect to this Indenture and the Series Supplement, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:

 

(a)                                 such Holder previously has given written notice to the Indenture Trustee of a continuing Event of Default;

 

(b)                                 the Holders of a majority of the Outstanding Amount of the Securitization Bonds have made written request to the Indenture Trustee to institute such Proceeding in respect of such Event of Default in its own name as Indenture Trustee hereunder;

 

(c)                                  such Holder or Holders have offered to the Indenture Trustee indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in complying with such request;

 

(d)                                 the Indenture Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute such Proceedings; and

 

(e)                                  no direction inconsistent with such written request has been given to the Indenture Trustee during such 60-day period by the Holders of a majority of the Outstanding Amount of the Securitization Bonds;

 

it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided.

 

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In the event the Indenture Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of Holders, each representing less than a majority of the Outstanding Amount of the Securitization Bonds, the Indenture Trustee in its sole discretion may determine what action, if any, shall be taken, notwithstanding any other provisions of this Indenture.

 

SECTION 5.07.  Unconditional Rights of Holders To Receive Principal, Premium, if any, and Interest. Notwithstanding any other provisions in this Indenture, the Holder of any Securitization Bond shall have the right, which is absolute and unconditional, (a) to receive payment of (i) the interest, if any, on such Securitization Bond on the due dates thereof expressed in such Securitization Bond or in this Indenture or (ii) the unpaid principal, if any, of the Securitization Bonds on the Final Maturity Date therefor and (b) to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder.

 

SECTION 5.08.  Restoration of Rights and Remedies. If the Indenture Trustee or any Holder has instituted any Proceeding to enforce any right or remedy under this Indenture and such Proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Indenture Trustee or to such Holder, then and in every such case the Issuer, the Indenture Trustee and the Holders shall, subject to any determination in such Proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Indenture Trustee and the Holders shall continue as though no such Proceeding had been instituted.

 

SECTION 5.09.  Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Indenture Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

 

SECTION 5.10.  Delay or Omission Not a Waiver. No delay or omission of the Indenture Trustee or any Holder to exercise any right or remedy accruing upon any Default or Event of Default shall impair any such right or remedy or constitute a waiver of any such Default or Event of Default or an acquiescence therein. Every right and remedy given by this Article V or by law to the Indenture Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee or by the Holders, as the case may be.

 

SECTION 5.11.  Control by Holders. The Holders of a majority of the Outstanding Amount of the Securitization Bonds of an affected Tranche or Tranches shall have the right to direct the time, method and place of conducting any Proceeding for any remedy available to the Indenture Trustee with respect to the Securitization Bonds of such Tranche or Tranches or exercising any trust or power conferred on the Indenture Trustee with respect to such Tranche or Tranches; provided, that:

 

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(a)                                 such direction shall not be in conflict with any rule of law or with this Indenture and shall not involve the Indenture Trustee in any personal liability or expense;

 

(b)                                 subject to other conditions specified in Section 5.04, any direction to the Indenture Trustee to sell or liquidate any Securitization Bond Collateral shall be by the Holders representing 100 percent of the Outstanding Amount of the Securitization Bonds;

 

(c)                                  if the conditions set forth in Section 5.05 have been satisfied and the Indenture Trustee elects to retain the Securitization Bond Collateral pursuant to Section 5.05, then any direction to the Indenture Trustee by Holders representing less than 100 percent of the Outstanding Amount of the Securitization Bonds to sell or liquidate the Securitization Bond Collateral shall be of no force and effect; and

 

(d)                                 the Indenture Trustee may take any other action deemed proper by the Indenture Trustee that is not inconsistent with such direction;

 

provided, however, that the Indenture Trustee’s duties shall be subject to Section 6.01, and the Indenture Trustee need not take any action that it determines might involve it in liability or might materially adversely affect the rights of any Holders not consenting to such action. Furthermore and without limiting the foregoing, the Indenture Trustee shall not be required to take any action for which it reasonably believes that it will not be indemnified to its satisfaction against any cost, expense or liabilities.

 

SECTION 5.12.  Waiver of Past Defaults. Prior to the declaration of the acceleration of the maturity of the Securitization Bonds as provided in Section 5.02, the Holders representing a majority of the Outstanding Amount of the Securitization Bonds of an affected Tranche may waive any past Default or Event of Default and its consequences except a Default (a) in payment of principal of or premium, if any, or interest on any of the Securitization Bonds or (b) in respect of a covenant or provision hereof that cannot be modified or amended without the consent of the Holder of each Securitization Bond of all Tranches affected. In the case of any such waiver, the Issuer, the Indenture Trustee and the Holders shall be restored to their former positions and rights hereunder, respectively, but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereto.

 

Upon any such waiver, such Default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured and not to have occurred, for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto.

 

SECTION 5.13.  Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Securitization Bond by such Holder’s acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Indenture Trustee for any action taken, suffered or omitted by it as Indenture 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,

 

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having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.13 shall not apply to (a) any suit instituted by the Indenture Trustee, (b) any suit instituted by any Holder, or group of Holders, in each case holding in the aggregate more than ten percent of the Outstanding Amount of the Securitization Bonds or (c) any suit instituted by any Holder for the enforcement of the payment of (i) interest on any Securitization Bond on or after the due dates expressed in such Securitization Bond and in this Indenture or (ii) the unpaid principal, if any, of any Securitization Bond on or after the Final Maturity Date therefor.

 

SECTION 5.14.  Waiver of Stay or Extension Laws. The Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon or plead or, in any manner whatsoever, claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Indenture Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

 

SECTION 5.15.  Action on Securitization Bonds. The Indenture Trustee’s right to seek and recover judgment on the Securitization Bonds or under this Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture. Neither the Lien of this Indenture nor any rights or remedies of the Indenture Trustee or the Holders shall be impaired by the recovery of any judgment by the Indenture Trustee against the Issuer or by the levy of any execution under such judgment upon any portion of the Securitization Bond Collateral or any other assets of the Issuer.

 

ARTICLE VI

 

THE INDENTURE TRUSTEE

 

SECTION 6.01.  Duties of Indenture Trustee.

 

(a)                                 If an Event of Default has occurred and is continuing, the Indenture Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

 

(b)                                 Except during the continuance of an Event of Default:

 

(i)                                     the Indenture Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Indenture Trustee; and

 

(ii)                                  in the absence of bad faith on its part, the Indenture Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Indenture Trustee and conforming to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

 

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(c)                                  The Indenture Trustee may not be relieved from liability for its own negligent action, its own bad faith, its own negligent failure to act or its own willful misconduct, except that:

 

(i)                                     this Section 6.01(c) does not limit the effect of Section 6.01(b);

 

(ii)                                  the Indenture Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is proved that the Indenture Trustee was negligent in ascertaining the pertinent facts; and

 

(iii)                               the Indenture Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it hereunder.

 

(d)                                 Every provision of this Indenture that in any way relates to the Indenture Trustee is subject to Section 6.01(a), Section 6.01(b) and Section 6.01(c).

 

(e)                                  The Indenture Trustee shall not be liable for interest on any money received by it except as the Indenture Trustee may agree in writing with the Issuer.

 

(f)                                   Money held in trust by the Indenture Trustee need not be segregated from other funds held by the Indenture Trustee except to the extent required by law or the terms of this Indenture, the Sale Agreement, the Servicing Agreement or the Administration Agreement.

 

(g)                                  No provision of this Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayments of such funds or indemnity satisfactory to it against such risk or liability is not reasonably assured to it.

 

(h)                                 Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Indenture Trustee shall be subject to the provisions of this Section 6.01 and to the provisions of the Trust Indenture Act.

 

(i)                                     In the event that the Indenture Trustee is also acting as Paying Agent or Securitization Bond Registrar hereunder, the protections of this Article VI shall also be afforded to the Indenture Trustee in its capacity as Paying Agent or Securitization Bond Registrar.

 

(j)                                    Except for the express duties of the Indenture Trustee with respect to the administrative functions set forth in the Basic Documents, the Indenture Trustee shall have no obligation to administer, service or collect Securitization Property or to maintain, monitor or otherwise supervise the administration, servicing or collection of the Securitization Property.

 

(k)                                 Under no circumstance shall the Indenture Trustee be liable for any indebtedness of the Issuer, the Servicer or the Seller evidenced by or arising under the Securitization Bonds or the Basic Documents.

 

(l)                                     Commencing with March 15, 2015, on or before March 15th of each fiscal year ending December 31, so long as the Issuer is required to file Exchange Act reports, the

 

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Indenture Trustee shall (i) deliver to the Issuer a report (in form and substance reasonably satisfactory to the Issuer and addressed to the Issuer and signed by an authorized officer of the Indenture Trustee) regarding the Indenture Trustee’s assessment of compliance, during the preceding fiscal year ended December 31, with each of the applicable servicing criteria specified on Exhibit C as required under Rule 13a-18 and Rule 15d-18 under the Exchange Act and Item 1122 of Regulation AB and (ii) deliver to the Issuer a report of an Independent registered public accounting firm reasonably acceptable to the Issuer that attests to and reports on, in accordance with Rule 1-02(a)(3) and Rule 2-02(g) of Regulation S-X under the Securities Act and the Exchange Act, the assessment of compliance made by the Indenture Trustee and delivered pursuant to Section 6.01(l)(i).

 

SECTION 6.02.  Rights of Indenture Trustee.

 

(a)                                 The Indenture Trustee may conclusively rely and shall be fully protected in relying on any document believed by it to be genuine and to have been signed or presented by the proper person. The Indenture Trustee need not investigate any fact or matter stated in such document.

 

(b)                                 Before the Indenture Trustee acts or refrains from acting, it may require and shall be entitled to receive an Officer’s Certificate or an Opinion of Counsel, which counsel may be an employee of or counsel to the Issuer or the Seller and which shall be reasonably satisfactory to the Indenture Trustee, or, in the Indenture Trustee’s sole judgment, external counsel of the Issuer (at no cost or expense to the Indenture Trustee) that such action is required or permitted hereunder. The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel.

 

(c)                                  The Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys or a custodian or nominee, and the Indenture Trustee shall not be responsible for any misconduct or negligence on the part of, or for the supervision of, any such agent, attorney, custodian or nominee appointed with due care by it hereunder. The Indenture Trustee shall give prompt written notice to the Issuer, in which case the Issuer shall then give prompt written notice to the Rating Agencies, of the appointment of any such agent, custodian or nominee to whom it delegates any of its express duties under this Indenture; provided, that the Indenture Trustee shall not be obligated to give such notice (i) if the Issuer or the Holders have directed the Indenture Trustee to appoint such agent, custodian or nominee (in which event the Issuer shall give prompt notice to the Rating Agencies of any such direction) or (ii) of the appointment of any agents, custodians or nominees made at any time that an Event of Default on account of non-payment of principal or interest on the Securitization Bonds or bankruptcy or insolvency of the Issuer has occurred and is continuing.

 

(d)                                 The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within its rights or powers; provided, however, that the Indenture Trustee’s conduct does not constitute willful misconduct, negligence or bad faith.

 

(e)                                  The Indenture Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Securitization Bonds

 

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shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

 

(f)                                   The Indenture Trustee shall be under no obligation to take any action or exercise any of the rights or powers vested in it by this Indenture or any other Basic Document, or to institute, conduct or defend any litigation hereunder or thereunder or in relation hereto or thereto, at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture and the Series Supplement or otherwise, unless it shall have received security or indemnity satisfactory to it against the costs, expenses and liabilities that may be incurred.

 

(g)                                  The Indenture Trustee may conclusively rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties.

 

(h)                                 Any request or direction of the Issuer mentioned herein shall be sufficiently evidenced by an Issuer Request or an Issuer Order.

 

(i)                                     Whenever in the administration of this Indenture the Indenture Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Indenture Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, conclusively rely upon an Officer’s Certificate.

 

(j)                                    The Indenture Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Indenture Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Indenture Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer, personally or by agent or attorney at the sole cost of the Issuer, and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

 

(k)                                 In no event shall the Indenture Trustee be responsible or liable for special, indirect or consequential loss or damage of any kind whatsoever (including loss of profit) irrespective of whether the Indenture Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

 

(l)                                     In no event shall the Indenture Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services, it being understood that the Indenture Trustee shall use reasonable efforts

 

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that are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

 

SECTION 6.03.  Individual Rights of Indenture Trustee. The Indenture Trustee in its individual or any other capacity may become the owner or pledgee of Securitization Bonds and may otherwise deal with the Issuer or its Affiliates with the same rights it would have if it were not Indenture Trustee. Any Paying Agent, Securitization Bond Registrar, co-registrar or co-paying agent or agent appointed under Section 3.02 may do the same with like rights. However, the Indenture Trustee must comply with Section 6.11 and Section 6.12.

 

SECTION 6.04.  Indenture Trustee’s Disclaimer.

 

(a)                                 The Indenture Trustee shall not be responsible for and makes no representation (other than as set forth in Section 6.13) as to the validity or adequacy of this Indenture or the Securitization Bonds, it shall not be accountable for the Issuer’s use of the proceeds from the Securitization Bonds, and it shall not be responsible for any statement of the Issuer in this Indenture or in any document issued in connection with the sale of the Securitization Bonds or in the Securitization Bonds other than the Indenture Trustee’s certificate of authentication. The Indenture Trustee shall not be responsible for the form, character, genuineness, sufficiency, value or validity of any of the Securitization Bond Collateral (or for the perfection or priority of the Liens thereon), or for or in respect of the Securitization Bonds (other than the certificate of authentication for the Securitization Bonds) or the Basic Documents, and the Indenture Trustee shall in no event assume or incur any liability, duty or obligation to any Holder, other than as expressly provided in this Indenture. The Indenture Trustee shall not be liable for the default or misconduct of the Issuer, the Seller or the Servicer under the Basic Documents or otherwise, and the Indenture Trustee shall have no obligation or liability to perform the obligations of such Persons.

 

(b)                                 The Indenture Trustee shall not be responsible for (i) the validity of the title of the Issuer to the Securitization Bond Collateral, (ii) insuring the Securitization Bond Collateral or (iii) the payment of taxes, charges, assessments or Liens upon the Securitization Bond Collateral or otherwise as to the maintenance of the Securitization Bond Collateral. The Indenture Trustee shall have no duty to ascertain or inquire as to the performance or observance of any of the terms of this Indenture or any of the other Basic Documents. The Indenture Trustee shall not be responsible for filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any security interest in the Securitization Bond Collateral.

 

SECTION 6.05.  Notice of Defaults. If a Default occurs and is continuing, the Indenture Trustee shall mail to each Rating Agency and each Holder notice of the Default within ten Business Days after actual notice of such Default was received by a Responsible Officer of the Indenture Trustee (provided that the Indenture Trustee shall give the Rating Agencies prompt notice of any payment default in respect of the Securitization Bonds). Except in the case of a Default in payment of principal of and premium, if any, or interest on any Securitization Bond, the Indenture Trustee may withhold the notice of the Default if and so long as a committee of its Responsible Officers in good faith determines that withholding such notice is in the interests of Holders. In no event shall the Indenture Trustee be deemed to have knowledge of a Default

 

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unless a Responsible Officer of the Indenture Trustee shall have actual knowledge of a Default or shall have received written notice thereof .

 

SECTION 6.06.  Reports by Indenture Trustee to Holders.

 

(a)                                 So long as Securitization Bonds are Outstanding and the Indenture Trustee is the Securitization Bond Registrar and Paying Agent, upon the written request of any Holder or the Issuer, within the prescribed period of time for tax reporting purposes after the end of each calendar year, the Indenture Trustee shall deliver to each relevant current or former Holder such information in its possession as may be required to enable such Holder to prepare its U.S. federal income and any applicable local or state tax returns. If the Securitization Bond Registrar and Paying Agent is other than the Indenture Trustee, such Securitization Bond Registrar and Paying Agent, within the prescribed period of time for tax reporting purposes after the end of each calendar year, shall deliver to each relevant current or former Holder such information in its possession as may be required to enable such Holder to prepare its U.S. federal income and any applicable local or state tax returns.

 

(b)                                 On or prior to each Payment Date or Special Payment Date therefor, the Indenture Trustee will deliver to each Holder of the Securitization Bonds on such Payment Date or Special Payment Date a statement as provided and prepared by the Servicer, which will include (to the extent applicable) the following information (and any other information so specified in the Series Supplement) as to the Securitization Bonds with respect to such Payment Date or Special Payment Date or the period since the previous Payment Date, as applicable:

 

(i)            the amount of the payment to Holders allocable to principal, if any;

 

(ii)           the amount of the payment to Holders allocable to interest;

 

(iii)          the aggregate Outstanding Amount of the Securitization Bonds, before and after giving effect to any payments allocated to principal reported under Section 6.06(b)(i);

 

(iv)                              the difference, if any, between the amount specified in Section 6.06(b)(iii) and the Outstanding Amount specified in the related Expected Amortization Schedule;

 

(v)                                 any other transfers and payments to be made on such Payment Date or Special Payment Date, including amounts paid to the Indenture Trustee and to the Servicer; and

 

(vi)                              the amounts on deposit in the Capital Subaccount and the Excess Funds Subaccount, after giving effect to the foregoing payments.

 

(c)                                  The Issuer shall send a copy of each of the Certificate of Compliance delivered to it pursuant to Section 3.03 of the Servicing Agreement and the Annual Accountant’s Report delivered to it pursuant to Section 3.04 of the Servicing Agreement to the Rating Agencies and to the Servicer for posting on the 17g-5 Website in accordance with Rule 17g-5 under the Exchange Act. A copy of such certificate and report may be obtained by any Holder by a request in writing to the Indenture Trustee.

 

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(d)                                 The Indenture Trustee may consult with counsel, and the advice or opinion of such counsel with respect to legal matters relating to this Indenture and the Securitization Bonds shall be full and complete authorization and protection from liability with respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

 

SECTION 6.07.  Compensation and Indemnity. The Issuer shall pay to the Indenture Trustee from time to time reasonable compensation for its services. The Indenture Trustee’s compensation shall not, to the extent permitted by law, be limited by any law on compensation of a trustee of an express trust. The Issuer shall reimburse the Indenture Trustee for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Indenture Trustee’s agents, counsel, accountants and experts. The Issuer shall indemnify and hold harmless the Indenture Trustee and its officers, directors, employees and agents against any and all cost, damage, loss, liability, tax or expense (including reasonable attorneys’ fees and expenses) incurred by it in connection with the administration and the enforcement of this Indenture, the Series Supplement and the other Basic Documents and the Indenture Trustee’s rights, powers and obligations under this Indenture, the Series Supplement and the other Basic Documents and the performance of its duties hereunder and thereunder and obligations under or pursuant to this Indenture, the Series Supplement and the other Basic Documents other than any such tax on the compensation of the Indenture Trustee for its services as Indenture Trustee. The Indenture Trustee shall notify the Issuer as soon as is reasonably practicable of any claim for which it may seek indemnity. Failure by the Indenture Trustee to so notify the Issuer shall not relieve the Issuer of its obligations hereunder. The Issuer shall defend the claim, the Indenture Trustee may have separate counsel, and the Issuer shall pay the reasonable fees and expenses of such counsel. The Issuer need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Indenture Trustee through the Indenture Trustee’s own willful misconduct, negligence or bad faith.

 

The payment obligations to the Indenture Trustee pursuant to this Section 6.07 shall survive the discharge of this Indenture and the Series Supplement or the earlier resignation or removal of the Indenture Trustee. When the Indenture Trustee incurs expenses after the occurrence of a Default specified in Section 5.01(e) or Section 5.01(f) with respect to the Issuer, the expenses are intended to constitute expenses of administration under the Bankruptcy Code or any other applicable U.S. federal or state bankruptcy, insolvency or similar law.

 

SECTION 6.08.  Replacement of Indenture Trustee and Securities Intermediary.

