Document:

Unassociated Document

    
      
        
          	
                   

                

        

         

      

    

    HI
SPEED RAIL FACILITIES PROVIDER, INC.

    

    MASTER TRUST
INDENTURE

    

    HSRF
TRUST, AS TRUSTEE

    

    Relating to

    

    $15,000,000,000

    

    HI
SPEED RAIL FACILITIES PROVIDER, INC.

    REVENUE
BONDS, SERIES 2010

    

    AMERI
METRO, INC.

    Developer

    

    MERRILL
LYNCH, PIERCE, FENNER & SMITH, INCORPORATED

    and

    ING
INVESTMENT MANAGEMENT CO.

    Financial
Advisor and Trust Custodian

    

    Dated
as of __________ 1, 2011

    
      
        
          	
                   

                

        

      

    

    
      
         

      

      
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    TABLE OF CONTENTS

    

    
      
        
          
            
              	 
      	
                      Page

                    
	 
      	 
      
	
                      ARTICLE I DEFINITIONS

                    	
                      4

                    
	 
      	 
      	 
      	 
      
	
                      Section 101.

                    	
                      Meaning
      of Words and Terms 

                    	 
      	
                      4

                    
	
                      Section 102.

                    	
                      Rules of Construction

                    	 
      	
                      14

                    
	 
      	 
      	 
      
	
                      ARTICLE II FORM,
      EXECUTION, DELIVERY AND DESIGNATION OF BONDS

                    	 
      	
                      15

                    
	 
      	 
      	 
      
	
                      Section 201.

                    	
                      Issuance
      of Bonds

                    	 
      	
                      15

                    
	
                      Section 202.

                    	
                      Details of Bonds

                    	 
      	
                      15

                    
	
                      Section 203.

                    	
                      Execution
      and Form of Bonds 

                    	 
      	
                      16

                    
	
                      Section 204.

                    	
                      Registration
      and Transfer of Bonds 

                    	 
      	
                      16

                    
	
                      Section 205.

                    	
                      Ownership of Bonds

                    	 
      	
                      16

                    
	
                      Section 206.

                    	
                      Special
      Obligations

                    	 
      	
                      17

                    
	
                      Section 207.

                    	
                      Authorization
      of Bonds

                    	 
      	
                      17

                    
	
                      Section 208.

                    	
                      Temporary Bonds

                    	 
      	
                      18

                    
	
                      Section 209.

                    	
                      Mutilated, Destroyed
      or Lost Bonds

                    	 
      	
                      18

                    
	
                      Section 210.

                    	
                      Pari Passu Obligations
      Under Credit Agreements

                    	 
      	
                      19

                    
	
                      Section 211.

                    	
                      Tax
      Status of Bonds

                    	 
      	
                      19

                    
	 
      	 
      	 
      
	
                      ARTICLE III REDEMPTION
      OF BONDS

                    	 
      	
                      20

                    
	 
      	 
      	 
      
	
                      Section 301.

                    	
                      Redemption
      Generally

                    	 
      	
                      20

                    
	
                      Section 302.

                    	
                      Notice
      of Redemption; Procedure for Selection

                    	 
      	
                      21

                    
	
                      Section 303.

                    	
                      Effect
      of Calling for Redemption.

                    	 
      	
                      22

                    
	
                      Section 304.

                    	
                      Cancellation

                    	 
      	
                      22

                    
	 
      	 
      	 
      
	
                      ARTICLE IV
      ACQUISITION AND CONSTRUCTION FUND 

                    	 
      	
                      23

                    
	 
      	 
      	 
      
	
                      Section 401.

                    	
                      Acquisition
      and Construction Fund

                    	 
      	
                      23

                    
	
                      Section 402.

                    	
                      Payments
      From Acquisition and Construction Fund

                    	 
      	
                      23

                    
	
                      Section 403.

                    	
                      Cost of Project

                    	 
      	
                      23

                    
	
                      Section 404.

                    	
                      Disposition of Balances in Acquisition and Construction Fund

                    	 
      	
                      24

                    
	 
      	 
      	 
      
	
                      ARTICLE V
      ESTABLISHMENT OF FUNDS AND APPLICATION THEREOF

                    	 
      	
                      25

                    
	 
      	 
      	 
      
	
                      Section 501.

                    	
                      Lien

                    	 
      	
                      25

                    
	
                      Section 502.

                    	
                      Establishment
      of Funds and Accounts

                    	 
      	
                      25

                    
	
                      Section 503.

                    	
                      Acquisition
      and Construction Fund

                    	 
      	
                      26

                    
	
                      Section 504.

                    	
                      Revenue
      Fund and Series Revenue Accounts

                    	 
      	
                      27

                    
	
                      Section 505.

                    	
                      Debt
      Service Fund and Series Debt Service Account

                    	 
      	
                      27

                    
	
                      Section 506.

                    	
                      Optional Redemption

                    	 
      	
                      29

                    
	
                      Section 507.

                    	
                      Rebate
      Fund and Series Rebate Accounts

                    	 
      	
                      29

                    
	
                      Section 508.

                    	
                      Investment of Funds
      and Accounts

                    	 
      	
                      30

                    
	
                      Section 509.

                    	
                      Deficiencies
      and Surpluses in Funds

                    	 
      	
                      31

                    
	
                      Section 510.

                    	
                      Investment Income

                    	 
      	
                      32

                    
	
                      Section 511.

                    	
                      Cancellation
      of the Bonds

                    	 
      	
                      32

                    

            

          

        

      

    

     

    
      
         

      

      
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                              ARTICLE VI CONCERNING
      THE TRUSTEE

                            	 
      	
                              33

                            
	 
      	 
      	 
      
	
                              Section 601.

                            	
                              Acceptance
      of Trust

                            	 
      	
                              33

                            
	
                              Section 602.

                            	
                              No
      Responsibility for Recitals

                            	 
      	
                              33

                            
	
                              Section 603.

                            	
                              Trustee May Act
      Through Agents; Answerable
      Only for Willful Misconduct or Gross
      Negligence

                            	 
      	
                              33

                            
	
                              Section 604.

                            	
                              Compensation
      and Indemnity

                            	 
      	
                              33

                            
	
                              Section 605.

                            	
                              No Duty to
      Renew Insurance

                            	 
      	
                              34

                            
	
                              Section 606.

                            	
                              Notice of Default;
      Right to Investigate

                            	 
      	
                              34

                            
	
                              Section 607.

                            	
                              Obligation
      to Act on Default

                            	 
      	
                              34

                            
	
                              Section 608.

                            	
                              Reliance
      by Trustee

                            	 
      	
                              34

                            
	
                              Section 609.

                            	
                              Trustee May Deal in Bonds

                            	 
      	
                              34

                            
	
                              Section 610.

                            	
                              Construction
      of Ambiguous Provision

                            	 
      	
                              34

                            
	
                              Section 611.

                            	
                              Resignation
      of Trustee

                            	 
      	
                              35

                            
	
                              Section 612.

                            	
                              Removal of Trustee

                            	 
      	
                              35
      

                            
	
                              Section 613.

                            	
                              Appointment of
      Successor Trustee

                            	 
      	
                               
      35

                            
	
                              Section 614.

                            	
                              Qualification
      of Successor Trustee

                            	 
      	
                               
      36

                            
	
                              Section 615.

                            	
                              Instruments of Succession

                            	 
      	
                               
      36

                            
	
                              Section 616.

                            	
                              Merger
      of Trustee

                            	 
      	
                               
      36

                            
	
                              Section 617.

                            	
                              Resignation of Escrow
      Agent, Paying Agent or Bond Registrar

                            	 
      	
                               
      36

                            
	
                              Section 618.

                            	
                              Removal of Escrow
      Agent, Paying Agent or Bond Registrar

                            	 
      	
                               
      37

                            
	
                              Section 619.

                            	
                              Appointment of
      Successor Escrow Agent, Paying Agent or
      Bond Registrar

                            	 
      	
                               
      37

                            
	
                              Section 620.

                            	
                              Qualifications
      of
      Successor Escrow Agent, Paying Agent or Bond Registrar

                            	 
      	
                               
      37

                            
	
                              Section 621.

                            	
                              Acceptance
      of Duties by Successor Escrow Agent, Paying Agent
      or Bond Registrar

                            	 
      	
                               
      37

                            
	
                              Section 622.

                            	
                              Successor
      by Merger or Consolidation

                            	 
      	
                               
      38

                            
	
                              Section
      623.

                            	
                              Patriot
      Act Requirements of the Trustee

                            	 
      	
                               
      38

                            
	 
      	 
      	 
      
	
                              ARTICLE VII FUNDS
      CONSTITUTE TRUST FUNDS

                            	 
      	
                              39

                            
	 
      	 
      	 
      
	
                              Section 701.

                            	
                              Trust Funds

                            	 
      	
                              39

                            
	 
      	 
      	 
      
	
                              ARTICLE VIII COVENANTS
      AND AGREEMENTS OF THE ISSUER

                            	 
      	
                              40

                            
	 
      	 
      	 
      
	
                              Section 801.

                            	
                              Payment
      of Bonds

                            	 
      	
                               
      40

                            
	
                              Section 802.

                            	
                              Extension
      of Payment of Bonds

                            	 
      	
                              40

                            
	
                              Section 803.

                            	
                              Further
      Assurance

                            	 
      	
                               
      40

                            
	
                              Section 804.

                            	
                              Power
      to Issue Bonds and Create a Lien

                            	 
      	
                              40

                            
	
                              Section 805.

                            	
                              Power
      to Undertake Series Projects and to Collect Pledged
Revenue

                            	 
      	
                               
      40

                            
	
                              Section 806.

                            	
                              Sale of
      Series Projects

                            	 
      	
                               
      41

                            
	
                              Section 807.

                            	
                              Completion
      and Maintenance of Series Projects

                            	 
      	
                              41

                            
	
                              Section 808.

                            	
                              Accounts
      and Reports

                            	 
      	
                               42
      

                            
	
                              Section 809.

                            	
                              Arbitrage
      and Other Tax Covenants

                            	 
      	
                              42

                            
	
                              Section 810.

                            	
                              Payment
      of Tolls

                            	 
      	
                               
      42

                            
	
                              Section 811.

                            	
                              Method
      of Collection of Assessments, Charges and Fees

                            	 
      	
                              42

                            
	
                              Section 812.

                            	
                              Deposit of Proceeds
      from Sale of Property

                            	 
      	
                              43

                            

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
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                      Section 813.

                    	
                      No Other Obligations Payable from Assessments,
      Charges or Fees

                    	 
      	
                       
      43

                    
	
                      Section 814.

                    	
                      General

                    	 
      	
                       
      43

                    
	
                      Section 815.

                    	
                      Secondary Market
      Disclosure

                    	 
      	
                       
      43

                    
	 
      	 
      	
                       

                    
	
                      ARTICLE IX
      EVENTS OF DEFAULT AND REMEDIES

                    	 
      	
                      44

                    
	 
      	 
      	
                       

                    
	
                      Section 901.

                    	
                      Extension
      of Interest Payment

                    	 
      	
                       
      44

                    
	
                      Section 902.

                    	
                      Events
      of Default

                    	 
      	
                       
      44

                    
	
                      Section 903.

                    	
                      No
      Acceleration of Maturities of Bonds of a Series

                    	 
      	
                       
      45

                    
	
                      Section 904.

                    	
                      Enforcement
      of Remedies

                    	 
      	
                       
      45

                    
	
                      Section 905.

                    	
                      Pro Rata Application
      of Funds Among Owners of a Series of Bonds

                    	 
      	
                       
      46

                    
	
                      Section 906.

                    	
                      Effect of Discontinuance
      of Proceedings

                    	 
      	
                       
      47

                    
	
                      Section 907.

                    	
                      Restriction
      on Individual Owner Actions

                    	 
      	
                       
      47

                    
	
                      Section 908.

                    	
                      No Remedy
      Exclusive

                    	 
      	
                       
      47

                    
	
                      Section 909.

                    	
                      Delay
      Not a Waiver

                    	 
      	
                       
      47

                    
	
                      Section 910.

                    	
                      Right
      to Enforce Payment of Bonds

                    	 
      	
                       
      47

                    
	
                      Section 911.

                    	
                      No
      Cross Default Among Series

                    	 
      	
                       
      48

                    
	
                      Section 912.

                    	
                      Indemnification

                    	 
      	
                       
      48

                    
	 
      	 
      	 
      
	
                      ARTICLE X
      EXECUTION OF INSTRUMENTS BY OWNERS AND PROOF OF
      OWNERSHIP OF BONDS 

                    	 
      	
                       
      49

                    
	 
      	 
      	 
      
	
                      Section 1001.

                    	
                      Execution
      of Instruments by Owners and Proof of Ownership
    of Bonds

                    	 
      	
                       
      49

                    
	
                      Section 1002.

                    	
                      Deposit of Bonds

                    	 
      	
                       
      49

                    
	 
      	 
      	 
      
	
                      ARTICLE XI SUPPLEMENTAL
      INDENTURES

                    	 
      	
                       
      50

                    
	 
      	 
      	 
      
	
                      Section 1101.

                    	
                      Supplemental Indentures

                    	 
      	
                       
      50

                    
	
                      Section 1102.

                    	
                      Supplemental Indentures With Owner Consent

                    	 
      	
                       
      50

                    
	
                      Section 1103.

                    	
                      Opinion of Bond Counsel With
      Respect to Supplemental Indenture

                    	 
      	
                       
      52

                    
	
                      Section 1104.

                    	
                      Supplemental Indenture
      Part of Indenture

                    	 
      	
                       
      52

                    
	
                      Section 1105.

                    	
                      Insurer
      or Issuer of a Credit or Liquidity Facility as Owner of
      Bonds

                    	 
      	
                       
      52

                    
	 
      	 
      	 
      
	
                      ARTICLE XII DEFEASANCE

                    	 
      	
                       
      53

                    
	 
      	 
      	 
      
	
                      Section 1201.

                    	
                      Defeasance
      and Discharge of the Lien of this Master Indenture
      and Supplemental Indentures

                    	 
      	
                       
      53

                    
	
                      Section 1202.

                    	
                      Moneys
      Held in Trust

                    	 
      	
                       
      56

                    
	 
      	 
      	 
      
	
                      ARTICLE XIII MISCELLANEOUS
      PROVISIONS

                    	 
      	
                       
      57

                    
	 
      	 
      	 
      	 
      
	
                      Section 1301.

                    	
                      Effect of Covenant

                    	 
      	
                       
      57

                    
	
                      Section 1302.

                    	
                      Manner
      of Giving Notice to the Issuer and the Trustee

                    	 
      	
                       
      57

                    
	
                      Section 1303.

                    	
                      Manner
      of Giving Notice to the Owners

                    	 
      	
                       
      57

                    
	
                      Section 1304.

                    	
                      Successorship of Issuer Officers

                    	 
      	
                       
      58

                    
	
                      Section 1305.

                    	
                      Inconsistent Provisions

                    	 
      	
                       
      58

                    
	
                      Section 1306.

                    	
                      Further
      Acts; Counterparts

                    	 
      	
                       
      58

                    
	
                      Section 1307.

                    	
                      Headings
      Not Part of Indenture

                    	 
      	
                       
      58

                    
	
                      Section 1308.

                    	
                      Effect of Partial Invalidity

                    	 
      	
                       
      58

                    

            

          

        

      

    

    
      
         

      

      
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                      Section 1309.

                    	
                      Effective
      Date

                    	 
      	
                      58

                    
	 
      	 
      	 
      
	
                      EXHIBIT A:
       FORM OF REQUISITION

                    	 
      	
                      A-1

                    

            

          

        

      

    

     

    
      
         

      

      
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    MASTER
TRUST INDENTURE

     

    THIS IS A MASTER TRUST
INDENTURE, dated as of _____________,
20__, by and between Hi Speed Rail Facilities Provider, Inc., a Delaware
not-for-profit corporation (the "Issuer"), and HSRF Trust, a ____________________
trust company as trustee (the "Trustee").

    

    WHEREAS, the Issuer is
organized and existing as a not-for-profit corporation pursuant to the laws of
the State (hereinafter defined) and is exempt from taxation under Section
501(c)(3) of the Internal Revenue Code of 1986, as amended; and,

    

    WHEREAS, the Issuer operates
as an of affiliated entity of Hi Speed Rail Facilities, Inc, a Pennsylvania
nonprofit corporation, which was created to facilitate the provision of
transportation services by affiliated entities, such as Issuer;
and,

    

    WHEREAS, the Issuer has been
established for the purpose of the financing, acquisition, construction,
operation, management, and maintenance of a high-speed rail system for passenger
and freight transportation in a designated rail corridor and other
transportation services (the "Project"); and,

    

    WHEREAS, the Issuer shall
operate pursuant to a Resolution (hereinafter defined) authorizing and
designating Issuer as the exclusive entity for the accomplishment of the Project
and the consent of the State to accept title in the name of the State to the
real and personal property constituting the Project, or any part thereof, upon
retirement of the Bonds (hereinafter defined) to be issued by Issuer related to
the Project; and,

    

    WHEREAS, the Issuer shall
operate pursuant to a Resolution expressing the State’s intent to act as the
State Sponsor (hereinafter defined) as an inducement to Issuer to proceed with
the Project and incur expenses for its initiation and financing;
and,

    

    WHEREAS, the Issuer deems it
advisable to borrow money and to issue its Bonds to finance certain Project
costs, and to mortgage and pledge as security for the Bonds the Issuer’s
interest in the Project and an assignment of the revenues to be derived from the
operation thereof; and,

    

    WHEREAS, the execution and
delivery of the Bonds and of this Master Trust Indenture have been duly
authorized by the Governing Body (hereinafter defined) of the Issuer and all
things necessary to make the Bonds, when executed by the Issuer and
authenticated by the Trustee, valid and binding legal obligations of the Issuer
and to make this Master Trust Indenture a valid and binding agreement and a
valid and binding lien on the Trust Estate (hereinafter defined) have been
done.

    
      
         

      

      
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    NOW,
THEREFORE, THIS MASTER TRUST INDENTURE WITNESSETH:

     

    GRANTING

    CLAUSES

    

    That the
Issuer, in consideration of the premises and acceptance by the Trustee of the
trusts hereby created and the purchase and acceptance of the Bonds (hereafter
defined) by the Owners (hereafter defined), and for other good and valuable
consideration, the receipt of which is hereby acknowledged, in order to secure
the payment of the principal of, premium, if any, and interest on the Bonds of a
Series (hereafter defined) issued hereunder according to their tenor and effect
and to  secure the performance and observance by the Issuer of all of
the covenants expressed or implied herein, in the Supplemental Indenture
authorizing the issuance of such Series of Bonds and in the Bonds of such
Series, does hereby assign and grant a security interest in the following
(herein called the "Trust Estate") to the Trustee and its successors in trust,
and assigns forever, for the securing of the performance of the obligations of
the Issuer herein set forth: (i) the Pledged Revenues (hereinafter defined) and
Pledged Funds (hereinafter defined); and (ii) any and all property of every kind
or description which may from time to time hereafter be sold, transferred,
conveyed, assigned, hypothecated, endorsed, deposited, pledged, granted or
delivered to, or deposited with, the Trustee as security for any Series of Bonds
issued pursuant to this Master Indenture by the Issuer or anyone on its behalf
or with its consent, or which pursuant to any of the provisions hereof or of the
Supplemental Indenture securing such Series of Bonds may come into the
possession or control of the Trustee or of a lawfully appointed receiver, as
such additional  security, and the Trustee is
hereby  authorized  to  receive
any  and  all  such property as and  for
security for the payment of such Series of Bonds and the interest and premium,
if any, thereon, and to hold and apply all such property subject to the terms
hereof, it
being  expressly  understood  and  agreed
that except as otherwise provided herein or in a Supplemental Indenture the
Trust Estate established and held hereunder for Bonds of a Series shall be held
separate and in trust solely for the benefit of the Owners of the Bonds of such
Series and for no other Series;

    

    TO HAVE AND TO HOLD the Trust
Estate, whether now owned or held or hereafter acquired, forever;

    

    IN TRUST NEVERTHELESS, upon
the terms and trusts herein set forth (a) for the equal and proportionate
benefit and security of all present and future Owners of the Bonds of a Series,
without preference of any Bond of such Series over any other Bond of such
Series, (b) for enforcement of the payment of the Bonds of a  Series,
in accordance with their terms and the terms of this Master Indenture and the
Supplemental Indenture authorizing the issuance of such Series  of
Bonds, and all other sums payable hereunder, under the Supplemental Indenture
authorizing such Series of Bonds or on the Bonds of such Series, and (c) for the
enforcement of and compliance with the obligations, covenants and conditions of
this Master Indenture except as otherwise expressly provided herein, as if all
the Bonds at any time Outstanding (hereafter defined) had been authenticated,
executed and delivered simultaneously with the execution and delivery of this
Master Indenture, all as herein set forth.

    
      
         

      

      
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    IT IS HEREBY COVENANTED, DECLARED AND
AGREED (a) that this Master Indenture creates a continuing lien equally
and ratably to secure the payment in full of the principal of, premium, if any,
and interest on all Bonds of a Series which may from time to time be Outstanding
hereunder, except as otherwise expressly provided herein, (b) that the Trust
Estate  shall immediately be subject to the lien of this pledge and
assignment without any physical delivery thereof or further act, (c) that the
lien of this pledge and assignment shall be a first lien and shall be valid and
binding against all parties having any claims of any kind in tort, contract or
otherwise against the Issuer, irrespective of whether such parties have notice
thereof, and (d) that the Bonds of a Series are to be issued, authenticated and
delivered, and that the Trust Estate is to be held, dealt with, and disposed of
by the Trustee, upon and subject to the terms, covenants, conditions, uses,
agreements and trusts set forth in this Master Indenture and the Issuer
covenants and agrees with the Trustee, for the equal and proportionate
benefit  of the respective Owners from time to time of the Bonds of
each respective Series, as follows:

     

    
      
         

      

      
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    ARTICLE
I

     

    DEFINITIONS

     

    Section
101.   Meaning of Words and
Terms.  The following words and terms used in this Master
Indenture shall have the following meanings, unless some other meaning is
plainly intended:

    

    "Accountant" shall mean the
independent certified public accountant or independent certified public
accounting firm retained by the Issuer to perform the duties of the Accountant
under this Master Indenture.

    

    "Accountant's Certificate"
shall mean an opinion signed by an independent certified public accountant or
firm of certified public accountants (which may be the Accountants) from time to
time selected by the Issuer.

    

    "Account" shall mean any
account created pursuant to Section 502 hereof except amounts on deposit in the
Series Rebate Account within the Rebate Fund.

    

    "Accreted Value" shall mean,
as of the date of computation with respect to any Capital Appreciation Bonds, an
amount (truncated to three (3) decimal places) equal to the original principal
amount of such Capital Appreciation Bonds at the date of issuance plus the
interest accrued on such Bonds from the date of original issuance of such
Capital Appreciation Bonds to the date of computation, such interest to accrue
at the rate of interest per annum of the Capital Appreciation Bonds (or in
accordance with a table of compound accreted values set forth in such Capital
Appreciation Bonds), compounded semi-annually on each Interest Payment Date;
provided, however, that if the date with respect to which any such computation
is made is not an Interest Payment Date, the Accreted Value of any Bond as of
such date shall be the amount determined by compounding the Accreted Value of
such Bond as of the immediately preceding Interest Payment Date (or the date of
original issuance if the date of computation is prior to the first Interest
Payment Date succeeding the date of original issuance) at the rate of interest
per annum of the Capital  Appreciation Bonds for the partial
semi-annual compounding period determined by dividing (x) the number of days
elapsed (determined on the basis of a three hundred sixty (360) day
year  comprised of twelve (12) thirty (30) day months) from the
immediately preceding Interest Payment Date (or the date of original issuance if
the date of computation is prior to the first Interest Payment Date succeeding
the date of original issuance), by (y) one hundred eighty (180). A table of
Accreted Values for the Capital Appreciation Bonds shall be incorporated in a
Supplemental Indenture executed by the Issuer upon issuance of any Capital
Appreciation Bonds.

    

    "Acquisition and Construction
Fund" shall mean the fund so designated in, and created pursuant to,
Section 502 hereof.

    

    "Additional Bonds" shall mean
Bonds of a Series authenticated and delivered pursuant to the terms of a
Supplemental Indenture providing for the issuance of pari passu Additional Bonds
of such Series.

    
      
         

      

      
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    "Additional Series Project"
shall mean the acquisition and/or construction of any additions, extensions,
improvements and betterments to and reconstructions of a Series Project to be
financed, in whole or in part, from the proceeds of any Additional
Bonds.

    

    "Amortization Installments"
shall mean the moneys required to be deposited in a Series Redemption Account
within a Series Debt Service Account for the purpose of redeeming and paying
when due any Term Bonds, the specific amounts and dates of such deposits to be
set forth in a Supplemental Indenture.

    

    "Authorized Denomination"
shall mean, except as provided in any Supplemental Indenture relating to a
Series of Bonds, mean the denomination of $100,000 or any larger amount that is
an integral multiple of $5,000.

    

    "Authorized Officer" shall
mean any person authorized by the Issuer in writing directed to the Trustee to
perform the act or sign the document in question.

    

    "Bond Counsel" shall mean an
attorney or firm of attorneys of nationally recognized standing in the field of
law relating to municipal bonds selected by the Issuer.

    

    "Bond Registrar" or "Registrar" shall mean the
bank or trust company designated as such by Supplemental Indenture with respect
to a Series of Bonds for the purpose of maintaining the registry of the Issuer
reflecting the names, addresses, and other identifying information of Owners of
Bonds of such Series.

    

    "Bond Year" shall mean, unless
otherwise provided in the Supplemental Indenture authorizing a Series of Bonds,
the period commencing on the first day of July in each year and ending on the
last day of June of the following year.

    

    "Bonds" shall mean the
Outstanding Bonds of all Series.

    

    "Business Day" shall mean any
day excluding Saturday, Sunday or any other day on which banks in the cities in
which the designated corporate trust office of the Trustee, Escrow Agent or the
Paying Agent are located are authorized or required by law or other governmental
action to close and on which the Trustee, Escrow Agent or Paying Agent, or both,
is closed.

    

    "Capital Appreciation Bonds"
shall mean Bonds issued under this Master Indenture and any Supplemental
Indenture as to which interest is compounded periodically on each of the
applicable periodic dates designated for compounding and payable in an amount
equal to the then-current Accreted Value only at the maturity or earlier
redemption thereof, all as so designated in a Supplemental Indenture of the
Issuer providing for the issuance thereof.

    

    "Capitalized Interest" shall
mean, with respect to the interest due or to be due on a Series of Bonds prior
to, during and for a period not exceeding one year after the completion of a
Project to be funded by such Series, all or part of such interest which will be
paid, or is expected to be paid, from the proceeds of such
Series.

    
      
         

      

      
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    "Capitalized
Interest  Account" shall mean any Capitalized Interest account
with respect to a Series of Bonds established within a Series Debt Service
Account so designated in, and created pursuant to, Section 502 hereof and
Supplemental Indenture issued under this Master Indenture, as authorized
pursuant to this Master Indenture.

    

    "Chairman" shall mean the
Chairman of the Issuer or the person succeeding to his or her principal
functions.