 

(a)                                 The Indenture Trustee may resign at any time upon 30 days’ prior written notice to the Issuer subject to Section 6.08(c). The Holders of a majority of the Outstanding Amount of the Securitization Bonds may remove the Indenture Trustee by so notifying the Indenture Trustee and may appoint a successor Indenture Trustee. The Issuer shall remove the Indenture Trustee if:

 

(i)                                     the Indenture Trustee fails to comply with Section 6.11;

 

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(ii)           the Indenture Trustee is adjudged a bankrupt or insolvent;

 

(iii)          a receiver or other public officer takes charge of the Indenture Trustee or its property;

 

(iv)          the Indenture Trustee otherwise becomes incapable of acting; or

 

(v)           the Indenture Trustee fails to provide to the Issuer any information reasonably requested by the Issuer pertaining to the Indenture Trustee and necessary for the Issuer or the Sponsor to comply with its respective reporting obligations under the Exchange Act and Regulation AB and such failure is not resolved to the Issuer’s and the Indenture Trustee’s mutual satisfaction within a reasonable period of time.

 

Any removal or resignation of the Indenture Trustee shall also constitute a removal or resignation of the Securities Intermediary.

 

(b)                                 If the Indenture Trustee gives notice of resignation or is removed or if a vacancy exists in the office of Indenture Trustee for any reason (the Indenture Trustee in such event being referred to herein as the retiring Indenture Trustee), the Issuer shall promptly appoint a successor Indenture Trustee and Securities Intermediary.

 

(c)                                  A successor Indenture Trustee shall deliver a written acceptance of its appointment as the Indenture Trustee and as the Securities Intermediary to the retiring Indenture Trustee and to the Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee shall become effective, and the successor Indenture Trustee shall have all the rights, powers and duties of the Indenture Trustee and Securities Intermediary, as applicable, under this Indenture and the other Basic Documents. No resignation or removal of the Indenture Trustee pursuant to this Section 6.08 shall become effective until acceptance of the appointment by a successor Indenture Trustee having the qualifications set forth in Section 6.11. Notice of any such appointment shall be promptly given to each Rating Agency by the successor Indenture Trustee. The successor Indenture Trustee shall mail a notice of its succession to Holders. The retiring Indenture Trustee shall promptly transfer all property held by it as Indenture Trustee to the successor Indenture Trustee.

 

(d)                                 If a successor Indenture Trustee does not take office within 60 days after the retiring Indenture Trustee resigns or is removed, the retiring Indenture Trustee, the Issuer or the Holders of a majority in Outstanding Amount of the Securitization Bonds may petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee.

 

(e)                                  If the Indenture Trustee fails to comply with Section 6.11, any Holder may petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor Indenture Trustee.

 

(f)                                   Notwithstanding the replacement of the Indenture Trustee pursuant to this Section 6.08, the Issuer’s obligations under Section 6.07 shall continue for the benefit of the retiring Indenture Trustee.

 

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SECTION 6.09.  Successor Indenture Trustee by Merger. If the Indenture Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation or banking association without any further act shall be the successor Indenture Trustee; provided, however, that, if such successor Indenture Trustee is not eligible under Section 6.11, then the successor Indenture Trustee shall be replaced in accordance with Section 6.08. Notice of any such event shall be promptly given to each Rating Agency by the successor Indenture Trustee.

 

In case at the time such successor or successors by merger, conversion, consolidation or transfer shall succeed to the trusts created by this Indenture any of the Securitization Bonds shall have been authenticated but not delivered, any such successor to the Indenture Trustee may adopt the certificate of authentication of any predecessor trustee and deliver the Securitization Bonds so authenticated; and, in case at that time any of the Securitization Bonds shall not have been authenticated, any successor to the Indenture Trustee may authenticate the Securitization Bonds either in the name of any predecessor hereunder or in the name of the successor to the Indenture Trustee; and in all such cases such certificates shall have the full force that it is anywhere in the Securitization Bonds or in this Indenture provided that the certificate of the Indenture Trustee shall have.

 

SECTION 6.10.  Appointment of Co-Trustee or Separate Trustee.

 

(a)                                 Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting any legal requirement of any jurisdiction in which any part of the trust created by this Indenture or the Securitization Bond Collateral may at the time be located, the Indenture Trustee shall have the power and may execute and deliver all instruments to appoint one or more Persons to act as a co-trustee or co-trustees, or separate trustee or separate trustees, of all or any part of the trust created by this Indenture or the Securitization Bond Collateral, and to vest in such Person or Persons, in such capacity and for the benefit of the Secured Parties, such title to the Securitization Bond Collateral, or any part hereof, and, subject to the other provisions of this Section 6.10, such powers, duties, obligations, rights and trusts as the Indenture Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 6.11 and no notice to Holders of the appointment of any co-trustee or separate trustee shall be required under Section 6.08. Notice of any such appointment shall be promptly given to each Rating Agency by the Indenture Trustee.

 

(b)                                 Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions:

 

(i)                                     all rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed upon and exercised or performed by the Indenture Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Indenture Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such 

 

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rights, powers, duties and obligations (including the holding of title to the Securitization Bond Collateral or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Indenture Trustee;

 

(ii)                                  no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and

 

(iii)                               the Indenture Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee.

 

(c)                                  Any notice, request or other writing given to the Indenture Trustee shall be deemed to have been given to each of the then-separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Indenture and the conditions of this Article VI. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Indenture Trustee or separately, as may be provided therein, subject to all the provisions of this Indenture, specifically including every provision of this Indenture relating to the conduct of, affecting the liability of, or affording protection to, the Indenture Trustee. Every such instrument shall be filed with the Indenture Trustee.

 

(d)                                 Any separate trustee or co-trustee may at any time constitute the Indenture Trustee, its agent or its attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Indenture on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Indenture Trustee, to the extent permitted by law, without the appointment of a new or successor trustee.

 

SECTION 6.11.  Eligibility; Disqualification. The Indenture Trustee shall at all times satisfy the requirements of Section 310(a)(1) of the Trust Indenture Act, Section 310(a)(5) of the Trust Indenture Act and Section 26(a)(1) of the Investment Company Act. The Indenture Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition and shall have a long-term debt rating from each of Moody’s and S&P in one of its generic rating categories that signifies investment grade. The Indenture Trustee shall comply with Section 310(b) of the Trust Indenture Act, including the optional provision permitted by the second sentence of Section 310(b)(9) of the Trust Indenture Act; provided, however, that there shall be excluded from the operation of Section 310(b)(1) of the Trust Indenture Act any indenture or indentures under which other securities of the Issuer are outstanding if the requirements for such exclusion set forth in Section 310(b)(1) of the Trust Indenture Act are met.

 

SECTION 6.12.  Preferential Collection of Claims Against Issuer. The Indenture Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 311(b) of the Trust Indenture Act. An Indenture Trustee who has 

 

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resigned or been removed shall be subject to Section 311(a) of the Trust Indenture Act to the extent indicated therein.

 

SECTION 6.13.  Representations and Warranties of Indenture Trustee. The Indenture Trustee hereby represents and warrants that:

 

(a)                                 the Indenture Trustee is a banking corporation validly existing and in good standing under the laws of the State of New York; and

 

(b)                                 the Indenture Trustee has full power, authority and legal right to execute, deliver and perform its obligations under this Indenture and the other Basic Documents to which the Indenture Trustee is a party and has taken all necessary action to authorize the execution, delivery and performance of obligations by it of this Indenture and such other Basic Documents.

 

SECTION 6.14.  Annual Report by Independent Registered Public Accountants. The Indenture Trustee hereby covenants that it will cooperate fully with the firm of Independent registered public accountants performing the procedures required under Section 3.04 of the Servicing Agreement, it being understood and agreed that the Indenture Trustee will so cooperate in conclusive reliance upon the direction of the Issuer, and the Indenture Trustee makes no independent inquiry or investigation to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures.

 

SECTION 6.15.  Custody of Securitization Bond Collateral. The Indenture Trustee shall hold such of the Securitization Bond Collateral (and any other collateral that may be granted to the Indenture Trustee) as consists of instruments, deposit accounts, negotiable documents, money, goods, letters of credit and advices of credit in the State of New York. The Indenture Trustee shall hold such of the Securitization Bond Collateral as constitute investment property through the Securities Intermediary (which, as of the date hereof, is The Bank of New York Mellon). The initial Securities Intermediary hereby agrees (and each future Securities Intermediary shall agree) with the Indenture Trustee that (a) such investment property shall at all times be credited to a securities account of the Indenture Trustee, (b) the Securities Intermediary shall treat the Indenture Trustee as entitled to exercise the rights that comprise each financial asset credited to such securities account, (c) all property credited to such securities account shall be treated as a financial asset, (d) the Securities Intermediary shall comply with entitlement orders originated by the Indenture Trustee without the further consent of any other Person, (e) the Securities Intermediary will not agree with any Person other than the Indenture Trustee to comply with entitlement orders originated by such other Person, (f) such securities accounts and the property credited thereto shall not be subject to any Lien or right of set-off in favor of the Securities Intermediary or anyone claiming through it (other than the Indenture Trustee) and (g) such agreement shall be governed by the internal laws of the State of New York. Terms used in the preceding sentence that are defined in the UCC and not otherwise defined herein shall have the meaning set forth in the UCC. Except as permitted by this Section 6.15 or elsewhere in this Indenture, the Indenture Trustee shall not hold Securitization Bond Collateral through an agent or a nominee.

 

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ARTICLE VII

 

HOLDERS’ LISTS AND REPORTS

 

SECTION 7.01.  Issuer To Furnish Indenture Trustee Names and Addresses of Holders. The Issuer will furnish or cause to be furnished to the Indenture Trustee (a) not more than five days after the earlier of (i) each Record Date and (ii) six months after the last Record Date, a list, in such form as the Indenture Trustee may reasonably require, of the names and addresses of the Holders as of such Record Date, and (b) at such other times as the Indenture Trustee may request in writing, within 30 days after receipt by the Issuer of any such request, a list of similar form and content as of a date not more than ten days prior to the time such list is furnished; provided, however, that, so long as the Indenture Trustee is the Securitization Bond Registrar, no such list shall be required to be furnished.

 

SECTION 7.02.  Preservation of Information; Communications to Holders.

 

(a)                                 The Indenture Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the Holders contained in the most recent list furnished to the Indenture Trustee as provided in Section 7.01 and the names and addresses of Holders received by the Indenture Trustee in its capacity as Securitization Bond Registrar. The Indenture Trustee may destroy any list furnished to it as provided in Section 7.01 upon receipt of a new list so furnished.

 

(b)                                 Holders may communicate pursuant to Section 312(b) of the Trust Indenture Act with other Holders with respect to their rights under this Indenture or under the Securitization Bonds. In addition, upon the written request of any Holder or group of Holders of Outstanding Securitization Bonds evidencing at least 10 percent of the Outstanding Amount of the Securitization Bonds, the Indenture Trustee shall afford the Holder or Holders making such request a copy of a current list of Holders for purposes of communicating with other Holders with respect to their rights hereunder; provided, that the Indenture Trustee gives prior written notice to the Issuer of such request.

 

(c)                                  The Issuer, the Indenture Trustee and the Securitization Bond Registrar shall have the protection of Section 312(c) of the Trust Indenture Act.

 

SECTION 7.03.  Reports by Issuer.

 

(a)                                 The Issuer shall:

 

(i)                                     so long as the Issuer or the Sponsor is required to file such documents with the SEC, provide to the Indenture Trustee, within 15 days after the Issuer is required to file the same with the SEC, 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 SEC may from time to time by rules and regulations prescribe) that the Issuer or the Sponsor may be required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act;

 

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(ii)                                  provide to the Indenture Trustee and file with the SEC, in accordance with rules and regulations prescribed from time to time by the SEC, such additional information, documents and reports with respect to compliance by the Issuer with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and

 

(iii)                               supply to the Indenture Trustee (and the Indenture Trustee shall transmit by mail to all Holders described in Section 313(c) of the Trust Indenture Act), such summaries of any information, documents and reports required to be filed by the Issuer pursuant to Section 7.03(a)(i) and Section 7.03(a)(ii) as may be required by rules and regulations prescribed from time to time by the SEC.

 

Except as may be provided by Section 313(c) of the Trust Indenture Act, the Issuer may fulfill its obligation to provide the materials described in this Section 7.03(a) by providing such materials in electronic format.

 

(b)                                 Unless the Issuer otherwise determines, the fiscal year of the Issuer shall end on December 31 of each year.

 

SECTION 7.04.  Reports by Indenture Trustee. If required by Section 313(a) of the Trust Indenture Act, within 60 days after March 30 of each year, commencing with March 30, 2015, the Indenture Trustee shall mail to each Holder as required by Section 313(c) of the Trust Indenture Act a brief report dated as of such date that complies with Section 313(a) of the Trust Indenture Act. The Indenture Trustee also shall comply with Section 313(b) of the Trust Indenture Act; provided, however, that the initial report so issued shall be delivered not more than 12 months after the initial issuance of the Securitization Bonds.

 

A copy of each report at the time of its mailing to Holders shall be filed by the Servicer with the SEC and each stock exchange, if any, on which the Securitization Bonds are listed. The Issuer shall notify the Indenture Trustee in writing if and when the Securitization Bonds are listed on any stock exchange.

 

ARTICLE VIII

 

ACCOUNTS, DISBURSEMENTS AND RELEASES

 

SECTION 8.01.  Collection of Money. Except as otherwise expressly provided herein, the Indenture Trustee may demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all money and other property payable to or receivable by the Indenture Trustee pursuant to this Indenture and the other Basic Documents. The Indenture Trustee shall apply all such money received by it as provided in this Indenture. Except as otherwise expressly provided in this Indenture, if any default occurs in the making of any payment or performance under any agreement or instrument that is part of the Securitization Bond Collateral, the Indenture Trustee may take such action as may be appropriate to enforce such payment or performance, subject to Article VI, including the institution and prosecution of appropriate Proceedings. Any such action 

 

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shall be without prejudice to any right to claim a Default or Event of Default under this Indenture and any right to proceed thereafter as provided in Article V.

 

SECTION 8.02.  Collection Account.

 

(a)                                 Prior to the Closing Date, the Issuer shall open or cause to be opened with the Securities Intermediary located at the Indenture Trustee’s office located at the Corporate Trust Office, or at another Eligible Institution, one or more segregated trust accounts in the Indenture Trustee’s name for the deposit of Securitization Charge Collections and all other amounts received with respect to the Securitization Bond Collateral (the “Collection Account”). There shall be established by the Indenture Trustee in respect of the Collection Account three subaccounts: a general subaccount (the “General Subaccount”); an excess funds subaccount (the “Excess Funds Subaccount”); and a capital subaccount (the “Capital Subaccount” and, together with the General Subaccount and the Excess Funds Subaccount, the “Subaccounts”). For administrative purposes, the Subaccounts may be established by the Securities Intermediary as separate accounts. Such separate accounts will be recognized individually as a Subaccount and collectively as the “Collection Account”. Prior to or concurrently with the issuance of Securitization Bonds, the Member shall deposit into the Capital Subaccount an amount equal to the Required Capital Level. All amounts in the Collection Account not allocated to any other subaccount shall be allocated to the General Subaccount. Prior to the initial Payment Date, all amounts in the Collection Account (other than funds deposited into the Capital Subaccount up to the Required Capital Level) shall be allocated to the General Subaccount. All references to the Collection Account shall be deemed to include reference to all subaccounts contained therein. Withdrawals from and deposits to each of the foregoing subaccounts of the Collection Account shall be made as set forth in Section 8.02(d) and Section 8.02(e). The Collection Account shall at all times be maintained in an Eligible Account and will be under the sole dominion and exclusive control of the Indenture Trustee, through the Securities Intermediary, and only the Indenture Trustee shall have access to the Collection Account for the purpose of making deposits in and withdrawals from the Collection Account in accordance with this Indenture. Funds in the Collection Account shall not be commingled with any other moneys. All moneys deposited from time to time in the Collection Account, all deposits therein pursuant to this Indenture and all investments made in Eligible Investments as directed in writing by the Issuer with such moneys, including all income or other gain from such investments, shall be held by the Securities Intermediary in the Collection Account as part of the Securitization Bond Collateral as herein provided. The Securities Intermediary shall have no liability in respect of losses incurred as a result of the liquidation of any Eligible Investment prior to its stated maturity or its date of redemption or the failure of the Issuer or the Servicer to provide timely written investment direction.

 

(b)                                 The Securities Intermediary hereby confirms that (i) the Collection Account is, or at inception will be established as, a “securities account” as such term is defined in Section 8-501(a) of the UCC, (ii) it is a “securities intermediary” (as such term is defined in Section 8-102(a)(14) of the UCC) and is acting in such capacity with respect to such accounts, (iii) the Indenture Trustee for the benefit of the Secured Parties is the sole “entitlement holder” (as such term is defined in Section 8-102(a)(7) of the UCC) with respect to such accounts and (iv) no other Person shall have the right to give “entitlement orders” (as such term is defined in Section 8-102(a)(8)) with respect to such accounts. The Securities Intermediary hereby further 

 

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agrees that each item of property (whether investment property, financial asset, security, instrument or cash) received by it will be credited to the Collection Account and shall be treated by it as a “financial asset” within the meaning of Section 8-102(a)(9) of the UCC. Notwithstanding anything to the contrary, the State of New York shall be deemed to be the jurisdiction of the Securities Intermediary for purposes of Section 8-110 of the UCC, and the Collection Account (as well as the securities entitlements related thereto) shall be governed by the laws of the State of New York.

 

(c)                                  The Indenture Trustee shall have sole dominion and exclusive control over all moneys in the Collection Account through the Securities Intermediary and shall apply such amounts therein as provided in this Section 8.02.

 

(d)                                 Securitization Charge Collections shall be deposited in the General Subaccount as provided in Section 6.11 of the Servicing Agreement. All deposits to and withdrawals from the Collection Account, all allocations to the subaccounts of the Collection Account and any amounts to be paid to the Servicer under Section 8.02(e) shall be made by the Indenture Trustee in accordance with the written instructions provided by the Servicer in the Monthly Servicer’s Certificate or the Semi-Annual Servicer’s Certificate.

 

(e)                                  On each Payment Date, the Indenture Trustee shall apply all amounts on deposit in the Collection Account, including all Investment Earnings thereon, in accordance with the Semi-Annual Servicer’s Certificate, in the following priority:

 

(i)                                     payment of the Indenture Trustee’s fees, expenses and outstanding indemnity amounts shall be paid to the Indenture Trustee (subject to Section 6.07) in an amount not to exceed the amount set forth in the Series Supplement;

 

(ii)                                  payment of the Servicing Fee with respect to such Payment Date, plus any unpaid Servicing Fees for prior Payment Dates shall be paid to the Servicer;

 

(iii)                               payment of the Administration Fee for such Payment Date shall be paid to the Administrator and the Independent Manager Fee for such Payment Date shall be paid to the Independent Managers, and in each case with any unpaid Administration Fees or Independent Manager Fees from prior Payment Dates;

 

(iv)                              payment of all other ordinary periodic Operating Expenses for such Payment Date not described above shall be paid to the parties to which such Operating Expenses are owed;

 

(v)                                 payment of Periodic Interest for such Payment Date, including any overdue Periodic Interest (together with, to the extent lawful, interest on such overdue Periodic Interest at the applicable Bond Interest Rate), with respect to the Securitization Bonds shall be paid to the Holders of Securitization Bonds;

 

(vi)                              payment of the principal required to be paid on the Securitization Bonds on the Final Maturity Date or as a result of an acceleration upon an Event of Default shall be paid to the Holders of Securitization Bonds;

 

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(vii)         payment of Periodic Principal for such Payment Date, including any previously unpaid Periodic Principal, with respect to the Securitization Bonds shall be paid to the Holders of Securitization Bonds, pro rata if there is a deficiency;

 

(viii)        payment of any other unpaid Operating Expenses (including any such amounts owed to the Indenture Trustee but unpaid due to the limitation in Section 8.02(e)(i)) and any remaining amounts owed pursuant to the Basic Documents shall be paid to the parties to which such Operating Expenses or remaining amounts are owed;

 

(ix)          replenishment of the amount, if any, by which the Required Capital Level exceeds the amount in the Capital Subaccount as of such Payment Date shall be allocated to the Capital Subaccount;

 

(x)           as long as no Event of Default has occurred or is continuing, the Capital Subaccount Investment Earnings shall be paid to Consumers Energy;

 

(xi)          the balance, if any, shall be allocated to the Excess Funds Subaccount; and

 

(xii)         after the Securitization Bonds have been paid in full and discharged, and all of the other foregoing amounts are paid in full, together with all amounts due and payable to the Indenture Trustee under Section 6.07 or otherwise, the balance (including all amounts then held in the Capital Subaccount and the Excess Funds Subaccount), if any, shall be paid to the Issuer, free from the Lien of this Indenture and the Series Supplement.