    

    "Code" shall mean the Internal
Revenue Code of 1986, as amended, or any successor provisions thereto and the
regulations promulgated thereunder or under the Internal Revenue Code of 1954,
as amended, if applicable, or any successor provisions thereto.

    

    "Completion Bonds" shall mean
Bonds issued pursuant to a Supplemental Indenture ranking on parity with the
Series of Bonds issued under such Supplemental Indenture, the proceeds of which
are to be used to complete the Series Project.

    

    "Consulting Engineers" shall
mean the independent engineer or engineering firm or corporation employed in
connection with any Series Project to perform and carry out the duties of the
Consulting Engineer under this Indenture or any Supplemental
Indenture.

    

    "Cost" as applied to a Series
Project shall include the cost of acquisition and construction thereof and all
obligations and expenses relating thereto including, but not limited to, those
items of cost which are set forth in Section 403 hereof.

    

    "Credit or Liquidity Facility"
shall mean a letter of credit, a municipal bond insurance policy, a surety bond
or other similar agreement issued by a banking institution or other entity
satisfactory to the Issuer and providing for the payment of the principal of,
interest on or purchase price of a Series of Bonds or any alternate or
substitute Credit or Liquidity Facility if then in effect.

    

    "Current Interest Bonds" shall
mean Bonds of a Series the interest on which is payable at least
annually.

    

    "Date of Completion" with
respect to a Series Project or Additional Series Project shall mean: (i) the
date upon which such Project and all components thereof have been acquired or
constructed and are capable of performing the functions for which they were
intended, as evidenced by an Engineers’ Certificate filed with the Trustee and
the Issuer; or (ii) the date on which the Issuer determines, upon the
recommendation of or in consultation with the Consulting Engineer, that it
cannot complete such Project in a sound and economical manner within a
reasonable period of time as evidenced by an Engineers’ Certificate filed with
the Trustee and the Issuer; provided that in each case such certificate of the
Consulting Engineer shall set forth the amount of all Costs of such Project
which have theretofore been incurred, but which on the Date of Completion is or
will be unpaid or unreimbursed.

    

    "Debt Service" shall mean
collectively the principal (including Amortization Installments), interest, and
redemption premium, if any, payable with respect to the Bonds.

    
      
         

      

      
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    "Debt Service Fund" shall mean
the fund so designated in, and created pursuant to, Section 502
hereof.

    

    "Depository" shall mean any
bank or trust company duly authorized by law to engage in the banking business
and designated by the Issuer as a depository of moneys subject to the provisions
of this Master Indenture.

    

    "Developer" shall mean Ameri
Metro, Inc., a Delaware corporation and any successors and assigns.

    

    "Engineers' Certificate" shall
mean a certificate of the Consulting Engineers or of such other engineer or firm
of engineers having a favorable repute for skill and experience in the
engineering matters with respect to which such certification is required by this
Master Indenture.

    

    "Escrow Agent" shall mean the
agent appointed from time to time by the Trustee.

    

    "Event of Default" shall mean
any of the events in Section 902.

    

    "Federal Securities" shall
mean, to the extent permitted by law for investment as contemplated in this
Master Indenture and any Supplemental Indenture, (i) Government Obligations,
(ii) any Tax Exempt Obligations which are fully secured as to principal and
interest by  an irrevocable pledge of Government Obligations, which
Government Obligations are segregated in trust and pledged for the benefit of
the holders of the Tax Exempt Obligations, (iii) certificates of ownership of
the principal or interest of Government Obligations, which Government
Obligations are held in trust and (iv) investment agreements at least 100%
collateralized by obligations described in clauses (i), (ii) or (iii)
above.

    

    "Fiscal Year" shall mean the
fiscal year of the Issuer in effect from time to time, which shall initially
mean the period commencing on the first day of October of any year and ending on
the last day of September of the following year.

    

    “Funds” shall mean any fund,
except the Rebate Fund, created pursuant to Section 502 hereof.

    

    "Governing Body" shall mean
the board of directors of the Issuer.

    

    "Government Obligations" shall
mean direct obligations of, or obligations the payment of which is
unconditionally guaranteed by, the United States of America.

    

    "Indenture" shall mean this
Master Indenture, as amended and supplemented from time to time by a
Supplemental Indenture or indentures, and shall mean, when used with respect to
a Series of Bonds issued hereunder, this Master Indenture, as amended and
supplemented by the Supplemental Indenture relating to such Series of
Bonds.

    
      
         

      

      
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    "Insurer" shall mean the
issuer of any municipal bond insurance policy insuring the timely payment of the
principal of and interest on Bonds or any Series of Bonds.

    

    "Interest Payment Date" shall
mean the dates specified in a Supplemental Indenture with respect to a Series of
Bonds upon which the principal of and/or interest on Bonds of such Series shall
be due and payable in each Bond Year.

    

    "Investment Obligations" shall
mean and include, except as otherwise provided in the Supplemental Indenture
providing for the authorization of Bonds, any of the following securities, if
and to the extent that such securities are legal investments for funds of the
Issuer;

    

    (i)           Government
Obligations;

    

    (ii)          Bonds,
debentures, notes or other evidences of indebtedness issued by any of the
following agencies or such other government-sponsored agencies which may
presently exist or be  hereafter created; provided that, such bonds,
debentures, notes or other evidences of indebtedness are fully guaranteed as to
both principal and interest by the United States of America; Bank for
Cooperatives; Federal Intermediate Credit Banks; Federal Financing Bank; Federal
Home Loan Bank System; Export-Import Bank of the United States; Farmers Home
Administration; Small Business Administration; Inter-American Development Bank;
International Bank for Reconstruction and Development; Federal Land Banks; the
Federal National Mortgage Association; the Government National Mortgage
Association; the Tennessee Valley Authority; or the Washington Metropolitan Area
Transit Authority;

    

    (iii)        Negotiable
or non-negotiable certificates of deposit, time deposits or other similar
banking arrangements issued by any bank or trust company, including the Trustee,
or any federal savings and loan association, the deposits of which are insured
by the Federal Deposit Insurance Corporation, which securities, to the extent
that the principal thereof exceeds the maximum amount insurable by the Federal
Deposit Insurance Corporation and, therefore, are not so insured, shall be fully
secured to the extent permitted by law by Governmental Obligations;

    

    (iv)        Bank
or broker repurchase agreements fully secured by Government Obligations, which
may include repurchase agreements with the commercial banking department of the
Trustee, provided that such securities are deposited with the Trustee, with a
Federal Reserve Bank  or with a bank or trust company (other than the
seller of such securities) having a combined capital and surplus of not less
than $100,000,000; and

    

    (v)         Any
short term government fund or any money market fund (which may be managed by the
Trustee or its affiliates) whose underlying assets consist of (i) and (ii)
above.

    

    "Issuer" shall mean Hi Speed
Rail Facilities Provider, Inc., as more particularly described herein
above.

    

    "Law" or "Laws" shall mean any
federal, state or local government law, rules or regulations applicable to a
Series Project.

    
      
         

      

      
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    "Letter of Credit Agreement"
shall mean any financing agreement relating to a Credit Facility for so long as
such agreement will be in effect.

    

    "Liquidity Agreement" shall
mean any financing agreement relating to a Liquidity Facility for so long as
such agreement will be in effect.

    

    "Master Indenture" shall mean
this Master Trust Indenture, as amended and supplemented from time to time in
accordance with the provisions hereof.

    

    "Maturity Amount" shall mean
the amount due at maturity with respect to a Capital Appreciation
Bond.

    

    "Maximum Annual Debt Service
Requirement" shall mean, at any given time of determination, the greatest
amount of principal, interest and Amortization Installments coming due in any
current or future Bond Year with regard to the Series of Bonds for which such
calculation is made; provided, the amount of interest coming due in any Bond
Year shall be reduced to the extent moneys derived from the proceeds of Bonds
are used to pay interest in such Bond Year.

    

    "Moody's" shall mean Moody's
Investors Service, Inc., a corporation organized and existing under the laws of
the State of Delaware, its successors and assigns, and, if such corporation is
dissolved or liquidated or no longer performs the functions of a securities
rating agency, Moody's will be deemed to refer to any other nationally
recognized securities rating agency designated by the Issuer by written notice
to the Trustee.

    

    "Option Bonds" shall mean
Current Interest Bonds, which may be either Serial or Term Bonds, which by their
terms may be tendered by and at the option of the Owner for purchase prior to
the stated maturity thereof.

    

    "Outstanding" when used with
reference to Bonds, shall mean, as of a particular date, all Bonds theretofore
authenticated and delivered under this Master Indenture, except:

    

    (i)           Bonds
theretofore canceled by the Trustee or delivered to the Trustee for
cancellation;

    

    (ii)          Bonds
(or portions of Bonds) for the payment or redemption of which moneys, equal to
the principal amount or redemption price thereof, as the case may be, with
interest to the date of maturity or redemption date, shall be held in trust
under this Master Indenture or Supplemental Indenture with respect to Bonds of
any Series and set aside for such payment or redemption (whether at or prior to
the maturity or redemption date), provided that if such Bonds (or portions of
Bonds) are to be redeemed, notice of such redemption shall have been given or
provision satisfactory to the Trustee shall have been made for the giving of
such notice as provided in Article III hereof or in the Supplemental Indenture
relating to the Bonds of any Series;

    
      
         

      

      
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    (iii)        Bonds  in  lieu  of  or  in  substitution  for  which  other  Bonds  shall  have  been
authenticated and delivered pursuant to this Master Indenture and the
Supplemental Indenture with respect to Bonds of a Series unless proof
satisfactory to the Trustee is presented that any such Bonds are held by a bona
fide purchaser in due course; and

    

    (iv)        Bonds
paid or deemed to have been paid as provided in this Master Indenture or in a
Supplemental Indenture with respect to Bonds of a Series, including Bonds with
respect to which payment or provision for payment has been made in accordance
with Article XII hereof.

    

    In
addition, Bonds actually known by the Trustee to be held by or for the Issuer
will not be deemed to be Outstanding for the purposes and within the purview of
Article IX and Article XI of this Master Indenture.

    

    "Owner" or "Owners" shall mean
the registered owners from time to time of Bonds.

    

    "Paying Agent" shall mean the
bank or trust company designated by Supplemental Indenture with respect to a
Series of Bonds as the place where Debt Service shall be payable with respect to
such Series of Bonds and which accepts the duties of Paying Agent under this
Master Indenture and under such Supplemental Indenture.

    

    "Pledged Funds" shall mean all
of the Series Pledged Funds.

    

    "Pledged Revenues" shall mean
all of the Series Pledged Revenues.

    

    "Prepayments" shall mean any
moneys which shall be paid to the Issuer prior to the time such amounts become
due.  Prepayments shall not include any interest paid on such
moneys.

    

    "Principal and Interest
Requirement" shall mean with respect to a Series of Bonds the respective
amounts which are required in each Bond Year to provide:

    

    (i)          for
paying the interest on all Bonds of such Series then Outstanding which is
payable in such Bond Year;

    

    (ii)         for
paying the principal or Maturity Amount of all Serial Bonds of such Series then
Outstanding which is payable in such Bond Year; and

    

    (iii)        the
Amortization Installments on the Term Bonds of such Series of Bonds, if any,
payable in such Bond Year.

    

    "Rebate Amount" shall mean the
amount, if any, required to be rebated to the United States pursuant to Section
148(f) of the Internal Revenue Code of 1986, as amended, and the regulations and
rulings thereunder.

     

    "Rebate Analyst" shall mean
the person or firm selected by the Issuer to calculate the Rebate Amount, which
person or firm shall either be a firm of attorneys or independent certified
public accountants with expertise in the calculation of the Rebate
Amount.

    
      
         

      

      
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    "Rebate Fund" shall mean the
fund so designated in, and created pursuant to, Section 502 hereof.

    

    "Record Date" shall mean the
fifteenth (15th) day of the calendar month next preceding any Debt Service
payment date or, in the case of any proposed redemption of Bonds, the fifth
(5th) day next preceding the date of mailing of notice of such redemption, or if
either of the foregoing days is not a Business Day, then the Business Day
immediately preceding such day.

    

    "Redemption Price" shall mean
the principal of, premium, if any, and interest accrued to the date fixed for
redemption of any Bond called for redemption pursuant to the provisions thereof,
hereof and of the Supplemental Indenture pursuant to which such Bond is
issued.

    

    "Refunding Bonds" shall mean
Bonds issued pursuant to provisions of this Master Indenture, the proceeds of
which are used to refund one or more Series of Outstanding Bonds.

    

    "Reserve Fund" shall mean the
fund so designated in, and created pursuant to, Section 502 hereof.

    

    "Resolution" shall mean the
authorizing resolution of the governing body of the State.

    

    "Revenue Fund" shall mean the
fund so designated in, and created pursuant to, Section 502 hereof.

    

    "S&P" shall mean Standard
& Poor's Rating Group, a division of McGraw Hill, Inc., a corporation
organized and existing under the laws of the State of New York, its successors
and its assigns, and, if such corporation is dissolved or liquidated or no
longer performs the functions of a securities rating agency, S&P will be
deemed to refer to any other nationally recognized securities rating agency
designated by the Issuer by written notice to the Trustee.

    

    "Secretary" shall mean the
Secretary or any Assistant Secretary to the Governing Body, or the person
succeeding to his or her principal functions.

    

    "Serial Bonds" shall mean
Bonds (other than Term Bonds) that mature in annual or semi-annual
installments.

    

    "Series" shall mean all of the
Bonds authenticated and delivered on original issuance of a stipulated aggregate
principal amount in a simultaneous transaction under and pursuant to the same
Supplemental Indenture and any Bonds thereafter authenticated and delivered in
lieu of or in substitution therefore pursuant to this Master Indenture and such
Supplemental Indenture regardless of variations in maturity, interest rate or
other provisions; provided, however, two or more Series of Bonds may be issued
simultaneously under the same Supplemental Indenture if designated as separate
Series of Bonds by the Issuer upon original issuance.

    
      
         

      

      
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    "Series Acquisition and Construction
Account" shall mean the account within the Acquisition and Construction
Fund with respect to each Series of Bonds so designated in, and created pursuant
to, Supplemental Indenture.

     

    "Series Costs of Issuance
Account" shall mean the ac count within the Acquisition and Construction
fund with respect to each Series of Bonds so designated in, and created pursuant
to, Supplemental Indenture.

    

    "Series Debt Service Account"
shall mean the account with respect to a Series of Bonds established within a
Series Debt Service Account so designated in, and created pursuant to, Section
502 hereof and Supplemental Indenture and Supplemental Indenture.

    

    "Series Interest Account"
shall mean the account with respect to a Series of Bonds established within the
Debt Service Fund so designated in, and created pursuant to, Section 502
hereof.

    

    "Series Pledged Funds" shall
mean all amounts on deposit from time to time in the Funds and Accounts and
designated in the Supplemental Indenture relating to such Series of Bonds as
pledged to the payment of such Series of Bonds; provided, however, such term
shall not include any amounts on deposit in a Series Rebate Account in the
Rebate Fund.

    

    "Series Pledged Revenues"
shall mean the revenues designated as such by Supplemental Indenture and which
shall constitute the security for and source of payment of a Series of Bonds and
may consist of assessments, service charges, franchise fees, impact fees or
other user fees or other revenues or combinations thereof imposed or levied by
the Issuer in accordance with Law.

    

    "Series Principal Account"
shall mean the account with respect to a Series of Bonds established within a
Series Debt Service Account so designated in, and created pursuant to, Section
502 hereof and Supplemental Indenture.

    

    "Series Project" or "Series
Projects" shall mean the acquisition, construction, operation, management
and/or maintenance of a high speed rail system for passenger and freight
transportation in a designated rail corridor and other transportation services
to be financed with all or a part of the proceeds of a Series of Bonds as shall
be described in the Supplemental Indenture authorizing such Series of
Bonds.

    

    "Series Rebate Account" shall
mean the account in the Rebate Fund with respect to a Series of Bonds so
designated in, and created pursuant to, Section 502 hereof and Supplemental
Indenture.

    

    "Series Redemption Account"
shall mean the account with respect to a Series of Bonds established within a
Series Debt Service Account so designated in, and created pursuant to, Section
502 hereof and Supplemental Indenture.

    
      
         

      

      
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    "Series Reserve Account" shall
mean the Reserve Account for the Series of Bonds established in the Reserve Fund
by Supplemental Indenture in an amount equal to the Series Reserve Account
Requirement for such Series of Bonds.

    

    "Series Reserve
Account Requirement" shall
mean the amount of money or other security which may be in the form of a reserve
fund insurance policy or other security as may be required by the terms of a
Supplemental Indenture to be deposited in or credited to a Series Reserve
Account for each Series of Bonds; provided, however, that unless otherwise
provided in the Supplemental Indenture relating to a Series of Bonds,
as  of any date of calculation for a particular  Series
Reserve Account, the "Series Reserve  Account  Requirement"
shall be an amount equal to  the least of: (A) Maximum Annual Debt
Service Requirement for all Outstanding Bonds of such  Series, (B)
125% of the average annual debt service for all Outstanding Bonds of such
Series, or (C) the aggregate of 10% of the proceeds of the Bonds of such Series
calculated as of the date of original issuance thereof.  In computing
the Series Reserve Account Requirement in respect of any Series of Bonds that
constitute Variable Rate Bonds, the interest rate on such Bonds shall be assumed
to be the greater of: (1) 110% of the daily average interest rate on such
Variable Rate Bonds during the 12 months ending with the month preceding the
date of calculation, or such shorter period of time that such Series of Bonds
shall have been Outstanding, or (2) the actual rate of interest borne by such
Variable Rate Bonds on such date of calculation; provided, in no event shall the
Series Reserve Account Requirement as adjusted on such date of calculation
exceed the least of the amounts specified in the immediately preceding
sentence.  In computing the Series Reserve Account Requirement in
accordance with clause (C) of this definition in respect of any Capital
Appreciation Bonds, the principal amount of such Bonds shall be the original
principal amount thereof, not the Accreted Value.

    

    "Series Revenue Account" shall
mean the Revenue Account for a Series of Bonds established in the Revenue Fund
by Supplemental Indenture for such Series of Bonds.

    

    "Series Sinking Fund Account"
shall mean the account with respect to a Series of Bonds established within a
Series Debt Service Account so designated in, and created pursuant to, Section
502 hereof and Supplemental Indenture.

    

    "State" shall mean the state
in which the Project will be located.

    

    "State Sponsor" shall mean a
unit of government qualified to act as sponsor for the issuance of bonds on its
behalf by the Issuer pursuant to Internal Revenue Ruling 63-20 and related
requirements.

    

    "Subordinate Debt" shall mean
indebtedness secured hereby or by any Supplemental Indenture which is by its
terms expressly subordinate and inferior hereto both in lien and right of
payment.

    

    "Supplemental Indenture" shall
mean an indenture supplemental hereto authorizing the issuance of a Series of
Bonds hereunder and establishing the terms thereof and the security therefore
and shall also mean any indenture supplementary hereto entered into for the
purpose of amending the terms and provisions hereof with respect to all Bonds in
accordance with Article XI hereof.

    
      
         

      

      
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    "Taxable Bonds" shall mean
Bonds of a Series which are not Tax Exempt Bonds.

    

    "Tax Exempt Bonds" shall mean
Bonds of a Series the interest on which, in the opinion of Bond Counsel on the
date of original issuance thereof, is excludable from gross income for federal
income tax purposes.

    

    "Tax Exempt Obligations" shall
mean any bond, note or other obligation issued by any person, the interest on
which is excludable from gross income for federal income tax
purposes.

    

    "Tax Regulatory Covenants"
shall mean any Tax Regulatory Covenants of the Issuer contained in the
Supplemental Indenture authorizing the issuance of a Series of Tax Exempt Bonds,
setting forth the covenants of the Issuer necessary for the preservation of the
excludability of interest thereon from gross income for federal income tax
purposes, as such covenants shall be amended from time to time upon written
instructions from Bond Counsel.

    

    "Term  Bonds"  shall  mean  Bonds  that  mature  on  one  date  and  that  are  subject  to
mandatory redemption from Amortization Installments or are subject to
extraordinary mandatory or mandatory redemption upon receipt of unscheduled
Pledged Revenues.

    

    "Time Deposits" shall mean
time deposits, certificates of deposit or similar arrangements with any bank or
trust company, including the Trustee or an affiliate thereof, which is a member
of the Federal Deposit Insurance Corporation.

    

    "Trust Estate" shall have the
meaning ascribed to such term in the granting clauses hereof, including, but not
limited to, the Pledged Revenues and Pledged Funds.

    

    "Trustee" shall mean the
Trustee designated herein, and any successor trustee appointed or serving
pursuant to Article VI hereof.

    

    "Variable Rate Bonds" shall
mean Current Interest Bonds, which may be either Serial Bonds or Term Bonds,
issued with a variable, adjustable, convertible or other similar interest rate
which is not fixed in percentage for the entire term thereof at the date of
issue, which Bonds may also be Option Bonds.

    

    Section
102.     Rules  of  Construction.  Words
of the masculine gender shall be deemed and construed to include correlative
words of the feminine and neuter genders.  Unless the context shall
otherwise indicate, the words "Bond," "Escrow Agent," "Owner," "person," "Paying
Agent," and "Bond Registrar" shall include the plural as well as the singular
number and the word "person" shall mean any individual, corporation partnership,
joint venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision
thereof.   All references to applicable provisions of Law shall
be deemed to include any and all amendments thereto.

     

    
      
         

      

      
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    ARTICLE
II

    

    FORM,
EXECUTION, DELIVERY AND DESIGNATION OF BONDS

    

    Section
201.     Issuance of
Bonds.  For the purpose of providing funds for paying all or
part of the Cost of a Series Project, Bonds of a Series, without limitation as
to aggregate principal amount, may be issued under this Master Indenture subject
to the conditions hereinafter provided in Section 207 of this
Article.  Debt Service on each Series of Bonds shall be payable solely
from the Series Pledged Revenues and Series Pledged Funds pledged to such Series
of Bonds in the Supplemental Indenture authorizing the issuance of such Series
of Bonds and, as may be provided in such Supplemental Indenture, all of the
provisions of this Master Indenture shall be for the benefit and security of the
present and future Owners of such Series of Bonds so issued, without preference,
priority or distinction, as to lien or otherwise, of any one Bond of such Series
over any other Bond of such Series.   The Issuer may also issue
from time to time Additional Bonds, Completion Bonds and Refunding Bonds of a
Series under and pursuant to the terms of the Supplemental Indenture authorizing
the issuance of such Series of Bonds.

    

    Section
202.     Details of
Bonds.  Bonds of a Series shall be in such denominations,
numbered consecutively, shall bear interest from their date until their payment
at rates not exceeding the maximum rate permitted by law, shall be dated, shall
be stated to mature in such year or years in accordance with the Act, and all be
subject to redemption prior to their respective maturities, subject to the
limitations hereinafter provided, as provided for in the Supplemental Indenture
authorizing the issuance of such Series of Bonds.  Bonds of a Series
may be Current Interest Bonds, Variable Rate Bonds, Capital Appreciation Bonds,
Option Bonds or any combination thereof and may be secured by a Credit and/or
Liquidity Facility, all as shall be provided in the Supplemental Indenture
authorizing the issuance of such Series of Bonds.  Bonds of a Series
(or a part of a Series) may be in book-entry form at the option of the Issuer as
shall be provided in the Supplemental Indenture authorizing the issuance of such
Series of Bonds.

    

    Debt
Service shall be payable in any coin or currency of the United States of America
which, at the date of payment thereof, is legal tender for the payment of public
and private debts. Interest shall be paid to the registered Owner of Bonds at
the close of business on the Record Date for such interest; provided, however,
that on or after the occurrence and continuance of an Event of Default under
clause (a) of Section 902 hereof, the payment of interest and principal or
Redemption Price or Amortization Installments pursuant hereto shall be made by
the Paying Agent to such person, who, on a special record date which is fixed by
the Trustee, which shall be not more than fifteen (15) and not less than ten
(10) days prior to the date of such proposed payment, appears on the
registration books of the Bond Registrar as the registered Owner of a
Bond.   Any payment of principal, Maturity Amount or Redemption
Price shall be made only upon presentation of the Bond at the designated
corporate trust office of the Paying Agent. Payment of interest shall be made by
check (or by wire transfer to the registered Owner if such Owner requests such
method of payment by delivery of written notice to the Paying Agent prior to the
Record Date for the respective interest payment to such account as shall be
specified in such request, but only if the registered Owner owns not less than
$1,000,000, or, if less than such amount, all of the Outstanding Bonds of a
Series, in aggregate principal amount of the Bonds). Unless otherwise provided
in the Supplemental Indenture authorizing a Series of Bonds, interest on a
Series of Bonds will be computed on the basis of a 360-day year of twelve 30-day
months.

    
      
         

      

      
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    Section
203.    Execution and Form of
Bonds.  The Bonds shall be signed by, or bear the facsimile
signature of the Chairman, shall be attested and countersigned by, or bear the
facsimile signature of the Secretary, and the certificate of authentication
appearing on the Bonds shall be manually signed by the Trustee.  The
official seal of the Issuer, or a facsimile thereof, shall be imprinted or
impressed on the Bonds.  In case any officer whose signature or a
facsimile of whose signature appears on any Bond shall cease to be such officer
before the delivery of such Bond, such signature or such facsimile shall
nevertheless be valid for all purposes the same as if he or she had remained in
office until such delivery.  Any Bond may bear the facsimile signature
of, or may be signed by, such persons as at the actual time of the execution of
such Bond shall be proper officers to execute such Bond although at the date of
such Bond such persons may not have been such officers.  The Bonds,
and the provisions for registration and reconversion to be endorsed on such
Bonds, shall be substantially in the form set forth in a Supplemental Indenture.
The Trustee may appoint one or more authenticating agents.

    

    Section
204.    Registration and Transfer of
Bonds.  The Issuer shall cause books for the registration and
for the transfer of the Bonds as provided in this Master Indenture to be kept by
the Bond Registrar.  All Bonds shall be registered as to both
principal and interest.  Any Bond may be transferred only upon an
assignment duly executed by the registered Owner or his attorney or legal
representative in such form as shall be satisfactory to the Bond Registrar, such
transfer to be made on such books and endorsed on the Bond by the Bond
Registrar.  No charge shall be made to any Owner for registration and
transfer as hereinabove provided, but any Owner requesting any such registration
or transfer shall pay any tax or other governmental charge required to be paid
with respect thereto.  The Bond Registrar shall not be required to
transfer any Bond during the period between the Record Date and the Interest
Payment Date next succeeding the Record Date of such Bond, during the period
between the Record Date for the mailing of a notice of redemption and the date
of such mailing, nor after such Bond has been selected for
redemption.

    

    Section
205.    Ownership of
Bonds.  The person in whose name any Bond shall be registered
shall be deemed the absolute Owner thereof for all purposes, and payment of Debt
Service shall be made only to or upon the order of the registered Owner thereof
or his attorney or legal representative as herein provided.  All such
payments shall be valid and effectual to satisfy and discharge the liability
upon such Bond to the extent of the sum or sums so paid.  The Trustee,
the Issuer, the Bond Registrar and the Paying Agent may deem and treat the
registered Owner of any Bond as the absolute Owner of such Bond, whether such
Bond shall be overdue or not, for the purpose of receiving payment thereof and
for all other purposes whatsoever, and neither the Trustee, the Issuer, the Bond
Registrar nor the Paying Agent shall be affected by any notice to the
contrary.

     

    
      
         

      

      
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    Section
206.    Special
Obligations.   Each Series of Bonds shall be a special and
direct obligation of the Issuer.  Neither the Bonds nor the interest
and premium, if any, payable thereon shall constitute a general obligation or
general indebtedness of the Issuer within the meaning of applicable Law. The
Bonds and the interest and premium, if any, payable thereon do not constitute
either a pledge of the full faith and credit of the Issuer or a lien upon any
property of the Issuer other than as provided herein or in the Supplemental
Indenture authorizing the issuance of such  Series of
Bonds.  No Owner or any other person shall ever have the right to
compel the exercise of any taxing power of any public authority or governmental
body to pay Debt Service or to pay any other amounts required to be paid
pursuant to this Master Indenture,  any  Supplemental
Indenture, or the Bonds.Rather, Debt Service and any other amounts required to
be paid pursuant to this Master Indenture, any Supplemental Indenture, or the
Bonds shall be payable solely from, and shall be secured solely by, the Series
Pledged Revenues and the Series Pledged
Funds  pledged  to  such Series of Bonds, all as
provided herein and in such Supplemental Indenture.

    

    Section
207.    Authorization of
Bonds.  There shall be issued from time to time in Series,
under and secured by this Master Indenture, Bonds without limitation as to
aggregate principal amount for the purposes of:  (i) paying all or
part of the Cost of a Series Project or Series Projects or Additional Series
Project or refunding an Outstanding Series of Bonds or any portion thereof; (ii)
depositing the Series Reserve Account Requirement to the Series Reserve Account
for such Series of Bonds; and (iii) paying the costs and expenses of issuing
such Series of Bonds.

    

    Each
Series of Bonds, upon initial issuance thereof, shall be executed by the Issuer
for delivery to the Trustee and thereupon shall be authenticated by the Trustee
and delivered to the Issuer or upon its order, but only upon the further receipt
by the Trustee of the following:

    

    (i)          an
executed and attested original or certified copy of this Master
Indenture;

    

    (ii)         an
executed and attested original or certified copy of the Supplemental Indenture
fixing the amount of and security for the Series of Bonds authorized to be
issued thereby and establishing, among other things, the dates on which, and the
amounts in which, such Series of Bonds will mature (provided that the final
maturity date of such Series of Bonds shall be not later than permitted by
applicable Law with respect to such Series of  Bonds), designating the
Paying Agent and Bond Registrar, fixing the Amortization Installments, if any,
for the Term Bonds of such Series, awarding the Series of Bonds, specifying the
interest rates or the method for calculating such interest rates with respect to
such Series of Bonds, specifying the redemption provisions and prices thereupon,
specifying other details of such Series of Bonds, and directing the delivery of
such Series of Bonds to or upon the order of the initial purchaser thereof upon
payment of the purchase price therefore set forth in such Supplemental
Indenture;

    

    (iii)        an
opinion of counsel for the Issuer substantially to the effect that the signer is
of the opinion that this Master Indenture and the Supplemental Indenture
relating to such Series of Bonds have been duly and validly authorized in
accordance with the terms hereof and applicable Law, and have been duly approved
and adopted, that the issuance of such Series of Bonds has been
duly  authorized, and that this Master Indenture and the Supplemental
Indenture constitute binding obligations of the Issuer, enforceable against the
Issuer in accordance with their terms except as enforcement thereof may be
affected by bankruptcy and other similar laws relating to creditor's rights
generally;

     

    
      
         

      

      
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    (iv)        an
opinion of Bond Counsel for the Issuer substantially to the effect that the
signer is of the opinion that the Bonds of such Series are valid, binding and
enforceable obligations of the Issuer and, if such Series of Bonds are not
Taxable Bonds, that interest thereon is excludable from gross income of the
Owners under the income tax laws of the United States in effect on the date such
Series of Bonds are delivered to their initial purchasers.

    

    The
Trustee shall be provided with reliance letters with respect to the opinions
required in paragraphs (iii) and (iv) above.  When the documents
mentioned in subsections (i) through (iv) above shall have been received, and
when the Bonds of such Series shall have been executed and authenticated as
required by this Master Indenture, such Series of Bonds shall be delivered to,
or upon the order of, the Issuer, but only upon payment to the Trustee of the
purchase price of such Series of Bonds, together with accrued interest, if any,
thereon as set forth in a certificate of delivery and payment executed by the
Chairman or Vice Chairman of the Issuer.

    

    The
proceeds (including accrued interest and any premium) of each Series of Bonds
shall be applied as soon as practicable upon delivery thereof to the Trustee as
follows:

    

    (i)           the
amount received as accrued interest on the Bonds shall be deposited to the
credit of the Series Interest Account and Capitalized Interest, if any, shall be
deposited to the credit of the Series Interest Account;

    

    (ii)          an
amount equal to the Series Reserve Account Requirement, or the initial cost of
satisfying the Series Reserve Account Requirement if not satisfied by the
deposit of cash, shall be deposited to the credit of the Series Reserve Account;
and

    

    (iii)         the
balance shall be deposited and applied as provided for in the Supplemental
Indenture authorizing the issuance of such Series of Bonds.

    

    Section 208.  Temporary
Bonds.  Pending delivery of definitive Bonds, there may be
executed, authenticated, and delivered to the Owners thereof, in lieu of
definitive Bonds and subject to the same limitations and conditions except as to
identifying numbers, temporary printed, engraved, lithographed or typewritten
Bonds in Authorized Denominations, substantially of the tenor set forth in the
Bond form to be set forth in the Supplemental Indenture authorizing such Series
of Bonds.  The Issuer shall cause definitive Bonds to be prepared and
to be executed, endorsed, registered and delivered to the Trustee, and the
Trustee, upon presentation to it of any temporary Bond, shall cancel the same or
cause the same to be canceled and cause to be authenticated and delivered, in
exchange therefore, at the place designated by the Owner, without expense to the
Owner, definitive Bonds of the same Series and in the same aggregate principal
amount, maturing on the same date and bearing interest or yield to maturity at
the same rate as the temporary Bond surrendered.  Until so exchanged,
the temporary Bonds shall in all respects be entitled to the same benefits of
this Master Indenture and any Supplemental Indenture as the definitive Bonds to
be issued hereunder.

    

    Section 209.  Mutilated, Destroyed or Lost
Bonds.  If any Bonds become mutilated or destroyed or lost, the
Issuer may cause to be executed, and the Issuer may cause to be delivered, a new
Bond in substitution therefor upon the cancellation of such mutilated Bond or in
lieu of and in substitution for such Bond destroyed or lost, and upon payment by
the Owner of the reasonable expenses and charges of the Issuer and the Trustee
in connection therewith and, in the case of a  Bond destroyed or lost,
upon the Owner filing with the Trustee evidence satisfactory to it that such
Bond was destroyed or lost and of his or her ownership thereof, and upon
furnishing the Issuer and the Trustee with indemnity satisfactory to
them.

    
      
         

      

      
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    Section 210.  Pari  Passu  Obligations  Under  Credit  Agreements. 
As may be provided for or required in any Supplemental Indenture, the
Issuer may incur financial obligations under a Letter of Credit Agreement or a
Liquidity Agreement payable pari passu with respect to the lien on the Trust
Estate pledged to a Series of Bonds issued under this Master Indenture and a
Supplemental Indenture, without meeting any financial test or requirement set
forth in this Master Indenture or the corresponding Supplemental Indenture, but
only if the Letter of Credit Agreement or Liquidity Agreement supports a related
Series of Bonds then  being issued which does meet such tests or
requirements.

    

    Section 211.  Tax Status of
Bonds.  Any Series of Bonds issued under this Master Indenture
either (i) may be issued as Tax Exempt Bonds, or (ii) may be issued as Taxable
Bonds. The intended tax status of any Series of Bonds to be issued may be
referenced in any Supplemental Indenture authorizing the issuance of such Series
of Bonds.

    
      
         

      

      
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    ARTICLE
III

    

    REDEMPTION
OF BONDS

    

    Section 301.  Redemption
Generally.  The Bonds of any Series shall be subject to
redemption, either in whole or in part on any date, and at such times, in the
manner and at such prices, as may be provided by the Supplemental Indenture
authorizing the issuance of such Series of Bonds. The Issuer shall provide
written notice to the Trustee of any optional redemption on or before the
forty-fifth (45th) day next preceding the date to be fixed for such optional
redemption.

    

    Unless
otherwise provided in the Supplemental Indenture relating to a Series of Bonds,
if less than all of the Bonds of any one maturity of a Series shall be called
for redemption, the particular Bonds of a Series to be redeemed shall be
selected by lot in such reasonable manner as the Bond Registrar in its
discretion may determine.  The portion of any Series of Bonds to be
redeemed shall be in denominations of $5,000 or any integral multiple thereof
and, in selecting the Bonds of such Series to be redeemed, the Bond Registrar
shall treat each such Bond as representing that number of Bonds of such Series
which is obtained by dividing the principal amount of such Bond by $5,000 (such
amount being hereafter referred to as the "unit of principal
amount").

    

    If it is
determined that one or more, but not all, of the units of principal amount
represented by any such Bond is to be called for redemption, then upon notice of
intention to redeem such unit or units of principal amount as provided below,
the registered Owner of such Bond, upon surrender of such Bond to the Paying
Agent for payment to such registered Owner of the redemption price of the unit
or units of principal amount called for redemption, shall be entitled to receive
a new Bond or Bonds of such Series in the aggregate principal amount of the
unredeemed balance of the principal amount of such Bond. New Bonds of such
Series representing the unredeemed balance of the principal amount shall be
issued to the Owner thereof without any charge therefore.  If the
Owner of any Bond of a denomination greater than the unit of principal amount to
be redeemed shall fail to present such Bond to the Paying Agent for payment in
exchange as aforesaid, such Bond shall, nevertheless, become due and payable on
the date fixed for redemption to the extent of the unit or units of principal
amount called for redemption.

    
      
         

      

      
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    Section 302.  Notice of Redemption; Procedure for
Selection.  The Issuer shall establish each redemption date, other
than in the case of a mandatory redemption, in which case the Trustee shall
establish the redemption date, and the Issuer or the Trustee, as the case may
be, shall notify the Bond Registrar in writing of such redemption date on or
before the forty-fifth (45th) day next preceding the date fixed for redemption,
which notice shall set forth the terms of the redemption and the aggregate
principal amount of Bonds so to be redeemed.  Except as provided
below, notice of redemption shall be given by the Bond Registrar not less than
thirty (30) nor more than forty-five (45) days prior to the date fixed for
redemption by first-class mail, postage prepaid, to any Paying Agent for the
Bonds to be redeemed and to the registered Owner of each Bond to be redeemed, at
the address of such registered Owner on the registration books maintained by the
Bond Registrar (and, for any Owner of $1,000,000 or more in the principal amount
of Bonds, to one additional address if written request therefore is provided to
the Bond Registrar prior to the Record Date); and a second notice of redemption
shall be sent by registered or certified mail at such address to any Owner who
has not submitted his Bond to the Paying Agent for payment on or before the date
sixty (60) days following the date fixed for redemption of such Bond, in each
case stating: (i) the numbers of the Bonds to be redeemed, by giving the
individual certificate number of each Bond to be redeemed (or stating that all
Bonds between two stated certificate numbers, both inclusive, are to be redeemed
or that all of the Bonds of one or more maturities have been called for
redemption); (ii) the CUSIP numbers of all Bonds being redeemed; (iii) in the
case of a partial redemption of Bonds, the principal amount of each Bond being
redeemed; (iv) the date of issue of each Bond as originally issued and the
complete official name of the Bonds including the series designation; (v) the
rate or rates of interest borne by each Bond being redeemed; (vi) the maturity
date of each Bond being redeemed; (vii) the place or places where amounts due
upon such redemption will be payable; and  (viii) the notice date,
redemption date, and redemption price.  The notice shall require that
such Bonds be surrendered at the designated corporate trust office of the Paying
Agent for redemption at the redemption price and shall state that further
interest on such Bonds will not accrue from and after the redemption
date.  CUSIP number identification with appropriate dollar amounts for
each CUSIP number also shall accompany all redemption payments.

    

    Any
required notice or redemption also shall be sent by registered mail, overnight
delivery service, telecopy or other secure means, postage prepaid, to any Owner
of $1,000,000 or more in aggregate principal amount of Bonds to be redeemed, to
certain municipal registered securities depositories in accordance with the
then-current guidelines of the Securities and Exchange Commission which are
known to the Bond Registrar to be holding Bonds thirty-two (32) days prior to
the redemption date and to at least two of the national Information Services
that disseminate securities redemption notices in accordance with the
then-current guidelines of the Securities and Exchange Commission, when
possible, at least thirty (30) days prior to the redemption date; provided that
neither failure to send or receive any such notice nor any defect in any notice
so mailed shall affect the sufficiency of the proceedings for the redemption of
such Bonds.

    

    Failure
to give notice by mailing to the Owner of any Bond designated for redemption or
to any depository or information service shall not affect the validity of the
proceedings for the redemption of any other Bond.

    

    If at the
time of mailing of notice of an optional redemption, the Issuer shall not have
deposited with the Trustee moneys sufficient to redeem or purchase all the
Series 2010 Bonds called for redemption or purchase, such notice shall state
that it is subject to the deposit of the redemption moneys with the Trustee not
later than the opening of business on the redemption date and such notice shall
be of no effect unless such moneys are so deposited.

     

    
      
        
        

      

      
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    Section 303.  Effect  of  Calling  for  Redemption.  On
the date designated for redemption of any Bonds, notice having been filed and
mailed in the manner provided above, the Bonds called for redemption shall be
due and payable at the redemption price provided for the redemption of such
Bonds on such date and, moneys for payment of the redemption price being held in
a separate account by the Paying Agent in  trust for the Owners of the
Bonds to be redeemed, interest on the Bonds called for redemption shall cease to
be entitled to any benefit under this Master Indenture, and the Owners of such
Bonds shall have no rights in respect thereof, except to receive payment of the
redemption price thereof, and interest, if any, accrued thereon to the
redemption date, and such Bonds shall no longer be deemed to be
Outstanding.

    

    Section 304.  Cancellation.  Bonds
called for redemption shall be canceled upon the surrender
thereof.

    
      
         

      

      
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    ARTICLE
IV

    

    ACQUISITION
AND CONSTRUCTION FUND

    

    Section 401.  Acquisition and Construction
Fund.  There is created and established by Section 502 hereof a
fund designated as the "Acquisition and Construction Fund" which shall be held
by the Escrow  Agent  and to the credit  of the
Series  Acquisition and Construction Accounts there shall be deposited
the amounts specified in the Supplemental Indenture relating to such Series of
Bonds.

    

    Section 402.  Payments From Acquisition and
Construction Fund.  Payments of the Cost of constructing and
acquiring a Series Project shall be made from the Acquisition and Construction
Fund as herein provided.  All such payments shall be subject to the
provisions and restrictions set forth in this Article and in Article V hereof,
and the Issuer covenants that it will not request any sums to be paid from the
Acquisition and Construction Fund except in accordance with such provisions and
restrictions.  Moneys in the Acquisition and Construction Fund shall
be disbursed by check, voucher, order, draft, certificate or warrant signed by
any one or more officers or employees of the Escrow Agent legally authorized to
sign such items or by wire transfer to an account specified by the payee upon
satisfaction of the conditions for disbursement set forth in Section 503(b)
hereof.

    

    Section 403.  Cost of
Project.  For the purposes of this Master Indenture, the Cost
of the Series Project shall include, without intending thereby to limit or to
restrict or expand any proper definition of such cost under applicable
provisions of Law or this Master Indenture, the following:

    

    (i)           Expenses of
Financing and Bond Issuance.  All expenses and fees relating to
amounts to repay temporary or bond anticipation notes or loans made to finance
any costs permitted under applicable Law, the issuance of the Bonds, including,
but not limited to, initial Credit and Liquidity Facility fees and costs,
attorneys' fees, underwriting fees  and  discounts, the
Trustee's acceptance fees and first-year annual fee, expenses and Trustee's
counsel fees and  costs, rating agency fees, fees of financial
advisors, engineer's fees and costs, administrative expenses of the Issuer, the
costs of preparing audits and engineering reports, the costs of preparing
reports, surveys, and studies, the costs of printing the Bonds and preliminary
and final disclosure documents, and the costs to create initial Reserve Funds
and Debt Service Funds.

    

    (ii)          Accrued and
Capitalized Interest.  Any interest accruing on the Bonds from
their date through the first Interest Payment Date received from the proceeds of
the Bonds shall be deposited into the related Series Interest Account, and
amounts received from the proceeds of the Bonds to be used for Capitalized
Interest shall be deposited into the related Series Interest Account or
Capitalized Interest Account as may be authorized or provided for by a
Supplemental Indenture related to a Series of Bonds.  Notwithstanding
the deposit of Capitalized Interest into the related Series Capitalized Interest
Account or Interest Account, Capitalized Interest shall also include any amount
directed by the Issuer to the Trustee in writing to be withdrawn from the
related Series Acquisition and Construction Account and deposited into such
Capitalized Interest Account or Interest Account, provided that such direction
includes a certification that such amount represents earnings on amounts on
deposit in the related Series Acquisition and Construction Account and that,
after such deposit, the amount on deposit in such Acquisition and Construction
Account, together with earnings thereon will be sufficient to complete the
related Series Project which is to be funded from such Acquisition and
Construction Account.

    
      
         

      

      
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    (iii)         Acquisition
Expenses.  The costs of acquiring, by purchase or condemnation,
all of the land, structures, improvements, rights-of-law, franchises, easements,
plans and specifications and similar items and other interests in property,
whether real or personal, tangible or intangible, which themselves constitute
the Series Project or which are necessary or convenient to acquire, install and
construct the Series Project and payments, contributions, dedications, taxes,
assessments or permit fees or costs and any other exactions required as a
condition to receive any government approval or permit necessary to accomplish
any Issuer purpose.

    

    (iv)        Planning,
Construction and Maintenance Expense.  All costs incurred,
including surveys, studies, estimates, plans, specifications, costs of effecting
compliance with any and all governmental permits or Laws relating to the Series
Project, charges for labor and  materials, including equipment,
machinery and fixtures, by contractors, builders, and materialmen in connection
with the planning, acquisition, installation, construction and maintenance of
the Project, and including without limitation costs incident to the award of
contracts.

    

    (v)        
Other
Professional Fees and Miscellaneous Expenses. Expenses of Series Project
management and supervision, all legal, architectural, engineering, survey, and
consulting fees, as well as all financing charges, taxes, contract bonds,
insurance premiums, costs on account of personal injuries and property damage in
the course of construction, costs to enforce remedies against contractors,
subcontractors, any provider of labor, material, or services or any other person
for a default or breach under the corresponding contract or in connection with
any dispute, working capital and miscellaneous expenses not specifically
referred to in this Master Indenture and allowed by Law that are incurred in
connection with the acquisition, installation, construction, management and
maintenance of the Series Project.

    

    (vi)   
Refinancing
Costs.  All costs described in (i) through (xvii) above or
otherwise permitted by the Act associated with refinancing or repaying any loan
or other debt obligation of the Issuer.

    

    Section 404.  Disposition of Balances in
Acquisition and Construction Fund.  On the Date of Completion
of a Series Project, the balance in the related Series Acquisition and
Construction Account not reserved for the payment of any remaining part of the
Cost of the Series Project shall be transferred by the Escrow Agent to the
credit of the Series Redemption Account, and used for the purposes set forth for
such Account in the Supplemental Indenture relating to such Series of
Bonds.

    
      
         

      

      
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    ARTICLE
V

    

    ESTABLISHMENT
OF FUNDS AND APPLICATION THEREOF

    

    Section
501.   Lien.   There
is hereby irrevocably pledged  for the payment of the Bonds of each
Series issued hereunder, subject only to the provisions of this Master Indenture
and any Supplemental Indenture permitting the application thereof for the
purposes and on the terms and conditions set forth in this  Master
Indenture and any such Supplemental Indenture with respect to each Series of
Bonds, the Trust Estate; provided, however, that unless otherwise specifically
provided herein or in a Supplemental Indenture relating to a Series of Bonds
with respect to the Trust Estate securing such Series of Bonds, the
Pledged  Funds and  Pledged Revenues securing a Series of
Bonds shall secure only such Series of Bonds and shall not secure any other
Bonds or Series of Bonds.

    

    The
foregoing pledge shall be valid and binding from and after the date of initial
delivery of the Bonds and the proceeds of sale of the Bonds and all the moneys,
securities and funds set forth in this Section 501 shall immediately be subject
to the lien of the foregoing pledge, which lien is hereby created, without any
physical delivery thereof or further act.  Such lien shall be valid
and binding as against all parties having claims of any kind in tort, contract
or otherwise against the Issuer or the Trustee, irrespective of whether such
parties have notice thereof.  Such lien shall be prior and superior to
all other liens now existing or hereafter created.

    

    Section
502.   Establishment of Funds and
Accounts.   The following Funds and Accounts are hereby
established and shall be held by the Escrow Agent:

    

    (a)          Acquisition  and  Construction  Fund,
and within such Fund there may be established by Supplemental Indenture
authorizing a Series of Bonds a separate Series Acquisition and Construction
Account and a Series Costs of Issuance Account for each Series of Bonds issued
hereunder;

    

    (b)          Revenue
Fund, and within such Fund there may be established by Supplemental
Indenture  authorizing a Series of Bonds a separate Series Revenue
Account for each Series issued hereunder;

    

    (c)          Debt
Service Fund, and within such Fund there may be established by Supplemental
Indenture authorizing a Series of Bonds a separate Series Debt Service Account
and within such Series Debt Service Account,

    

    
      (i)         
 a Series
Interest Account,

    

    

    (ii)           a
Series Principal Account,

    

    (iii)          a
Series Sinking Fund Account,

    

    (iv)          a
Series Redemption Account and therein a Prepayment Subaccount and an Optional
Redemption Subaccount, and

    
      
         

      

      
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    (v)          a
Capitalized Interest Account for each such series of Bonds issued
hereunder;

    

    (d)           Reserve
Fund, and within such Fund there may be established by Supplemental Indenture
authorizing a Series of Bonds a separate Series Reserve Account for each such
Series of Bonds issued hereunder and any Bonds issued on a parity with any such
Series of Bonds hereunder; and

    

    (e)           Rebate
Fund, and within such Fund there may be established by Supplemental Indenture
authorizing a Series of Bonds a separate Series Rebate Account for each such
Series of Bonds issued hereunder.

    

    Notwithstanding
the foregoing, the Supplemental Indenture authorizing any Series of Bonds may
establish such other Series Accounts or dispense with the Series Accounts set
forth above as shall be deemed advisable by the Issuer in connection with such
Series of Bonds.

    

    Section
503.   Acquisition and Construction Fund.

    

    (a)          Deposits.  The
Issuer shall pay to the Escrow Agent, for deposit into the related Series
Acquisition and Construction Account in the Acquisition and Construction Fund,
as promptly as practicable, the following amounts received by it:

    

    (1)           the
amount set forth in the Supplemental Indenture relating to such Series of
Bonds;

    

    (2)           subject
to Section 806 hereof, payments made to the Issuer from the sale, lease or other
disposition of the Series Project or any portion thereof;

    

    (3)           the
balance of insurance proceeds with respect to the loss or destruction of the
Series Project or any portion thereof; and

    

    (4)           such
other amounts as may be provided in a Supplemental Indenture.

    

    Amounts
in such Series Acquisition and Construction Account shall be applied to the Cost
of the Series Project; provided, however, that if any amounts remain in the
Series Acquisition  and Construction Account after the Date of
Completion, and if such amounts are not reserved for payment of any remaining
part of the Cost of the Series Project, such amounts shall be applied in the
manner set forth in Section 404 above.

    

    (b)           Disbursements. Unless
otherwise provided in the Supplemental Indenture authorizing the issuance of
such Series of Bonds, payments from a Series Acquisition and Construction
Account shall be paid in accordance with the provisions of this subsection (b).
Before any such payment shall be made, the Issuer shall file with the Escrow
Agent a requisition in the form of Exhibit A hereto, signed by an Authorized
Officer.

    
      
         

      

      
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    Upon
receipt of each such requisition and accompanying certificate the Escrow Agent
shall promptly withdraw from the Series Acquisition and Construction Account and
pay to the person, firm or corporation named in such requisition the amount
designated in such requisition.

    

    The
Escrow Agent shall have no duty to investigate the accuracy or validity of the
items delivered pursuant to this Section 503(b).

    

    (c)           Inspection.  All  requisitions  and  certificates
received by the Escrow Agent pursuant to this Article shall be retained in the
possession of the Escrow Agent, subject at all reasonable times to the
inspection of the Issuer, the Consulting Engineer, the Owner of any Bonds of the
related Series, and the agents and representatives thereof.

    

    (d)           Completion of Series
Project.  On the Date of Completion, the balance in the Series
Acquisition and Construction Account not reserved by the Issuer for the payment
of any remaining part of the Cost of acquiring or constructing the Project shall
be applied in accordance with the provisions of Section 404 hereof.

    

    Section
504.   Revenue Fund and Series Revenue
Accounts.  The Issuer hereby covenants and agrees that it will
assess, impose, establish and collect the Pledged Revenues with respect to each
Series of Bonds in amounts and at times sufficient to pay, when due, the
principal of, premium, if any, and interest on such Series of
Bonds.   The Issuer hereby covenants and agrees to immediately
deposit with the Escrow Agent upon receipt of all such Pledged Revenues (except
Prepayments), when received, into the related Series Revenue Account and to
immediately deposit all Prepayments, when received, into the related Series
Redemption Account, unless otherwise provided for in the Supplemental Indenture
relating to a Series of Bonds.

    

    Section
505.   Debt Service Fund and Series Debt Service
Account.

    

    (a)           Principal, Maturity Amount,
Interest and Amortization Installments.  On the Business Day
preceding each Interest Payment Date on the Bonds, the Trustee shall direct the
Escrow Agent to withdraw from the Series Revenue Account and, from the amount so
withdrawn, shall make the following deposits in the following order of
priority:

    

    (i)           to
the credit of the related Series Interest Account, an amount which, together
with  other amounts, if any, then on deposit therein will equal the
amount of interest payable on the Bonds of such Series on such Interest Payment
Date;

    

    (ii)          to
the related Series Principal Account, an amount which, together with other
amounts, if any, then on deposit therein will equal the principal amount, if
any, payable with respect to Serial Bonds of such Series on such Interest
Payment Date;

    

    (iii)         in
each Bond Year in which Term Bonds of such Series are subject to mandatory
redemption from Amortization Installments, to the related Series Sinking Fund
Account, an amount which, together with other amounts, if any, then on deposit
therein, will equal the Amortization Installment payable on the Term Bonds of
such Series on such Interest Payment Date;

    
      
         

      

      
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    (iv)          in
each Bond Year in which Capital Appreciation Bonds of such Series mature to
the  related Series Principal Account, an amount which, together with
other amounts, if any, then on deposit  therein, will equal the
Maturity Amount payable with respect to the Capital Appreciation Bonds of such
Series maturing on such Interest Payment Date;

    

    (v)          to
the credit of the Series Reserve Account, an amount, if any, which, together
with the amount then on deposit therein, will equal the Series Reserve Account
Requirement; and

    

    (vi)         to
the credit of the Series Rebate Account the Rebate Amount, if any, required to
be  deposited therein pursuant to the Supplemental Indenture related
to a Series of Tax Exempt Bonds.