 

All payments to the Holders of the Securitization Bonds pursuant to Section 8.02(e)(v), Section 8.02(e)(vi) and Section 8.02(e)(vii) shall be made to such Holders pro rata based on the respective amounts of interest and/or principal owed, unless, in the case of Securitization Bonds comprised of two or more Tranches, the Series Supplement provides otherwise. Payments in respect of principal of and premium, if any, and interest on any Tranche of Securitization Bonds will be made on a pro rata basis among all the Holders of such Tranche. In the case of an Event of Default, then, in accordance with Section 5.04(c), in respect of any application of moneys pursuant to Section 8.02(e)(v) or Section 8.02(e)(vi), moneys will be applied pursuant to Section 8.02(e)(v) and Section 8.02(e)(vi), as the case may be, in such order, on a pro rata basis, based upon the interest or the principal owed.

 

(f)                                   If on any Payment Date, or, for any amounts payable under Section 8.02(e)(i), Section 8.02(e)(ii), Section 8.02(e)(iii) and Section 8.02(e)(iv), on any Business Day, funds on deposit in the General Subaccount are insufficient to make the payments contemplated by Section 8.02(e)(i), Section 8.02(e)(ii), Section 8.02(e)(iii), Section 8.02(e)(iv), Section 8.02(e)(v), Section 8.02(e)(vi), Section 8.02(e)(vii) and Section 8.02(e)(viii), the Indenture Trustee shall (i) first, draw from amounts on deposit in the Excess Funds Subaccount, and (ii) second, draw from amounts on deposit in the Capital Subaccount, in each case, up to the amount of such shortfall in order to make the payments contemplated by Section 8.02(e)(i), Section 8.02(e)(ii), Section 8.02(e)(iii), Section 8.02(e)(iv), Section 8.02(e)(v), Section 8.02(e)(vi), Section 8.02(e)(vii) and Section 8.02(e)(viii). In addition, if on any Payment Date funds on deposit in the General Subaccount are insufficient to make the allocations contemplated by Section 8.02(e)(ix), the Indenture Trustee shall draw any amounts on deposit in the Excess Funds Subaccount to make such allocations to the Capital Subaccount.

 

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(g)                                  On any Business Day upon which the Indenture Trustee receives a written request from the Administrator stating that any Operating Expense payable by the Issuer (but only as described in Section 8.02(e)(i), Section 8.02(e)(ii), Section 8.02(e)(iii) and Section 8.02(e)(iv)) will become due and payable prior to the next Payment Date, and setting forth the amount and nature of such Operating Expense, as well as any supporting documentation that the Indenture Trustee may reasonably request, the Indenture Trustee, upon receipt of such information, will make payment of such Operating Expenses on or before the date such payment is due from amounts on deposit in the General Subaccount, the Excess Funds Subaccount and the Capital Subaccount, in that order and only to the extent required to make such payment.

 

SECTION 8.03.  General Provisions Regarding the Collection Account.

 

(a)                                 So long as no Default or Event of Default shall have occurred and be continuing, all or a portion of the funds in the Collection Account shall be invested in Eligible Investments and reinvested by the Indenture Trustee upon Issuer Order; provided, however, that such Eligible Investments shall not mature or be redeemed later than the Business Day prior to the next Payment Date or Special Payment Date, if applicable, for the Securitization Bonds. All income or other gain from investments of moneys deposited in the Collection Account shall be deposited by the Indenture Trustee in the Collection Account, and any loss resulting from such investments shall be charged to the Collection Account. The Issuer will not direct the Indenture Trustee to make any investment of any funds or to sell any investment held in the Collection Account unless the security interest Granted and perfected in such account will continue to be perfected in such investment or the proceeds of such sale, in either case without any further action by any Person, and, in connection with any direction to the Indenture Trustee to make any such investment or sale, if requested by the Indenture Trustee, the Issuer shall deliver to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer (at the Issuer’s cost and expense) to such effect. In no event shall the Indenture Trustee be liable for the selection of Eligible Investments or for investment losses incurred thereon. The Indenture Trustee shall have no liability in respect of losses incurred as a result of the liquidation of any Eligible Investment prior to its stated maturity or its date of redemption or the failure of the Issuer or the Servicer to provide timely written investment direction. The Indenture Trustee shall have no obligation to invest or reinvest any amounts held hereunder in the absence of written investment direction pursuant to an Issuer Order.

 

(b)                                 Subject to Section 6.01(c), the Indenture Trustee shall not in any way be held liable by reason of any insufficiency in the Collection Account resulting from any loss on any Eligible Investment included therein except for losses attributable to the Indenture Trustee’s failure to make payments on such Eligible Investments issued by the Indenture Trustee, in its commercial capacity as principal obligor and not as trustee, in accordance with their terms.

 

(c)                                  If (i) the Issuer shall have failed to give written investment directions for any funds on deposit in the Collection Account to the Indenture Trustee by 11:00 a.m. New York City time (or such other time as may be agreed by the Issuer and Indenture Trustee) on any Business Day or (ii) a Default or Event of Default shall have occurred and be continuing with respect to the Securitization Bonds but the Securitization Bonds shall not have been declared due and payable pursuant to Section 5.02, then the Indenture Trustee shall, to the fullest extent 

 

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practicable, invest and reinvest funds in such Collection Account in Eligible Investments specified in the most recent written investment directions delivered by the Issuer to the Indenture Trustee; provided, that if the Issuer has never delivered written investment directions to the Indenture Trustee, the Indenture Trustee shall not invest or reinvest such funds in any investments.

 

(d)                                 The parties hereto acknowledge that the Servicer may, pursuant to the Servicing Agreement, select Eligible Investments on behalf of the Issuer.

 

(e)                                  Except as otherwise provided hereunder or agreed in writing among the parties hereto, the Issuer shall retain the authority to institute, participate and join in any plan of reorganization, readjustment, merger or consolidation with respect to the issuer of any Eligible Investments held hereunder, and, in general, to exercise each and every other power or right with respect to each such asset or investment as Persons generally have and enjoy with respect to their own assets and investment, including power to vote upon any Eligible Investments.

 

SECTION 8.04.  Release of Securitization Bond Collateral.

 

(a)                                 So long as the Issuer is not in default hereunder and no Default hereunder would occur as a result of such action, the Issuer, through the Servicer, may collect, sell or otherwise dispose of written-off receivables, at any time and from time to time in the ordinary course of business, without any notice to, or release or consent by, the Indenture Trustee, but only as and to the extent permitted by the Basic Documents; provided, however, that any and all proceeds of such dispositions shall become Securitization Bond Collateral and be deposited to the General Subaccount immediately upon receipt thereof by the Issuer or any other Person, including the Servicer. Without limiting the foregoing, the Servicer, may, at any time and from time to time without any notice to, or release or consent by, the Indenture Trustee, sell or otherwise dispose of any Securitization Bond Collateral previously written-off as a defaulted or uncollectible account in accordance with the terms of the Servicing Agreement and the requirements of the proviso in the preceding sentence.

 

(b)                                 The Indenture Trustee may, and when required by the provisions of this Indenture shall, execute instruments to release property from the Lien of this Indenture, or convey the Indenture Trustee’s interest in the same, in a manner and under circumstances that are not inconsistent with the provisions of this Indenture. No party relying upon an instrument executed by the Indenture Trustee as provided in this Article VIII shall be bound to ascertain the Indenture Trustee’s authority, inquire into the satisfaction of any conditions precedent or see to the application of any moneys. The Indenture Trustee shall release property from the Lien of this Indenture pursuant to this Section 8.04(b) only upon receipt of an Issuer Request accompanied by an Officer’s Certificate, an Opinion of Counsel of external counsel of the Issuer (at the Issuer’s cost and expense) and (if required by the Trust Indenture Act) Independent Certificates in accordance with Section 314(c) of the Trust Indenture Act and Section 314(d)(1) of the Trust Indenture Act meeting the applicable requirements of Section 10.01.

 

(c)                                  The Indenture Trustee shall, at such time as there are no Securitization Bonds Outstanding and all sums payable to the Indenture Trustee pursuant to Section 6.07 or otherwise have been paid, release any remaining portion of the Securitization Bond Collateral 

 

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that secured the Securitization Bonds from the Lien of this Indenture and release to the Issuer or any other Person entitled thereto any funds or investments then on deposit in or credited to the Collection Account.

 

SECTION 8.05.  Opinion of Counsel. The Indenture Trustee shall receive at least seven days’ notice when requested by the Issuer to take any action pursuant to Section 8.04, accompanied by copies of any instruments involved, and the Indenture Trustee shall also require, as a condition to such action, an Opinion of Counsel of external counsel of the Issuer, in form and substance satisfactory to the Indenture Trustee, stating the legal effect of any such action, outlining the steps required to complete the same, and concluding that all conditions precedent to the taking of such action have been complied with and such action will not materially and adversely impair the security for the Securitization Bonds or the rights of the Holders in contravention of the provisions of this Indenture and the Series Supplement; provided, however, that such Opinion of Counsel shall not be required to express an opinion as to the fair value of the Securitization Bond Collateral. Counsel rendering any such opinion may rely, without independent investigation, on the accuracy and validity of any certificate or other instrument delivered to the Indenture Trustee in connection with any such action.

 

SECTION 8.06.  Reports by Independent Registered Public Accountants. As of the Closing Date, the Issuer shall appoint a firm of Independent registered public accountants of recognized national reputation for purposes of preparing and delivering the reports or certificates of such accountants required by this Indenture and the Series Supplement. In the event such firm requires the Indenture Trustee to agree to the procedures performed by such firm, the Issuer shall direct the Indenture Trustee in writing to so agree, it being understood and agreed that the Indenture Trustee will deliver such letter of agreement in conclusive reliance upon the direction of the Issuer, and the Indenture Trustee makes no independent inquiry or investigation to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures. Upon any resignation by, or termination by the Issuer of, such firm, the Issuer shall provide written notice thereof to the Indenture Trustee and shall promptly appoint a successor thereto that shall also be a firm of Independent registered public accountants of recognized national reputation. If the Issuer shall fail to appoint a successor to a firm of Independent registered public accountants that has resigned or been terminated within 15 days after such resignation or termination, the Indenture Trustee shall promptly notify the Issuer of such failure in writing. If the Issuer shall not have appointed a successor within ten days thereafter, the Indenture Trustee shall promptly appoint a successor firm of Independent registered public accountants of recognized national reputation; provided, that the Indenture Trustee shall have no liability with respect to such appointment. The fees of such Independent registered public accountants and its successor shall be payable by the Issuer.

 

ARTICLE IX

 

SUPPLEMENTAL INDENTURES

 

SECTION 9.01.  Supplemental Indentures Without Consent of Holders.

 

(a)                                 Without the consent of the Holders of any Securitization Bonds but with prior notice to the Rating Agencies, the Issuer and the Indenture Trustee, when authorized by an 

 

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Issuer Order, at any time and from time to time, may enter into one or more indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as in force at the date of the execution thereof), in form satisfactory to the Indenture Trustee, for any of the following purposes:

 

(i)                                     to correct or amplify the description of any property, including the Securitization Bond Collateral, at any time subject to the Lien of this Indenture, or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subjected to the Lien of this Indenture and the Series Supplement, or to subject to the Lien of this Indenture and the Series Supplement additional property;

 

(ii)                                  to evidence the succession, in compliance with the applicable provisions hereof, of another Person to the Issuer, and the assumption by any such successor of the covenants of the Issuer herein and in the Securitization Bonds;

 

(iii)                               to add to the covenants of the Issuer, for the benefit of the Secured Parties, or to surrender any right or power herein conferred upon the Issuer;

 

(iv)                              to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee;

 

(v)                                 to cure any ambiguity, to correct or supplement any provision herein or in any supplemental indenture, including the Series Supplement, that may be inconsistent with any other provision herein or in any supplemental indenture, including the Series Supplement, or to make any other provisions with respect to matters or questions arising under this Indenture or in any supplemental indenture; provided, that (A) such action shall not, as evidenced by an Opinion of Counsel of external counsel of the Issuer, adversely affect in any material respect the interests of the Holders of the Securitization Bonds and (B) the Rating Agency Condition shall have been satisfied with respect thereto;

 

(vi)                              to evidence and provide for the acceptance of the appointment hereunder by a successor trustee with respect to the Securitization Bonds and to add to or change any of the provisions of this Indenture as shall be necessary to facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Article VI;

 

(vii)                           to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the Trust Indenture Act and to add to this Indenture such other provisions as may be expressly required by the Trust Indenture Act;

 

(viii)                        to evidence the final terms of the Securitization Bonds in the Series Supplement;

 

(ix)                              to qualify the Securitization Bonds for registration with a Clearing Agency; or

 

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(x)                                 to satisfy any Rating Agency requirements.

 

The Indenture Trustee is hereby authorized to join in the execution of any such supplemental indenture and to make any further appropriate agreements and stipulations that may be therein contained.

 

(b)                                 The Issuer and the Indenture Trustee, when authorized by an Issuer Order, may, also without the consent of any of the Holders of the Securitization Bonds, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Holders of the Securitization Bonds under this Indenture; provided, however, that (i) such action shall not, as evidenced by an Opinion of Counsel of nationally recognized counsel of the Issuer experienced in structured finance transactions, adversely affect in any material respect the interests of the Holders and (ii) the Rating Agency Condition shall have been satisfied with respect thereto.

 

SECTION 9.02.  Supplemental Indentures with Consent of Holders. The Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may, with prior notice to the Rating Agencies and with the consent of the Holders of a majority of the Outstanding Amount of the Securitization Bonds of each Tranche to be affected, by Act of such Holders delivered to the Issuer and the Indenture Trustee, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Holders of the Securitization Bonds under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Securitization Bond of each Tranche affected thereby:

 

(i)                                     change the date of payment of any installment of principal of or premium, if any, or interest on any Securitization Bond of such Tranche, or reduce the principal amount thereof, the interest rate thereon or premium, if any, with respect thereto;

 

(ii)                                  change the provisions of this Indenture and the Series Supplement relating to the application of collections on, or the proceeds of the sale of, the Securitization Bond Collateral to payment of principal of or premium, if any, or interest on the Securitization Bonds, or change any place of payment where, or the coin or currency in which, any Securitization Bond or the interest thereon is payable;

 

(iii)                               reduce the percentage of the Outstanding Amount of the Securitization Bonds or of a Tranche thereof, the consent of the Holders of which is required for any such supplemental indenture, or the consent of the Holders of which is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture;

 

(iv)                              reduce the percentage of the Outstanding Amount of the Securitization Bonds or Tranche thereof required to direct the Indenture Trustee to direct the Issuer to sell or liquidate the Securitization Bond Collateral pursuant to Section 5.04;

 

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(v)                                 modify any provision of this Section 9.02 or any provision of the other Basic Documents similarly specifying the rights of the Holders to consent to modification thereof, except to increase any percentage specified herein or to provide that those provisions of this Indenture or the other Basic Documents referenced in this Section 9.02 cannot be modified or waived without the consent of the Holder of each Outstanding Securitization Bond affected thereby;

 

(vi)                              modify any of the provisions of this Indenture in such manner as to affect the calculation of the amount of any payment of interest, principal or premium, if any, due on any Securitization Bond on any Payment Date (including the calculation of any of the individual components of such calculation) or change the Expected Amortization Schedule or Final Maturity Date of any Tranche of Securitization Bonds;

 

(vii)                           decrease the Required Capital Level;

 

(viii)                        permit the creation of any Lien ranking prior to or on a parity with the Lien of this Indenture with respect to any part of the Securitization Bond Collateral or, except as otherwise permitted or contemplated herein, terminate the Lien of this Indenture on any property at any time subject hereto or deprive the Holder of any Securitization Bond of the security provided by the Lien of this Indenture;

 

(ix)                              cause any material adverse U.S. federal income tax consequence to the Seller, the Issuer, the Managers, the Indenture Trustee or the then-existing Holders; or

 

(x)                                 impair the right to institute suit for the enforcement of the provisions of this Indenture regarding payment or application of funds.

 

It shall not be necessary for any Act of Holders under this Section 9.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

 

Promptly after the execution by the Issuer and the Indenture Trustee of any supplemental indenture pursuant to this Section 9.02, the Issuer shall mail to the Rating Agencies a copy of such supplemental indenture and to the Holders of the Securitization Bonds to which such supplemental indenture relates either a copy of such supplemental indenture or a notice setting forth in general terms the substance of such supplemental indenture. Any failure of the Issuer to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

 

SECTION 9.03.  Execution of Supplemental Indentures. In executing any supplemental indenture permitted by this Article IX or the modifications thereby of the trust created by this Indenture, the Indenture Trustee shall be fully protected in relying upon an Opinion of Counsel stating that the execution of such supplemental indenture is authorized and permitted by this Indenture and all conditions precedent, if any, provided for in this Indenture relating to such supplemental indenture or modification have been satisfied. The Indenture Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Indenture Trustee’s own rights, duties, liabilities or immunities under this Indenture or 

 

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otherwise. All fees and expenses in connection with any such supplemental indenture shall be paid by the requesting party.

 

SECTION 9.04.  Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith with respect to each Tranche of Securitization Bonds affected thereby, and the respective rights, limitations of rights, obligations, duties, liabilities and immunities under this Indenture of the Indenture Trustee, the Issuer and the Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

 

SECTION 9.05.  Conformity with Trust Indenture Act. Every amendment of this Indenture and every supplemental indenture executed pursuant to this Article IX shall conform to the requirements of the Trust Indenture Act as then in effect so long as this Indenture shall then be qualified under the Trust Indenture Act.

 

SECTION 9.06.  Reference in Securitization Bonds to Supplemental Indentures. Securitization Bonds authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and if required by the Indenture Trustee shall, bear a notation in form approved by the Indenture Trustee as to any matter provided for in such supplemental indenture. If the Issuer or the Indenture Trustee shall so determine, new Securitization Bonds so modified as to conform, in the opinion of the Indenture Trustee and the Issuer, to any such supplemental indenture may be prepared and executed by the Issuer and authenticated and delivered by the Indenture Trustee in exchange for Outstanding Securitization Bonds.

 

ARTICLE X

 

MISCELLANEOUS

 

SECTION 10.01.  Compliance Certificates and Opinions, etc.

 

(a)                                 Upon any application or request by the Issuer to the Indenture Trustee to take any action under any provision of this Indenture, the Issuer shall furnish to the Indenture Trustee (i) an Officer’s Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, (ii) an Opinion of Counsel stating that in the opinion of such counsel the amendment is authorized and permitted and all such conditions precedent, if any, have been complied with and (iii) (if required by the Trust Indenture Act) an Independent Certificate from a firm of registered public accountants meeting the applicable requirements of this Section 10.01, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture, no additional certificate or opinion need be furnished.

 

Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

 

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(i)                                     a statement that each signatory of such certificate or opinion has read or has caused to be read such covenant or condition and the definitions herein relating thereto;

 

(ii)                                  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;

 

(iii)                               a statement that, in the opinion of each such signatory, such signatory has made such examination or investigation as is necessary to enable such signatory to express an informed opinion as to whether or not such covenant or condition has been complied with; and

 

(iv)                              a statement as to whether, in the opinion of each such signatory, such condition or covenant has been complied with.