    

    Notwithstanding
the foregoing, so long as there are moneys on deposit in the related Series
Capitalized Interest Account on the date required for any transfer into the
Series Interest Account as set forth above, the Trustee shall, prior to
directing the Escrow Agent to make any transfer into the related Series Interest
Account from the related Series Revenue Account, transfer to the related Series
Interest Account from the related Series Capitalized Interest Account, the
lesser of the interest on such Series of Bonds coming due on the next succeeding
Interest Payment Date or the amount remaining on deposit in the related Series
Capitalized Interest Account.

    

    (b)           Disposition of Remaining
Amounts on Deposit in Series Revenue Account.  The Issuer shall
authorize the withdrawal, from time to time, from the Series Revenue Account of
an amount sufficient to pay the fees and charges of the Trustee, Escrow Agent,
Bond Registrar, and Paying Agent, when due. If, after such amounts have been
withdrawn, paid and provided for as provided above, any amounts remain in the
Series Revenue Account, such amounts shall be disbursed to the Issuer on written
request of an Authorized Officer and applied to pay the operating and
administrative costs and expenses of the Issuer.  After making the
payments provided for in this subsection (b), the balance, if any, remaining in
the Series Revenue Account shall be retained therein, or, at the written
direction of an Authorized Officer to the Trustee, transferred into the Series
Redemption Account.

    

    (c)           Series  Reserve
Account.  Moneys held for the credit of a Series Reserve
Account shall be used  for  the purpose of paying interest
or principal or Amortization Installment or Maturity Amount on the Bonds of the
related Series whenever amounts on deposit in the Series Debt Service Account
shall be insufficient for such purpose.

    

    (d)           Series Debt Service
Account.   Moneys held for the credit of a Series
Principal Account and  Series Interest Account  in a Series
Debt Service Account shall be withdrawn therefrom by the Escrow Agent and
transferred by the Trustee to the Paying Agent in amounts and at times
sufficient to pay, when due, the interest on the Bonds of such Series, the
principal of Serial Bonds of such Series, the Maturity Amount of Capital
Appreciation Bonds of such Series and to redeem Term Bonds of such Series that
are subject to mandatory redemption from Amortization Installments, as the case
may be.

    
      
         

      

      
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    (e)           Series Redemption
Account.  Moneys representing Prepayments on deposit in a
Series  Redemption Account to the full extent of a multiple of $5,000
shall unless otherwise provided in the Supplemental Indenture relating to such
Series of Bonds, be used by the Trustee to redeem Bonds of such Series on the
earliest date on which such Bonds are permitted to be called without payment of
premium by the terms hereof (including extraordinary or extraordinary mandatory
redemption) and of the Supplemental Indenture relating to such Series of
Bonds.  Such redemption shall be made pursuant to the provisions of
Article III.  The Issuer shall pay all expenses incurred by the
Trustee, Escrow Agent and Paying Agent in connection with such redemption.
Moneys other than from Prepayments shall be held and applied in a Series
Redemption Account as provided in Section 506(a) hereof.

    

    (f)           Payment to the
Issuer.  When no Bonds of a Series remain Outstanding, and
after all expenses and charges herein and in the related Supplemental Indenture
required to be paid have been paid as certified to the  Trustee in
writing by an Authorized Officer, and after all amounts due and owing to the
Trustee have been paid in full, the Trustee shall direct the Escrow Agent to pay
any balance in the Series Accounts for such Series of Bonds to the Issuer upon
the written direction of an Authorized Officer, free and clear of any lien and
pledge created by this Master Indenture; provided, however, that if an Event of
Default has occurred and is continuing in the payment of the principal or
Maturity Amount of, or interest or premium on the Bonds of any other Series, the
Trustee shall direct the Escrow Agent to pay over and apply any such excess pro
rata (based upon the ratio of the aggregate principal amount of such Series to
the aggregate principal amount of all Series Outstanding and for which such an
Event of Default has occurred and is continuing) to each other Series of Bonds
for which such an Event of Default has occurred and is continuing.

    

    Section
506.   Optional
Redemption.  The Trustee shall, but only at the written
direction of an Authorized Officer on or prior to the forty-fifth (45th) day
preceding the date of redemption, call for redemption on the date on which Bonds
are subject to optional redemption, from moneys on deposit with the Escrow Agent
in a Series Redemption Account such amount of Bonds of such Series then subject
to optional redemption as, with the redemption premium, if any, will exhaust
such amount as nearly as may be practicable.   Such redemption
shall be made pursuant to the provisions of Article III.  The Issuer
shall pay all expenses incurred by the Trustee, Escrow Agent and Paying Agent in
connection with such redemption.

    

    Section
507.   Rebate Fund and Series Rebate Accounts.

    

    (a)           Creation.  There
is hereby created and established a Rebate Fund, and within the Rebate Fund a
Series Rebate Account for each Series of Tax Exempt Bonds.  Moneys
deposited and held in the Rebate Fund shall not be subject to the pledge of this
Master Indenture.

    
      
         

      

      
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    (b)         
Payment to United
States. The Trustee shall direct the Escrow Agent to pay to the Issuer
upon written request of the Issuer the Rebate Amount required to be paid to the
United States at the times, in the manner and as calculated in accordance with
the Supplemental Indenture related to a Series of Tax Exempt Bonds. The Trustee
shall have no responsibility for computation of the Rebate Amount and instead
the Issuer shall cause the Rebate Amount to be calculated by the Rebate Analyst
and shall cause the Rebate Analyst to deliver such computation to the Trustee as
provided in the Supplemental Indenture related to a Series of Tax Exempt Bonds
but before the date of any required payment of the Rebate Amount to the Internal
Revenue Service. The fees of, and expenses incurred by, the Rebate Analyst in
computing the Rebate Amount shall be paid by the Issuer, which amount shall be
treated as administrative and operating expenses of the Issuer payable or
reimbursable from the Series Revenue Account in accordance with Section 505(b)
hereof.

    

    (c)           Deficiencies.  If
the Escrow Agent does not have on deposit in the Series Rebate Account
sufficient amounts to make the payments required by this Section, the Issuer
shall pay, from any legally available source, the amount of any such deficiency
to the United States as in paragraph (b) above provided.

    

    (d)         
Survival. The
covenants and agreements of the Issuer in this Section 507 and Section 809, and
any additional covenants related to compliance with provisions necessary in
order to preserve the exclusion of interest on the Bonds of a Series from gross
income for Federal income tax purposes, shall survive the defeasance of the
Bonds of such Series in accordance with Article XII hereof.

    

    Section
508.   Investment of Funds and
Accounts.  Unless otherwise provided in the Supplemental
Indenture authorizing the issuance of a Series of Bonds, moneys held for the
credit of the Series Accounts shall be invested by the Escrow Agent as
hereinafter in this Section 508 provided.

    

    (a)       
 Series
Acquisition and Construction Account, Series Revenue Account and Series Debt
Service Account.Moneys held for the credit of a Series Acquisition and
Construction Account, the Series Revenue Account, and the Series Debt Service
Account shall, as nearly as may be practicable, be continuously invested and
reinvested by the Escrow Agent in Investment Obligations as directed in writing
by an Authorized Officer, which Investment Obligations shall mature, or shall be
subject to redemption by the holder thereof at the option of such holder, not
later than the respective dates, as estimated by an Authorized Officer, when
moneys held for the credit of each such Series Account will be required for the
purposes intended.

    

    (b)           Series Reserve
Account.  Moneys held for the credit of a Series Reserve
Account shall be continuously invested and reinvested by the Escrow Agent in
Investment Obligations as directed in writing by an Authorized
Officer.

    
      
         

      

      
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    (c)           Investment Obligations as a
Part of Funds and Accounts.  Investment Obligations purchased
as an investment of moneys in any Fund or Account shall be deemed at all times
to be a part of such Fund or Account, and the interest accruing thereon and
profit realized from such investment shall be credited as provided in Section
510 hereof.   Any loss resulting from such investment shall be
charged to such Fund or Account.  The foregoing notwithstanding, for
purposes of investment and to the extent permitted by Law, amounts on deposit in
any Fund or Account may be commingled for purposes of investment, provided
adequate care is taken to account for such amounts in accordance with the prior
sentence.  The Escrow Agent may, upon the written direction of an
Authorized Officer, transfer investments within such Funds  or
Accounts without being required to sell such investments.  The Escrow
Agent shall sell at the best price obtainable or present for redemption any
obligations so purchased whenever it shall be necessary to provide moneys to
meet any payment or transfer from any such Fund or Account.   The
Escrow Agent shall not be liable or responsible for any loss resulting from any
such investment or for failure to make an investment (except failure to make an
investment in accordance with the written direction of an Authorized Officer) or
for failure to achieve the maximum possible earnings on investments.The Escrow
Agent shall have no obligation to invest funds without written direction from an
Authorized Officer.

    

    (d)           Valuation.    In  computing  the  value  of  the  assets  of  any  Fund  or  Account
investments and earnings thereon shall be deemed a part
thereof.  Except as may be otherwise provided in a Supplemental
Indenture, the Escrow Agent shall value the assets in each of the Funds and
Accounts established hereunder as of September 30 of each Fiscal Year, and as
soon as practicable after each such valuation date (but no later than ten (10)
days after each such valuation date) shall provide the Issuer a report of the
status of each Fund and Account as of the valuation date.  For the
purpose of determining the amount on deposit to the credit of any Fund or
Account established hereunder, with the exception of a Series Reserve Account,
obligations in which money in such Fund or Account shall have been invested
shall be valued at the market value or the amortized cost thereof, whichever is
lower, or at the redemption price thereof, to the extent that any such
obligation is then redeemable at the option of the holder.  For the
purpose of determining the amount on deposit to the credit of a Series
Reserve  Account, obligations in
which  money  in  such  Account  shall
have  been  invested shall  be  valued
at the value  such obligations were traded on the preceding business
day.  Amortized cost, when used with respect to an obligation
purchased at a premium above or a discount below par, means the value as of any
given time obtained by dividing the total premium or discount at which such
obligation was purchased by the number of days remaining to maturity on such
obligation at the date of such purchase and by multiplying the amount thus
calculated by the number of days having passed since such purchase; and (1) in
the case of an obligation purchased at a premium by deducting the product thus
obtained from the purchase price, and (2) in the case of an obligation purchased
at a discount by adding the product thus obtained to the purchase
price.

    

    Section 509. Deficiencies and Surpluses in
Funds. For purposes of this Section: (a) a "deficiency" shall mean, in
the case of a Series Reserve Account, that the amount on deposit therein is less
than the Series Reserve Account Requirement (but only after the Bond Year in
which the amount on deposit therein is less than the Series Reserve Account
Requirement) (but only after the Bond Year in which the amount on deposit
therein first equals the Series Reserve Account Requirement), and (b) a
"surplus" shall mean in the case of a Series Reserve Account, that the amount on
deposit therein is in excess of the applicable Series Reserve Account
Requirement.

    
      
         

      

      
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    At the
time of any withdrawal from a Series Reserve Account that results in a
deficiency therein, the Escrow Agent shall promptly notify the Issuer of the
amount of any such deficiency and the Escrow Agent shall  withdraw the
amount of such deficiency from the related Series Revenue Account, and, if
amounts on deposit therein are insufficient therefor, the Issuer shall pay the
amount of such deficiency to the Escrow Agent, for  deposit in such
Series Reserve Account, from the first legally available sources of the
Issuer.

    

    The
Escrow Agent, as of the close of business on the last Business Day in each Bond
Year, after taking into account all payments and transfers made as of such date,
shall compute, in the manner set forth in Section 508(d), the value of the
Series Reserve Account and shall promptly notify the Issuer of the amount of any
deficiency or surplus as of such date in such Series Reserve
Account.  The Issuer shall immediately pay the amount of any
deficiency to the Escrow Agent, for deposit in the Series Reserve Account, from
any legally available sources of the Issuer.  The Escrow Agent, as
soon as practicable after such computation, shall deposit any surplus, at the
direction of an Authorized Officer, to the credit of the Series Redemption
Account or the Series Principal Account.

    

    Section 510.  Investment Income. 
Unless provided otherwise in a Supplemental Indenture, earnings on Investments
in a Series Acquisition and Construction Account, a Series Interest Account and
a Series Revenue Account shall be deposited, as realized, to the credit of such
Series Account and used for the purpose of such Account.Unless provided in a
Supplemental Indenture, earnings on investments in a Series Principal Account
and Redemption Account shall be deposited, as realized, to the credit of such
Series Interest Account and used for the purpose of such Account.

    

    Earnings
on investments in a Series Reserve Account shall, unless otherwise therein
provided in a Supplemental Indenture, be disposed of as follows:

    

    (a)           if
there was no deficiency (as defined in Section 509 above) in the Series Reserve
Account as of the most recent date on which amounts on deposit in the Series
Reserve Account were valued by the Escrow Agent, and if no withdrawals have been
made from the Series Reserve Account since such date, then earnings on
investments in the Series Reserve Account shall be deposited, as realized, in
the Series Revenue Account.

    

    (b)           if
as of the last date on which amounts on deposit in the Series Reserve Account
were valued by the Escrow Agent there was a deficiency (as defined in Section
509 above) in the Series Reserve Account, or if after such date withdrawals have
been made from the Series Reserve Account and have created such a deficiency,
then earnings on investments in the Series Reserve Account shall be deposited to
the credit of the Series Reserve Account until the amount on deposit therein
equals the Series Reserve Account Requirement and thereafter shall be deposited
to the Series Revenue Account.

    

    Section
511.   Cancellation of the Bonds. All
Bonds paid, redeemed or purchased, either at or before maturity, shall be
canceled upon the payment, redemption or purchase of such Bonds.All Bonds
canceled under any of the provisions of this Master Indenture shall be destroyed
by the Paying Agent.

    
      
         

      

      
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    ARTICLE
VI

    

    CONCERNING
THE TRUSTEE

    

    Section
601.   Acceptance of
Trust.  The Trustee accepts and agrees to execute the trusts
hereby created, but only upon the additional terms set forth in this Article, to
all of which the parties hereto and the Owners agree.  The Trustee
shall have only those duties expressly set forth herein, and no duties shall be
implied against the Trustee.

    

    Section
602.   No   Responsibility   for   Recitals.   The
recitals, statements and representations in this Master Indenture, in any
Supplemental Indenture or in the Bonds, save only the Trustee's authentication
certificate, if any, upon the Bonds, have been made by the Issuer and not by the
Trustee; and the Trustee shall be under no responsibility for the correctness
thereof.

    

    Section
603.   Trustee May Act Through Agents;
Answerable Only for Willful Misconduct or Gross
Negligence.  The Trustee may execute any powers hereunder and
perform any duties required of it through attorneys, agents, officers or
employees, and shall be entitled to advice of counsel concerning all questions
hereunder, and the Trustee shall not be answerable for the default or misconduct
of any attorney, agent or employee selected by it with reasonable care. In
performance of its duties hereunder, the Trustee may rely on the advice of
counsel and shall not be held liable for actions taken in reliance on the advice
of counsel.  The Trustee shall not be answerable for the exercise of
any discretion or power under this Master Indenture or any Supplemental
Indenture nor for anything whatever in connection with the trust hereunder,
except only its own gross negligence or willful misconduct.

    

    Section
604.   Compensation  and  Indemnity.  The
Issuer shall pay the Trustee reasonable compensation for its services hereunder,
and also all its reasonable expenses and disbursements, including the reasonable
fees and expenses of Trustee's counsel, and to the extent permitted under Law
shall indemnify the Trustee and hold the Trustee harmless against any
liabilities which it may incur in the exercise and performance of its powers and
duties hereunder except with respect to its own gross negligence or willful
misconduct.  The Trustee shall have no duty in connection with its
responsibilities hereunder to advance its own funds nor shall the Trustee have
any duty to take any action hereunder without first having received
indemnification satisfactory to it.  If the Issuer defaults in respect
of the foregoing obligations, the Trustee may deduct the amount owing to it from
any moneys received or held by the Escrow Agent under this Master Indenture or
any Supplemental Indenture and payable to the Issuer other than moneys from a
Credit Facility or a Liquidity Facility.This provision shall survive termination
of this Master Indenture and any Supplemental Indenture, and as to any Trustee,
its resignation or removal thereof.  As security for the
foregoing,  the Issuer hereby grants to the Trustee a security
interest in and to the amounts on deposit in all Series Funds  and
Accounts (other than the Rebate Fund) thereby, in effect, granting the Trustee a
first charge against these moneys following an Event of Default for its fees and
expenses (including legal counsel and
default  administration  costs  and  expenses),
subordinate  and  inferior to  the
security  interest granted to the Owners of the Bonds from time to
time secured thereby, but nevertheless payable in the order of priority as set
forth in Section 905(a) upon the occurrence of an Event of
Default.

    
      
         

      

      
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    Section
605.   No
Duty to Renew Insurance.  The Trustee shall be under no duty to
effect or to renew any insurance policy nor shall it incur any liability for the
failure of the Issuer to require or effect or renew insurance or to report or
file claims of loss thereunder.

    

    Section
606.   Notice
of  Default;  Right  to  Investigate.   The
Trustee shall give written notice, as soon as practicable, by first-class mail
to registered Owners of Bonds of all defaults of which the Trustee has actual
knowledge, unless such defaults have been remedied (the term "defaults" for
purposes of this Section and Section 607 being defined to include the events
specified as "Events of Default" in Section 902  hereof, but not
including any notice or periods of grace provided for therein) or if the
Trustee, based upon the advice of counsel upon which the Trustee is entitled to
rely, determines that the giving of such notice is not in the best interests of
the Owners of the Bonds.  The Trustee will be deemed to have actual
knowledge of any payment default under this Master Indenture or under any
Supplemental Indenture and, after receipt of written notice thereof, by a Credit
Facility issuer or a Liquidity Facility issuer of a default under its respective
reimbursement agreement, but shall not be deemed to have actual knowledge of any
other default unless notified in writing of such default by the Owners of at
least 25% in aggregate principal amount of the Outstanding Bonds.  The
Trustee may, however, at  any  time  require of
the Issuer full information as to the performance of any covenant hereunder; and
if information satisfactory to it is not forthcoming, the Trustee may make or
cause to be made, at the expense of the Issuer, an investigation into the
affairs of the Issuer.

    

    Section
607.    Obligation to Act on
Default.  Before taking any action under this Master Indenture
or any Supplemental Indenture in respect of an Event of Default, the Trustee
may  require that a satisfactory indemnity bond be furnished for the
reimbursement of all expenses to which it may be put and to protect it against
all liability, except liability resulting from its own gross negligence or
willful misconduct in connection with any such action.

    

    Section
608.   Reliance  by  Trustee.  The
Trustee may act on any requisition, resolution, notice, request, consent,
waiver, certificate, statement, affidavit, voucher, bond, or other paper or
document or telephone message which it in good faith believes to be genuine and
to have been passed, signed or given by the proper persons or to have been
prepared and furnished pursuant to any of
the  provisions  of  this  Master  Indenture  or  any  Supplemental
Indenture; and the Trustee shall be under no duty to make any investigation as
to any statement contained in any such instrument, but may accept the same as
conclusive evidence of the accuracy of such statement.

    

    Section
609.   Trustee May Deal in
Bonds.  The Trustee may in good faith buy, sell, own, hold and
deal in any of the Bonds and may join in any action which any Owners may be
entitled to take with like effect as if the Trustee were not a party to this
Master Indenture or any Supplemental Indenture.  The Trustee may also
engage in or be interested in any financial or other transaction with the
Issuer.

    

    Section
610.   Construction of Ambiguous
Provision.   The Trustee may construe any ambiguous or
inconsistent provisions of this Master Indenture or any Supplemental Indenture
and any construction by the Trustee shall be binding upon the
Owners.  The Trustee shall give prompt written notice to the Issuer of
any intention to make such construal.

    
      
         

      

      
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    Section
611.   Resignation of
Trustee.  The Trustee may resign and be discharged of the
trusts created by this Master Indenture by written resignation filed with the
Secretary of the Issuer not less than sixty  (60) days before the date
when such resignation is to take effect; provided that notice of such
resignation shall be sent by first-class mail to each Owner as its name and
address appears on the Bond Register and to any Escrow Agent, Paying Agent, Bond
Registrar, any Credit Facility issuer, and any Liquidity Facility issuer, at
least sixty (60) days before the resignation is to take effect.  Such
resignation shall take effect on the day specified in the Trustee's notice of
resignation unless a successor Trustee is previously appointed, in which
event  the  resignation  shall  take  effect  immediately  on  the  appointment  of  such  successor;
provided, however, that notwithstanding the foregoing such resignation shall not
take effect until a successor Trustee has been appointed.   If a
successor Trustee has not been appointed within sixty (60) days after the
Trustee has given its notice of resignation, the Trustee may petition any court
of competent jurisdiction for the appointment of a temporary successor Trustee
to serve as Trustee until a successor Trustee has been duly
appointed.

    

    Section
612.   Removal of
Trustee.  Any Trustee hereunder may be removed at any time by
an instrument appointing a successor to the Trustee so removed, upon application
of the Issuer; provided, however, that if an Event of Default has occurred
hereunder and is continuing with respect to a Series of Bonds, then the Trustee
hereunder may be removed only by an instrument appointing a successor to the
Trustee so removed executed by the Owners of a majority in aggregate principal
amount of all Bonds Outstanding of the Series as to which Event of Default
exists and filed with the Trustee and the Issuer.

    

    The
Trustee may also be removed at any time for any breach of trust or for acting or
proceeding in violation of, or for failing to act or proceed in accordance with,
any provision of this Master Indenture or any Supplemental Indenture with
respect to the duties and obligations of the Trustee by any court of competent
jurisdiction upon the application of the Issuer; provided that no Event of
Default has occurred hereunder and is continuing, or upon the application of the
Owners of not less than 20% in aggregate principal amount of the Bonds then
Outstanding.

    

    Section
613.   Appointment of Successor
Trustee.  If the Trustee or any successor Trustee resigns or is
removed or dissolved, or if its property or business is taken under the control
of any state or federal  court or administrative body, a vacancy shall
forthwith exist in the office of the Trustee, and the Issuer  shall
appoint a successor and shall mail notice of such appointment, including the
name and address of the applicable corporate trust office of the successor
Trustee, by first-class mail to each Owner as its name and address appears on
the Bond Register, and to the Escrow Agent, Paying Agent, Bond Registrar, any
Credit  Facility issuer and any Liquidity Facility issuer; provided,
however, that the Issuer shall not appoint a successor  Trustee unless
no Event of Default has occurred and is continuing and unless the Issuer shall
have received  the  prior written consent, which consent
shall not be unreasonably withheld, of any Credit Facility issuer, and any
Liquidity Facility issuer, to the appointment of such successor
Trustee.  If an Event of Default has occurred hereunder and is
continuing and the Trustee or any successor Trustee resigns or is removed or
dissolved, or if its property or business is taken under the control of any
state or federal court or administrative body, a vacancy shall forthwith exist
in the office of the Trustee, and a successor may be appointed by any court of
competent jurisdiction upon the application of the Owners of not less than
twenty percent (20%) in aggregate principal amount of the Bonds then Outstanding
and such successor Trustee shall mail notice of its appointment, including the
name and address of the applicable corporate trust office of the successor
Trustee, by first-class mail to each Owner as its name and address appears on
the Bond Registrar, and to  the Escrow Agent, Paying Agent, Bond
Registrar, any Credit Facility issuer and any Liquidity Facility
issuer.

    
      
         

      

      
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    Section
614.   Qualification of Successor
Trustee.   A successor Trustee shall be a national bank
with trust powers or a bank or trust company with trust powers, having a
combined net capital and surplus of at least $50,000,000.

    

    Section
615.   Instruments of
Succession.   Any successor Trustee shall execute,
acknowledge and deliver to the Issuer an instrument accepting such appointment
hereunder; and thereupon such successor Trustee, without any further act, deed,
or conveyance, shall become fully vested with all the estates, properties,
rights, powers, trusts, duties and obligations of its predecessor in trust
hereunder, with like effect as if originally named Trustee
herein.  After withholding from the funds on hand any amounts owed to
itself hereunder, the Trustee ceasing to act hereunder shall pay over to the
successor Trustee all moneys held by it hereunder; and the Trustee ceasing to
act and the Issuer shall execute and deliver an instrument or instruments
transferring to the successor Trustee all the estates, properties, rights,
powers and trusts hereunder of the Trustee ceasing to act except for the rights
granted under Section 604 hereof. The successor Trustee shall mail notice of its
appointment, including the name and address of the applicable corporate trust
office of the successor Trustee, by first-class mail to each Owner as its name
and address appears on the Bond Registrar, and to the Escrow Agent, Paying
Agent, Bond Registrar, any Credit Facility issuer and any Liquidity Facility
issuer.

    

    Section
616.   Merger of
Trustee.   Any corporation into
which  any  Trustee hereunder may be merged or with which it
may be consolidated or into which all or substantially all of its
corporate  trust assets shall be sold or its operations conveyed, or
any corporation resulting from any merger or consolidation to which any Trustee
hereunder shall be a party, shall be the successor Trustee under this Master
Indenture without the execution or filing of any paper
or  any  further act on the part of the parties thereto,
anything herein to the contrary notwithstanding; provided, however, that any
such successor corporation  continuing to act as Trustee hereunder
shall meet the requirements of Section 614 hereof, and if such corporation does
not meet the aforesaid requirements, a successor Trustee shall be appointed
pursuant to this Article VI.

    

    Section
617.   Resignation of Escrow Agent, Paying
Agent or Bond Registrar. The Escrow Agent, Paying Agent or Bond Registrar
may resign and be discharged of the duties created by this Master Indenture by
executing an instrument in writing resigning such duties and specifying the date
when such resignation shall take effect, and filing the same with the Issuer and
the Trustee not less than sixty (60) days before the date specified in such
instrument when such resignation shall take effect, and by giving written
notice  of such resignation shall take effect, and by giving written
notice of such resignation mailed not less than sixty (60) days prior to such
resignation date to each Owner as its name and address appear on the
registration books of the Issuer maintained by the Bond
Registrar.  Such resignation shall take effect on the date specified
in such  notice, unless a successor Escrow Agent, Paying Agent or Bond
Registrar is previously appointed in which  event  such
resignation shall take effect immediately upon the appointment of such successor
Escrow Agent, Paying Agent or Bond Registrar.  If the successor Escrow
Agent, Paying Agent or Bond Registrar shall not have been appointed within a
period of sixty (60) days following the giving of notice, then the Trustee may
appoint a successor Escrow Agent, Paying Agent or Bond Registrar as provided in
Section 619 hereof.

    
      
         

      

      
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    Section
618.   Removal of Escrow Agent, Paying Agent
or Bond Registrar.  The Escrow Agent, Paying Agent or Bond
Registrar may be removed at any time prior to any Event of Default by the Issuer
by filing with the Escrow Agent, Paying Agent or Bond Registrar to be removed,
and with the Trustee, an instrument or instruments in writing executed by an
Authorized Officer appointing a successor.  Such removal shall be
effective thirty (30) days (or such longer period as may be set forth in such
instrument) after  delivery of the instrument; provided, however, that
no such removal shall be effective until the successor  Escrow Agent,
Paying Agent or Bond Registrar appointed hereunder shall execute, acknowledge
and deliver to the Issuer an instrument accepting such appointment
hereunder.

    

    Section
619.   Appointment of Successor Escrow
Agent, Paying Agent or Bond Registrar.  In case at any time the
Escrow Agent, Paying Agent or Bond Registrar shall be removed, or be dissolved,
or if its property or affairs shall be taken under the control of any state or
federal court or administrative body because of insolvency or bankruptcy, or for
any other reason, then a vacancy shall forthwith and ipso facto exist in
the  office of the Escrow Agent, Paying Agent or Bond Registrar, as
the case may be, and a successor shall be appointed by the Issuer; and in case
at any time the Escrow Agent, Paying Agent or Bond Registrar shall resign, then
a successor shall be appointed by the Issuer.  Upon any such
appointment, the Issuer shall give written notice of such appointment to the
predecessor Escrow Agent, Paying Agent or Bond Registrar, the successor
Escrow  Agent, Paying Agent or Bond Registrar, the Trustee and all
Owners.  Any new Escrow Agent, Paying Agent or Bond Registrar so
appointed shall immediately and without further act supersede the predecessor
Escrow Agent, Paying Agent or Bond Registrar.

    

    Section
620.   Qualifications of Successor Escrow
Agent, Paying Agent or Bond Registrar.Every successor Escrow Agent,
Paying Agent or Bond Registrar (i) shall be a subsidiary of any commercial bank
or trust company (a) duly organized under the laws of the United States or any
state or territory thereof,  (b) authorized by Law to perform all the
duties imposed upon it by this Master Indenture, and (c) capable of meeting its
obligations hereunder, and (ii) shall have a combined net capital and surplus of
at least $50,000,000.

    

    Section
621.   Acceptance of Duties by Successor
Escrow Agent, Paying Agent or Bond Registrar.  Any successor
Escrow Agent, Paying Agent or Bond Registrar appointed hereunder shall execute,
acknowledge  and deliver to the Issuer an instrument accepting such
appointment hereunder, and thereupon such successor Escrow Agent, Paying Agent
or Bond Registrar, without any further act, deed or conveyance, shall become
duly  vested with all the estates, property, rights, powers, duties
and obligations of its predecessor hereunder, with like effect as if originally
named Escrow Agent, Paying Agent or Bond Registrar herein. Upon request of such
Escrow Agent, Paying Agent or Bond Registrar, such predecessor Escrow Agent,
Paying  Agent  or  Bond  Registrar  and  the  Issuer  shall  execute  and  deliver  an  instrument
transferring to such successor  Escrow Agent, Paying Agent or Bond
Registrar all the estates, property, rights and powers hereunder of such
predecessor Escrow Agent, Paying Agent or Bond Registrar and such predecessor
Escrow Agent, Paying Agent or registrar shall pay over and deliver to the
successor Escrow Agent, Paying Agent or Bond Registrar all moneys and other
assets at the time held by it hereunder.

    
      
         

      

      
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    Section
622.   Successor by Merger or
Consolidation.  Any corporation into which any Escrow Agent,
Paying Agent or Bond Registrar hereunder may be merged or converted or with
which it may be consolidated or into which substantially all of its corporate
trust assets shall be sold or otherwise conveyed, or any corporation resulting
from any merger or consolidation to which any Escrow Agent, Paying Agent or Bond
Registrar hereunder shall be a party, shall be the
successor  Escrow  Agent,
Paying  Agent  or Bond  Registrar  under
this  Master  Indenture without the execution or filing of
any paper or any further act on the part of the parties hereto, anything in this
Master Indenture to the contrary notwithstanding.

    

    Section
623.   Patriot Act Requirements of the
Trustee.   To help the government fight the funding of
terrorism and money laundering activities, federal law requires all financial
institutions to obtain,  verify,  and record information
that identifies each person who opens an account.  For a
non-individual person such as a business entity, a charity, or other legal
entity, the Trustee will ask for documentation to verify its formation and
existence as a legal entity.  The
Trustee  may  also  ask  to  see  financial  statements,  licenses,  identification  and  authorization
documents from individuals claiming authority to represent the entity or other
relevant documentation.

     

    
      
         

      

      
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    ARTICLE
VII

    

    FUNDS
CONSTITUTE TRUST FUNDS

    

    Section
701.   Trust
Funds.   Subject to the provisions of Section 604 and
Section 905(a) hereof, all amounts on deposit with the Escrow Agent in Series
Funds or Accounts for the benefit of a Series of Bonds shall:

    

    (a)           be
used only for the purposes and in the manner herein and in the Supplemental
Indenture relating to such Series of Bonds provided and, pending such
application, be held by the Escrow Agent for the Trustee in trust for the
benefit of the Owners of such Series of Bonds;

    

    (b)           be  irrevocably  pledged
to the payment of such Series of Bonds, except for amounts on deposit in the
Series Rebate Accounts in the Rebate Fund;

    

    (c)           be
held and accounted for separate and apart from all other Funds and Accounts,
including Series Accounts of other Series of Bonds, and other funds and accounts
of the Trustee and the Issuer;

    

    (d)           until
applied for the purposes provided herein, be subject to a first lien in favor of
the Owners of  such Series of Bonds and any pari passu obligations to
issuers of Credit or Liquidity Facilities with respect to such series of Bonds,
which lien is hereby created, prior and superior to all other liens now existing
or hereafter created, and, to a second lien in favor of the Trustee, as security
for the reasonable compensation for the services of the Trustee hereunder, and
also all its reasonable expenses and disbursements, including the reasonable
fees and expenses of Trustee's counsel, subordinate and inferior to the security
interest granted to the Owners of such Series of Bonds and any pari passu
obligations to issuers of Credit or Liquidity Facilities with respect to such
series of Bonds, but nevertheless payable in the order of priority as set forth
in Section 905(a) hereof upon the occurrence of an Event of Default;
and

    

    (e)           not
be subject to lien or attachment by any creditor of the Trustee or any creditor
of the Issuer or any other Series of Bonds other than the Owners of such Series
of Bonds and the issuers of Credit or Liquidity Facilities with respect to such
Series of Bonds.

     

    
      
         

      

      
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    ARTICLE
VIII

    

    COVENANTS
AND AGREEMENTS OF THE ISSUER

    

    Section
801.   Payment of
Bonds.  The Issuer shall duly and punctually pay or cause to be
paid, but only from the Trust Estate with respect to each Series of Bonds, Debt
Service on the dates, at the places, and in the amounts stated herein, in any
Supplemental Indenture, and in the Bonds of such Series.

    

    Section
802.   Extension of Payment of
Bonds.  Except as provided in Section 901 hereof, the Issuer
shall not directly or indirectly extend the time for payment of the interest on
any Bonds.   The time for payment of Bonds of any Series shall be
the time prescribed in the Supplemental Indenture relating to such Series of
Bonds.

    

    Section
803.   Further
Assurance.  At any and all times the Issuer shall, so far as it
may be authorized by Law, pass, make, do, execute, acknowledge and deliver, all
and every such further resolutions, acts, deeds, conveyances, assignments,
transfers and assurances as may be necessary or desirable for the better
assuring, conveying, granting, assigning and confirming all and singular the
rights, moneys, securities and funds hereby pledged or assigned, or intended so
to be, or which the Issuer may become bound to pledge or assign after the date
of execution of this Master Indenture.

    

    Section
804.   Power to Issue Bonds and Create a
Lien.  The Issuer hereby represents to the Trustee and to the
Owners that it is and will be duly authorized under all applicable Laws to issue
the Bonds of each Series, to execute this Master Indenture, to adopt
Supplemental Indentures, and to pledge its moneys, securities and funds in the
manner and to the extent provided herein. Except as provided herein, the Issuer
hereby represents that such moneys, securities and funds of the Issuer are and
will be free and clear of any pledge, lien, charge or encumbrance thereon and
all action on the part of the Issuer to that end has been and will be duly and
validly taken. The Bonds of each Series, this Master Indenture and any
Supplemental Indenture are and will be the valid and legally enforceable
obligations of the Issuer, enforceable in accordance with their terms except to
the extent that enforcement thereof may be subject to bankruptcy and other
similar laws affecting creditors' rights generally.  The Issuer shall
at all times, to the extent permitted by Law, defend, preserve and protect the
pledge and lien created by this Master Indenture and all the rights of the
Owners hereunder against all claims and demands of all other persons
whomsoever.

    

    Section
805.    Power to Undertake Series Projects
and to Collect Pledged Revenue.   The Issuer has or will
have upon the date of issuance of each Series of Bonds, and will have so long as
any Bonds are Outstanding, good right and lawful power: (i) to undertake the
Series Projects, or it will take such action on its part required which it deems
reasonable in order to obtain licenses, orders, permits or other authorizations,
if any, from any agency or regulatory body having lawful jurisdiction which must
be obtained in order to undertake such Series Project; and (ii) to fix, levy and
collect or cause to be collected any and all  Pledged
Revenues.

    
      
         

      

      
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    Section
806.     Sale of Series
Projects.  The Issuer covenants that, until such time as there
are no Bonds of a Series Outstanding, it will not sell, lease or otherwise
dispose of or encumber the related Series Project or any part thereof other than
as provided herein.  The Issuer may, however, from time to time, sell
any machinery, fixtures, apparatus, tools, instruments, or
other  movable property acquired  by the
Issuer  in  connection with a Series  Project,
or  any materials used in connection therewith, if the Issuer shall
determine  that such articles are no longer needed or are no longer
useful in connection with the acquisition, construction, operation or
maintenance of a Series Project, and the proceeds thereof may be applied to the
replacement of the properties so sold or disposed of and, if not so applied,
shall be deposited to the credit of the related Series Acquisition and
Construction Account or, after the Date of Completion of the Series Project,
shall be deposited to the credit of the related Series Principal
Account.  The Issuer may from time to time sell or lease such other
property forming part of a Series Project which it may determine is not needed
or serves no useful purpose in connection with the maintenance and operation of
such Series Project, if the Consulting Engineers shall in writing approve such
sale or lease; the proceeds of any such sale or lease shall be disposed of as
hereinabove provided for the proceeds of the sale or disposal of movable
property.  The proceeds of any lease as described above shall be
deposited to the credit of the related Series Principal Account or Redemption
Account.

    

    Notwithstanding
the foregoing, the Issuer may: (i) dispose of all or any part of a Series
Project, other than a Series Project the revenues to be derived from the
operation of which are pledged to a Series of Bonds, by gift or dedication
thereof to any unit of local government, or to the State or  any
agency or instrumentality of either of the foregoing or the
United  States Government; and/or (ii) impose, declare or grant title
to or interests in the Series Project or a portion or portions thereof in order
to create ingress and egress rights and public and private utility easements as
the Issuer may deem necessary or desirable for the development, use and
occupancy of the property within the Issuer; and/or (iii) impose or declare
covenants, conditions and restrictions pertaining to the use, occupancy and
operation of the Series Projects.

    

    Section
807.     Completion and Maintenance of Series
Projects.   The Issuer shall complete the acquisition and
construction of a Series Project with all practical dispatch and in a sound and
economical manner.  So long as any Series Project is owned by the
Issuer, the Issuer shall maintain, preserve and keep the same or cause the same
to be maintained, preserved and kept, with the appurtenances and every part and
parcel thereof, in good repair, working order and condition, and shall from time
to time make, or cause to be made, all necessary and proper repairs,
replacements and renewals so that at all times the operation thereof may be
properly and advantageously conducted.

    
      
         

      

      
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    Section
808.      Accounts and Reports.

    

    (a)           Annual
Report.  The Issuer shall, within one hundred eighty (180) days
after the end of its Fiscal Year, so long as any Bonds are Outstanding, deliver
to each Requesting Owner (hereinafter defined) and file with the Trustee, solely
as a repository of such information, and otherwise as provided by Law, a copy of
its annual audit for such year, accompanied by an Accountant's Certificate,
including: (a) statements in reasonable detail of its financial condition as of
the end of such Fiscal Year and income and expenses for such Fiscal Year, and
(b) statements of all receipts and disbursements of the Pledged Revenues of each
Series of Bonds (unless the Pledged Revenues of such Series are remitted
directly to the Trustee).  The Trustee shall, within ninety (90) days
after the close of each Fiscal Year so long as any Bonds are Outstanding, file
with the Issuer a summary with respect to each Fund and Account of the deposits
thereto and disbursements therefrom during such Fiscal Year and the amounts held
therein at the end of such Fiscal Year or, at the option of the Trustee, such
summary can be made on a monthly basis.  For purposes of the
foregoing, the term "Requesting Owner" shall mean the Owner (or beneficial owner
in the case of book-entry Bonds) of more than $1,000,000 aggregate principal
amount of any Series of Bonds who requests such information in writing to the
Issuer.

    

    (b)           Default
Certificate.  The Issuer shall file with the Trustee, so long
as any Bonds are  Outstanding,  a certificate of an
Authorized Officer upon the occurrence of an Event of Default as
described  in  Section 902(g) hereof, such certificate to
contain a description of the nature of such default and actions taken or to be
taken to remedy such default.

    

    (c)           Inspection.  The
reports, statements and other documents required to be furnished by the Issuer
to the Trustee and by the Trustee to the Issuer pursuant to any provisions
hereof shall be available on any Business Day, during regular business hours,
for inspection by any Owner at the designated corporate trust office of the
Trustee upon the giving of at least five (5) Business Days advance written
notice to the Trustee.

    

    Section
809.     Arbitrage and Other Tax
Covenants.   The Issuer hereby covenants that it will not
take any action, and will not fail to take any action, which action or failure
would cause the Tax Exempt Bonds to become "arbitrage bonds" as defined in
Section 148 of the Code or "private activity bonds" as defined in Section 141 of
the Code.  The Issuer further covenants that it will take all such
actions after delivery of any Tax Exempt Bonds as may be required in order for
interest on such Tax Exempt Bonds to remain excludable  from
gross  income (as defined in Section 61 of the Code) of the
Owners.Without limiting the generality of the foregoing, the Issuer hereby
covenants that it will to the extent not remitted by the Trustee from funds held
in the Series Rebate Account, remit to the United States that Rebate Amount at
the time and place required by this Master Indenture and any Supplemental
Indenture, including any Tax Regulatory Covenants contained
therein.

    

    Section
810.     Payment of
Tolls.  The Issuer will collect and enforce the payment of
assessments, service charges, franchise fees, impact fees and other user fees
associated with the Project and any other sources which constitute Pledged
Revenues for the payment of any Series of Bonds in the manner prescribed by this
Master Indenture, any Supplemental Indenture and all resolutions, ordinances or
Laws thereunto appertaining at times and in amounts as shall be necessary in
order to pay, when due, the principal of and interest on the Series of Bonds to
which such Pledged Revenues are pledged; and to pay or cause to be paid the
assessments, service charges, franchise fees, impact fees and other user fees as
received to the Trustee in accordance with the provisions hereof.

    

    Section
811.     Method of Collection of Assessments,
Charges and Fees.The Issuer will develop and implement a plan to collect
the assessments, service charges, franchise fees, impact fees and other user
fees associated with the Project.

    
      
         

      

      
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    Section
812.     Deposit of Proceeds from Sale of
Property.  If any property comprising a Series Project is sold,
the proceeds of such sale shall be paid by the Issuer to the Trustee not later
than five (5) Business Days following receipt of such proceeds by the Issuer and
shall be deposited by the Trustee to the credit of the related Series Revenue
Account.

    

    Section
813.     No Other Obligations Payable from
Assessments, Charges or Fees.  The Issuer will not issue or
incur any obligations payable from the proceeds of the assessments, service
charges, franchise fees, impact fees or other user charges securing a Series of
Bonds nor voluntarily create or cause to be created any debt, lien, pledge,
assignment, encumbrance or other charge upon such assessments, service charges,
franchise fees, impact fees or other user charges other than the lien of any
Subordinate Debt.

    

    Section
814.     General.  The Issuer
shall do and perform or cause to be done and performed  all acts and
things required to be done or performed by or on behalf of the Issuer under Law
and this Master Indenture, in accordance with the terms of such
provisions.

    

    Upon the
date of issuance of each Series of Bonds, all conditions, acts and things
required by Law and this Master Indenture and any Supplemental Indenture to
exist, to have happened and to have been performed precedent to and in the
issuance of such Series of Bonds shall exist, have happened and have been
performed and upon issuance the issue of such Series of Bonds shall be within
every debt and other limit  prescribed by Law applicable to the
Issuer.

    

    Section
815.     Secondary Market
Disclosure.  The Issuer covenants and agrees with the Owners,
from time to time, of the Bonds issued hereunder to make best efforts to
provide, or cause to be provided, on a timely basis, all appropriate information
repositories such information and documents as shall be required by applicable
Law to enable Owners to purchase and resell the Bonds issued, from time to time,
hereunder.  For purposes of
complying  with  the  above- described provision,
the Issuer may rely on an opinion of counsel which is familiar with disclosure
of information relating to municipal securities.  Nothing herein
shall, however, require the Issuer to provide disclosure in order to enable the
purchaser of a security in a "private placement transaction" within the meaning
of applicable securities laws, to offer or re-sell such security in other than a
"private placement transaction."  All financial statements provided to
a repository shall be in accordance with generally accepted governmental
accounting principles and shall be provided to such repository as soon as
practicable after the same becomes available. The financial statements shall
contain such information as shall be customary for local governments, such as
the Issuer.  Nothing in this Section 815 is intended to impose upon
the Issuer, and this Section 815 shall not be construed as imposing upon the
Issuer, any disclosure obligations beyond those imposed by applicable
Law.

    
      
         

      

      
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    ARTICLE
IX

    

    EVENTS
OF DEFAULT AND REMEDIES

    

    Section
901.     Extension of Interest
Payment.  If the time for payment of interest of a Bond of any
Series shall be extended, whether or not such extension be by or with the
consent of the Issuer, such interest so extended shall not be entitled in case
of default hereunder to the benefit or security of this Master Indenture unless
the aggregate principal amount of all Bonds of such Bonds then Outstanding and
of all accrued interest the time for payment of which shall not have been
extended shall have previously been paid in full.

    

    Section
902.      Events of
Default.  Each of the following events is hereby declared an
Event of Default with respect to a Series of Bonds:

    

    (a)           Any
payment of Debt Service on such Series of Bonds is not made when
due;

    

    (b)           The
Issuer shall for any reason be rendered incapable of fulfilling its obligations
hereunder or under the Supplemental Indenture relating to such Series of
Bonds;

    

    (c)           The
Issuer admits in writing its inability to pay its debts generally as they become
due, or files a petition in bankruptcy or makes an assignment for the benefit of
its creditors or consents to the appointment of a receiver or trustee for itself
or for the whole or any part of a related Series Project;

    

    (d)           The  Issuer  is  adjudged  insolvent  by  a  court  of  competent  jurisdiction,  or  is
adjudged a bankrupt on a petition in bankruptcy filed against the Issuer, or an
order, judgment or decree be entered by any court of competent jurisdiction
appointing, without the consent of the Issuer, a receiver or trustee of the
Issuer or of the whole or any part of its property and if the aforesaid
adjudications, orders, judgments or decrees shall not be vacated or set aside or
stayed within ninety (90) days from the date of entry thereof;

    

    (e)           The  Issuer
shall file a petition or answer seeking reorganization or any arrangement under
the Federal bankruptcy laws or any other applicable law or statute of the United
States of America or any state thereof;

    

    (f)           Under
the provisions of any other law for the relief or aid of debtors, any court of
competent jurisdiction shall assume custody or control of the Issuer's assets or
any part thereof, and such custody or control shall not be terminated within
ninety (90) days from the date of assumption of such custody or control;
or

    

    (g)           The  Issuer  shall  default  in  the  due  and  punctual
performance  of any  of the material covenants, conditions,
agreements and provisions contained in the Bonds of such Series or in this
Master Indenture or in the Supplemental Indenture relating to such Series of
Bonds on the part of the Issuer to be performed (other than a default in the
payment of Debt Service on the related Series of Bonds when due, which is an
Event of Default under subsection (a) above) and such default shall continue for
thirty (30) days after written notice specifying such default and requiring same
to be remedied shall have been given to the Issuer by the Trustee or, if the
Trustee is unwilling or unable to act, by Owners of not less than ten percent
(10%) in aggregate principal amount of the Bonds of such Series then Outstanding
and affected by such default.

    
      
         

      

      
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    Section
903.      No Acceleration of Maturities of
Bonds of a Series.  No Bonds of a Series issued under this
Master Trust Indenture shall be subject to acceleration by reason of an Event of
Default.

    

    Section
904.     Enforcement of
Remedies.   Upon the happening and continuance of any
Event of  Default specified in Section 902 above with respect to a
Series of Bonds, the Trustee may protect and enforce  the rights of
the Owners of the Bonds of such Series under applicable Law, and under this
Master Indenture, the related Supplemental Indenture and the Bonds of such
Series, by such proceedings in equity or at law, either for the specific
performance of any covenant or agreement contained herein or in aid or execution
of any power herein or in the  related  Supplemental
Indenture granted or for the enforcement of any proper legal or equitable
remedy, as the Trustee shall deem most effectual to protect and enforce such
rights.

    

    The
Owners of not less than a majority in aggregate principal amount of the Bonds of
such Series Outstanding shall, subject to the requirements of Section 607, have
the right, by an instrument or instruments in writing executed and delivered to
the Trustee, to direct the method and place of conducting all remedial
proceedings by the Trustee hereunder, provided that such directions shall not be
in conflict with any rule of Law or this Indenture and that the Trustee shall
have the right to decline to follow any such direction which in the opinion of
the Trustee would be unduly prejudicial to the rights of the Owners of such
Series of Bonds not parties to  such direction or would subject the
Trustee to personal liability or expense.  Notwithstanding the
foregoing, the Trustee shall have the right to select and retain legal counsel
of its choosing to represent it in any such proceedings.  The Trustee
may take any other action which is not inconsistent with any direction under
this second paragraph of this Section 904.

    

    No Owner
of such Series of Bonds shall have any right to pursue any other remedy under
this Indenture or such Series of Bonds unless: (1) an Event of Default shall
have occurred and is continuing; (2) the Owners of not less than a majority in
aggregate principal amount of the Bonds of such Series Outstanding have
requested the Trustee, in writing, to exercise the powers granted in the first
paragraph of this Section 904 or to pursue such remedy in its or their name or
names; (3) the Trustee has been offered indemnity satisfactory to it against
costs, expenses and liabilities reasonably anticipated to be incurred; (4) the
Trustee has declined to comply with such request, or has failed to do so, within
sixty (60) days after its receipt of such written request and offer
of  indemnity; and (5) no direction inconsistent with such request has
been given to the Trustee during such 60-day  period by the Owners of
not less than a majority in aggregate principal amount of the Bonds of such
Series Outstanding.  The provisions of this immediately preceding
sentence of this Section 904 are conditions precedent to the exercise by any
Owner of such Series of Bonds of any remedy hereunder.  The exercise
of such rights is further subject to the provisions of Section 909, and the
second paragraph of this Section 904.  No one or more Owners of such
Series of Bonds shall have any right in any manner whatever to enforce any right
under this Indenture, except in the manner herein provided.

    
      
         

      

      
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    Section
905.      Pro  Rata  Application
of  Funds  Among  Owners  of  a  Series  of
Bonds.   Anything in this Master Indenture to the contrary
notwithstanding, if at any time the moneys in the Series Funds and Accounts
shall not be sufficient to pay Debt Service on the related Series of Bonds when
due, such moneys together with any moneys then available or thereafter becoming
available for  such purpose, whether through the exercise of the
remedies provided for in this Article or otherwise, shall be applied as
follows:

    

    (a)           Unless
the aggregate principal amount of all the Bonds of such Series shall have become
due and payable, all such moneys shall be applied:

    

    First:        to
the payment of any then-due fees and expenses of the Trustee, including
reasonable counsel fees and expenses, to the extent not otherwise
paid;

    

    Second:  to
payment to the persons entitled thereto of all installments of interest then due
and payable on the Bonds of such Series, in the order in which such installments
become due and payable and, if the amount available shall not be sufficient to
pay in full any particular installment, then to the payment ratably, according
to the amounts due on such installment, to the persons entitled thereto, without
any discrimination or preference except as to any difference in the rates of
interest specified in the Bonds of such Series; and

    

    Third:  to
the payment to the persons entitled thereto of the unpaid principal of any of
the Bonds of such Series which shall have become due (other than Bonds of such
Series called for redemption for the payment of which sufficient moneys are held
pursuant to this Master Indenture), in the order of their due dates, with
interest upon the Bonds of such Series at the rates specified therein from the
dates upon which they become due to their payment date, and, if the amount
available shall not be sufficient to pay in full the principal of Bonds of such
Series due on any particular date, together with such interest, then to the
payment first of such interest, ratably according to the amount of such interest
due on such date, and then to the payment of such principal, ratably according
to the amount of such principal due on such date, to the Owners of the Bonds of
such Series entitled thereto without any discrimination or preference except as
to any difference in the foregoing rates of interest.

    

    (b)           If
the aggregate principal amount of all the Bonds of a Series shall have become
due and payable in accordance with their terms, all such moneys shall be applied
first to the payment of any fees and expenses of the Trustee, including
reasonable counsel fees and expenses, to the extent not otherwise paid,
and, then the payment of the whole amount of principal and interest then due and
unpaid upon the Bonds of such Series, without preference or priority of
principal or of interest or of any installment of interest over any other, or of
any Bond over any other Bond of such Series, ratably, according to the amounts
due respectively for principal and interest, to the persons entitled thereto
without any discrimination or preference except as to any difference in the
respective rates of interest specified in the Bonds of such Series.

    

    The
provisions of this Section are in all respects subject to the provisions of
Section 901 of this Article.

    
      
        
        

      

      
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    Whenever
moneys are to be applied pursuant to this Section, such moneys shall be applied
by the Escrow Agent at such times as the Trustee in its sole discretion shall
determine, having due regard to the amount of such moneys available for
application and the likelihood of additional moneys becoming available for such
application. The deposit of such moneys with the Escrow Agent for the benefit of
the Payment Agent shall constitute proper application by the Trustee, and the
Trustee shall incur no liability whatsoever to any Owner or to any other person
for any delay in applying any such funds, so long as the Trustee acts with
reasonable diligence, having due regard to the circumstances, and ultimately
applies such moneys in accordance with such  provisions  of
this  Master  Indenture  as  may  be  applicable  at  the  time  of  application.
Whenever the Trustee shall exercise such discretion in applying such funds, it
shall fix the date upon which such application is to be made and upon such date
interest on the amounts of principal to be paid on such date shall cease to
accrue.  The Trustee shall give such notice as it may deem appropriate
of the fixing of any such date, and shall not be required to make payment to any
Owner until such Bond shall be surrendered to him for appropriate
endorsement.