 

(b)                                 Prior to the deposit of any Securitization Bond Collateral or other property or securities with the Indenture Trustee that is to be made the basis for the release of any property or securities subject to the Lien of this Indenture, the Issuer shall, in addition to any obligation imposed in Section 10.01(a) or elsewhere in this Indenture, furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of each person signing such certificate as to the fair value (within 90 days of such deposit) to the Issuer of the Securitization Bond Collateral or other property or securities to be so deposited.

 

(c)                                  Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of any signer thereof as to the matters described in Section 10.01(b), the Issuer shall also deliver to the Indenture Trustee an Independent Certificate as to the same matters, if the fair value to the Issuer of the securities to be so deposited and of all other such securities made the basis of any such withdrawal or release since the commencement of the then-current fiscal year of the Issuer, as set forth in the certificates delivered pursuant to Section 10.01(b) and this Section 10.01(c), is ten percent or more of the Outstanding Amount of the Securitization Bonds, but such a certificate need not be furnished with respect to any securities so deposited, if the fair value thereof to the Issuer as set forth in the related Officer’s Certificate is less than the lesser of (A) $25,000 or (B) one percent of the Outstanding Amount of the Securitization Bonds.

 

(d)                                 Whenever any property or securities are to be released from the Lien of this Indenture other than pursuant to Section 8.02(e), the Issuer shall also furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of each person signing such certificate as to the fair value (within 90 days of such release) of the property or securities proposed to be released and stating that in the opinion of such person the proposed release will not impair the security under this Indenture in contravention of the provisions hereof.

 

(e)                                  Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of any signatory thereof as to the matters described in Section 10.01(d), the Issuer shall also furnish to the Indenture Trustee an Independent Certificate as to the same matters if the fair value of the property or securities with 

 

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respect thereto, or securities released from the Lien of this Indenture (other than pursuant to Section 8.02(e)) since the commencement of the then-current calendar year, as set forth in the certificates required by Section 10.01(d) and this Section 10.01(e), equals 10 percent or more of the Outstanding Amount of the Securitization Bonds, but such certificate need not be furnished in the case of any release of property or securities if the fair value thereof as set forth in the related Officer’s Certificate is less than the lesser of (A) $25,000 or (B) one percent of the then Outstanding Amount of the Securitization Bonds.

 

(f)                                   Notwithstanding any other provision of this Section 10.01, the Indenture Trustee may (A) collect, liquidate, sell or otherwise dispose of the Securitization Property and the other Securitization Bond Collateral as and to the extent permitted or required by the Basic Documents and (B) make cash payments out of the Collection Account as and to the extent permitted or required by the Basic Documents.

 

SECTION 10.02.  Form of Documents Delivered to Indenture Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

 

Any certificate or opinion of a Responsible Officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion is based are erroneous. Any such certificate of a Responsible Officer or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Servicer or the Issuer stating that the information with respect to such factual matters is in the possession of the Servicer or the Issuer, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.

 

Whenever in this Indenture, in connection with any application or certificate or report to the Indenture Trustee, it is provided that the Issuer shall deliver any document as a condition of the granting of such application, or as evidence of the Issuer’s compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Issuer to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to affect the Indenture Trustee’s right to rely conclusively upon the truth and accuracy of any statement or opinion contained in any such document as provided in Article VI.

 

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

 

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SECTION 10.03.  Acts of Holders.

 

(a)                                 Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing, and except as herein otherwise expressly provided such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.01) conclusive in favor of the Indenture Trustee and the Issuer, if made in the manner provided in this Section 10.03.

 

(b)                                 The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner that the Indenture Trustee deems sufficient.

 

(c)                                  The ownership of Securitization Bonds shall be proved by the Securitization Bond Register.

 

(d)                                 Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Securitization Bonds shall bind the Holder of every Securitization Bond issued upon the registration thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Indenture Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Securitization Bond.

 

SECTION 10.04.  Notices, etc., to Indenture Trustee, Issuer and Rating Agencies. Any notice, report or other communication given hereunder shall be in writing and shall be effective (i) upon receipt when sent through the mails, registered or certified mail, return receipt requested, postage prepaid, with such receipt to be effective the date of delivery indicated on the return receipt, (ii) upon receipt when sent by an overnight courier, (iii) on the date personally delivered to an authorized officer of the party to which sent or (iv) on the date transmitted by facsimile or other electronic transmission with a confirmation of receipt in all cases, addressed as follows:

 

(a)                     in the case of the Issuer, to Consumers 2014 Securitization Funding LLC at One Energy Plaza, Jackson, Michigan 49201, Attention: Corporate Secretary, Telephone: (517) 788-1030, Facsimile: (517) 788-6911;

 

(b)                     in the case of the Indenture Trustee, to the Corporate Trust Office;

 

(c)                      in the case of Moody’s, to Moody’s Investors Service, Inc., ABS/RMBS Monitoring Department, 25th Floor, 7 World Trade Center, 250 Greenwich Street, New York, New York 10007, Email: servicerreports@moodys.com (all such notices to be delivered to Moody’s in writing by email); and

 

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(d)                     in the case of S&P, to Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, Structured Credit Surveillance, 55 Water Street, New York, New York 10041, Telephone: (212) 438-8991, Email: servicer_reports@standardandpoors.com (all such notices to be delivered to S&P in writing by email).

 

Each party hereto may, by notice given in accordance herewith to the other party or parties hereto, designate any further or different address to which subsequent notices, reports and other communications shall be sent.

 

SECTION 10.05.  Notices to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class, postage prepaid to each Holder affected by such event, at such Holder’s address as it appears on the Securitization Bond Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular Holder shall affect the sufficiency of such notice with respect to other Holders, and any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given.

 

Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Indenture Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such a waiver.

 

In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity, it shall be impractical to mail notice of any event of Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice.

 

Where this Indenture provides for notice to the Rating Agencies, failure to give such notice shall not affect any other rights or obligations created hereunder and shall not under any circumstance constitute a Default or Event of Default.

 

SECTION 10.06.  Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof that is required to be included in this Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control.

 

The provisions of Sections 310 through 317 of the Trust Indenture Act that impose duties on any Person (including the provisions automatically deemed included herein unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not physically contained herein.

 

SECTION 10.07.  Successors and Assigns. All covenants and agreements in this Indenture and the Securitization Bonds by the Issuer shall bind its successors and assigns, 

 

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whether so expressed or not. All agreements of the Indenture Trustee in this Indenture shall bind its successors.

 

SECTION 10.08.  Severability. Any provision in this Indenture or in the Securitization Bonds that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remainder of such provision (if any) or the remaining provisions hereof (unless such construction shall be unreasonable), and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

SECTION 10.09.  Benefits of Indenture. Nothing in this Indenture or in the Securitization Bonds, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Holders, and any other party secured hereunder, and any other Person with an ownership interest in any part of the Securitization Bond Collateral, any benefit or any legal or equitable right, remedy or claim under this Indenture.

 

SECTION 10.10.  Legal Holidays. In any case where the date on which any payment is due shall not be a Business Day, then (notwithstanding any other provision of the Securitization Bonds or this Indenture) payment need not be made on such date, but may be made on the next Business Day with the same force and effect as if made on the date on which nominally due, and no interest shall accrue for the period from and after any such nominal date.

 

SECTION 10.11.  GOVERNING LAW. This Indenture shall be governed by and construed in accordance with the laws of the State of New York, without reference to its conflict of law provisions (other than Section 5-1401 of the New York General Obligations Law and Sections 9-301 through 9-306 of the NY UCC), and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws; provided, that the creation, attachment and perfection of any Liens created hereunder in Securitization Property, and all rights and remedies of the Indenture Trustee and the Holders with respect to the Securitization Property, shall be governed by the laws of the State of Michigan.

 

SECTION 10.12.  Counterparts. This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

 

SECTION 10.13.  Recording of Indenture. If this Indenture is subject to recording in any appropriate public recording offices, such recording is to be effected by the Issuer and at its expense accompanied by an Opinion of Counsel at the Issuer’s cost and expense (which may be counsel to the Indenture Trustee or any other counsel reasonably acceptable to the Indenture Trustee or, if requested by the Indenture Trustee, external counsel of the Issuer) to the effect that such recording is necessary either for the protection of the Holders or any other Person secured hereunder or for the enforcement of any right or remedy granted to the Indenture Trustee under this Indenture.

 

SECTION 10.14.  No Recourse to Issuer. No recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the 

 

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Securitization Bonds or under this Indenture or any certificate or other writing delivered in connection herewith or therewith, against (a) any owner of a membership interest in the Issuer (including Consumers Energy) or (b) any shareholder, partner, owner, beneficiary, agent, officer or employee of the Indenture Trustee, the Managers or any owner of a membership interest in the Issuer (including Consumers Energy) in its respective individual capacity, or of any successor or assign of any of them in their respective individual or corporate capacities, except as any such Person may have expressly agreed in writing. Notwithstanding any provision of this Indenture or the Series Supplement to the contrary, Holders shall look only to the Securitization Bond Collateral with respect to any amounts due to the Holders hereunder and under the Securitization Bonds and, in the event such Securitization Bond Collateral is insufficient to pay in full the amounts owed on the Securitization Bonds, shall have no recourse against the Issuer in respect of such insufficiency. Each Holder by accepting a Securitization Bond specifically confirms the nonrecourse nature of these obligations and waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Securitization Bonds.

 

SECTION 10.15.  Basic Documents. The Indenture Trustee is hereby authorized to execute and deliver the Servicing Agreement and to execute and deliver any other Basic Document that it is requested to acknowledge, including, upon receipt of an Issuer Request, the Intercreditor Agreement, so long as the Intercreditor Agreement is substantially in the form of the Intercreditor Agreement dated as of the Closing Date and does not materially and adversely affect any Holder’s rights in and to any Securitization Bond Collateral or otherwise hereunder. Such request shall be accompanied by an Opinion of Counsel of external counsel of the Issuer, upon which the Indenture Trustee may rely conclusively with no duty of independent investigation or inquiry, to the effect that all conditions precedent for the execution of the Intercreditor Agreement have been satisfied. The Intercreditor Agreement shall be binding on the Holders.

 

SECTION 10.16.  No Petition. The Indenture Trustee, by entering into this Indenture, and each Holder, by accepting a Securitization Bond (or interest therein) issued hereunder, hereby covenant and agree that they shall not, prior to the date that is one year and one day after the termination of this Indenture, acquiesce, petition or otherwise invoke or cause the Issuer or any Manager to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Issuer under any bankruptcy or insolvency law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of its property, or ordering the dissolution, winding up or liquidation of the affairs of the Issuer. Nothing in this Section 10.16 shall preclude, or be deemed to estop, such Holder or the Indenture Trustee (a) from taking or omitting to take any action prior to such date in (i) any case or proceeding voluntarily filed or commenced by or on behalf of the Issuer under or pursuant to any such law or (ii) any involuntary case or proceeding pertaining to the Issuer that is filed or commenced by or on behalf of a Person other than such Holder and is not joined in by such Holder (or any Person to which such Holder shall have assigned, transferred or otherwise conveyed any part of the obligations of the Issuer hereunder) under or pursuant to any such law or (b) from commencing or prosecuting any legal action that is not an involuntary case or proceeding under or pursuant to any such law against the Issuer or any of its properties.

 

70

 

SECTION 10.17.  Securities Intermediary. The Securities Intermediary, in acting under this Indenture, is entitled to all rights, benefits, protections, immunities and indemnities accorded to The Bank of New York Mellon, a New York banking corporation, in its capacity as Indenture Trustee under this Indenture.

 

SECTION 10.18.  Rule 17g-5 Compliance.

 

(a)                                 The Indenture Trustee agrees that any notice, report, request for satisfaction of the Rating Agency Condition, document or other information provided by the Indenture Trustee to any Rating Agency under this Indenture or any other Basic Document to which it is a party for the purpose of determining or confirming the credit rating of the Securitization Bonds or undertaking credit rating surveillance of the Securitization Bonds shall be provided, substantially concurrently, to the Servicer for posting on a password-protected website (the “17g-5 Website”). The Servicer shall be responsible for posting all of the information on the 17g-5 Website.

 

(b)                                 The Indenture Trustee will not be responsible for creating or maintaining the 17g-5 Website, posting any information to the 17g-5 Website or assuring that the 17g-5 Website complies with the requirements of this Indenture, Rule 17g-5 under the Exchange Act or any other law or regulation. In no event shall the Indenture Trustee be deemed to make any representation in respect of the content of the 17g-5 Website or compliance by the 17g-5 Website with this Indenture, Rule 17g-5 under the Exchange Act or any other law or regulation. The Indenture Trustee shall have no obligation to engage in or respond to any oral communications with respect to the transactions contemplated hereby, any transaction documents relating hereto or in any way relating to the Securitization Bonds or for the purposes of determining the initial credit rating of the Securitization Bonds or undertaking credit rating surveillance of the Securitization Bonds with any Rating Agency or any of its respective officers, directors or employees. The Indenture Trustee shall not be responsible or liable for the dissemination of any identification numbers or passwords for the 17g-5 Website, including by the Servicer, the Rating Agencies, a nationally recognized statistical rating organization (“NRSRO”), any of their respective agents or any other party. Additionally, the Indenture Trustee shall not be liable for the use of the information posted on the 17g-5 Website, whether by the Servicer, the Rating Agencies, an NRSRO or any other third party that may gain access to the 17g-5 Website or the information posted thereon.

 

SECTION 10.19.  Submission to Non-Exclusive Jurisdiction; Waiver of Jury Trial. Each of the Issuer and the Indenture Trustee hereby irrevocably submits to the non-exclusive jurisdiction of any New York State court sitting in The Borough of Manhattan in The City of New York or any U.S. federal court sitting in The Borough of Manhattan in The City of New York in respect of any suit, action or proceeding arising out of or relating to this Indenture and the Securitization Bonds and irrevocably accepts for itself and in respect of its respective property, generally and unconditionally, jurisdiction of the aforesaid courts. Each of the Issuer and the Indenture Trustee irrevocably waives, to the fullest extent that it may effectively do so under applicable law, trial by jury.

 

SECTION 10.20.  Certain Tax Laws. In order to comply with applicable tax laws, rules and regulations (inclusive of directives, guidelines and interpretations promulgated by 

 

71

 

competent authorities) in effect from time to time to which a foreign financial institution, issuer, trustee, paying agent, holder or other institution is or has agreed to be subject related to the Basic Documents, the Issuer agrees (a) to provide to the Indenture Trustee sufficient information about Holders or other applicable parties and/or transactions (including any modification to the terms of such transactions) so as to enable the Indenture Trustee to determine whether it has tax-related obligations under such applicable tax laws, rules and regulations (inclusive of directives, guidelines and interpretations promulgated by competent authorities) and (b) that the Indenture Trustee shall be entitled to make any withholding or deduction from payments under the Basic Documents to the extent necessary to comply with such applicable tax laws, rules and regulations (inclusive of directives, guidelines and interpretations promulgated by competent authorities) for which the Indenture Trustee shall not have any liability.

 

{SIGNATURE PAGE FOLLOWS}

 

72

 

IN WITNESS WHEREOF, the Issuer, the Indenture Trustee and the Securities Intermediary have caused this Indenture to be duly executed by their respective officers thereunto duly authorized and duly attested, all as of the day and year first above written.

 

	
 
    	
CONSUMERS   2014 SECURITIZATION FUNDING LLC,
    
	
 
    	
as   Issuer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   DV Rao
    
	
 
    	
 
    	
Name:
    	
Venkat   Dhenuvakonda Rao
    
	
 
    	
 
    	
Title:
    	
President,   Chief Executive Officer, Chief Financial Officer and Treasurer
    
	
 
    	
 
    
	
 
    	
THE   BANK OF NEW YORK MELLON,
    
	
 
    	
as   Indenture Trustee and as Securities Intermediary
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Esther Antoine
    
	
 
    	
 
    	
Name:
    	
Esther   Antoine
    
	
 
    	
 
    	
Title:
    	
Vice   President
    

 

Signature Page to

Indenture

 

 

	
STATE   OF MICHIGAN
    	
)
    
	
 
    	
  ss.
    
	
COUNTY   OF JACKSON
    	
)
    

 

The foregoing instrument was acknowledged before me this 18th day of July, 2014, by Venkat Dhenuvakonda Rao, President, Chief Executive Officer, Chief Financial Officer and Treasurer of CONSUMERS 2014 SECURITIZATION FUNDING LLC, a Delaware limited liability company, on behalf of the company.

 

 

	
 
    	
/s/   Margaret Hillman
    
	
 
    	
Margaret   Hillman, Notary Public
    
	
{Seal}
    	
State   of Michigan, County of Jackson
    
	
 
    	
My   Commission Expires: June 14, 2016
    
	
 
    	
Acting   in the County of Jackson
    

 

 

	
STATE   OF NEW YORK
    	
)
    
	
 
    	
  ss.
    
	
COUNTY   OF NEW YORK
    	
)
    

 

The foregoing instrument was acknowledged before me this 21st day of July, 2014, by Esther Antoine, Vice President of THE BANK OF NEW YORK MELLON, as Indenture Trustee and Securities Intermediary, a New York banking corporation, on behalf of the bank.

 

 

	
 
    	
/s/   Ricky Chou
    
	
 
    	
Ricky   Chou
    
	
 
    	
Notary   Public, State of New York
    
	
 
    	
No. 01CH6254129
    
	
 
    	
Qualified   in Kings County
    
	
 
    	
Commission   Expires Jan. 17, 2016
    

 

 

EXHIBIT A

 

FORM OF SECURITIZATION BOND

 

See attached.

 

A-1

 

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE REGISTERED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO THE NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON OR ENTITY IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

	
No. {          }
    	
${                    }
    
	
Tranche   {    }
    	
CUSIP No.:   {                    }
    

 

THE PRINCIPAL OF THIS TRANCHE {    } SENIOR SECURED SECURITIZATION BOND, SERIES 2014A (THIS “SECURITIZATION BOND”) WILL BE PAID IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS SECURITIZATION BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE. THE HOLDER OF THIS SECURITIZATION BOND HAS NO RECOURSE TO THE ISSUER HEREOF AND AGREES TO LOOK ONLY TO THE SECURITIZATION BOND COLLATERAL, AS DESCRIBED IN THE INDENTURE, FOR PAYMENT OF ANY AMOUNTS DUE HEREUNDER. ALL OBLIGATIONS OF THE ISSUER OF THIS SECURITIZATION BOND UNDER THE TERMS OF THE INDENTURE WILL BE RELEASED AND DISCHARGED UPON PAYMENT IN FULL HEREOF OR AS OTHERWISE PROVIDED IN SECTION 3.10(b) OR ARTICLE IV OF THE INDENTURE. THE HOLDER OF THIS SECURITIZATION BOND HEREBY COVENANTS AND AGREES THAT PRIOR TO THE DATE THAT IS ONE YEAR AND ONE DAY AFTER THE PAYMENT IN FULL OF THIS SECURITIZATION BOND, IT WILL NOT INSTITUTE AGAINST, OR JOIN ANY OTHER PERSON IN INSTITUTING AGAINST, THE ISSUER ANY BANKRUPTCY, REORGANIZATION, ARRANGEMENT, INSOLVENCY OR LIQUIDATION PROCEEDINGS OR OTHER SIMILAR PROCEEDING UNDER THE LAWS OF THE UNITED STATES OR ANY STATE OF THE UNITED STATES. NOTHING IN THIS PARAGRAPH SHALL PRECLUDE, OR BE DEEMED TO ESTOP, SUCH HOLDER (A) FROM TAKING OR OMITTING TO TAKE ANY ACTION PRIOR TO SUCH DATE IN (I) ANY CASE OR PROCEEDING VOLUNTARILY FILED OR COMMENCED BY OR ON BEHALF OF THE ISSUER UNDER OR PURSUANT TO ANY SUCH LAW OR (II) ANY INVOLUNTARY CASE OR PROCEEDING PERTAINING TO THE ISSUER THAT IS FILED OR COMMENCED BY OR ON BEHALF OF A PERSON OTHER THAN SUCH HOLDER AND IS NOT JOINED IN BY SUCH HOLDER (OR ANY PERSON TO WHICH SUCH HOLDER SHALL HAVE ASSIGNED, TRANSFERRED OR 

 

1

 

OTHERWISE CONVEYED ANY PART OF THE OBLIGATIONS OF THE ISSUER HEREUNDER) UNDER OR PURSUANT TO ANY SUCH LAW OR (B) FROM COMMENCING OR PROSECUTING ANY LEGAL ACTION THAT IS NOT AN INVOLUNTARY CASE OR PROCEEDING UNDER OR PURSUANT TO ANY SUCH LAW AGAINST THE ISSUER OR ANY OF ITS PROPERTIES.