    

    Section
906.     Effect of Discontinuance of
Proceedings.  If any proceeding taken by the Trustee or any
Owner on account of any default shall have been discontinued or abandoned for
any reason, then the Issuer and the Owner shall be restored to their former
positions and rights hereunder, respectively, and all rights and remedies of the
Owners shall continue as though no such proceeding had been taken.

    

    Section
907.     Restriction on Individual Owner
Actions.     Except as provided in Section 910
below, no Owner of any of the Bonds shall have any right in any manner whatever
to  affect,  disturb or prejudice the security of this
Master Indenture or any Supplemental Indenture, or to enforce any right
hereunder or thereunder except in the manner herein or therein provided, and all
proceedings at law or in equity shall be instituted and maintained for the
benefit of all Owners of the Bonds of such Series.

    

    Section
908.     No Remedy
Exclusive.  No remedy conferred upon the Trustee or the Owners
is intended to be exclusive of any other remedy herein or in any Supplemental
Indenture provided, and each such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or thereunder.

    

    Section
909.     Delay Not a
Waiver.   No delay or omission of the Trustee or any Owner
to exercise any right or power accruing upon any default shall impair any such
right or power or shall be construed to be a waiver of any such default or an
acquiescence therein; and every power and remedy given to the Trustee and the
Owners may be exercised from time to time and as often as may be deemed
expedient.

    

    Section
910.     Right to Enforce Payment of
Bonds.   Nothing in this Article shall affect or impair
the right of any Owner to enforce the payment of Debt Service on the Bond of
which such person is the registered Owner, or the obligation of the Issuer to
pay Debt Service to the Owner at the time and place specified in such
Bond.

    
      
         

      

      
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    Section
911.     No Cross Default Among
Series.       The occurrence of an
Event of Default hereunder or under any Supplemental Indenture with respect to
any Series of Bonds shall not constitute an Event of Default with respect to any
other Series of Bonds, unless the event giving rise to the Event of Default also
constitutes an Event of Default hereunder or under the Supplemental Indenture
with respect to such other Series of Bonds.

    

    Section
912.     Indemnification.  Other
than to make proper draws under a Credit Facility, the Trustee shall be under no
obligation to institute any suit or to take any remedial proceeding under this
Master Indenture or any Supplemental Indenture or to enter any appearance or in
any way defend in any suit in which it may be made defendant, or to advance its
own money, or to take any
steps  in  the  execution  of  the  trusts  hereby  created  or  in  the
enforcement of any rights and powers hereunder, until it shall be indemnified to
its satisfaction against any and all costs and expenses, outlays and counsel
fees and other reasonable disbursements, and against all
liability.  Notwithstanding the foregoing, the indemnification
provided by this Section 912 shall not be applicable in cases of the Trustee's
gross negligence or willful misconduct.

    
      
         

      

      
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    ARTICLE
X

    

    EXECUTION
OF INSTRUMENTS BY OWNERS AND PROOF OF OWNERSHIP OF 

    BONDS

    

    Section 1001. Execution of Instruments by Owners
and Proof of Ownership of Bonds. Any request, direction, consent or other
instrument in writing required or permitted by this Master Indenture or any
Supplemental Indenture to be signed or executed by Owners may be in any number
of concurrent instruments of similar tenor and may be signed or executed by
Owners or their attorneys or legal representatives. Proof of the execution of
any such instrument shall be sufficient for any purpose of this Master Indenture
and shall be conclusive in favor of the Issuer with regard to any action taken
by it under such instrument if verified by any officer in any jurisdiction who,
by the laws thereof, has power to take affidavits within such jurisdiction, to
the effect that such instrument was subscribed and sworn to before him, or by an
affidavit of a witness to such execution. Where such execution is on behalf of a
person other than an individual, such verification or affidavit shall also
constitute sufficient proof of the authority of the signer thereof.

    

    Nothing
contained in this Article shall be construed as limiting the Trustee to such
proof, it being intended that the Trustee may accept any other evidence of the
matters herein stated which it may deem sufficient.  Any request or
consent of the Owner of any Bond shall bind every future owner of the same Bond
in respect of anything done by the Trustee or the Issuer in pursuance of such
request or consent.

    

    Section 1002. Deposit of Bonds.
Notwithstanding the foregoing, neither the Issuer nor the Trustee shall
be required to recognize any person as an Owner of any Bond or to take any
action at his request unless such Bond shall be deposited with the
Trustee.

    
      
         

      

      
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    ARTICLE
XI

    

    SUPPLEMENTAL
INDENTURES

    

    Section 1101. Supplemental Indentures.
Without Owners' consent, the Governing Body from time to time may authorize such
indentures supplemental hereto or amendatory hereof as shall not be inconsistent
with the terms and provisions hereof (which supplemental indenture shall
thereafter form a part hereof), without the consent of the Owners, for the
following purposes:

    

    (a)           to
provide for the initial issuance of a Series of Bonds or Refunding Bonds of a
Series;
or

    

    (b)           to  make  any  change  whatsoever  to  the  terms  and  provisions  of
this  Master Indenture, but only as such change relates to a Series of
Bonds upon the original issuance thereof (or upon the original issuance of
Refunding Bonds of a Series which defease and discharge the Supplemental
Indenture of the Series of Bonds to be refunded) under and pursuant to the terms
of the Supplemental Indenture effecting such change; or

    

    (c)           to
cure any ambiguity or formal defect or omission or to correct any inconsistent
provisions in this Master Indenture; or

    

    (d)           to
grant to the Owners or to the Trustee on behalf of the Owners any additional
rights or security that may lawfully be granted; or

    

    (e)           to
add to the covenants and agreements of the Issuer in this Master Indenture other
covenants  and agreements thereafter to be observed by the Issuer to
the benefit of the Owners of the Outstanding Bonds; or

    

    (f)           to
modify the provisions of this Master Indenture or any Supplemental Indenture
provided that  such modification does not, in the written opinion of
Bond Counsel, materially adversely affect the interests of the Owners of the
Bonds Outstanding, upon which opinion the Trustee may conclusively
rely.

    

    Section 1102. Supplemental Indentures With Owner
Consent. Subject to the provisions contained in this Section, and not
otherwise, the Owners of not less than fifty-one percent (51%) in aggregate
principal amount of the Bonds then Outstanding shall have the right, from time
to time, anything contained in this Master Indenture to the contrary
notwithstanding, to consent to and approve the adoption of such indentures
supplemental hereto or amendatory hereof as shall be deemed desirable by the
Issuer for the purpose of modifying, altering, amending, adding to or
rescinding, in any particular, any of the provisions of this Master Indenture;
provided, however, that nothing herein contained shall permit, or be construed
as permitting, without the consent of all Owners of Bonds then Outstanding and
affected by such supplement or amendment,

    
      
         

      

      
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    (a)           an
extension of the maturity of, or an extension of the Interest Payment Date on,
any Bond;

    

    (b)          a
reduction in the principal, premium, or interest on any Bond;

    

    (c)           a
preference or priority of any Bond over any other Bond; or

    

    (d)           a
reduction in the aggregate principal amount of the Bonds required for consent to
such Supplemental Indenture.

    

    In
addition to the foregoing, the Owners of not less than fifty-one percent (51%)
in aggregate  principal amount of the Bonds of any Series then
Outstanding shall have the right, from time to time, anything contained in this
Master Indenture or in the Supplemental Indenture relating to such Series of
Bonds to the contrary notwithstanding, to consent to and approve the adoption of
such indentures supplemental to the Supplemental Indenture relating to such
Series of Bonds or amendatory thereof, but not hereof, as shall be deemed
desirable by the Issuer for the purpose of modifying, altering, amending, adding
to or rescinding, in any particular, any of the provisions of such Supplemental
Indenture or of any indenture supplemental thereto; provided, however, that
nothing herein contained shall permit, or be construed as permitting, without
the consent of all Owners of Bonds of such Series then Outstanding and affected
by such amendment,

    

    (a)           an
extension of the maturity of, or an extension of the Interest Payment Date on,
any Bond of such Series;

    

    (b)           a
reduction in the principal, premium, or interest on any Bond of such
Series;

    

    (c)           a
preference or priority of any Bond of such Series over any other Bond of such
Series;
or

    

    (d)           a
reduction in the aggregate principal amount of the Bonds of such Series required
for consent to such indenture supplemental to the Supplemental
Indenture.

    

    If at any
time the Issuer shall determine that it is desirable to approve any Supplemental
Indenture pursuant to this Section 1102, the Issuer shall cause the Trustee to
mail, at the expense of the Issuer, notice of the proposed approval to the
Owners whose approval is required.  Such notice shall be prepared by
the Issuer and shall briefly set forth the nature of the proposed Supplemental
Indenture or indenture supplemental to a Supplemental Indenture and shall state
that copies thereof are on file with the Secretary for inspection by all
affected Owners.   The Issuer shall not, however, be subject to
any liability to any Owner by reason of its failure to cause the notice required
by this Section to be mailed and any such failure shall not affect the validity
of such Supplemental Indenture or indenture supplemental to a Supplemental
Indenture when consented to and approved as provided in this
Section.

    
      
         

      

      
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    Whenever,
at any time within one (1) year after the date of the first mailing of such
notice, there shall be delivered to the Issuer an instrument or instruments in
writing purporting to be executed  by the
Owners  of  the requisite  principal amount of the
Bonds of such  Series Outstanding, which instrument or instruments
shall refer to the proposed Supplemental Indenture
or  indenture  supplemental to a Supplemental Indenture
described in such notice and shall specifically consent to and approve the
execution thereof in substantially the  form of the copy thereof
referred to in such notice, thereupon, but not otherwise, the Governing Body and
the Trustee may approve such Supplemental Indenture and cause it to be executed,
in substantially such form, without liability or responsibility to any
Owner.

    

    Section
1103.   Opinion of Bond Counsel With Respect
to Supplemental Indenture.  In addition to the other
requirements herein set forth with respect to Supplemental Indentures
or  indenture supplemental to a Supplemental Indenture, no such
indenture shall be effective unless and until there  shall have been
delivered to the Trustee the opinion of Bond Counsel to the effect that such
indenture is permitted pursuant to this Master Indenture and that such indenture
is the valid and binding obligation of the Issuer enforceable in accordance with
its terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency or general equitable principles, upon which opinion the Trustee may
conclusively rely.  In addition, if such indenture relates to a Series
of Tax Exempt Bonds, such opinion shall also state that such indenture
will  not adversely affect the exclusion from gross income for federal
income tax purposes of interest on the related Series of Bonds.

    

    Section 1104. Supplemental Indenture Part of
Indenture.Any supplemental indenture executed in accordance with this
Article and approved as to legality by counsel to the Issuer shall thereafter,
except as otherwise provided therein, form a part of this Master Indenture.
Except as applicable only to Bonds of a Series, all of the terms and conditions
contained in any such supplemental indenture amendatory of this Master indenture
shall be part of the terms and conditions hereof.

    

    Section
1105.    Insurer or Issuer of a Credit or
Liquidity Facility as Owner of Bonds.   As  long
as a Credit or Liquidity Facility securing all or a portion of the Bonds of a
Series Outstanding is in effect and the issuer thereof is not in default of any
of its obligations under such Credit or Liquidity Facility, as the case may be,
the issuer of the Credit or Liquidity Facility or the Insurer, to the extent so
authorized in the applicable Supplemental Indenture, will be deemed to be the
Owner of the Bonds of such Series secured by the  Credit or Liquidity
Facility: (i) at all times for the purpose of the execution and delivery of a
supplemental indenture or of  any amendment, change or modification of
the Master Indenture or the applicable Supplemental Indenture or the initiation
by Owners of any action to be undertaken by the Trustee
at  the  Owner's request, which under the Master Indenture
or the applicable Supplemental Indenture requires the written approval or
consent of or can be initiated by the Owners of at least a majority in principal
amount of the Bonds of the Series at the time Outstanding; (ii) at all times for
the purpose of the mailing of any notice to Owners under the Master Indenture or
the applicable Supplemental Indenture; and (iii) following an Event of Default
for all other purposes. Notwithstanding the foregoing, neither an Insurer nor
the issuer of a Credit or Liquidity Facility with respect to a Series of Bonds
will be deemed to be an Owner of the Bonds of such Series with respect to any
such Supplemental Indenture or of any amendment, change or modification of the
Master Indenture which would have the effect of permitting: (i) a change in the
terms of redemption or maturity of any Bonds of a Series Outstanding or of any
installment of interest thereon; or (ii) a reduction in the principal amount or
the Redemption Price thereof or in rate of interest thereon; or (iii) reducing
the percentage or otherwise affecting the classes of Bonds the consent of the
Owners of which is required to effect any such modification or amendment; or
(iv) creating any preference or priority of any Bond of a Series over any other
Bond of such Series.

    
      
         

      

      
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    ARTICLE
XII

    

    DEFEASANCE

    

    Section
1201.    Defeasance and Discharge of the Lien of this Master
Indenture and Supplemental
Indentures.

    

    (a)           If
the Issuer pays or causes to be paid, or there shall otherwise be paid, to the
Owners of all  Bonds the principal or Redemption Price, if applicable,
and interest due or to become due thereon and the obligations under any Letter
of Credit Agreement and any Liquidity Agreement, at the times and in the manner
stipulated therein and in this Master Indenture and any Letter of Credit
Agreement and any Liquidity Agreement and pays or causes to be paid all
other  moneys owing hereunder and under any
Supplemental  Indenture  (including,  without
limitation the fees and expenses of the Trustee, including reasonable counsel
fees and expenses), then the lien of this Master Indenture and all covenants,
agreements and other obligations of the Issuer to the Owners and the issuer of
any Credit Facility or Liquidity Facility shall thereupon cease, terminate
and  become void and be discharged and satisfied.  In such
event, the Trustee upon the request of the Issuer shall execute and deliver to
the Issuer all such instruments as may be desirable to evidence such discharge
and satisfaction, and the Trustee, Escrow Agent and the Paying Agent shall pay
over or deliver, as directed by the Issuer, all moneys or securities held by
them pursuant to this Master Indenture which are not required for the payment of
principal or Redemption Price, if applicable, on Bonds not theretofore
surrendered for such payment or redemption or
for  payment  of  obligations
under  any  Letter  of  Credit  Agreement  and  any
Liquidity Agreement.  If the Issuer pays or causes to be paid, or
there shall otherwise be paid, to the Owners of all Outstanding Bonds or of a
particular maturity, of a particular Series or of any part of a particular
maturity or  Series the principal or Redemption Price, if applicable,
and interest due or to become due thereon, at the times and in the manner
stipulated therein and in this Master Indenture, such Bonds shall cease to be
entitled to any lien, benefit or security under this Master Indenture, and all
covenants, agreements and obligations of the Issuer to the Owners of such Bonds
shall thereupon cease, terminate and become void and be discharged and
satisfied. Anything to the contrary in this Section 1201 notwithstanding, this
Master Indenture shall not be discharged nor shall any Bonds with respect to
which moneys or Governmental Obligations have been deposited in accordance with
the provisions of this Section 1201 cease to be entitled to the lien, benefit or
security under this Master Indenture, except to the extent that the lien,
benefit and security of this Master Indenture and the obligations of the
Issuer  hereunder shall be limited solely to and such Bonds shall be
secured solely by and be payable solely from the moneys or Governmental
Obligations so deposited.

    
      
         

      

      
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    (b)           Bonds
or interest installments for the payment or redemption of which moneys shall
have been set aside and shall be held in trust by the Escrow Agent for the
Trustee (through deposit pursuant to this Master Indenture of funds for such
payment or redemption or otherwise) at the maturity or redemption date thereof
shall be deemed to have been paid within the meaning and with the effect
expressed in this Section.  All Outstanding Bonds of any particular
maturity or Series shall prior to the maturity or redemption date thereof be
deemed to have  been  paid within the meaning and with the
effect expressed in subsection (a) of this Section 1201 if: (i) in case any of
such Bonds are to be redeemed on any date prior to their maturity, the Issuer
shall have given to the Trustee or the Bond Registrar irrevocable instructions
accepted in writing by the Trustee or the Bond Registrar to mail as provided in
Article III notice of redemption of such Bonds on such date; (ii) there shall
have been deposited with the Escrow Agent for the Trustee either moneys in an
amount which shall be sufficient, or Governmental Obligations, the principal of
and the interest on which when due shall, as  demonstrated in an
Accountant's Certificate, provide moneys which, together with the moneys, if
any, deposited with the Escrow Agent for the Trustee at the same time, be
sufficient to pay when due the principal or Redemption Price,  if
applicable, and  interest due and to  become due on said
Bonds on or prior to the redemption date or maturity date thereof, as the case
may be; (iii) the Issuer shall have given the Trustee or the Bond Registrar in
form satisfactory to it irrevocable instructions to mail, postage prepaid, to
each registered Owner of Bonds then Outstanding at the address, if any,
appearing upon the registry books of the Issuer, a notice to the registered
Owners of such Bonds and to the Registrar that the deposit required by (ii)
above has been made with the Trustee and that such Bonds are deemed to have been
paid in accordance with this Section 1201 and  stating such maturity
or redemption date upon which moneys are to be available for the payment of the
principal or redemption price, if applicable, on such Bonds; and (iv) an opinion
of Bond Counsel to the effect that such defeasance is permitted under this
Master Indenture and the Supplemental Indenture relating to the Series of Bonds
so defeased and that, in the case of Tax-Exempt Bonds, such defeasance will not
adversely affect the tax exempt status of such Series of
Bonds.  Neither Governmental Obligations nor moneys deposited with the
Escrow Agent for the Trustee pursuant to this Section 1201 nor principal or
interest payments on any such Governmental Obligations shall be withdrawn or
used for any purpose other than, and shall be held in trust for, the payment of
the principal or redemption price, if applicable, and interest on such Bonds;
provided that any
cash  received  from  such  principal  or  interest  payments  on  such  Governmental
Obligations deposited with the Escrow Agent: (i) to the extent such cash shall
not be required at any time for such purpose as evidenced by an Accountant's
Certificate  or, and to the extent all obligations under any Letter of
Credit Agreement or any Liquidity Agreement are satisfied, as determined by an
Insurer or an issuer of any Credit Facility and any Liquidity Facility securing
the Bonds with respect to which such Governmental Obligations have been so
deposited, shall be paid over upon the direction of the Issuer as received by
the Escrow Agent, free and clear of any trust, lien, pledge or assignment
securing such Bonds or otherwise existing under this Master Indenture; and (ii)
to the extent such cash shall be required for such purpose at a later date,
shall, to the extent practicable, be reinvested in
Governmental  Obligations maturing at times and in amounts sufficient
to pay when due the principal or redemption price,  if
applicable,  and  interest  to become due on such
Bonds, or obligations  under any Letter of Credit Agreement or any
Liquidity Agreement, on or prior to such redemption date or maturity date
thereof, as the case may be, and  interest earned from such
reinvestments shall be paid over as received by the Escrow to the Trustee for
the  Issuer, free and clear of any lien, pledge or security interest
securing such Bonds or otherwise existing under this Master
Indenture.  For the purposes of this provision, Governmental
Obligations means and includes only such securities which shall not be subject
to redemption prior to their maturity other than at the option of the holder
thereof.

    
      
         

      

      
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    (c)         
 As to any Variable Rate Bonds, whether discharged and satisfied under the
provisions of subsection (a) or (b) above, the amount required for the interest
thereon shall be calculated at the maximum rate permitted by the terms of the
provisions which authorized the issuance of such Variable Rate Bonds; provided,
however, that if on any date, as a result of such Variable Rate Bonds having
borne interest at less than such maximum rate for any period, the total amount
of moneys and Investment Obligations on deposit for the payment of interest on
such Variable Rate Bonds is in excess of the total amount which would have been
required to be deposited on such date in respect of such Variable Rate Bonds in
order to fully discharge and satisfy such Bonds and obligations under Letter of
Credit Agreement and any Liquidity Agreement pursuant to the provisions of this
Section, the Issuer may use the amount of such excess free and clear of any
trust, lien, security interest, pledge or assignment securing said Variable Rate
Bonds or otherwise existing under this Master Indenture or under any Letter of
Credit Agreement or any Liquidity Agreement.

    

    (d)           Notwithstanding
any of the provisions of this Master Indenture to the contrary, Option Bonds may
only be fully discharged and satisfied either pursuant to subsection (a) above
or by depositing in the Series  Interest Account, the Series Principal
Account and the Series Redemption Account, or in such other accounts which are
irrevocably pledged to the payment of the Option Bonds, as the Issuer may create
and establish by Supplemental Indenture, moneys which together with other moneys
lawfully available therefore shall be sufficient at the time of such deposit to
pay when due the maximum amount of principal of and redemption price, if any,
and interest on such Option Bonds which could become payable to the Owners of
such Bonds upon the exercise of any options provided to the Owners of such
Bonds; provided, however, that if, at the time a deposit is made pursuant to
this subsection (d), the options originally exercisable by the Owner of an
Option Bond are no longer exercisable, such Bond shall not be considered an
Option Bond for purposes of this subsection (d).  If any portion of
the moneys deposited for the payment of the principal of and redemption price,
if any, and interest on Option Bonds is not required for such purpose and is not
needed to reimburse an Insurer or an issuer of any Credit Facility or Liquidity
Facility, for obligations under any Letter of Credit  Agreement or any
Liquidity Agreement, the Issuer may use the amount of such excess free and clear
of any trust, lien, security interest,  pledge or assignment securing
such Option Bonds or otherwise existing under this Master Indenture or any
Letter of Credit Agreement or Liquidity Agreement.

    

    (e)           Anything
in this Master Indenture to the contrary notwithstanding, any moneys held by
the  Escrow Agent for the Trustee or any Paying Agent in trust for the
payment and discharge of any of the Bonds which remain unclaimed for six (6)
years after the date when such Bonds have become due and payable, either at
their stated maturity dates or by call for earlier redemption, if such moneys
were held by the Escrow Agent for the Trustee or any Paying Agent at such date,
or for six (6) years after the date of deposit of such moneys if deposited with
the Escrow Agent for the Trustee or Paying Agent after the date when such Bonds
became due and payable, shall at the written request of the Issuer be repaid by
the Escrow Agent for the Trustee or Paying Agent to the Issuer, as its absolute
property and free from trust, and the Escrow Agent for the Trustee or Paying
Agent shall thereupon be released and discharged with respect thereto and the
Owners shall look only to the Issuer for the payment of such Bonds; provided,
however, that before being required to make any such payment to the Issuer, the
Escrow Agent, Trustee or Paying Agent shall, at the expense of the Issuer, cause
to be mailed, postage prepaid,  to any Insurer or any issuer of any
Credit Facility or Liquidity Facility, and to each registered Owner of Bonds
then Outstanding at the address, if any, appearing upon the registry books of
the Issuer, a notice that such moneys remain unclaimed and that, after a date
named in such notice, which date shall be not less than thirty (30) days after
the date of the mailing of such notice, the balance of such moneys then
unclaimed shall be returned to the Issuer.

    
      
         

      

      
        55

        
          

        

      

      
         

      

    

    

     (f)           In
the event that the principal and Redemption Price, if applicable, and interest
due on the Bonds shall be paid by the Insurer pursuant to a municipal bond
insurance policy, the assignment and pledge and all covenants, agreements and
other obligations of the Issuer to the Owners of such Bonds shall continue to
exist and the Insurer shall be subrogated to the rights of such
Owners.

    

    (g)         
 Anything in this Master Indenture to the contrary notwithstanding, the
provisions of the foregoing subsections (b) through (f) shall apply to the
discharge of Bonds of a Series and to the discharge of the lien of any
Supplemental Indenture securing such Series of Bonds as though each reference to
the "Master Indenture" were a reference to such "Supplemental Indenture" and as
though each reference to "Bonds Outstanding" were a reference to the "Bonds of
such Series Outstanding."

    

    Section
1202.   Moneys Held in
Trust.  All moneys and obligations held by an escrow agent or
paying agent or trustee pursuant to this Section shall be held in trust and the
principal and interest of said obligations when received, and said moneys, shall
be applied to the payment, when due, of the principal, interest and premium, if
any, of the Bonds to be paid or to be called for redemption.

    
      
         

      

      
        56

        
          

        

      

      
         

      

    

    ARTICLE
XIII

    

    MISCELLANEOUS
PROVISIONS

    

    Section
1301.   Effect  of  Covenant.     All
covenants, stipulations, obligations and agreements of the Issuer contained in
this Master Indenture shall be deemed to be covenants, stipulations, obligations
and agreements of the Issuer and of the Governing Body of the Issuer to the full
extent authorized or permitted by Law  and all such covenants,
stipulations, obligations and agreements shall bind or inure to the benefit of
the successor or successors thereof from time to time and any officer, board,
body or commission to whom or to which any power or duty affecting such
covenants, stipulations, obligations and agreements shall be transferred by or
in accordance with Law.

    

    Except as
otherwise provided herein, all rights, powers and privileges conferred, and
duties and liabilities imposed, upon the Issuer or upon the Governing Body by
this Master Indenture shall be exercised or performed by the Governing Body, or
by such other officers, board, body or commission as may be required by Law to
exercise such powers or to perform such duties.

    

    No
covenant, stipulation, obligation or agreement herein contained shall be deemed
to be a covenant, stipulation, obligation or agreement of any member, agent or
employee of the Governing Body in his or her individual capacity, and neither
the members of the Governing Body nor any official executing the Bonds shall be
liable personally on the Bonds or be subject to any personal liability or
accountability by reason of the issuance thereof.

    

    Section
1302.   Manner of Giving Notice to the Issuer
and the Trustee.  Any notice, demand, direction, request or
other instrument authorized or required by this Master Indenture to be given to
or filed with the Issuer or the Governing Body or the Trustee shall be deemed to
have been sufficiently given or filed for all  purposes of this Master
Indenture if and when sent by certified mail, return receipt
requested:

    

    To the
Issuer, addressed to:

    

    To the
Trustee, addressed to:

    

    or to
such other address as shall be provided to the other party hereto in
writing.

    

    All
documents received by the Issuer and the Trustee under this Master Indenture
shall be retained in their possession, subject at all reasonable times to the
inspection of any Owner and the agents and representatives thereof.

    

    Section
1303.   Manner of Giving Notice to the
Owners.  Any notice, demand, direction, request, or other
instrument authorized or required by this Master Indenture to be mailed to the
Owners shall be deemed to have been sufficiently mailed if mailed by first class
mail, postage pre-paid, to the Owners at their addresses as they appear at the
time of mailing on the registration books maintained by the Bond
Registrar.

    
      
         

      

      
        57

        
          

        

      

      
         

      

    

    Section
1304.   Successorship of Issuer
Officers.    If the offices of Chairman, or Secretary
shall be abolished or any two or more of such offices shall be merged or
consolidated, or in the event of a vacancy in any such office by reason of
death, resignation, removal from office or otherwise, or in the event any such
officer shall become incapable of performing the duties of his office by reason
of sickness, absence  from the Issuer or otherwise, all powers
conferred and all obligations and duties imposed upon such
officer  shall be performed by the officer succeeding to the principal
functions thereof or by the officer upon whom such powers, obligations and
duties shall be imposed by Law.

    

    Section 1305. Inconsistent Provisions. All
provisions of any resolutions, and parts thereof, which are inconsistent with
any of the provisions of this Master Indenture are hereby declared to be
inapplicable to this Master Indenture.

    

    Section
1306.   Further Acts;
Counterparts.  The officers and agents of the Issuer are hereby
authorized and directed to do all the acts and things required of them by the
Bonds and this Master Indenture, for the full, punctual and complete performance
of all of the terms, covenants, provisions and agreements contained in the Bonds
and this Master Indenture.

    

    This
Master Indenture and any Supplemental Indenture may be executed in duplicate
counterparts each of which shall constitute one and the same
agreement.

    

    Section
1307.   Headings Not Part of
Indenture.  Any headings preceding the texts of the several
Articles and Sections hereof and any table of contents, marginal notes or
footnotes appended to copies hereof shall be solely for convenience of
reference, and shall not constitute a part of this Master Indenture, nor shall
they affect its meaning, construction or effect.

    

    Section
1308.   Effect of Partial
Invalidity.  In case any one or more of the provisions of this
Master Indenture or of any Bonds shall for any reason be held to be illegal or
invalid, such illegality or invalidity shall not affect any other provision of
this Master Indenture or of the Bonds, but this Master Indenture and the Bonds
shall be construed and enforced as if such illegal or invalid provision had not
been contained therein.The Bonds are issued and this Master Indenture is adopted
with the intent that applicable Laws shall govern their
construction.

    

    Section
1309.    Effective
Date.  This Master Indenture shall be effective as of the date
first above-written.

     

    
      
        
          
            	
                    (SEAL)

                  	
                    HI
      SPEED RAIL FACILITIES PROVIDER, INC.

                  
	 
      	 
      
	
                    ATTEST:

                  	 
      
	 	 
	      
                    /s/
      Shah Mathias

                  	
                    By: /s/
      Shah Mathias

                  
	
                    Secretary

                  	
                    Print
      Name: Shah
      Mathias

                  
	 
      	
                    Title: Chairman

                  

          

        

      

    

    
      
         

      

      
        58

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              	 
      	 
      	
                      HSRF
      TRUST

                    
	 
      	 
      	 
      
	 
      	 
      	
                      By:
      /s/
      David Martin

                    
	 
      	 
      	
                      Print
      Name: David
      Martin

                    
	
                      (SEAL)

                    	 
      	
                      Title:
      SVP

                    
	 
      	 
      	 
      
	
                      ATTEST:

                    	 
      	 
      
	 
      	 
      	 
      
	_________________________________ 	 	 
	
                      Authorized
      Trust Officer

                    	
                        

                    	 
      

            

          

        

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    EXHIBIT A

    FORM OF
REQUISITION

    

    The
undersigned, an Authorized Officer of Hi Speed Rail Facilities Provider, Inc.
(the "Issuer"), hereby submits the following requisition for disbursement under
and pursuant to the terms of the Master Trust Indenture from the Issuer to HSRF
Trust, as trustee (the "Trustee"), dated as of __________________,
20_____
(the "Master Indenture"), as amended and supplemented by the First Supplemental
Trust Indenture from the Issuer to the Trustee, dated as of _______________________,
20______
(the Master Indenture as amended and supplemented is hereinafter referred to as
the "Indenture") (all capitalized terms used herein shall have the meaning
ascribed to such term in the Indenture):

    

    (A)           Requisition Number:

     

    (B)           Name of Payee:

     

    (C)           Amount
Payable:

    

    (D)           Purpose
for which paid or incurred (refer also to specific contract if amount is due and
payable pursuant to a contract involving progress payments, or, state Costs of
Issuance, if applicable):

    

    (E)           Fund
or Account and subaccount, if any, from which disbursement to be
made:

    

    The
undersigned hereby certifies that [obligations in the stated amount set forth
above have been incurred by the Issuer, that each disbursement set forth above
is a proper charge against the Series Acquisition and Construction Account and
the subaccount, if any, referenced above, that each disbursement set forth above
was incurred in connection with the acquisition and construction of the Series
Project and each represents a Cost of the Series Project, and has not previously
been paid] OR [this requisition is for Costs of Issuance payable from the Series
Costs of Issuance Account that has not previously been paid].

    

    The
undersigned hereby further certifies that there has not been filed with or
served upon the Issuer notice of any lien, right to lien, or attachment upon, or
claim affecting the right to receive payment of, any of the moneys payable to
the Payee set forth above, which has not been released or will not be released
simultaneously with the payment hereof.

    

    The
undersigned hereby further certifies that such requisition contains no item
representing payment on account of any retained percentage which the Issuer is
at the date of such certificate entitled to retain.

    

    
      
        	 
      	
                HI
      SPEED RAIL FACILITIES PROVIDER, INC.

              
	 
      	 
      
	 
      	
                By:

              	 
      
	 
      	
                Authorized
      Officer

              

      

    

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

     

    
      CONSULTING ENGINEER'S APPROVAL FOR NON-COST 

      OF
ISSUANCE REQUESTS ONLY

    

    

    If this
requisition is for a disbursement from other than Costs of Issuance, the
undersigned Consulting Engineer hereby certifies that this disbursement is for a
Cost of the Series Project and is consistent with: (i) the applicable
acquisition or construction contract; (ii) the plans and specifications for the
portion of the Series Project with respect to which such disbursement is being
made; and, (ii) the report of the Consulting Engineer attached as an Exhibit to
the First Supplemental Trust Indenture, as such report shall have been amended
or modified on the date hereof.

    

    
      
        	 
      	 
      
	 
      	
                Consulting
      Engineer

              
	 
      	 
      
	 
      	
                By:

              	 
      
	 
      	
                Its:

              	 
      

      

    

    
      
         

      

      
        A-2Unassociated Document

    
      LOAN
AND SECURITY AGREEMENT

       

      THIS LOAN AND SECURITY
AGREEMENT (this “Agreement”) dated as of
December 7, 2010 (the “Closing
Date”) among OXFORD
FINANCE CORPORATION (“Lender”), a Delaware
corporation, WAFERGEN,
INC., a Delaware corporation (“WGI”) and WAFERGEN BIO-SYSTEMS, INC., a
Nevada corporation (“Parent,” and collectively
with WGI, “Borrowers”
and, each individually, a “Borrower”), provides the terms
on which Lender shall lend to Borrowers and Borrowers shall repay
Lender.  The parties agree as follows:

       

      1          
 ACCOUNTING AND
OTHER TERMS

       

      Accounting
terms not defined in this Agreement shall be construed following
GAAP.  Calculations and determinations must be made following
GAAP.  Capitalized terms not otherwise defined in this Agreement shall
have the meanings set forth in Section 13.  All other terms
contained in this Agreement, unless otherwise indicated, shall have the meaning
provided by the Code to the extent such terms are defined therein.

       

      2         
  LOAN AND
TERMS OF PAYMENT

       

      2.1       
Promise to Pay.  Borrowers hereby unconditionally promise to
pay Lender the outstanding principal amount of all Credit Extensions and accrued
and unpaid interest thereon and any other amounts due hereunder as and when due
in accordance with this Agreement.

       

      2.1.1    
Growth Capital Loan Facility.

       

      (a)          Availability.  Subject
to the terms and conditions of this Agreement, on or about the Closing Date,
Lender agrees to make an advance (the “Growth Capital Advance”) to
Borrowers in an aggregate amount not to exceed Two Million Dollars
($2,000,000).

       

      (b)          Repayment.  Borrowers
shall make monthly payments of interest only, in arrears, commencing on the
first day of the month following the month in which the Funding Date occurs and
continuing thereafter on the first day of each successive calendar month during
the Interest Only Period.  Commencing on the Growth Capital
Amortization Date, Borrowers shall make thirty (30) equal monthly payments of
principal and interest, in arrears, which would fully amortize the outstanding
amount of the Growth Capital Advance.  All unpaid principal and
accrued and unpaid interest and all other amounts due on account of the Growth
Capital Advance are due and payable in full on the Maturity Date.  The
Growth Capital Advance may only be prepaid in accordance with Sections 2.1.1(d)
and/or 2.1.1(e).

       

      (c)          Final
Payment.  On the Maturity Date, Borrowers shall pay, in
addition to the unpaid principal and accrued interest and all other amounts due
on such date with respect to the Growth Capital Advance, an amount equal to the
Final Payment.

       

      (d)         Permitted
Prepayment.  Borrowers shall have the option to prepay all, but
not less than all, of the Growth Capital Advance made by Lender under this
Agreement, provided Borrowers, (i) provide written notice to Lender of the
election to prepay the Growth Capital Advance at least fifteen (15) days prior
to such prepayment, and (ii) pay, on the date of such prepayment (A) all
outstanding principal plus accrued interest on the Growth Capital Advance, (B)
the Final Payment, (C) the Prepayment Fee, plus (D) all other sums that have
become due and payable, including Lender Expenses, if any, and interest at the
Default Rate with respect to any past due amounts.

       

      (e)          Mandatory Prepayment Upon an
Acceleration.  If the Growth Capital Advance is accelerated,
including following the occurrence of an Event of Default, Borrowers shall
immediately pay to Lender an amount equal to the sum of:  (i) all
outstanding principal plus accrued and unpaid interest on the Growth Capital
Advance, (ii) the Final Payment, (iii) the Prepayment Fee, plus (iv) all other
sums, if any, that shall have become due and payable, including interest at the
Default Rate with respect to any past due amounts.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      2.2  
      Payment of Interest on the Credit
Extensions.

       

      (a)          Interest
Rate.  Subject to Section 2.2(b), the principal amount
outstanding under the Growth Capital Advance shall accrue interest, which
interest shall be payable monthly, in arrears, in accordance with Section 2.2(e)
below, at a fixed per annum rate equal to the greater of (i) thirteen percent
(13.00%) or (ii) the LIBOR Rate, as of the Funding Date, plus the LIBOR
Margin.

       

      (b)          Default
Rate.  Immediately upon the occurrence and during the
continuance of an Event of Default, Obligations shall bear interest at a rate
per annum which is five (5.00%) percentage points above the rate that is
otherwise applicable thereto (the “Default
Rate”).  Payment or acceptance of the increased interest rate
provided in this Section 2.2(b) is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of Lender.

       

      (c)          360-Day
Year.  Interest shall be computed on the basis of a three
hundred sixty (360) day year consisting of twelve (12) months of thirty (30)
days.

       

      (d)          Debit of
Accounts.  Lender may debit any of Borrowers’ deposit accounts,
including the Designated Deposit Account, through automatic debit of such
accounts, Automated Clearinghouse (“ACH”) or other transfers, for
principal and interest payments or any other amounts Borrowers owe Lender when
due; provided that, except (x) with respect to debits for regularly scheduled
principal and interest, (y) upon the occurrence and during the continuance of an
Event of Default, and (z) as otherwise previously authorized by the applicable
Borrower, Lender shall provide notice within two (2) Business Days of such
debit.  These debits shall not constitute a set-off.

       

      (e)          Payments.  Unless
otherwise provided, interest is payable monthly, in arrears, on the first
calendar day of each month.  Payments of principal and/or interest
received after 12:00 p.m. Pacific time are considered received at the opening of
business on the next Business Day.  When a payment is due on a day
that is not a Business Day, the payment is due the next Business Day and
additional fees or interest, as applicable, shall continue to
accrue.

       

      2.3         Fees.  Borrowers
shall pay to Lender:

       

      (a)          Facility
Fee.  A fully earned, non-refundable loan fee of Thirty
Thousand Dollars ($30,000) (the “Facility Fee”), receipt of
which hereby is acknowledged by Lender (as such fee was paid upon execution of
the loan proposal);

       

      (b)          Final
Payment.  The Final Payment when due on the Maturity Date or
pursuant to the terms of Sections 2.1.1(d) or 2.1.1(e); and

       

      (c)          Prepayment
Fee.  The Prepayment Fee, if any, when due pursuant to the
terms of Sections 2.1.1(d) or 2.1.1(e);

       

      (d)          Lender
Expenses.  All Lender Expenses (including reasonable attorneys’
fees and expenses, plus expenses, for documentation and negotiation of this
Agreement) incurred through and after the Closing Date, when due.

       

      3  
         CONDITIONS OF
LOANS

       

      3.1        Conditions
Precedent to Initial Credit Extension.  Lender’s obligation to
make the initial Credit Extension is subject to the condition precedent that
each Borrower shall consent to or have delivered, in form and substance
satisfactory to Lender, such documents, and completion of such other matters, as
Lender may reasonably deem necessary or appropriate, including, without
limitation:

       

      (a)          duly
executed original signatures to the Loan Documents to which it is a
party;

       

      
        
           

        

        
          - 2
-

          
            

          

        

        
           

        

      

       

      (b)          Reserved;

       

      (c)          its
Operating Documents and good standing certificates (or equivalents) of Borrower
certified by the Secretary of State of the State of Delaware (with respect to
Parent) and Nevada (and such other states and/or jurisdictions in which each
Borrower is qualified to do and or doing business) as of a date no earlier than
thirty (30) days prior to the Closing Date;

       

      (d)          duly
executed original signatures to the completed Borrowing Resolutions for each
Borrower;

       

      (e)          the
certificate(s) for the Shares, together with Assignment(s) Separate from
Certificate, duly executed by the pledgor in blank;

       

      (f)          Reserved;

       

      (g)          Reserved;

       

      (h)          a
legal opinion of Borrowers’ counsel, addressed to Lender, dated as of the
Closing Date, together with the duly executed original signatures
thereto;

       

      (i)       
   certified copies, dated as of a recent date, of financing
statement searches, as Lender shall request, accompanied by written evidence
(including any UCC termination statements) that the Liens indicated in any such
financing statements either constitute Permitted Liens or have been or, in
connection with the initial Credit Extension, will be terminated or
released;

       

      (j)         
 the Perfection Certificate executed by Parent, with respect to each
Borrower;

       

      (k)          evidence
satisfactory to Lender that the insurance policies required by Section 6.5 hereof are in full force
and effect, together with appropriate evidence showing lender loss payable
and/or additional insured clauses or endorsements in favor of Lender;
and

       

      (l)         
 payment of the fees and Lender Expenses then due as specified in Section
2.3 hereof.

       

      3.2         Conditions
Precedent to all Credit Extensions.  Lender’s obligation to
make each Credit Extension, including the initial Credit Extension, is subject
to the following:

       

      (a)          Borrowers
shall have duly executed and delivered to Lender the Promissory Note in the
amount of the Growth Capital Advance and the Disbursement Letter;

       

      (b)          the
representations and warranties in Section 5 shall be true in all material
respects on the on the Funding Date of each Credit Extension; provided, however,
that such materiality qualifier shall not be applicable to any representations
and warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date, and no Event of Default shall have
occurred and be continuing or result from the Credit Extension.  Each
Credit Extension is each Borrower’s representation and warranty on that date
that the representations and warranties in Section 5 remain true in all material
respects; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date;
and

       

      (c)          in
Lender’s sole discretion, there has not been a Material Adverse
Change.

       

      
        
           

        

        
          - 3
-

          
            

          

        

        
           

        

      

       

      3.3        Post-Closing
Conditions.  Lender shall have received, in form and substance
satisfactory to Lender:

       

      (a)          Within
thirty (30) days after the Closing Date, a landlord’s consent executed in favor
of Lender with respect to each of Borrowers’ leased locations;

       

      (b)          Within
thirty (30) days after the Closing Date, the WaferGen Malaysia Share Pledge
Documents, duly executed by the parties thereto; and

       

      (c)          Within
fourteen (14) days after the Closing Date, duly executed original signatures to
the Control Agreement(s), as required under Section 6.6 below.

       

      3.4        Covenant
to Deliver.  Each Borrower agrees to deliver to Lender each
item required to be delivered to Lender under this Agreement as a condition to
any Credit Extension.  Each Borrower expressly agrees that a Credit
Extension made prior to the receipt by Lender of any such item shall not
constitute a waiver by Lender of a Borrower’s obligation to deliver such item,
and any such Credit Extension in the absence of a required item shall be made in
Lender’s sole discretion.

       

      4        
  CREATION
OF SECURITY INTEREST

       

      4.1        Grant
of Security Interest.  Each Borrower hereby grants Lender, to
secure the payment and performance in full of all of the Obligations, a
continuing security interest in, and pledges to Lender, the Collateral, wherever
located, whether now owned or hereafter acquired or arising, and all proceeds
and products thereof.  Each Borrower represents, warrants, and
covenants that the security interest granted herein is and shall at all times
continue to be a first priority perfected security interest in the Collateral
(subject only to Permitted Liens that may have superior priority to Lender’s
Lien pursuant to the terms of this Agreement).  If a Borrower shall
acquire a commercial tort claim (as defined in the Code), such Borrower shall
promptly notify Lender in a writing signed by such Borrower of the general
details thereof (and further details as may be required by Lender) and grant to
Lender in such writing a security interest therein and in the proceeds thereof,
all upon the terms of this Agreement, with such writing to be in form and
substance reasonably satisfactory to Lender.

       

      If this
Agreement is terminated, Lender’s Lien in the Collateral shall continue until
the Obligations (other than inchoate indemnity obligations) are repaid in full
in cash.  Upon payment in full in cash of the Obligations and at such
time as Lender’s obligation to make Credit Extensions has terminated, Lender
shall, at Borrowers’ sole cost and expense, release its Liens in the Collateral
and all rights therein shall revert to the respective Borrower.

       

      4.2        Authorization
to File Financing Statements.  Each Borrower hereby authorizes
Lender to file financing statements, without notice to any Borrower, with all
appropriate jurisdictions to perfect or protect Lender’s interest or rights
hereunder, including a notice that any disposition of the Collateral, by either
a Borrower or any other Person, shall be deemed to violate the rights of Lender
under the Code.  Such financing statements may indicate the Collateral
as “all assets of the Debtor” or words of similar effect, or as being of an
equal or lesser scope, or with greater detail, all in Lender’s
discretion.

       

      4.3        Pledge
of Collateral.  Each Borrower hereby pledges, assigns and
grants to Lender a security interest in all the Shares, together with all
proceeds and substitutions thereof, all cash, stock and other moneys and
property paid thereon, all rights to subscribe for securities declared or
granted in connection therewith, and all other cash and noncash proceeds of the
foregoing, as security for the performance of the Obligations.  On the
Closing Date, the certificate or certificates for the Shares will be delivered
to Lender, accompanied by an instrument of assignment duly governing the Shares;
each Borrower shall cause the books of each Subsidiary, as applicable, whose
Shares are part of the Collateral and any transfer agent to reflect the pledge
of the Shares.  Upon the occurrence of an Event of Default hereunder
and subject to applicable laws, Lender may effect the transfer of any securities
included in the Collateral (including but not limited to the Shares) into the
name of Lender and cause new certificates representing such securities to be
issued in the name of Lender or its transferee.  Unless an Event of
Default shall have occurred and be continuing, each Borrower shall be entitled
to exercise any voting rights with respect to the Shares and to give consents,
waivers and ratifications in respect thereof, provided that no vote shall be
cast or consent, waiver or ratification given or action taken which would be
inconsistent with any of the terms of this Agreement or which would constitute
or create any violation of any of such terms.  All such rights to vote
and give consents, waivers and ratifications shall terminate upon the occurrence
and continuance of an Event of Default.

       

      
        
           

        

        
          - 4
-

          
            

          

        

        
           

        

      

       

      5   
        REPRESENTATIONS AND
WARRANTIES

       

      Each
Borrower represents and warrants as follows:

       

      5.1         Due
Organization, Authorization; Power and Authority.  Borrower is
duly existing and in good standing in its jurisdiction of formation and is
qualified and licensed to do business and is in good standing in any
jurisdiction in which the conduct of its business or its ownership of property
requires that it be qualified except where the failure to do so could not
reasonably be expected to have a Material Adverse Change.  In
connection with this Agreement, Borrower has delivered to Lender a completed
certificate signed by Borrower, entitled “Perfection
Certificate”.  Borrower represents and warrants to Lender that
(a) Borrower’s exact legal name is that indicated on the Perfection Certificate
and on the signature page hereof; (b) Borrower is an organization of the
type and is organized in the jurisdiction set forth in the Perfection
Certificate; (c) the Perfection Certificate accurately sets forth Borrower’s
organizational identification number or accurately states that Borrower has
none; (d) the Perfection Certificate accurately sets forth Borrower’s place of
business, or, if more than one, Borrower’s chief executive office as well as
Borrower’s mailing address (if different than its chief executive office);
(e)  Borrower (and none of its predecessors) has not, in the past five (5)
years, changed its jurisdiction of formation, organizational structure or type,
or any organizational number assigned by its jurisdiction; and (f) all other
information set forth on the Perfection Certificate pertaining to Borrower and
its Subsidiaries is accurate and complete (it being understood and agreed that
Borrower may from time to time update certain information in the Perfection
Certificate after the Closing Date to the extent permitted by one or more
specific provisions in this Agreement).  If Borrower is not now a
Registered Organization but later becomes one, Borrower shall promptly notify
Lender of such occurrence and provide Lender with Borrower’s organizational
identification number.

       

      The
execution, delivery and performance by Borrower of the Loan Documents to which
it is a party have been duly authorized, and do not (i) conflict with any of
Borrower’s organizational documents, (ii) contravene, conflict with,
constitute a default under or violate any material Requirement of Law,
(iii) contravene, conflict or violate any applicable order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority by
which Borrower or any its Subsidiaries or any of their property or assets may be
bound or affected, (iv) require any action by, filing, registration, or
qualification with, or Governmental Approval from, any Governmental Authority
(except such Governmental Approvals which have already been obtained and are in
full force and effect) or (v) after giving effect to compliance with
Section 3.3, constitute an event of default under any material agreement by
which Borrower is bound.  Borrower is not in default under any
agreement to which it is a party or by which it is bound in which the default
could have a Material Adverse Change.

       

      5.2        Collateral.  Borrower
has good title to, has rights in, and the power to transfer each item of the
Collateral upon which it purports to grant a Lien under the Loan Documents to
which it is a party, free and clear of any and all Liens except Permitted
Liens.  Borrower does not have any deposit accounts other than the
deposit accounts with Bank of America, the deposit accounts, if any, described
in the Perfection Certificate delivered to Lender in connection herewith, or of
which Borrower has given Lender notice and taken such actions as are necessary
to give Lender a perfected security interest therein as requested by Lender in
accordance with Section 6.6.

       

      The
Collateral is not in the possession of any third party bailee (such as a
warehouse) except as otherwise provided in the Perfection
Certificate.  None of the components of the Collateral shall be
maintained at locations other than as provided in the Perfection Certificate or
as permitted pursuant to Section 7.2.  In the event that Borrower,
after the date hereof, intends to store or otherwise deliver any portion of the
Collateral with an aggregate value in excess of Twenty Five Thousand Dollars
($25,000) to a bailee, then Borrower will first receive the written consent of
Lender and such bailee must execute and deliver a bailee agreement in form and
substance satisfactory to Lender in its sole discretion.

       

      
        
           

        

        
          - 5
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      Borrower
is the sole owner of the Intellectual Property which it owns or purports to own
except for (a) non-exclusive licenses granted to its customers in the ordinary
course of business, (b) over-the-counter software that is commercially available
to the public, and (c) material Intellectual Property licensed to Borrower and
noted on the Perfection Certificate.  Each Patent which it owns or
purports to own and which is material to Borrower’s business is valid and
enforceable, and no part of the Intellectual Property which Borrower owns or
purports to own and which is material to Borrower’s business has been judged
invalid or unenforceable, in whole or in part.  To the best of
Borrower’s knowledge, no claim has been made that any part of the Intellectual
Property violates the rights of any third party except to the extent such claim
would not reasonably be expected to have a Material Adverse
Change.  Except as noted on the Perfection Certificate, Borrower is
not a party to, nor is it bound by, any Restricted License.  Borrower
shall provide written notice to Lender within ten (10) days of entering or
becoming bound by any such license or agreement (other than over-the-counter
software that is commercially available to the public).  Borrower
shall take such commercially reasonable steps as Lender requests to obtain the
consent of, or waiver by, any person whose consent or waiver is necessary for
(i) all such licenses or agreements to be deemed “Collateral” and for Lender to
have a security interest in it that might otherwise be restricted or prohibited
by law or by the terms of any such license or agreement, whether now existing or
entered into in the future, and (ii) Lender shall have the ability in the event
of a liquidation of any Collateral to dispose of such Collateral in accordance
with Lenders’ rights and remedies under this Agreement and the other Loan
Documents.

       

      5.3        Litigation.  Except
as set forth in the Perfection Certificate, there are no actions or proceedings
pending or, to the knowledge of the Responsible Officers, threatened in writing
by or against Borrower or any of its Subsidiaries involving more than One
Hundred Thousand Dollars ($100,000).

       

      5.4        No
Material Deviation in Financial Statements.  All consolidated
financial statements for Borrower and its Subsidiaries delivered to Lender
fairly present in all material respects Borrower’s and each Subsidiaries’
consolidated financial condition and consolidated results of operations (subject
to normal year-end adjustments and the absence of footnotes).  There
has not been any material deterioration in Borrower’s and its Subsidiaries’
consolidated financial condition since the date of the most recent financial
statements submitted to Lender.

       

      5.5        Solvency.  The
fair salable value of Borrower’s assets (including goodwill minus disposition
costs) exceeds the fair value of its liabilities; Borrower is not left with
unreasonably small capital after the transactions in this Agreement; and
Borrower is able to pay its debts (including trade debts) as they
mature.

       

      5.6        Regulatory
Compliance.  Borrower is not an “investment company” or a
company “controlled” by an “investment company” under the Investment Company Act
of 1940, as amended.  Borrower is not engaged as one of its important
activities in extending credit for margin stock (under Regulations X, T and U of
the Federal Reserve Board of Governors).  Borrower has complied in all
material respects with the Federal Fair Labor Standards Act.  Neither
Borrower nor any of its Subsidiaries is a “holding company” or an “affiliate” of
a “holding company” or a “subsidiary company” of a “holding company” as each
term is defined and used in the Public Utility Holding Company Act of
2005.  Borrower has not violated any laws, ordinances or rules, the
violation of which could reasonably be expected to have a Material Adverse
Change.  None of Borrower’s or any of its Subsidiaries’ properties or
assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s
knowledge, by previous Persons, in disposing, producing, storing, treating, or
transporting any hazardous substance other than legally.  Borrower and
each of its Subsidiaries have obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all Governmental Authorities that are necessary to continue their respective
businesses as currently conducted.

       

      5.7        Subsidiaries;
Investments.  Borrower does not own any stock, partnership
interest or other equity securities except for Permitted
Investments.