 

CONSUMERS 2014 SECURITIZATION FUNDING LLC
 SENIOR SECURED SECURITIZATION BONDS, SERIES 2014A, TRANCHE {    }

 

	
BOND INTEREST
   RATE
    	
 
    	
ORIGINAL PRINCIPAL
   AMOUNT
    	
 
    	
FINAL MATURITY
   DATE
    	
 
    
	
{        }
    	
%
    	
$
    	
{                    }
    	
 
    	
{                    },   20{    }
    	
 
    
	
{        }
    	
%
    	
$
    	
{                    }
    	
 
    	
{                    },   20{    }
    	
 
    
	
{        }
    	
%
    	
$
    	
{                    }
    	
 
    	
{                    },   20{    }
    	
 
    

 

CONSUMERS 2014 SECURITIZATION FUNDING LLC, a limited liability company created under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to {                    }, or registered assigns, the Original Principal Amount shown above in semi-annual installments on the Payment Dates and in the amounts specified below or, if less, the amounts determined pursuant to Section 8.02 of the Indenture, in each year, commencing on the date determined as provided below and ending on or before the Final Maturity Date shown above and to pay interest, at the Bond Interest Rate shown above, on each {                    } and {                    } or, if any such day is not a Business Day, the next Business Day, commencing on {                    }, 20{    } and continuing until the earlier of the payment in full of the principal hereof and the Final Maturity Date (each, a “Payment Date”), on the principal amount of this Securitization Bond. Interest on this Securitization Bond will accrue for each Payment Date from the most recent Payment Date on which interest has been paid to but excluding such Payment Date or, if no interest has yet been paid, from the date of issuance. Interest will be computed on the basis of {                    }. Such principal of and interest on this Securitization Bond shall be paid in the manner specified below.

 

The principal of and interest on this Securitization Bond are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Issuer with respect to this Securitization Bond shall be applied first to interest due and payable on this Securitization Bond as provided above and then to the unpaid principal of and premium, if any, on this Securitization Bond, all in the manner set forth in the Indenture.

 

Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual signature, this Securitization Bond shall not be entitled to any benefit under the Indenture referred to below or be valid or obligatory for any purpose.

 

2

 

IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Responsible Officer.

 

	
Date:   {                    },   20{    }
    	
CONSUMERS   2014 SECURITIZATION FUNDING LLC,
    
	
 
    	
as   Issuer
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

3

 

INDENTURE TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

Dated: {                    }, 20{    }

 

This is one of the Tranche {    } Senior Secured Securitization Bonds, Series 2014A, designated above and referred to in the within-mentioned Indenture.

 

	
 
    	
THE   BANK OF NEW YORK MELLON,
    
	
 
    	
as   Indenture Trustee
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

4

 

This Senior Secured Securitization Bond, Series 2014A is one of a duly authorized issue of Senior Secured Securitization Bonds, Series 2014A of the Issuer (herein called the “Bonds”), which Bonds are issuable in one or more Tranches. The Bonds consist of {    } Tranches, including the Tranche {    } Senior Secured Securitization Bonds, Series 2014A, which include this Senior Secured Securitization Bond, Series 2014A (herein called the “Securitization Bonds”), all issued and to be issued under that certain Indenture dated as of July 22, 2014 (as supplemented by the Series Supplement (as defined below), the “Indenture”), between the Issuer and The Bank of New York Mellon, in its capacity as indenture trustee (the “Indenture Trustee”, which term includes any successor indenture trustee under the Indenture) and in its separate capacity as a securities intermediary (the “Securities Intermediary”, which term includes any successor securities intermediary under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and the Holders of the Bonds. For purposes herein, “Series Supplement” means that certain Series Supplement dated as of July 22, 2014 between the Issuer and the Indenture Trustee. All terms used in this Securitization Bond that are defined in the Indenture, as amended, restated, supplemented or otherwise modified from time to time, shall have the meanings assigned to such terms in the Indenture.

 

All Tranches of Bonds are and will be equally and ratably secured by the Securitization Bond Collateral pledged as security therefor as provided in the Indenture.

 

The principal of this Securitization Bond shall be payable on each Payment Date only to the extent that amounts in the Collection Account are available therefor, and only until the outstanding principal balance thereof on the preceding Payment Date (after giving effect to all payments of principal, if any, made on the preceding Payment Date) has been reduced to the principal balance specified in the Expected Amortization Schedule that is attached to the Series Supplement as Schedule A, unless payable earlier because an Event of Default shall have occurred and be continuing and the Indenture Trustee or the Holders representing a majority of the Outstanding Amount of the Bonds have declared the Bonds to be immediately due and payable in accordance with Section 5.02 of the Indenture (unless such declaration shall have been rescinded and annulled in accordance with Section 5.02 of the Indenture). However, actual principal payments may be made in lesser than expected amounts and at later than expected times as determined pursuant to Section 8.02 of the Indenture. The entire unpaid principal amount of this Securitization Bond shall be due and payable on the Final Maturity Date hereof. Notwithstanding the foregoing, the entire unpaid principal amount of the Bonds shall be due and payable, if not then previously paid, on the date on which an Event of Default shall have occurred and be continuing and the Indenture Trustee or the Holders of the Bonds representing a majority of the Outstanding Amount of the Bonds have declared the Securitization Bonds to be immediately due and payable in the manner provided in Section 5.02 of the Indenture (unless such declaration shall have been rescinded and annulled in accordance with Section 5.02 of the Indenture). All principal payments on the Securitization Bonds shall be made pro rata to the Holders of the Securitization Bonds entitled thereto based on the respective principal amounts of the Securitization Bonds held by them.

 

Payments of interest on this Securitization Bond due and payable on each Payment Date, together with the installment of principal or premium, if any, shall be made by 

 

5

 

check mailed first-class, postage prepaid, to the Person whose name appears as the Registered Holder of this Securitization Bond (or one or more Predecessor Securitization Bonds) on the Securitization Bond Register as of the close of business on the Record Date or in such other manner as may be provided in the Indenture or the Series Supplement, except that (a) upon application to the Indenture Trustee by any Holder owning a Global Securitization Bond evidencing this Securitization Bond in the principal amount of $10,000,000 or more not later than the applicable Record Date, payment will be made by wire transfer to an account maintained by such Holder, and (b) if this Securitization Bond is held in Book-Entry Form, payments will be made by wire transfer in immediately available funds to the account designated by the Holder of the applicable Global Securitization Bond evidencing this Securitization Bond unless and until such Global Securitization Bond is exchanged for Definitive Securitization Bonds (in which event payments shall be made as provided above) and except for the final installment of principal and premium, if any, payable with respect to this Securitization Bond on a Payment Date, which shall be payable as provided below. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Securitization Bond Register as of the applicable Record Date without requiring that this Securitization Bond be submitted for notation of payment. Any reduction in the principal amount of this Securitization Bond (or any one or more Predecessor Securitization Bonds) effected by any payments made on any Payment Date shall be binding upon all future Holders of this Securitization Bond and of any Securitization Bond issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the then-remaining unpaid principal amount of this Securitization Bond on a Payment Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, will notify the Person who was the Registered Holder hereof as of the Record Date preceding such Payment Date by notice mailed no later than five days prior to such final Payment Date and shall specify that such final installment will be payable only upon presentation and surrender of this Securitization Bond and shall specify the place where this Securitization Bond may be presented and surrendered for payment of such installment.

 

The Issuer shall pay interest on overdue installments of interest at the Bond Interest Rate to the extent lawful.

 

This Securitization Bond is a “securitization bond” as such term is defined in the Securitization Law. Principal and interest due and payable on this Securitization Bond are payable from and secured primarily by Securitization Property created and established by the Financing Order obtained from the Michigan Public Service Commission pursuant to the Securitization Law. Securitization Property consists of the rights and interests of the Seller in the Financing Order, including the right to impose, collect and receive Securitization Charges, the right to obtain True-Up Adjustments and all revenue, collections, payments, moneys and proceeds arising out of the rights and interests created under the Financing Order.

 

Under the laws of the State of Michigan in effect on the Closing Date, pursuant to Section 10n(2) of the Securitization Law, the State of Michigan has pledged for the benefit and protection of the Holders, the Indenture Trustee, other Persons acting for the benefit of the Holders and Consumers Energy that the State of Michigan will not take or permit any action that impairs the value of Securitization Property, reduce or alter, except as allowed under Section 10k(3) of the Securitization Law, or impair Securitization Charges to be imposed, collected and 

 

6

 

remitted to the Holders, the Indenture Trustee and other Persons acting for the benefit of the Holders, until any principal, interest and premium in respect of Securitization Bonds, and any other charges incurred and contracts to be performed, in connection with Securitization Bonds have been paid or performed in full.

 

The Issuer and Consumers Energy hereby acknowledge that the purchase of this Securitization Bond by the Holder hereof or the purchase of any beneficial interest herein by any Person are made in reliance on the foregoing pledge.

 

As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Securitization Bond may be registered on the Securitization Bond Register upon surrender of this Securitization Bond for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by, (a) a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Holder hereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) such other signature guaranty program acceptable to the Indenture Trustee, and (b) such other documents as the Indenture Trustee may require, and thereupon one or more new Securitization Bonds of Authorized Denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Securitization Bond, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange, other than exchanges pursuant to Section 2.04 or Section 2.06 of the Indenture not involving any transfer.

 

Each Holder, by acceptance of a Securitization Bond, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Securitization Bonds or under the Indenture or any certificate or other writing delivered in connection therewith, against (a) any owner of a membership interest in the Issuer (including Consumers Energy) or (b) any shareholder, partner, owner, beneficiary, agent, officer or employee of the Indenture Trustee, the Managers or any owner of a membership interest in the Issuer (including Consumers Energy) in its respective individual or corporate capacities, or of any successor or assign of any of them in their individual or corporate capacities, except as any such Person may have expressly agreed in writing. Each Holder by accepting a Securitization Bond specifically confirms the nonrecourse nature of these obligations and waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Securitization Bonds.

 

Prior to the due presentment for registration of transfer of this Securitization Bond, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Securitization Bond is registered (as of the day of determination) as the owner hereof for the purpose of receiving payments of principal of and premium, if any, and interest on this Securitization Bond and for all other purposes whatsoever, whether or not this Securitization Bond be overdue, and none of the Issuer, the Indenture Trustee or any such agent shall be affected by notice to the contrary.

 

7

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders of the Securitization Bonds under the Indenture at any time by the Issuer with the consent of the Holders representing a majority of the Outstanding Amount of all Securitization Bonds at the time outstanding of each Tranche to be affected. The Indenture also contains provisions permitting the Holders representing specified percentages of the Outstanding Amount of the Securitization Bonds, on behalf of the Holders of all the Securitization Bonds, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Securitization Bond (or any one of more Predecessor Securitization Bonds) shall be conclusive and binding upon such Holder and upon all future Holders of this Securitization Bond and of any Securitization Bond issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Securitization Bond. The Indenture also permits the Indenture Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of the Securitization Bonds issued thereunder.

 

The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of the Issuer on this Securitization Bond and (b) certain restrictive covenants and the related Events of Default, upon compliance by the Issuer with certain conditions set forth in the Indenture, which provisions apply to this Securitization Bond.

 

The term “Issuer” as used in this Securitization Bond includes any successor to the Issuer under the Indenture.

 

The Issuer is permitted by the Indenture, under certain circumstances, to merge or consolidate, subject to the rights of the Indenture Trustee and the Holders under the Indenture.

 

The Securitization Bonds are issuable only in registered form in denominations as provided in the Indenture and the Series Supplement subject to certain limitations therein set forth.

 

This Securitization Bond, the Indenture and the Series Supplement shall be construed in accordance with the laws of the State of New York, without reference to its conflict of law provisions (other than Section 5-1401 of the New York General Obligations Law and Sections 9-301 through 9-306 of the NY UCC), and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws; provided, that the creation, attachment and perfection of any Liens created under the Indenture in Securitization Property, and all rights and remedies of the Indenture Trustee and the Holders with respect to the Securitization Property, shall be governed by the laws of the State of Michigan.

 

No reference herein to the Indenture and no provision of this Securitization Bond or of the Indenture shall alter or impair the obligation, which is absolute and unconditional, to pay the principal of and interest on this Securitization Bond at the times, place and rate and in the coin or currency herein prescribed.

 

8

 

The Issuer and the Indenture Trustee, by entering into the Indenture, and the Holders and any Persons holding a beneficial interest in any Securitization Bond, by acquiring any Securitization Bond or interest therein, (a) express their intention that, solely for the purpose of U.S. federal taxes and, to the extent consistent with applicable state, local and other tax law, solely for the purpose of state, local and other taxes, the Securitization Bonds qualify under applicable tax law as indebtedness of the sole owner of the Issuer secured by the Securitization Bond Collateral and (b) solely for purposes of U.S. federal taxes and, to the extent consistent with applicable state, local and other tax law, solely for purposes of state, local and other taxes, so long as any of the Securitization Bonds are outstanding, agree to treat the Securitization Bonds as indebtedness of the sole owner of the Issuer secured by the Securitization Bond Collateral unless otherwise required by appropriate taxing authorities.

 

9

 

ABBREVIATIONS

 

The following abbreviations, when used above on this Securitization Bond, shall be construed as though they were written out in full according to applicable laws or regulations.

 

	
TEN   COM
    	
as   tenants in common
    
	
 
    	
 
    
	
TEN   ENT
    	
as   tenants by the entireties
    
	
 
    	
 
    
	
JT   TEN
    	
as   joint tenants with right of survivorship and not as tenants in common
    
	
 
    	
 
    
	
UNIF   GIFT MIN ACT
    	
                                        Custodian
    
	
 
    	
                (Custodian)                                     (minor)
    
	
 
    	
Under   Uniform Gifts to Minor Act   (                                        )
    
	
 
    	
                                                                         (State)
    

 

Additional abbreviations may also be used though not in the above list.

 

10

 

ASSIGNMENT

 

Social Security or taxpayer I.D. or other identifying number of assignee

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

 

	
 
    

 

(name and address of assignee)

 

the within Securitization Bond and all rights thereunder, and hereby irrevocably constitutes and appoints                         , attorney, to transfer said Securitization Bond on the books kept for registration thereof, with full power of substitution in the premises.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature   Guaranteed:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

The signature to this assignment must correspond with the name of the registered owner as it appears on the within Securitization Bond in every particular, without alteration, enlargement or any change whatsoever.

 

NOTE: Signature(s) must be guaranteed by an institution that is a member of: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other signature guaranty program acceptable to the Indenture Trustee.

 

11

 

EXHIBIT B

 

FORM OF SERIES SUPPLEMENT

 

See attached.

 

B-1

 

This SERIES SUPPLEMENT, dated as of July 22, 2014 (this “Supplement”), is by and between CONSUMERS 2014 SECURITIZATION FUNDING LLC, a limited liability company created under the laws of the State of Delaware (the “Issuer”), and The Bank of New York Mellon, a New York banking corporation (“Bank”), in its capacity as indenture trustee (the “Indenture Trustee”) for the benefit of the Secured Parties under the Indenture dated as of July 22, 2014, by and between the Issuer and The Bank of New York Mellon, in its capacity as Indenture Trustee and in its separate capacity as a securities intermediary (the “Indenture”).

 

PRELIMINARY STATEMENT

 

Section 9.01 of the Indenture provides, among other things, that the Issuer and the Indenture Trustee may at any time enter into an indenture supplemental to the Indenture for the purposes of authorizing the issuance by the Issuer of the Securitization Bonds and specifying the terms thereof. The Issuer has duly authorized the creation of the Securitization Bonds with an initial aggregate principal amount of ${                    } to be known as Senior Secured Securitization Bonds, Series 2014A (the “Securitization Bonds”), and the Issuer and the Indenture Trustee are executing and delivering this Supplement in order to provide for the Securitization Bonds.

 

All terms used in this Supplement that are defined in the Indenture, either directly or by reference therein, have the meanings assigned to them therein, except to the extent such terms are defined or modified in this Supplement or the context clearly requires otherwise. In the event that any term or provision contained herein shall conflict with or be inconsistent with any term or provision contained in the Indenture, the terms and provisions of this Supplement shall govern.

 

GRANTING CLAUSE

 

With respect to the Securitization Bonds, the Issuer hereby Grants to the Indenture Trustee, as Indenture Trustee for the benefit of the Secured Parties of the Securitization Bonds, all of the Issuer’s right, title and interest (whether now owned or hereafter acquired or arising) in and to (a) the Securitization Property created under and pursuant to the Financing Order and the Securitization Law, and transferred by the Seller to the Issuer pursuant to the Sale Agreement (including, to the fullest extent permitted by law, the right to impose, collect and receive the Securitization Charges, the right to obtain periodic adjustments to the Securitization Charges, and all revenue, collections, payments, money and proceeds arising out of the rights and interests created under the Financing Order), (b) all Securitization Charges related to the Securitization Property, (c) the Sale Agreement and the Bill of Sale executed in connection therewith and all property and interests in property transferred under the Sale Agreement and the Bill of Sale with respect to the Securitization Property and the Securitization Bonds, (d) the Servicing Agreement, the Administration Agreement, the Intercreditor Agreement and any subservicing, agency, administration or collection agreements executed in connection therewith, to the extent related to the foregoing Securitization Property and the Securitization Bonds, (e) the Collection Account, all subaccounts thereof and all amounts of cash, instruments, investment property or other assets on deposit therein or credited thereto from time to time and all financial assets and securities entitlements carried therein or credited thereto, (f) all rights to 

 

1

 

compel the Servicer to file for and obtain periodic adjustments to the Securitization Charges in accordance with Section 10k(3) of the Securitization Law and the Financing Order, (g) all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing, whether such claims, demands, causes and choses in action constitute Securitization Property, accounts, general intangibles, instruments, contract rights, chattel paper or proceeds of such items or any other form of property, (h) all accounts, chattel paper, deposit accounts, documents, general intangibles, goods, instruments, investment property, letters of credit, letters-of-credit rights, money, commercial tort claims and supporting obligations related to the foregoing, and (i) all payments on or under, and all proceeds in respect of, any or all of the foregoing, it being understood that the following do not constitute Securitization Bond Collateral: (x) cash that has been released pursuant to the terms of the Indenture, including Section 8.02(e)(x) of the Indenture and, following retirement of all Outstanding Securitization Bonds, pursuant to Section 8.02(e)(xii) of the Indenture and (y) amounts deposited with the Issuer on the Closing Date, for payment of costs of issuance with respect to the Securitization Bonds (together with any interest earnings thereon), it being understood that such amounts described in clause (x) and clause (y) above shall not be subject to Section 3.17 of the Indenture.

 

The foregoing Grant is made in trust to secure the Secured Obligations equally and ratably without prejudice, priority or distinction, except as expressly provided in the Indenture, to secure compliance with the provisions of the Indenture with respect to the Securitization Bonds, all as provided in the Indenture and to secure the performance by the Issuer of all of its obligations under the Indenture. The Indenture and this Supplement constitute a security agreement within the meaning of the Securitization Law and under the UCC to the extent that the provisions of the UCC are applicable hereto.

 

The Indenture Trustee, as indenture trustee on behalf of the Secured Parties of the Securitization Bonds, acknowledges such Grant and accepts the trusts under this Supplement and the Indenture in accordance with the provisions of this Supplement and the Indenture.

 

SECTION 1. Designation. The Securitization Bonds shall be designated generally as the Securitization Bonds{, and further denominated as Tranches {    } through {    }}.

 

SECTION 2. Initial Principal Amount; Bond Interest Rate; Scheduled Final Payment Date; Final Maturity Date. The Securitization Bonds {of each Tranche} shall have the initial principal amount, bear interest at the rates per annum (the “Bond Interest Rate”) and shall have the Scheduled Final Payment Dates and the Final Maturity Dates set forth below:

 

	
{Tranche}
    	
 
    	
Initial
   Principal
   Amount
    	
 
    	
Bond
   Interest
   Rate
    	
 
    	
Scheduled
   Final Payment
   Date
    	
 
    	
Final
   Maturity
   Date
    	
 
    
	
{    }
    	
 
    	
$
    	
{                    }
    	
 
    	
{        }
    	
%
    	
{          },   20{    }
    	
 
    	
{          },   20{    }
    	
 
    
	
{    }
    	
 
    	
$
    	
{                    }
    	
 
    	
{        }
    	
%
    	
{          },   20{    }
    	
 
    	
{          },   20{    }
    	
 
    
	
{    }
    	
 
    	
$
    	
{                    }
    	
 
    	
{        }
    	
%
    	
{          },   20{    }
    	
 
    	
{          },   20{    }
    	
 
    

 

The Bond Interest Rate shall be computed on the basis of a 360-day year of twelve 30-day months.

 

2

 

SECTION 3. Authentication Date; Payment Dates; Expected Amortization Schedule for Principal; Periodic Interest; Book-Entry Securitization Bonds; Waterfall Caps.

 

(a)                                 Authentication Date. The Securitization Bonds that are authenticated and delivered by the Indenture Trustee to or upon the order of the Issuer on July 22, 2014 (the “Closing Date”) shall have as their date of authentication July 22, 2014.

 

(b)                                 Payment Dates. The “Payment Dates” for the Securitization Bonds are {                    } and {                    } of each year or, if any such date is not a Business Day, the next Business Day, commencing on {                    }, 20{    } and continuing until the earlier of repayment of the Securitization Bonds in full and the Final Maturity Date.

 

(c)                                  Expected Amortization Schedule for Principal. Unless an Event of Default shall have occurred and be continuing, on each Payment Date, the Indenture Trustee shall distribute to the Holders of record as of the related Record Date amounts payable pursuant to Section 8.02(e) of the Indenture as principal, in the following order and priority: {(1) to the holders of the Tranche {    } Securitization Bonds, until the Outstanding Amount of such Tranche of Securitization Bonds thereof has been reduced to zero; (2) to the holders of the Tranche {    } Securitization Bonds, until the Outstanding Amount of such Tranche of Securitization Bonds thereof has been reduced to zero; and (3) to the holders of the Tranche {    } Securitization Bonds, until the Outstanding Amount of such Tranche of Securitization Bonds thereof has been reduced to zero; provided, however, that in no event shall a principal payment pursuant to this Section 3(c) on any Tranche on a Payment Date be greater than the amount necessary to reduce the Outstanding Amount of such Tranche of Securitization Bonds to the amount specified in the Expected Amortization Schedule that is attached as Schedule A hereto for such Tranche and Payment Date}.

 

(d)                                 Periodic Interest. “Periodic Interest” will be payable on {each Tranche of} the Securitization Bonds on each Payment Date in an amount equal to one-half of the product of (i) the applicable Bond Interest Rate and (ii) the Outstanding Amount of the {related Tranche of} Securitization Bonds as of the close of business on the preceding Payment Date after giving effect to all payments of principal made to the Holders of the {related Tranche of} Securitization Bonds on such preceding Payment Date; provided, however, that, with respect to the initial Payment Date, or if no payment has yet been made, interest on the outstanding principal balance will accrue from and including the Closing Date to, but excluding, the following Payment Date.

 

(e)                                  Book-Entry Securitization Bonds. The Securitization Bonds shall be Book-Entry Securitization Bonds, and the applicable provisions of Section 2.11 of the Indenture shall apply to the Securitization Bonds.

 

(f)                                   Waterfall  Caps.  The  amount  payable  with  respect  to  the  Securitization  Bonds  pursuant  to  Section  8.02(e)(i)  of the indenture shall not exceed ${                } annually.

 

SECTION 4. Authorized Denominations. The Securitization Bonds shall be issuable in denominations of {$100,000 and integral multiples of $1,000 in excess thereof} (the “Authorized Denominations”).

 

SECTION 5. Delivery and Payment for the Securitization Bonds; Form of the Securitization Bonds. The Indenture Trustee shall deliver the Securitization Bonds to the Issuer 

 

3

 

when authenticated in accordance with Section 2.03 of the Indenture. The Securitization Bonds {of each Tranche} shall be in the form of Exhibit{s} {    } hereto.

 

SECTION 6. Ratification of Indenture. As supplemented by this Supplement, the Indenture is in all respects ratified and confirmed and the Indenture, as so supplemented by this Supplement, shall be read, taken and construed as one and the same instrument. This Supplement amends, modifies and supplements the Indenture only insofar as it relates to the Securitization Bonds.

 

SECTION 7. Counterparts. This Supplement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument.

 

SECTION 8. Governing Law. This Supplement shall be governed by and construed in accordance with the laws of the State of New York, without reference to its conflict of law provisions (other than Section 5-1401 of the New York General Obligations Law and Sections 9-301 through 9-306 of the NY UCC), and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws; provided, that, except as set forth in Section 8.02(b) of the Indenture, the creation, attachment and perfection of any Liens created under the Indenture in Securitization Property, and all rights and remedies of the Indenture Trustee and the Holders with respect to the Securitization Property, shall be governed by the laws of the State of Michigan.

 

SECTION 9. Issuer Obligation. No recourse may be taken directly or indirectly by the Holders with respect to the obligations of the Issuer on the Securitization Bonds, under the Indenture or this Supplement or any certificate or other writing delivered in connection herewith or therewith, against (a) any owner of a beneficial interest in the Issuer (including Consumers Energy) or (b) any shareholder, partner, owner, beneficiary, officer, director, employee or agent of the Indenture Trustee, the Managers or any owner of a beneficial interest in the Issuer (including Consumers Energy) in its individual capacity, or of any successor or assign of any of them in their respective individual or corporate capacities, except as any such Person may have expressly agreed. Each Holder by accepting a Securitization Bond specifically confirms the nonrecourse nature of these obligations and waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Securitization Bonds.

 

SECTION 10. Indenture Trustee Disclaimer. The Indenture Trustee is not responsible for the validity or sufficiency of this Supplement or for the recitals contained herein.

 

SECTION 11. Submission to Non-Exclusive Jurisdiction; Waiver of Jury Trial. Each of the Issuer and the Indenture Trustee hereby irrevocably submits to the non-exclusive jurisdiction of any New York State court sitting in The Borough of Manhattan in The City of New York or any U.S. federal court sitting in The Borough of Manhattan in The City of New York in respect of any suit, action or proceeding arising out of or relating to this Supplement and the Securitization Bonds and irrevocably accepts for itself and in respect of its respective property, generally and unconditionally, jurisdiction of the 

 

4

 

aforesaid courts. Each of the Issuer and the Indenture Trustee irrevocably waives, to the fullest extent that it may effectively do so under applicable law, trial by jury.

 

5

 

IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this Supplement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.

 

	
 
    	
CONSUMERS   2014 SECURITIZATION FUNDING LLC,
    
	
 
    	
as   Issuer
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
THE   BANK OF NEW YORK MELLON,
    
	
 
    	
as   Indenture Trustee and as Securities Intermediary
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

6

 

SCHEDULE A
 TO SERIES SUPPLEMENT

 

EXPECTED AMORTIZATION SCHEDULE

 

OUTSTANDING PRINCIPAL BALANCE

 

	
Date
    	
 
    	
Tranche {    }
    	
 
    	
Tranche {    }
    	
 
    	
Tranche {    }
    	
 
    
	
Closing Date
    	
 
    	
$
    	
{                    }
    	
 
    	
$
    	
{                    }
    	
 
    	
$
    	
{                    }
    	
 
    
	
{                    },   20{    }
    	
 
    	
$
    	
{                    }
    	
 
    	
$
    	
{                    }
    	
 
    	
$
    	
{                    }
    	
 
    
	
{                    },   20{    }
    	
 
    	
$
    	
{                    }
    	
 
    	
$
    	
{                    }
    	
 
    	
$
    	
{                    }
    	
 
    
	
{                    },   20{    }
    	
 
    	
$
    	
{                    }
    	
 
    	
$
    	
{                    }
    	
 
    	
$
    	
{                    }
    	
 
    

 

7

 

EXHIBIT {    }
 TO SERIES SUPPLEMENT

 

FORM OF {TRANCHE {    } OF} SECURITIZATION BONDS

 

{                    }

 

8

 

EXHIBIT C

 

SERVICING CRITERIA TO BE ADDRESSED
 BY INDENTURE TRUSTEE IN ASSESSMENT OF COMPLIANCE

 

	
Regulation AB
   Reference
    	
 
    	
Servicing Criteria
    	
 
    	
Applicable Indenture
   Trustee Responsibility
    
	
 
    	
 
    	
General   Servicing Considerations
    	
 
    	
 
    
	
1122(d)(1)(i)
    	
 
    	
Policies   and procedures are instituted to monitor any performance or other triggers   and events of default in accordance with the transaction agreements.
    	
 
    	
 
    
	
1122(d)(1)(ii)
    	
 
    	
If   any material servicing activities are outsourced to third parties, policies   and procedures are instituted to monitor the third party’s performance and   compliance with such servicing activities.
    	
 
    	
 
    
	
1122(d)(1)(iii)
    	
 
    	
Any   requirements in the transaction agreements to maintain a back-up servicer for   the pool assets are maintained.
    	
 
    	
 
    
	
1122(d)(1)(iv)
    	
 
    	
A   fidelity bond and errors and omissions policy is in effect on the party   participating in the servicing function throughout the reporting period in   the amount of coverage required by and otherwise in accordance with the terms   of the transaction agreements.
    	
 
    	
 
    
	
 
    	
 
    	
Cash   Collection and Administration
    	
 
    	
 
    
	
1122(d)(2)(i)
    	
 
    	
Payments   on pool assets are deposited into the appropriate custodial bank accounts and   related bank clearing accounts no more than two business days following   receipt, or such other number of days specified in the transaction   agreements.
    	
 
    	
X
    
	
1122(d)(2)(ii)
    	
 
    	
Disbursements   made via wire transfer on behalf of an obligor or to an investor are made   only by authorized personnel.
    	
 
    	
X
    
	
1122(d)(2)(iii)
    	
 
    	
Advances   of funds or guarantees regarding collections, cash flows or distributions,   and any interest or other fees charged for such advances, are made, reviewed   and approved as specified in the transaction agreements.
    	
 
    	
 
    
	
1122(d)(2)(iv)
    	
 
    	
The   related accounts for the transaction, such as cash reserve accounts or   accounts established as a form of overcollateralization, are separately   maintained (e.g., with respect to commingling of cash) as set forth in the   transaction agreements.
    	
 
    	
X
    
	
1122(d)(2)(v)
    	
 
    	
Each   custodial account is maintained at a federally insured depository institution   as set forth in the transaction agreements. For purposes of this criterion,   “federally insured depository institution” with respect to a foreign   financial institution means a foreign financial institution that meets the   requirements of Rule 13k-1(b)(1) under the Exchange Act.
    	
 
    	
X
    
	
1122(d)(2)(vi)
    	
 
    	
Unissued   checks are safeguarded so as to prevent unauthorized access.
    	
 
    	
 
    
	
1122(d)(2)(vii)
    	
 
    	
Reconciliations   are prepared on a monthly basis for all asset-backed securities related bank   accounts, including custodial accounts and related bank clearing accounts.   These reconciliations are: (A) mathematically accurate;   (B) prepared within 30 calendar days after the bank statement cutoff   date, or such other number of days specified in the transaction agreements;   (C) reviewed and approved by someone other than the person who prepared   the reconciliation; and (D) contain explanations for reconciling items.   These reconciling items are resolved within 90 calendar days of their   original identification, or such other number of days specified in the   transaction agreements.
    	
 
    	
 
    
	
 
    	
 
    	
Investor   Remittances and Reporting
    	
 
    	
 
    
	
1122(d)(3)(i)
    	
 
    	
Reports   to investors, including those to be filed with the SEC, are maintained in   accordance with the transaction agreements and applicable SEC requirements.   Specifically, such reports: (A) are prepared in accordance with   timeframes and other terms set forth in the transaction agreements;   (B) provide information calculated in accordance with the terms specified   in the transaction agreements; (C) are filed with the SEC as required by   its rules and regulations; and (D) agree with investors’ or the   trustee’s records as to the total unpaid principal balance and number of pool   assets serviced by the servicer.
    	
 
    	
 
    
	
1122(d)(3)(ii)
    	
 
    	
Amounts   due to investors are allocated and remitted in accordance with timeframes,   distribution priority and other terms set forth in the transaction   agreements.
    	
 
    	
X
    
	
1122(d)(3)(iii)
    	
 
    	
Disbursements   made to an investor are posted within two business days to the servicer’s   investor records, or such other number of days specified in the transaction   agreements.
    	
 
    	
X
    
	
1122(d)(3)(iv)
    	
 
    	
Amounts   remitted to investors per the investor reports agree with cancelled checks,   or other form of payment, or custodial bank statements.
    	
 
    	
X
    

 

C-1

 

	
Regulation AB
   Reference
    	
 
    	
Servicing Criteria
    	
 
    	
Applicable Indenture
   Trustee Responsibility
    
	
 
    	
 
    	
Pool   Asset Administration
    	
 
    	
 
    
	
1122(d)(4)(i)
    	
 
    	
Collateral   or security on pool assets is maintained as required by the transaction   agreements or related pool asset documents.
    	
 
    	
X
    
	
1122(d)(4)(ii)
    	
 
    	
Pool   assets and related documents are safeguarded as required by the transaction   agreements.
    	
 
    	
 
    
	
1122(d)(4)(iii)
    	
 
    	
Any   additions, removals or substitutions to the asset pool are made, reviewed and   approved in accordance with any conditions or requirements in the transaction   agreements.
    	
 
    	
 
    
	
1122(d)(4)(iv)
    	
 
    	
Payments   on pool assets, including any payoffs, made in accordance with the related   pool asset documents are posted to the servicer’s obligor records maintained   no more than two business days after receipt, or such other number of days   specified in the transaction agreements, and allocated to principal, interest   or other items (e.g., escrow) in accordance with the related pool asset   documents.
    	
 
    	
 
    
	
1122(d)(4)(v)
    	
 
    	
The   servicer’s records regarding the pool assets agree with the servicer’s   records with respect to an obligor’s unpaid principal balance.
    	
 
    	
 
    
	
1122(d)(4)(vi)
    	
 
    	
Changes   with respect to the terms or status of an obligor’s pool assets (e.g., loan   modifications or re-agings) are made, reviewed and approved by authorized   personnel in accordance with the transaction agreements and related pool   asset documents.
    	
 
    	
 
    
	
1122(d)(4)(vii)
    	
 
    	
Loss   mitigation or recovery actions (e.g., forbearance plans, modifications and   deeds in lieu of foreclosure, foreclosures and repossessions, as applicable)   are initiated, conducted and concluded in accordance with the timeframes or   other requirements established by the transaction agreements.
    	
 
    	
 
    
	
1122(d)(4)(viii)
    	
 
    	
Records   documenting collection efforts are maintained during the period a pool asset   is delinquent in accordance with the transaction agreements. Such records are   maintained on at least a monthly basis, or such other period specified in the   transaction agreements, and describe the entity’s activities in monitoring   delinquent pool assets, including, for example, phone calls, letters and   payment rescheduling plans in cases where delinquency is deemed temporary   (e.g., illness or unemployment).
    	
 
    	
 
    
	
1122(d)(4)(ix)
    	
 
    	
Adjustments   to interest rates or rates of return for pool assets with variable rates are   computed based on the related pool asset documents.
    	
 
    	
 
    
	
1122(d)(4)(x)
    	
 
    	
Regarding   any funds held in trust for an obligor (such as escrow accounts):   (A) such funds are analyzed, in accordance with the obligor’s pool asset   documents, on at least an annual basis, or such other period specified in the   transaction agreements; (B) interest on such funds is paid, or credited,   to obligors in accordance with applicable pool asset documents and state   laws; and (C) such funds are returned to the obligor within 30 calendar   days of full repayment of the related pool assets, or such other number of   days specified in the transaction agreements.
    	
 
    	
 
    
	
1122(d)(4)(xi)
    	
 
    	
Payments   made on behalf of an obligor (such as tax or insurance payments) are made on   or before the related penalty or expiration dates, as indicated on the   appropriate bills or notices for such payments, provided that such support   has been received by the servicer at least 30 calendar days prior to these   dates, or such other number of days specified in the transaction agreements.
    	
 
    	
 
    
	
1122(d)(4)(xii)
    	
 
    	
Any   late payment penalties in connection with any payment to be made on behalf of   an obligor are paid from the servicer’s funds and not charged to the obligor,   unless the late payment was due to the obligor’s error or omission.
    	
 
    	
 
    
	
1122(d)(4)(xiii)
    	
 
    	
Disbursements   made on behalf of an obligor are posted within two business days to the   obligor’s records maintained by the servicer, or such other number of days   specified in the transaction agreements.
    	
 
    	
 
    
	
1122(d)(4)(xiv)
    	
 
    	
Delinquencies,   charge-offs and uncollectible accounts are recognized and recorded in   accordance with the transaction agreements.
    	
 
    	
 
    
	
1122(d)(4)(xv)
    	
 
    	
Any   external enhancement or other support, identified in Item   1114(a)(1) through (3) or Item 1115 of Regulation AB, is maintained   as set forth in the transaction agreements.
    	
 
    	
 
    

 

C-2

 

APPENDIX A

 

DEFINITIONS AND RULES OF CONSTRUCTION

 

A.            Defined Terms. The following terms have the following meanings:

 

“17g-5 Website” is defined in Section 10.18(a) of the Indenture.

 

“Account Records” is defined in Section 1(a)(i) of the Administration Agreement.

 

“Act” is defined in Section 10.03(a) of the Indenture.

 

“Additional Interim True-Up Adjustment” means any Interim True-Up Adjustment made pursuant to Section 4.01(b)(iii) of the Servicing Agreement.

 

“Administration Agreement” means the Administration Agreement, dated as of the Closing Date, by and between Consumers Energy and the Issuer.

 

“Administration Fee” is defined in Section 2 of the Administration Agreement.

 

“Administrator” means Consumers Energy, as Administrator under the Administration Agreement, or any successor Administrator to the extent permitted under the Administration Agreement.

 

“Affiliate” means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such specified Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

“Affiliate Wheeling” means a Person’s use of direct access service where an electric utility delivers electricity generated at a Person’s industrial site to that Person or that Person’s affiliate at a location, or general aggregated locations, within the State of Michigan that was either one of the following: (a) for at least 90 days during the period from January 1, 1996 to October 1, 1999, supplied by Self-Service Power, but only to the extent of the capacity reserved or load served by Self-Service Power during the period; or (b) capable of being supplied by a Person’s cogeneration capacity within the State of Michigan that has had since January 1, 1996 a rated capacity of 15 megawatts or less, was placed in service before December 31, 1975 and has been in continuous service since that date. The term affiliate for purposes of this definition means a Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with another specified entity, where control means, whether through an ownership, beneficial, contractual or equitable interest, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person or the ownership of at least 7% of an entity either directly or indirectly.

 

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“Amendatory Schedule” means a revision to service riders or any other notice filing filed with the Commission in respect of the Securitization Rate Schedule pursuant to a True-Up Adjustment.

 

“Annual Accountant’s Report” is defined in Section 3.04(a) of the Servicing Agreement.

 

“Annual True-Up Adjustment” means each adjustment to the Securitization Charges made in accordance with Section 4.01(b)(i) of the Servicing Agreement.

 

“Annual True-Up Adjustment Date” means the first billing cycle of August of each year, commencing in August, 2015.

 

“Authorized Denomination” means, with respect to any Securitization Bond, the authorized denomination therefor specified in the Series Supplement, which shall be at least $100,000 and, except as otherwise provided in the Series Supplement, integral multiples of $1,000 in excess thereof.

 

“Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. §§ 101 et seq.).

 

“Basic Documents” means the Indenture, the Administration Agreement, the Sale Agreement, the Bill of Sale, the Certificate of Formation, the LLC Agreement, the Servicing Agreement, the Series Supplement, the Intercreditor Agreement, the Letter of Representations, the Underwriting Agreement and all other documents and certificates delivered in connection therewith.

 

“Bill of Sale” means a bill of sale substantially in the form of Exhibit A to the Sale Agreement delivered pursuant to Section 2.02(a) of the Sale Agreement.

 

“Billed Securitization Charges” means the amounts of Securitization Charges billed by the Servicer.

 

“Billing Period” means the period created by dividing the calendar year into 12 consecutive periods of approximately 21 Servicer Business Days.

 

“Bills” means each of the regular monthly bills, summary bills, opening bills and closing bills issued to Customers by Consumers Energy in its capacity as Servicer.

 

“Bond Interest Rate” means, with respect to any Tranche of Securitization Bonds, the rate at which interest accrues on the Securitization Bonds of such Tranche, as specified in the Series Supplement.

 

“Book-Entry Form” means, with respect to any Securitization Bond, that such Securitization Bond is not certificated and the ownership and transfers thereof shall be made through book entries by a Clearing Agency as described in Section 2.11 of the Indenture and the Series Supplement pursuant to which such Securitization Bond was issued.

 

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“Book-Entry Securitization Bonds” means any Securitization Bonds issued in Book-Entry Form; provided, however, that, after the occurrence of a condition whereupon book-entry registration and transfer are no longer permitted and Definitive Securitization Bonds are to be issued to the Holder of such Securitization Bonds, such Securitization Bonds shall no longer be “Book-Entry Securitization Bonds”.

 

“Business Day” means any day other than a Saturday, a Sunday or a day on which banking institutions in Detroit, Michigan, Jackson, Michigan, New York, New York or Cincinnati, Ohio are, or DTC or the Corporate Trust Office is, authorized or obligated by law, regulation or executive order to be closed.

 

“Calculation Period” means, with respect to any True-Up Adjustment, the period comprised of the 12 consecutive Collection Periods beginning with the Collection Period in which such True-Up Adjustment would go into effect; provided, that, in the case of any True-Up Adjustment that would go into effect after the date that is 12 months prior to the last Scheduled Final Payment Date, the Calculation Period shall begin on the date the True-Up Adjustment would go into effect and end on the Payment Date following such True-Up Adjustment date; provided, further, that, for the purpose of calculating the first Periodic Payment Requirement as of the Closing Date, “Calculation Period” means, initially, the period commencing on the Closing Date and ending on the last day of the billing cycle of July, 2015.

 

“Capital Subaccount” is defined in Section 8.02(a) of the Indenture.

 

“Capital Subaccount Investment Earnings” shall mean, for any Payment Date with respect to any Calculation Period, the sum of (a) an amount equal to investment earnings since the previous Payment Date (or, in the case of the first Payment Date, since the Closing Date) on the initial amount deposited by Consumers Energy in the Capital Subaccount plus (b) any such amounts not paid on any prior Payment Date.

 

“Certificate of Compliance” means the certificate referred to in Section 3.03 of the Servicing Agreement and substantially in the form of Exhibit E to the Servicing Agreement.

 

“Certificate of Formation” means the Certificate of Formation filed with the Secretary of State of the State of Delaware on March 6, 2014 pursuant to which the Issuer was formed.

 

“Claim” means a “claim” as defined in Section 101(5) of the Bankruptcy Code.

 

“Clearing Agency” means an organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act.

 

“Clearing Agency Participant” means a securities broker, dealer, bank, trust company, clearing corporation or other financial institution or other Person for whom from time to time a Clearing Agency effects book entry transfers and pledges of securities deposited with such Clearing Agency.

 

“Closing Date” means July 22, 2014, the date on which the Securitization Bonds are originally issued in accordance with Section 2.10 of the Indenture and the Series Supplement.

 

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“Code” means the Internal Revenue Code of 1986.

 

“Collection Account” is defined in Section 8.02(a) of the Indenture.

 

“Collection in Full of the Securitization Charges” means the day on which the aggregate amounts on deposit in the General Subaccount and the Excess Funds Subaccount are sufficient to pay in full all the Outstanding Securitization Bonds and to replenish any shortfall in the Capital Subaccount.

 

“Collection Period” means any period commencing on the first Servicer Business Day of any Billing Period and ending on the last Servicer Business Day of such Billing Period.

 

“Commission” means the Michigan Public Service Commission.

 

“Commission Regulations” means any regulations, including temporary regulations, promulgated by the Commission pursuant to Michigan law.

 

“Company Minutes” is defined in Section 1(a)(iv) of the Administration Agreement.

 

“Consumers Energy” means Consumers Energy Company, a Michigan corporation.

 

“Corporate Trust Office” means the office of the Indenture Trustee at which, at any particular time, its corporate trust business shall be administered, which office as of the Closing Date is located at 101 Barclay Street, 7 East, New York, New York 10286, Attention: Asset Backed Securities Unit, Telephone: (212) 815-5331, Facsimile: (212) 815-2830, or at such other address as the Indenture Trustee may designate from time to time by notice to the Holders of Securitization Bonds and the Issuer, or the principal corporate trust office of any successor trustee designated by like notice.

 

“Covenant Defeasance Option” is defined in Section 4.01(b) of the Indenture.

 

“Customers” means all existing and future retail electric distribution customers of Consumers Energy or its successors, including all existing and future retail electric customers who are obligated to pay Securitization Charges pursuant to the Financing Order, except that “Customers” shall exclude (i) customers taking retail open access service from Consumers Energy as of December 6, 2013 to the extent that those retail open access customers remain, without transition to bundled service, on Consumers Energy’s retail choice program, (ii) customers to the extent they obtain or use Self-Service Power and (iii) customers to the extent engaged in Affiliate Wheeling.

 

“Daily Remittance” is defined in Section 6.11(a) of the Servicing Agreement.

 

“Default” means any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default.

 

“Definitive Securitization Bonds” is defined in Section 2.11 of the Indenture.

 

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“Delaware UCC” means the Uniform Commercial Code as in effect on the Closing Date in the State of Delaware.

 

“DTC” means The Depository Trust Company.

 

“Eligible Account” means a segregated non-interest-bearing trust account with an Eligible Institution.

 

“Eligible Institution” means:

 

(a)           the corporate trust department of the Indenture Trustee, so long as any of the securities of the Indenture Trustee has a credit rating from each Rating Agency in one of its generic rating categories that signifies investment grade; or

 

(b)           a depository institution organized under the laws of the United States of America or any State (or any domestic branch of a foreign bank) (i) that has either (A) a long-term issuer rating of “AA-” or higher by S&P and “A2” or higher by Moody’s or (B) a short-term issuer rating of “A-1+” or higher by S&P and “P-1” or higher by Moody’s or any other long-term, short-term or certificate of deposit rating acceptable to the Rating Agencies, and (ii) whose deposits are insured by the Federal Deposit Insurance Corporation.

 

If so qualified under clause (b) of this definition, the Indenture Trustee may be considered an Eligible Institution for the purposes of clause (a) of this definition.

 

“Eligible Investments” means instruments or investment property that evidence:

 

(a)           direct obligations of, or obligations fully and unconditionally guaranteed as to timely payment by, the United States of America;

 

(b)           demand or time deposits of, unsecured certificates of deposit of, money market deposit accounts of, or bankers’ acceptances issued by, any depository institution (including the Indenture Trustee, acting in its commercial capacity) incorporated or organized under the laws of the United States of America or any State thereof and subject to supervision and examination by U.S. federal or state banking authorities, so long as the commercial paper or other short-term debt obligations of such depository institution are, at the time of deposit, rated at least “A-1” and “P-1” or their equivalents by each of S&P and Moody’s or such lower rating as will not result in the downgrading or withdrawal of the ratings of the Securitization Bonds;

 

(c)           commercial paper (including commercial paper of the Indenture Trustee, acting in its commercial capacity, and other than commercial paper of Consumers Energy or any of its Affiliates), which at the time of purchase is rated at least “A-1” and “P-1” or their equivalents by each of S&P and Moody’s or such lower rating as will not result in the downgrading or withdrawal of the ratings of the Securitization Bonds;

 

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(d)           investments in money market funds having a rating in the highest investment category granted thereby (including funds for which the Indenture Trustee or any of its Affiliates is investment manager or advisor) from Moody’s and S&P;

 

(e)           repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the United States of America or its agencies or instrumentalities, entered into with Eligible Institutions;

 

(f)            repurchase obligations with respect to any security or whole loan entered into with an Eligible Institution or with a registered broker/dealer acting as principal and that meets the ratings criteria set forth below:

 

(i)            a broker/dealer (acting as principal) registered as a broker or dealer under Section 15 of the Exchange Act (any such broker/dealer being referred to in this definition as a “broker/dealer”), the unsecured short-term debt obligations of which are rated at least “P-1” by Moody’s and “A-1+” by S&P at the time of entering into such repurchase obligation; or

 

(ii)           an unrated broker/dealer, acting as principal, that is a wholly-owned subsidiary of a non-bank or bank holding company the unsecured short-term debt obligations of which are rated at least “P-1” by Moody’s and “A-1+” by S&P at the time of purchase so long as the obligations of such unrated broker/dealer are unconditionally guaranteed by such non-bank or bank holding company; and

 

(g)           any other investment permitted by each of the Rating Agencies;

 

in each case maturing not later than the Business Day preceding the next Payment Date or Special Payment Date, if applicable (for the avoidance of doubt, investments in money market funds or similar instruments that are redeemable on demand shall be deemed to satisfy the foregoing requirement). Notwithstanding the foregoing: (1) no securities or investments that mature in 30 days or more shall be “Eligible Investments” unless the issuer thereof has either a short-term unsecured debt rating of at least “P-1” from Moody’s or a long-term unsecured debt rating of at least “A2” from Moody’s and also has a long-term unsecured debt rating of at least “A+” from S&P; (2) no securities or investments described in clauses (b) through (d) above that have maturities of more than 30 days but less than or equal to 3 months shall be “Eligible Investments” unless the issuer thereof has a long-term unsecured debt rating of at least “A1” from Moody’s and a short-term unsecured debt rating of at least “P-1” from Moody’s; and (3) no securities or investments described in clauses (b) through (d) above that have maturities of more than 3 months shall be “Eligible Investments” unless the issuer thereof has a long-term unsecured debt rating of at least “Aa3” from Moody’s and a short-term unsecured debt rating of at least “P1” from Moody’s.

 

“Event of Default” is defined in Section 5.01 of the Indenture.

 

“Excess Funds Subaccount” is defined in Section 8.02(a) of the Indenture.

 

“Exchange Act” means the Securities Exchange Act of 1934.

 

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“Expected Amortization Schedule” means, with respect to any Tranche, the expected amortization schedule related thereto set forth in the Series Supplement.

 

“Federal Book-Entry Regulations” means 31 C.F.R. Part 357 et seq. (Department of Treasury).

 

“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Servicer from three federal funds brokers of recognized standing selected by it.

 

“Final” means, with respect to the Financing Order, that the Financing Order has become final, that the Financing Order is not being appealed and that the time for filing an appeal thereof has expired.

 

“Final Maturity Date” means, with respect to each Tranche of Securitization Bonds, the final maturity date therefor as specified in the Series Supplement.

 

“Financing Order” means the financing order issued by the Commission to Consumers Energy on December 6, 2013, Case No. U-17473, authorizing the creation of the Securitization Property. Consumers Energy unconditionally accepted all conditions and limitations requested by such order in a letter dated January 24, 2014 from Consumers Energy to the Commission.

 

“General Subaccount” is defined in Section 8.02(a) of the Indenture.

 

“Global Securitization Bond” means a Securitization Bond to be issued to the Holders thereof in Book-Entry Form, which Global Securitization Bond shall be issued to the Clearing Agency, or its nominee, in accordance with Section 2.11 of the Indenture and the Series Supplement.

 

“Governmental Authority” means any nation or government, any U.S. federal, state, local or other political subdivision thereof and any court, administrative agency or other instrumentality or entity exercising executive, legislative, judicial, regulatory or administrative functions of government.

 

“Grant” means mortgage, pledge, bargain, sell, warrant, alienate, remise, release, convey, grant, transfer, create, grant a lien upon, a security interest in and right of set-off against, deposit, set over and confirm pursuant to the Indenture and the Series Supplement. A Grant of the Securitization Bond Collateral shall include all rights, powers and options (but none of the obligations) of the granting party thereunder, including the immediate and continuing right to claim for, collect, receive and give receipt for payments in respect of the Securitization Bond Collateral and all other moneys payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in the name of the granting party or otherwise and generally to do and receive

 

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anything that the granting party is or may be entitled to do or receive thereunder or with respect thereto.

 

“Holder” means the Person in whose name a Securitization Bond is registered on the Securitization Bond Register.

 

“Indemnified Losses” is defined in Section 5.03 of the Servicing Agreement.

 

“Indemnified Party” is defined in Section 6.02(a) of the Servicing Agreement.

 

“Indemnified Person” is defined in Section 5.01(f) of the Sale Agreement.

 

“Indenture” means the Indenture, dated as of the Closing Date, by and between the Issuer and The Bank of New York Mellon, a New York banking corporation, as Indenture Trustee and as Securities Intermediary.

 

“Indenture Trustee” means The Bank of New York Mellon, a New York banking corporation, as indenture trustee for the benefit of the Secured Parties, or any successor indenture trustee for the benefit of the Secured Parties, under the Indenture.

 

“Independent” means, when used with respect to any specified Person, that such specified Person (a) is in fact independent of the Issuer, any other obligor on the Securitization Bonds, the Seller, the Servicer and any Affiliate of any of the foregoing Persons, (b) does not have any direct financial interest or any material indirect financial interest in the Issuer, any such other obligor, the Seller, the Servicer or any Affiliate of any of the foregoing Persons and (c) is not connected with the Issuer, any such other obligor, the Seller, the Servicer or any Affiliate of any of the foregoing Persons as an officer, employee, promoter, underwriter, trustee, partner, director (other than as an independent director or manager) or person performing similar functions.

 

“Independent Certificate” means a certificate to be delivered to the Indenture Trustee under the circumstances described in, and otherwise complying with, the applicable requirements of Section 10.01 of the Indenture, made by an Independent appraiser or other expert appointed by an Issuer Order and consented to by the Indenture Trustee, and such certificate shall state that the signer has read the definition of “Independent” in the Indenture and that the signer is Independent within the meaning thereof.

 

“Independent Manager” is defined in Section 4.01(a) of the LLC Agreement.

 

“Independent Manager Fee” is defined in Section 4.01(a) of the LLC Agreement.

 

“Insolvency Event” means, with respect to a specified Person: (a) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of such specified Person or any substantial part of its property in an involuntary case under any applicable U.S. federal or state bankruptcy, insolvency or other similar law in effect as of the Closing Date or thereafter, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such specified Person or for any substantial part of its property, or ordering the winding-up or liquidation of such specified Person’s affairs, and such

 

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decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (b) the commencement by such specified Person of a voluntary case under any applicable U.S. federal or state bankruptcy, insolvency or other similar law in effect as of the Closing Date or thereafter, or the consent by such specified Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such specified Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such specified Person or for any substantial part of its property, or the making by such specified Person of any general assignment for the benefit of creditors, or the failure by such specified Person generally to pay its debts as such debts become due, or the taking of action by such specified Person in furtherance of any of the foregoing.

 

“Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of the Closing Date, by and among the Issuer, the Indenture Trustee, Consumers Energy, the parties to the accounts receivables sale program of Consumers Receivables Funding II, LLC, Consumers Funding LLC and the trustee for the securitization bonds issued by Consumers Funding LLC, and any subsequent such agreement.

 

“Interim True-Up Adjustment” means either a Semi-Annual Interim True-Up Adjustment made in accordance with Section 4.01(b)(ii) of the Servicing Agreement or an Additional Interim True-Up Adjustment made in accordance with Section 4.01(b)(iii) of the Servicing Agreement.

 

“Investment Company Act” means the Investment Company Act of 1940.

 

“Investment Earnings” means investment earnings on funds deposited in the Collection Account net of losses and investment expenses.

 

“Issuer” means Consumers 2014 Securitization Funding LLC, a Delaware limited liability company, named as such in the Indenture until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained herein and required by the Trust Indenture Act, each other obligor on the Securitization Bonds.

 

“Issuer Documents” is defined in Section 1(a)(iv) of the Administration Agreement.

 

“Issuer Order” means a written order signed in the name of the Issuer by any one of its Responsible Officers and delivered to the Indenture Trustee or Paying Agent, as applicable.

 

“Issuer Request” means a written request signed in the name of the Issuer by any one of its Responsible Officers and delivered to the Indenture Trustee or Paying Agent, as applicable.

 

“Legal Defeasance Option” is defined in Section 4.01(b) of the Indenture.

 

“Letter of Representations” means any applicable agreement between the Issuer and the applicable Clearing Agency, with respect to such Clearing Agency’s rights and obligations (in its capacity as a Clearing Agency) with respect to any Book-Entry Securitization Bonds.

 

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“Lien” means a security interest, lien, mortgage, charge, pledge, claim or encumbrance of any kind.

 

“LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of Consumers 2014 Securitization Funding LLC, dated as of the Closing Date.

 

“Losses” means (a) any and all amounts of principal of and interest on the Securitization Bonds not paid when due or when scheduled to be paid in accordance with their terms and the amounts of any deposits by or to the Issuer required to have been made in accordance with the terms of the Basic Documents or the Financing Order that are not made when so required and (b) any and all other liabilities, obligations, losses, claims, damages, payments, costs or expenses of any kind whatsoever.

 

“Manager” means each manager of the Issuer under the LLC Agreement.

 

“Member” has the meaning specified in the first paragraph of the LLC Agreement.

 

“Michigan UCC” means the Uniform Commercial Code as in effect on the Closing Date in the State of Michigan.

 

“Monthly Servicer’s Certificate” is defined in Section 3.01(b)(i) of the Servicing Agreement.

 

“Moody’s” means Moody’s Investors Service, Inc.. References to Moody’s are effective so long as Moody’s is a Rating Agency.

 

“NRSRO” is defined in Section 10.18(b) of the Indenture.

 

“NY UCC” means the Uniform Commercial Code as in effect on the Closing Date in the State of New York.

 

“Officer’s Certificate” means a certificate signed by a Responsible Officer of the Issuer under the circumstances described in, and otherwise complying with, the applicable requirements of Section 10.01 of the Indenture, and delivered to the Indenture Trustee.

 

“Ongoing Other Qualified Costs” means the Qualified Costs described as such in the Financing Order, including Operating Expenses and any other costs identified in the Basic Documents; provided, however, that Ongoing Other Qualified Costs do not include the Issuer’s costs of issuance of the Securitization Bonds and Consumers Energy’s costs of retiring existing debt and equity securities.

 

“Operating Expenses” means all unreimbursed fees, costs and out-of-pocket expenses of the Issuer, including all amounts owed by the Issuer to the Indenture Trustee (including indemnities, legal fees and expenses) or any Manager, the Servicing Fee, the Administration Fee, legal and accounting fees, Rating Agency and related fees (i.e. website provider fees) and any franchise or other taxes owed by the Issuer, including on investment income in the Collection Account.

 

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“Opinion of Counsel” means one or more written opinions of counsel, who may, except as otherwise expressly provided in the Basic Documents, be employees of or counsel to the party providing such opinion of counsel, which counsel shall be reasonably acceptable to the party receiving such opinion of counsel, and shall be in form and substance reasonably acceptable to such party.

 

“Outstanding” means, as of the date of determination, all Securitization Bonds theretofore authenticated and delivered under the Indenture, except:

 

(a)           Securitization Bonds theretofore canceled by the Securitization Bond Registrar or delivered to the Securitization Bond Registrar for cancellation;

 

(b)           Securitization Bonds or portions thereof the payment for which money in the necessary amount has been theretofore deposited with the Indenture Trustee or any Paying Agent in trust for the Holders of such Securitization Bonds; and

 

(c)           Securitization Bonds in exchange for or in lieu of other Securitization Bonds that have been issued pursuant to the Indenture unless proof satisfactory to the Indenture Trustee is presented that any such Securitization Bonds are held by a Protected Purchaser;

 

provided, that, in determining whether the Holders of the requisite Outstanding Amount of the Securitization Bonds or any Tranche thereof have given any request, demand, authorization, direction, notice, consent or waiver under any Basic Document, Securitization Bonds owned by the Issuer, any other obligor upon the Securitization Bonds, the Member, the Seller, the Servicer or any Affiliate of any of the foregoing Persons shall be disregarded and deemed not to be Outstanding (unless one or more such Persons owns 100% of such Securitization Bonds), except that, in determining whether the Indenture Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securitization Bonds that the Indenture Trustee actually knows to be so owned shall be so disregarded. Securitization Bonds so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Indenture Trustee the pledgee’s right so to act with respect to such Securitization Bonds and that the pledgee is not the Issuer, any other obligor upon the Securitization Bonds, the Member, the Seller, the Servicer or any Affiliate of any of the foregoing Persons.

 

“Outstanding Amount” means the aggregate principal amount of all Securitization Bonds, or, if the context requires, all Securitization Bonds of a Tranche, Outstanding at the date of determination.

 

“Paying Agent” means, with respect to the Indenture, the Indenture Trustee and any other Person appointed as a paying agent for the Securitization Bonds pursuant to the Indenture.

 

“Payment Date” means, with respect to any Tranche of Securitization Bonds, the dates specified in the Series Supplement; provided, that if any such date is not a Business Day, the Payment Date shall be the Business Day succeeding such date.

 

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“Periodic Billing Requirement” means, for any Calculation Period, the aggregate amount of Securitization Charges calculated by the Servicer as necessary to be billed during such period in order to collect the Periodic Payment Requirement on a timely basis.

 

“Periodic Interest” means, with respect to any Payment Date, the periodic interest for such Payment Date as specified in the Series Supplement.

 

“Periodic Payment Requirement” for any Calculation Period means the total dollar amount of Securitization Charge Collections reasonably calculated by the Servicer in accordance with Section 4.01 of the Servicing Agreement as necessary to be received during such Calculation Period (after giving effect to the allocation and distribution of amounts on deposit in the Excess Funds Subaccount at the time of calculation and that are projected to be available for payments on the Securitization Bonds at the end of such Calculation Period and including any shortfalls in Periodic Payment Requirements for any prior Calculation Period) in order to ensure that, as of the last Payment Date occurring in such Calculation Period, (a) all accrued and unpaid interest on the Securitization Bonds then due shall have been paid in full on a timely basis, (b) the Outstanding Amount of the Securitization Bonds is equal to the Projected Unpaid Balance on each Payment Date during such Calculation Period, (c) the balance on deposit in the Capital Subaccount equals the Required Capital Level and (d) all other fees and expenses due and owing and required or allowed to be paid under Section 8.02 of the Indenture as of such date shall have been paid in full; provided, that, with respect to any Annual True-Up Adjustment or Interim True-Up Adjustment occurring after the date that is one year prior to the last Scheduled Final Payment Date for the Securitization Bonds, the Periodic Payment Requirements shall be calculated to ensure that sufficient Securitization Charges will be collected to retire the Securitization Bonds in full as of the next Payment Date.

 

“Periodic Principal” means, with respect to any Payment Date, the excess, if any, of the Outstanding Amount of Securitization Bonds over the outstanding principal balance specified for such Payment Date on the Expected Amortization Schedule.

 

“Permitted Lien” means the Lien created by the Indenture.

 

“Permitted Successor” is defined in Section 5.02 of the Sale Agreement.

 

“Person” means any individual, corporation, limited liability company, estate, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or Governmental Authority.

 

“Predecessor Securitization Bond” means, with respect to any particular Securitization Bond, every previous Securitization Bond evidencing all or a portion of the same debt as that evidenced by such particular Securitization Bond, and, for the purpose of this definition, any Securitization Bond authenticated and delivered under Section 2.06 of the Indenture in lieu of a mutilated, lost, destroyed or stolen Securitization Bond shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Securitization Bond.

 

“Premises” is defined in Section 1(g) of the Administration Agreement.

 

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“Proceeding” means any suit in equity, action at law or other judicial or administrative proceeding.

 

“Projected Unpaid Balance” means, as of any Payment Date, the sum of the projected outstanding principal amount of each Tranche of Securitization Bonds for such Payment Date set forth in the Expected Amortization Schedule.

 

“Protected Purchaser” has the meaning specified in Section 8-303 of the UCC.

 

“Qualified Costs” means all qualified costs as defined in Section 10h(g) of the Securitization Law allowed to be recovered by Consumers Energy under the Financing Order.

 

“Rating Agency” means, with respect to any Tranche of Securitization Bonds, any of Moody’s or S&P that provides a rating with respect to the Securitization Bonds. If no such organization (or successor) is any longer in existence, “Rating Agency” shall be a nationally recognized statistical rating organization or other comparable Person designated by the Issuer, notice of which designation shall be given to the Indenture Trustee and the Servicer.

 

“Rating Agency Condition” means, with respect to any action, at least ten Business Days’ prior written notification to each Rating Agency of such action, and written confirmation from each of S&P and Moody’s to the Servicer, the Indenture Trustee and the Issuer that such action will not result in a suspension, reduction or withdrawal of the then current rating by such Rating Agency of any Tranche of Securitization Bonds; provided, that, if, within such ten Business Day period, any Rating Agency (other than S&P) has neither replied to such notification nor responded in a manner that indicates that such Rating Agency is reviewing and considering the notification, then (a) the Issuer shall be required to confirm that such Rating Agency has received the Rating Agency Condition request and, if it has, promptly request the related Rating Agency Condition confirmation and (b) if the Rating Agency neither replies to such notification nor responds in a manner that indicates it is reviewing and considering the notification within five Business Days following such second request, the applicable Rating Agency Condition requirement shall not be deemed to apply to such Rating Agency. For the purposes of this definition, any confirmation, request, acknowledgment or approval that is required to be in writing may be in the form of electronic mail or a press release (which may contain a general waiver of a Rating Agency’s right to review or consent).

 

“Record Date” means one Business Day prior to the applicable Payment Date.

 

“Registered Holder” means the Person in whose name a Securitization Bond is registered on the Securitization Bond Register.

 

“Regulation AB” means the rules of the SEC promulgated under Subpart 229.1100 — Asset Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1123.

 

“Reimbursable Expenses” is defined in Section 2 of the Administration Agreement.

 

“Released Parties” is defined in Section 6.02(d) of the Servicing Agreement.

 

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“Required Capital Level” means an amount of capital equal to 0.5% of the initial principal amount of the Securitization Bonds.

 

“Requirement of Law” means any foreign, U.S. federal, state or local laws, statutes, regulations, rules, codes or ordinances enacted, adopted, issued or promulgated by any Governmental Authority or common law.

 

“Responsible Officer” means, with respect to: (a) the Issuer, any Manager or any duly authorized officer; (b) the Indenture Trustee, any officer within the Corporate Trust Office of such trustee (including the President, any Vice President, any Assistant Vice President, any Secretary, any Assistant Treasurer or any other officer of the Indenture Trustee customarily performing functions similar to those performed by persons who at the time shall be such officers, respectively, and that has direct responsibility for the administration of the Indenture and also, with respect to a particular matter, any other officer to whom such matter is referred to because of such officer’s knowledge and familiarity with the particular subject); (c) any corporation (other than the Indenture Trustee), the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Treasurer, any Assistant Treasurer or any other duly authorized officer of such Person who has been authorized to act in the circumstances; (d) any partnership, any general partner thereof; and (e) any other Person (other than an individual), any duly authorized officer or member of such Person, as the context may require, who is authorized to act in matters relating to such Person.

 

“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business. References to S&P are effective so long as S&P is a Rating Agency.

 

“Sale Agreement” means the Securitization Property Purchase and Sale Agreement, dated as of the Closing Date, by and between the Issuer and Consumers Energy, and acknowledged and accepted by the Indenture Trustee.

 

“Scheduled Final Payment Date” means, with respect to each Tranche of Securitization Bonds, the date when all interest and principal is scheduled to be paid with respect to that Tranche in accordance with the Expected Amortization Schedule, as specified in the Series Supplement. For the avoidance of doubt, the Scheduled Final Payment Date with respect to any Tranche shall be the last Scheduled Payment Date set forth in the Expected Amortization Schedule relating to such Tranche. The “last Scheduled Final Payment Date” means the Scheduled Final Payment Date of the latest maturing Tranche of Securitization Bonds.

 

“Scheduled Payment Date” means, with respect to each Tranche of Securitization Bonds, each Payment Date on which principal for such Tranche is to be paid in accordance with the Expected Amortization Schedule for such Tranche.

 

“SEC” means the Securities and Exchange Commission.

 

“Secured Obligations” means the payment of principal of and premium, if any, interest on, and any other amounts owing in respect of, the Securitization Bonds and all fees, expenses, counsel fees and other amounts due and payable to the Indenture Trustee.

 

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“Secured Parties” means the Indenture Trustee, the Holders and any credit enhancer described in the Series Supplement.

 

“Securities Act” means the Securities Act of 1933.

 

“Securities Intermediary” means The Bank of New York Mellon, a New York banking corporation, solely in the capacity of a “securities intermediary” as defined in the NY UCC and Federal Book-Entry Regulations or any successor securities intermediary under the Indenture.

 

“Securitization Bond Collateral” is defined in the preamble of the Indenture.

 

“Securitization Bond Register” is defined in Section 2.05 of the Indenture.

 

“Securitization Bond Registrar” is defined in Section 2.05 of the Indenture.

 

“Securitization Bonds” means the securitization bonds authorized by the Financing Order and issued under the Indenture.

 

“Securitization Charge” means any securitization charges as defined in Section 10h(i) of the Securitization Law that are authorized by the Financing Order.

 

“Securitization Charge Collections” means Securitization Charges actually received by the Servicer to be remitted to the Collection Account.

 

“Securitization Charge Payments” means the payments made by Customers based on the Securitization Charges.

 

“Securitization Law” means the laws of the State of Michigan adopted in June 2000 enacted as 2000 PA 142.

 

“Securitization Property” means all securitization property as defined in Section 10h(j) of the Securitization Law created pursuant to the Financing Order and under the Securitization Law, including the right to impose, collect and receive the Securitization Charges in an amount necessary to provide the full recovery of all Qualified Costs, the right under the Financing Order to obtain periodic adjustments of Securitization Charges under Section 10k(3) of the Securitization Law and all revenue, collections, payments, moneys and proceeds arising out of the rights and interests described under Section 10(j) of the Securitization Law. The term “Securitization Property” when used with respect to Consumers Energy means and includes the rights of Consumers Energy that exist prior to the time that such rights are first transferred in connection with the issuance of the Securitization Bonds so as to become Securitization Property in accordance with Section 10j(2) of the Securitization Law and the Financing Order.

 

“Securitization Property Records” is defined in Section 5.01 of the Servicing Agreement.

 

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“Securitization Rate Class” means one of the four separate rate classes to whom Securitization Charges are allocated for ratemaking purposes in accordance with the Financing Order.

 

“Securitization Rate Schedule” means the Tariff sheets to be filed with the Commission stating the amounts of the Securitization Charges, as such Tariff sheets may be amended or modified from time to time pursuant to a True-Up Adjustment.

 

“Self-Service Power” means (a) electricity generated and consumed at an industrial site or contiguous industrial site or single commercial establishment or single residence without the use of an electric utility’s transmission and distribution system or (b) electricity generated primarily by the use of by-product fuels, including waste water solids, which electricity is consumed as part of a contiguous facility, with the use of an electric utility’s transmission and distribution system, but only if the point or points of receipt of the power within the facility are not greater than three miles distant from the point of generation. A site or facility with load existing on the effective date of the Securitization Law that is divided by an inland body of water or by a public highway, road or street but that otherwise meets this definition meets the contiguous requirement of this definition regardless of whether Self-Service Power was being generated on the effective date of the Securitization Law. A commercial or industrial facility or single residence that meets the requirements of clause (a) above or clause (b) above meets this definition whether or not the generation facility is owned by an entity different from the owner of the commercial or industrial site or single residence.

 

“Seller” is defined in the preamble to the Sale Agreement.

 

“Semi-Annual Interim True-Up Adjustment” means any Interim True-Up Adjustment made pursuant to Section 4.01(b)(ii) of the Servicing Agreement.

 

“Semi-Annual Servicer’s Certificate” is defined in Section 4.01(c)(ii) of the Servicing Agreement.

 

“Series Supplement” means the indenture supplemental to the Indenture in the form attached as Exhibit B to the Indenture that authorizes the issuance of the Securitization Bonds.

 

“Servicer” means Consumers Energy, as Servicer under the Servicing Agreement.

 

“Servicer Business Day” means any day other than a Saturday, a Sunday or a day on which banking institutions in Detroit, Michigan, Jackson, Michigan, New York, New York or Cincinnati, Ohio are authorized or obligated by law, regulation or executive order to be closed, on which the Servicer maintains normal office hours and conducts business.

 

“Servicer Default” is defined in Section 7.01 of the Servicing Agreement.

 

“Servicer Policies and Practices” means, with respect to the Servicer’s duties under Exhibit A to the Servicing Agreement, the policies and practices of the Servicer applicable to such duties that the Servicer follows with respect to comparable assets that it services for itself and, if applicable, others.

 

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“Servicing Agreement” means the Securitization Property Servicing Agreement, dated as of the Closing Date, by and between the Issuer and Consumers Energy, and acknowledged and accepted by the Indenture Trustee.

 

“Servicing Fee” is defined in Section 6.06(a) of the Servicing Agreement.

 

“Servicing Standard” means the obligation of the Servicer to calculate, apply, remit and reconcile proceeds of the Securitization Property, including Securitization Charge Payments, and all other Securitization Bond Collateral for the benefit of the Issuer and the Holders (a) with the same degree of care and diligence as the Servicer applies with respect to payments owed to it for its own account, (b) in accordance with all applicable procedures and requirements established by the Commission for collection of electric utility tariffs and (c) in accordance with the other terms of the Servicing Agreement.

 

“Special Payment Date” means the date on which, with respect to any Tranche of Securitization Bonds, any payment of principal of or interest (including any interest accruing upon default) on, or any other amount in respect of, the Securitization Bonds of such Tranche that is not actually paid within five days of the Payment Date applicable thereto is to be made by the Indenture Trustee to the Holders.

 

“Special Record Date” means, with respect to any Special Payment Date, the close of business on the fifteenth day (whether or not a Business Day) preceding such Special Payment Date.

 

“Sponsor” means Consumers Energy, in its capacity as “sponsor” of the Securitization Bonds within the meaning of Regulation AB.

 

“State” means any one of the fifty states of the United States of America or the District of Columbia.

 

“State Pledge” means the pledge of the State of Michigan as set forth in Section 10n(2) of the Securitization Law.

 

“Subaccounts” is defined in Section 8.02(a) of the Indenture.

 

“Successor” means any successor to Consumers Energy under the Securitization Law, whether pursuant to any bankruptcy, reorganization or other insolvency proceeding or pursuant to any merger, acquisition, sale or transfer, by operation of law, as a result of electric utility restructuring or otherwise.

 

“Successor Servicer” is defined in Section 3.07(e) of the Indenture.

 

“Tariff” means the most current version on file with the Commission of Sheet No. C-43.10 and Sheet No. D-5.10 of Consumers Energy’s Rate Book for Electric Service, M.P.S.C. 13 — Electric, or substantially comparable sheets included in a later complete revision of Consumers Energy’s Rate Book for Electric Service approved and on file with the Commission.

 

“Tax Returns” is defined in Section 1(a)(iii) of the Administration Agreement.

 

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“Temporary Securitization Bonds” means Securitization Bonds executed and, upon the receipt of an Issuer Order, authenticated and delivered by the Indenture Trustee pending the preparation of Definitive Securitization Bonds pursuant to Section 2.04 of the Indenture.

 

“Termination Notice” is defined in Section 7.01 of the Servicing Agreement.

 

“Tranche” means any one of the groupings of Securitization Bonds differentiated by amortization schedule, interest rate or sinking fund schedule, as specified in the Series Supplement.

 

“True-Up Adjustment” means any Annual True-Up Adjustment or Interim True-Up Adjustment, as the case may be.

 

“Trust Indenture Act” means the Trust Indenture Act of 1939 as in force on the Closing Date, unless otherwise specifically provided.

 

“UCC” means the Uniform Commercial Code as in effect in the relevant jurisdiction.

 

“Underwriters” means the underwriters who purchase Securitization Bonds of any Tranche from the Issuer and sell such Securitization Bonds in a public offering.

 

“Underwriting Agreement” means the Underwriting Agreement, dated July 14, 2014, by and among Consumers Energy, the representatives of the several Underwriters named therein and the Issuer.

 

“U.S. Government Obligations” means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and that are not callable at the option of the issuer thereof.

 

“Weighted Average Days Outstanding” means the weighted average number of days Consumers Energy’s monthly bills to Customers remain outstanding during the calendar year preceding the calculation thereof pursuant to Section 4.01(b)(i) of the Servicing Agreement.

 

B.            Rules of Construction. Unless the context otherwise requires, in each Basic Document to which this Appendix A is attached:

 

(a)           All accounting terms not specifically defined herein shall be construed in accordance with United States generally accepted accounting principles. To the extent that the definitions of accounting terms in any Basic Document are inconsistent with the meanings of such terms under generally accepted accounting principles or regulatory accounting principles, the definitions contained in such Basic Document shall control.

 

(b)           The term “including” means “including without limitation”, and other forms of the verb “include” have correlative meanings.

 

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(c)           All references to any Person shall include such Person’s permitted successors and assigns, and any reference to a Person in a particular capacity excludes such Person in other capacities.

 

(d)           Unless otherwise stated in any of the Basic Documents, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and each of the words “to” and “until” means “to but excluding”.

 

(e)           The words “hereof”, “herein” and “hereunder” and words of similar import when used in any Basic Document shall refer to such Basic Document as a whole and not to any particular provision of such Basic Document. References to Articles, Sections, Appendices and Exhibits in any Basic Document are references to Articles, Sections, Appendices and Exhibits in or to such Basic Document unless otherwise specified in such Basic Document.

 

(f)            The various captions (including the tables of contents) in each Basic Document are provided solely for convenience of reference and shall not affect the meaning or interpretation of any Basic Document.

 

(g)           The definitions contained in this Appendix A apply equally to the singular and plural forms of such terms, and words of the masculine, feminine or neuter gender shall mean and include the correlative words of other genders.

 

(h)           Unless otherwise specified, references to an agreement or other document include references to such agreement or document as from time to time amended, restated, reformed, supplemented or otherwise modified in accordance with the terms thereof (subject to any restrictions on such amendments, restatements, reformations, supplements or modifications set forth in such agreement or document) and include any attachments thereto.

 

(i)            References to any law, rule, regulation or order of a Governmental Authority shall include such law, rule, regulation or order as from time to time in effect, including any amendment, modification, codification, replacement or reenactment thereof or any substitution therefor.

 

(j)            The word “will” shall be construed to have the same meaning and effect as the word “shall”.

 

(k)           The word “or” is not exclusive.

 

(l)            All terms defined in the relevant Basic Document to which this Appendix A is attached shall have the defined meanings when used in any certificate or other document made or delivered pursuant thereto unless otherwise defined therein.

 

(m)          A term has the meaning assigned to it.

 

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