       

      5.8         Tax
Returns and Payments; Pension Contributions.  Borrower has
timely filed all required tax returns and reports, and has timely paid all
foreign, federal, state and local taxes, assessments, deposits and contributions
owed by Borrower.  Borrower may defer payment of any contested taxes,
provided that Borrower (a) in good faith contests its obligation to pay the
taxes by appropriate proceedings promptly and diligently instituted and
conducted, (b) notifies Lender in writing of the commencement of, and any
material development in, the proceedings, (c) posts bonds or takes any other
steps required to prevent the governmental authority levying such contested
taxes from obtaining a Lien upon any of the Collateral that is other than a
“Permitted Lien”.  Borrower is unaware of any claims or adjustments
proposed for any of Borrower's prior tax years which could result in additional
taxes becoming due and payable by Borrower.  Borrower has paid all
amounts necessary to fund all present pension, profit sharing and deferred
compensation plans in accordance with their terms, as applicable, and Borrower
has not withdrawn from participation in, and has not permitted partial or
complete termination of, or permitted the occurrence of any other event with
respect to, any such plan which could reasonably be expected to result in any
liability of Borrower, including any liability to the Pension Benefit Guaranty
Corporation or its successors or any other governmental agency, as
applicable.

       

      
        
           

        

        
          - 6
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      5.9        Use
of Proceeds.  Borrower shall use the proceeds of the Credit
Extensions solely as working capital and to fund its general business
requirements, and to refinance existing Indebtedness, and not for personal,
family, household or agricultural purposes.

       

      5.10      Shares.  Borrower
has full power and authority to create a first lien on the Shares and no
disability or contractual obligations exists that would prohibit Borrower from
pledging the Shares pursuant to this Agreement.  To Borrower’s
knowledge, there are no subscriptions, warrants, rights of first refusal or
other restrictions on transfer relative to, or options exercisable with respect
to the Shares.  The Shares have been and will remain duly authorized
and validly issued, and are fully paid and non-assessable.  To
Borrower’s knowledge, the Shares are not the subject of any present or
threatened suit, action, arbitration, administrative or other proceeding, and
Borrower knows of no reasonable grounds for the institution of any such
proceedings.

       

      5.11      Full
Disclosure.  No written representation, warranty or other
statement of Borrower in any certificate or written statement given to Lender,
as of the date such representation, warranty, or other statement was made, taken
together with all such written certificates and written statements given to
Lender, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained in the certificates or
statements not misleading (it being recognized by Lender that the projections
and forecasts provided by Borrower in good faith and based upon reasonable
assumptions are not viewed as facts and that actual results during the period or
periods covered by such projections and forecasts may differ from the projected
or forecasted results).

       

      6         
  AFFIRMATIVE
COVENANTS

       

      Each
Borrower (except as otherwise indicated) shall do all of the
following:

       

      6.1        Government
Compliance.

       

      (a)          Maintain
its and all its Subsidiaries’ legal existence and good standing in their
respective jurisdictions of formation and maintain qualification in each
jurisdiction in which the failure to so qualify would reasonably be expected to
have a Material Adverse Change.  Borrower shall comply, and have each
Subsidiary comply, with all laws, ordinances and regulations to which it is
subject, noncompliance with which could have a Material Adverse
Change.

       

      (b)          Obtain
all of the Governmental Approvals necessary for the performance by Borrower of
its obligations under the Loan Documents to which it is a party and the grant of
a security interest to Lender in all of its property.  Borrower shall
promptly provide copies of any such obtained Governmental Approvals to
Lender.

       

      6.2        Financial
Statements, Reports, Certificates.  Parent shall deliver to
Lender:

       

      (a)          Quarterly Financial
Statements.  As soon as available, but no later than forty-five
(45) days after the last day of each of the first three quarters of Parent’s
fiscal year, a company prepared consolidated financial statements prepared under
GAAP, consistently applied (subject to normal year-end adjustments and the
absence of footnotes), certified by a Responsible Officer and in a form
acceptable to Lender;

       

      (b)         Annual Audited Financial
Statements.  As soon as available, but no later than ninety
(90) days after the last day of Parent’s fiscal year, audited consolidated
financial statements prepared under GAAP, consistently applied, together with an
opinion, which is either unqualified, or qualified only for going concern, on
the financial statements from an independent certified public accounting firm
acceptable to Lender in its reasonable discretion;

       

      
        
           

        

        
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      (c)          Compliance
Certificates.  Concurrently with the delivery of any financial
statements pursuant to clauses (a) and (b), a duly completed Compliance
Certificate signed by a Responsible Officer, certifying that as of the end of
such period, Borrowers were in full compliance with all of the terms and
conditions of this Agreement, and setting forth such other information as Lender
shall reasonably request;

       

      (d)          Other
Statements.  Within five (5) days of delivery, copies of all
statements, reports and notices made available to any Borrower’s security
holders or to any holders of Subordinated Debt;

       

      (e)          SEC
Filings.  Within five (5) Business Days of filing, copies of
all periodic and other reports, proxy statements and other materials filed by
Parent with the SEC, any Governmental Authority succeeding to any or all of the
functions of the SEC or with any national securities exchange, or distributed to
its shareholders, as the case may be.  Documents required to be
delivered pursuant to the terms hereof (to the extent any such documents are
included in materials otherwise filed with the SEC) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on
the date on which Borrower posts such documents, or provides a link thereto, on
Parent’s website on the Internet at Borrower’s website address;

       

                As
to any information contained in the materials furnished pursuant to this clause
(e), Borrowers shall not be required separately to furnish such information
under clauses (a), (b) and (d), but the foregoing shall not be in
derogation of the obligation of Borrowers to furnish the information and
materials described in such clauses (a), (b) and (d) at the times specified
therein; provided, that
Borrowers shall provide paper copies to Lender of the Compliance Certificates
required by Section 6.2(d).

       

      (f)          Annual Financial
Projections.  Within forty-five (45) days after the end of each
fiscal year, annual financial projections for the following fiscal year (on a
quarterly basis) as approved by Parent’s board of directors, together with any
related business forecasts used in the preparation of such annual financial
projections;

       

      (g)          Legal Action
Notice.  A prompt report of any legal actions pending or
threatened in writing against any Borrower or any of its Subsidiaries that could
result in damages or costs to a Borrower or any of its Subsidiaries of,
individually or in the aggregate, One Hundred Thousand Dollars ($100,000) or
more;

       

      (h)          Intellectual Property
Notice.  Prompt written notice of (i) any material change in the
composition of the Intellectual Property, (ii) the registration of any
copyright, including any subsequent ownership right of any Borrower in or to any
copyright, patent or trademark, and (iii) any Borrower’s knowledge of an
event that could reasonably be expected to materially and adversely affect the
value of the Intellectual Property; and

       

      (i)          Other Financial
Information.  Budgets, sales projections, operating plans and
other financial information reasonably requested by Lender, including but not
limited to account statements with respect to each bank, investment or similar
account maintained by each Borrower, within ten (10) days after the end of each
month or other receipt thereof.

       

      6.3        Inventory;
Returns.  Keep all Inventory in good and marketable condition,
free from material defects.  Returns and allowances between Borrower
and its Account Debtors shall follow Borrower’s customary practices as they
exist at the Closing Date.  Borrowers must promptly notify Lender of
all returns, recoveries, disputes and claims that involve more than One Hundred
Thousand Dollars ($100,000).

       

      6.4        Taxes;
Pensions.  Timely file, and require each Subsidiary to timely
file, all required tax returns and reports and timely pay, and require each
Subsidiary to timely file, all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower or such Subsidiary,
except for deferred payment of any taxes contested pursuant to the terms of
Section 5.8 hereof, and shall deliver to Lender, on demand, appropriate
certificates attesting to such payments, and pay all amounts necessary to fund
all present pension, profit sharing and deferred compensation plans in
accordance with their terms.

       

      
        
           

        

        
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      6.5         Insurance.  Keep
its, and cause each Subsidiary to keep its respective business and the
Collateral insured for risks and in amounts standard for companies in Borrower’s
industry and locations and as Lender may reasonably
request.  Insurance policies shall be in a form, with companies, and
in amounts that are satisfactory to Lender.  All property policies
shall have a lender’s loss payable endorsement showing Lender as lender loss
payee and waive subrogation against Lender, and all liability policies shall
show, or have endorsements showing, Lender as an additional
insured.  All policies (or the loss payable and additional insured
endorsements) shall provide that the insurer shall give Lender at least twenty
(20) days notice before canceling, amending, or declining to renew its
policy.  At Lender’s request, Borrower shall deliver certified copies
of policies and evidence of all premium payments.  If Borrower or any
Subsidiary fails to obtain insurance as required under this Section 6.5 or
to pay any amount or furnish any required proof of payment to third persons and
Lender, Lender may make all or part of such payment or obtain such insurance
policies required in this Section 6.5, and take any action under the policies
Lender deems prudent.

       

      6.6        Operating
Accounts.  Provide Lender five (5) days prior written notice
before establishing any Collateral Account at or with any bank or financial
institution.  For each Collateral Account that Borrower at any time
maintains, Borrower shall cause the applicable bank or financial institution at
or with which any Collateral Account is maintained to execute and deliver a
Control Agreement or other appropriate instrument with respect to such
Collateral Account to perfect Lender’s Lien in such Collateral Account in
accordance with the terms hereunder; provided that Borrower shall deliver a
Control Agreement or other appropriate instrument with respect to any Collateral
Account existing as of the Closing Date, within fourteen (14) days of the
Closing Date.  The provisions of the previous sentence shall not apply
to deposit accounts exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of Borrower’s employees
and identified to Lender by Borrower as such.

       

      6.7        Protection
of Intellectual Property Rights.  Borrower shall (i) protect,
defend and maintain the validity and enforceability of the Intellectual
Property; (ii) promptly advise Lender in writing of material infringements of
the Intellectual Property; and (iii) not allow any Intellectual Property
material to Borrower’s business to be abandoned, forfeited or dedicated to the
public without Lender’s written consent.

       

      6.8         Litigation
Cooperation.  From the date hereof and continuing through the
termination of this Agreement, make available to Lender, without expense to
Lender, Borrower and its officers, employees and agents and Borrower's books and
records, to the extent that Lender may deem them reasonably necessary to
prosecute or defend any third-party suit or proceeding instituted by or against
Lender with respect to any Collateral or relating to Borrower.

       

      6.9        Notices
of Litigation and Default.  Borrower will give prompt written
notice to Lender of any litigation or governmental proceedings pending or
threatened (in writing) against Borrower which would reasonably be expected to
have a Material Adverse Change.  Without limiting or contradicting any
other more specific provision of this Agreement, promptly (and in any event
within three (3) Business Days) upon Borrower (or any officer thereof) becoming
aware of the existence of any Event of Default or event which, with the giving
of notice or passage of time, or both, would constitute an Event of Default,
Borrower shall give written notice to Lender of such occurrence, which such
notice shall include a reasonably detailed description of such Event of Default
or event which, with the giving of notice or passage of time, or both, would
constitute an Event of Default.

       

      6.10      Formation
or Acquisition of Subsidiaries.  No later than thirty (30) days
after Borrower or any Subsidiary forms any direct or indirect Subsidiary or
acquires any direct or indirect Subsidiary after the Closing Date, Borrower and
such Subsidiary shall (a) cause such new Subsidiary to provide to Lender a
joinder to this Agreement to cause such Subsidiary to become a co-borrower
hereunder, together with such appropriate financing statements and/or Control
Agreements, all in form and substance satisfactory to Lender (including being
sufficient to grant Lender a first priority Lien (subject to Permitted Liens) in
and to the assets of such newly formed or acquired Subsidiary), (b) provide to
Lender appropriate certificates and powers and financing statements, pledging
all of the Shares in such new Subsidiary, in form and substance satisfactory to
Lender, and (c) provide to Lender all other documentation in form and
substance satisfactory to Lender, including one or more opinions of counsel
satisfactory to Lender, which in its opinion is appropriate with respect to the
execution and delivery of the applicable documentation referred to above;
provided that (a) above shall not apply to WaferGen Malaysia, WaferGen Luxemburg
or any other such direct or indirect Subsidiary which (x) is not an entity
organized under the laws of the United States or any territory thereof and (y)
does not at any time have cash and/or book value assets in excess of Fifty
Thousand Dollars ($50,000).  Any document, agreement, or instrument
executed or issued pursuant to this Section 6.10 shall be a Loan
Document.

       

      
        
           

        

        
          - 9
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      6.11      Further
Assurances.  Execute any further instruments and take further
action as Lender reasonably requests to perfect or continue Lender’s Lien in the
Collateral or to effect the purposes of this Agreement and the other Loan
Documents.  Deliver to Lender, within five (5) days
after the same are sent or received, copies of all correspondence, reports,
documents and other filings with any Governmental Authority regarding compliance
with or maintenance of Governmental Approvals or Requirements of Law or that
could reasonably be expected to have a material effect on any of the
Governmental Approvals or otherwise on the operations of Borrower.

       

      7        
  NEGATIVE
COVENANTS

       

      No
Borrower shall do any of the following without Lender’s prior written
consent:

       

      7.1         Dispositions.  Convey,
sell, lease, transfer or otherwise dispose of (collectively, “Transfer”), or permit any
Subsidiary to Transfer, all or any part of its business or property, except for
Transfers (a) of Inventory in the ordinary course of business; (b) of
worn-out or obsolete Equipment; and (c) in connection with Permitted Liens and
Permitted Investments; and (d) of non-exclusive licenses for the use of the
property of Borrower or its Subsidiaries in the ordinary course of business and
licenses that could not result in a legal transfer of title of the licensed
property but that may be exclusive in respects other than territory and that may
be exclusive as to territory only as to discreet geographical areas outside of
the United States.

       

      7.2        Changes
in Business, Management, Control, or Business
Locations.  (a) Engage in or permit any Subsidiary to
engage in any business other than the businesses currently engaged in by
Borrower or such Subsidiary, as applicable, or reasonably related thereto; (b)
liquidate or dissolve; or (c) (i) permit any Key Person to cease
holding his or her office with a Borrower unless an interim or permanent
replacement satisfactory to such Borrower’s Board of Directors is made within
ninety (90) days of such Key Person’s departure from such Borrower; or (ii)
permit or suffer any Change in Control.  Borrower shall not, without
at least thirty (30) days prior written notice to Lender: (1) add any new
offices or business locations, including warehouses (unless such new offices or
business locations contain less than Twenty-Five Thousand Dollars ($25,000) in
Borrower’s assets or property), (2) change its jurisdiction of organization,
(3) change its organizational structure or type, (4) change its legal name,
or (5) change any organizational number (if any) assigned by its
jurisdiction of organization.

       

      7.3         Mergers
or Acquisitions.  Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person.  A Subsidiary may merge
or consolidate into another Subsidiary (provided such surviving Subsidiary is a
“co-Borrower” hereunder or has provided a secured guaranty hereunder) or into
Borrower provided Borrower is the surviving legal entity, and as long as no
Event of Default is occurring prior thereto or arises as a result
therefrom.

       

      7.4      
  Indebtedness.  Create, incur, assume, or be liable
for any Indebtedness, or permit Borrower to do so, other than Permitted
Indebtedness.

       

      7.5         Encumbrance.  Create,
incur, allow, or suffer any Lien on any of the Collateral, or assign or convey
any right to receive income, including the sale of any Accounts, or permit any
of its Subsidiaries to do so, except for Permitted Liens, permit any Collateral
not to be subject to the first priority security interest granted herein, or
enter into any agreement, document, instrument or other arrangement (except with
or in favor of Lender) with any Person which directly or indirectly prohibits or
has the effect of prohibiting Borrower or any Subsidiary from assigning,
mortgaging, pledging, granting a security interest in or upon, or encumbering
any of Borrower’s or any Subsidiary’s Intellectual Property, except as is
otherwise permitted in Section 7.1 hereof and the definition of “Permitted
Liens” herein.

       

      7.6        Maintenance
of Collateral Accounts.  Maintain any Collateral Account except
pursuant to the terms of Section 6.6(b) hereof.

       

      7.7        Distributions;
Investments.  (a) Pay any dividends or make any distribution or
payment or redeem, retire or purchase any capital stock other than Permitted
Distributions; or (b) directly or indirectly acquire or own any Person, or make
any Investment in any Person, other than Permitted Investments, or permit any of
its Subsidiaries to do so.

       

      
        
           

        

        
          - 10
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      7.8         Transactions
with Affiliates.  Directly or indirectly enter into or permit
to exist any material transaction with any Affiliate of Borrower, except for (a)
transactions that are in the ordinary course of Borrower’s business, upon fair
and reasonable terms (when viewed in the context of any series of transactions
of which it may be a part, if applicable) that are no less favorable to Borrower
than would be obtained in an arm’s length transaction with a non-affiliated
Person; or (b) transactions among Borrower and its Subsidiaries and among
Borrower’s Subsidiaries so long as no Event of Default exists or could result
therefrom.  Without limiting the foregoing, Borrowers shall not permit
the cash and/or book value of assets to exceed the following amounts with
respect to the following Subsidiaries: (x) at any time after September 1, 2011,
Five Hundred Thousand Dollars ($500,000) with respect to WGMB; (y) at any time
after September 1, 2011, Ten Thousand Dollars ($10,000) with respect to WGRD;
and (z) at any time, Two Million Dollars ($2,000,000) with respect to WaferGen
Luxemburg; provided that the forgoing limitations with respect to such
Subsidiaries shall not apply at any time during which Borrowers maintain at
least Five Million Dollars ($5,000,000) in a Deposit Account over which a
Control Agreement exists in favor of Lender.

       

      7.9         Subordinated
Debt.  (a) Make or permit any payment on any Subordinated Debt,
except under the terms of the subordination, intercreditor, or other similar
agreement to which such Subordinated Debt is subject, or (b) amend any
provision in any document relating to the Subordinated Debt which would increase
the amount thereof or adversely affect the subordination thereof to Obligations
owed to Lender.

       

      7.10      Compliance.  Become
an “investment company” or a company controlled by an “investment company”,
under the Investment Company Act of 1940, as amended, or undertake as one of its
important activities extending credit to purchase or carry margin stock (as
defined in Regulation U of the Board of Governors of the Federal Reserve
System), or use the proceeds of any Credit Extension for that purpose; fail to
meet the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the
Federal Fair Labor Standards Act or violate any other law or regulation, if the
violation could reasonably be expected to have a Material Adverse Change, or
permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to
withdraw from participation in, permit partial or complete termination of, or
permit the occurrence of any other event with respect to, any present pension,
profit sharing and deferred compensation plan which could reasonably be expected
to result in any liability of Borrower, including any liability to the Pension
Benefit Guaranty Corporation or its successors or any other governmental
agency.

       

      7.11      Indebtedness
Payments.  (i) Prepay, redeem, purchase, defease or otherwise
satisfy in any manner prior to the scheduled repayment thereof any Indebtedness
for borrowed money (other than amounts due under this Agreement or due Lender)
or lease obligations, (ii) amend, modify or otherwise change the terms of any
Indebtedness for borrowed money or lease obligations so as to accelerate the
scheduled repayment thereof or (iii) repay any notes to officers, directors or
shareholders.

       

      8       
    EVENTS OF
DEFAULT

       

      Any one
of the following shall constitute an event of default (an “Event of Default”) under this
Agreement:

       

      8.1         Payment
Default.  A Borrower fails to (a) make any payment of
principal or interest on any Credit Extension on its due date, or (b) pay
any other Obligations within three (3) Business Days after such Obligations are
due and payable (which three (3) day grace period shall not apply to payments
due on the Maturity Date).  During the cure period, the failure to
cure the payment default is not an Event of Default (but no Credit Extension
will be made during the cure period);

       

      8.2        Covenant
Default.

       

      (a)          A
Borrower fails or neglects to perform any obligation in Sections 6.2, 6.4, 6.5
6.6, 6.7 or 6.10 or violates any covenant in Section 7; or

       

      
        
           

        

        
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      (b)          A
Borrower fails or neglects to perform, keep, or observe any other term,
provision, condition, covenant or agreement contained in this Agreement or any
Loan Document to which it is a party, and as to any default (other than those
specified in this Section 8) under such other term, provision, condition,
covenant or agreement that can be cured, has failed to cure the default within
ten (10) days after the occurrence thereof; provided, however, that if the
default cannot by its nature be cured within the ten (10) day period or cannot
after diligent attempts by Borrowers be cured within such ten (10) day period,
and such default is likely to be cured within a reasonable time, then Borrowers
shall have an additional period (which shall not in any case exceed thirty (30)
days) to attempt to cure such default, and within such reasonable time period
the failure to cure the default shall not be deemed an Event of Default (but no
Credit Extensions shall be made during such cure period).  Grace
periods provided under this section shall not apply, among other things, to
financial covenants or any other covenants set forth in subsection (a)
above;

       

      8.3         Material
Adverse Change.  A Material Adverse Change occurs;

       

      8.4         Attachment;
Levy; Restraint on Business.  (a) (i) The service of process
seeking to attach, by trustee or similar process, any funds of a Borrower or of
any entity under control of a Borrower (including a Subsidiary) on deposit or
otherwise maintained in any Collateral Account, or (ii) a notice of lien, levy,
or assessment is filed against any of a Borrower’s assets by any government
agency, and the same under subclauses (i) and (ii) hereof are not, within ten
(10) days after the occurrence thereof, discharged or stayed (whether through
the posting of a bond or otherwise); provided, however, no Credit Extensions
shall be made during any ten (10) day cure period; or (b) (i) any material
portion of a Borrower’s assets is attached, seized, levied on, or comes into
possession of a trustee or receiver, or (ii) any court order enjoins,
restrains, or prevents a Borrower from conducting any part of its
business;

       

      8.5         Insolvency.  As
to any Borrower: (a) such Borrower is unable to pay its debts (including trade
debts) as they become due or otherwise becomes insolvent; (b) such Borrower
begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun
against such Borrower and not dismissed or stayed within forty-five (45) days
(but no Credit Extensions shall be made while of any of the conditions described
in clause (a) exist and/or until any Insolvency Proceeding is
dismissed);

       

      8.6        Other
Agreements.  There is a default in any agreement to which a
Borrower is a party with a third party or parties resulting in a right by such
third party or parties, whether or not exercised, to accelerate the maturity of
any Indebtedness in an amount in excess of One Hundred Thousand Dollars
($100,000) or that could have a Material Adverse Change;

       

      8.7         Judgments.  One
or more judgments, orders, or decrees for the payment of money in an amount,
individually or in the aggregate, of at least One Hundred Thousand Dollars
($100,000) (not covered by independent third-party insurance as to which
liability has been accepted by such insurance carrier) shall be rendered against
a Borrower and shall remain unsatisfied, unvacated, or unstayed for a period of
fifteen (15) days after the entry thereof (provided that no Credit Extensions
will be made prior to the satisfaction, vacation, or stay of such judgment,
order, or decree);

       

      8.8        Misrepresentations.  A
Borrower or any Person acting for a Borrower makes any representation, warranty,
or other statement now or later in this Agreement, any Loan Document or in any
writing delivered to Lender or to induce Lender to enter this Agreement or any
Loan Document, and such representation, warranty, or other statement is
incorrect in any material respect when made;

       

      8.9        Subordinated
Debt.  A default or breach occurs under any agreement between a
Borrower and any creditor of Borrower that signed a subordination,
intercreditor, or other similar agreement with Lender, or any creditor that has
signed such an agreement with Lender breaches any terms of such
agreement;

       

      8.10      Governmental
Approvals.  Any Governmental Approval shall have been
(a) revoked, rescinded, suspended, modified in an adverse manner or not
renewed in the ordinary course for a full term or (b) subject to any
decision by a Governmental Authority that designates a hearing with respect to
any applications for renewal of any of such Governmental Approval or that could
result in the Governmental Authority taking any of the actions described in
clause (a) above, and such decision or such revocation, rescission, suspension,
modification or non-renewal (i) has, or could reasonably be expected to have, a
Material Adverse Change, or (ii) adversely affects the legal qualifications
of a Borrower to hold such Governmental Approval in any applicable jurisdiction
and such revocation, rescission, suspension, modification or non-renewal could
reasonably be expected to affect the status of or legal qualifications of such
Borrower to hold any Governmental Approval in any other
jurisdiction.

       

      
        
           

        

        
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      9   
        LENDER’S RIGHTS AND
REMEDIES

       

      9.1        Rights
and Remedies.  While an Event of Default occurs and continues
Lender may, without notice or demand, do any or all of the
following:

       

      (a)          declare
all Obligations immediately due and payable (but if an Event of Default
described in Section 8.5 occurs all Obligations are immediately due and payable
without any action by Lender);

       

      (b)          stop
advancing money or extending credit for Borrowers’ benefit under this Agreement
or under any other agreement between a Borrower and Lender;

       

      (c)          settle
or adjust disputes and claims directly with Account Debtors for amounts on terms
and in any order that Lender considers advisable, notify any Person owing a
Borrower money of Lender’s security interest in such funds, and verify the
amount of such account;

       

      (d)          make
any payments and do any acts it considers necessary or reasonable to protect the
Collateral and/or its security interest in the Collateral.  Each
Borrower shall assemble the Collateral if Lender requests and make it available
as Lender designates.  Lender may enter premises where the Collateral
is located, take and maintain possession of any part of the Collateral, and pay,
purchase, contest, or compromise any Lien which appears to be prior or superior
to its security interest and pay all expenses incurred.  Each Borrower
grants Lender a license to enter and occupy any of its premises, without charge,
to exercise any of Lender’s rights or remedies;

       

      (e)          apply
to the Obligations any (i) balances and deposits of any Borrower it holds, or
(ii) any amount held by Lender owing to or for the credit or the account of
Borrowers;

       

      (f)          ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
for sale, and sell the Collateral.  Lender is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge, each
Borrower’s labels, Patents, Copyrights, mask works, rights of use of any name,
trade secrets, trade names, Trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Lender’s exercise of its rights under this Section, each
Borrower’s rights under all licenses and all franchise agreements inure to
Lender’s benefit;

       

      (g)          place
a “hold” on any account maintained with Lender and/or deliver a notice of
exclusive control, any entitlement order, or other directions or instructions
pursuant to any Control Agreement or similar agreements providing control of any
Collateral;

       

      (h)          demand
and receive possession of Borrower’s Books; and

       

      (i)          exercise
all rights and remedies available to Lender under the Loan Documents or at law
or equity, including all remedies provided under the Code (including disposal of
the Collateral pursuant to the terms thereof).

       

      
        
           

        

        
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      9.2        Power
of Attorney.  Each Borrower hereby irrevocably appoints Lender
as its lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to:  (a) endorse such Borrower’s
name on any checks or other forms of payment or security; (b) sign such
Borrower’s name on any invoice or bill of lading for any Account or drafts
against Account Debtors; (c) settle and adjust disputes and claims about the
Accounts directly with Account Debtors, for amounts and on terms Lender
determines reasonable; (d) make, settle, and adjust all claims under each
Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge,
encumbrance, security interest, and adverse claim in or to the Collateral, or
any judgment based thereon, or otherwise take any action to terminate or
discharge the same; and (f) transfer the Collateral into the name of Lender or a
third party as the Code permits.  Each Borrower hereby appoints Lender
as its lawful attorney-in-fact to sign such Borrower’s name on any documents
necessary to perfect or continue the perfection of Lender’s security interest in
the Collateral regardless of whether an Event of Default has occurred until all
Obligations have been satisfied in full and Lender is under no further
obligation to make Credit Extensions hereunder.  Lender’s foregoing
appointment as Borrowers’ attorney in fact, and all of Lender’s rights and
powers, coupled with an interest, are irrevocable until all Obligations have
been fully repaid and performed and Lender’s obligation to provide Credit
Extensions terminates.

       

      9.3        Protective
Payments.  If a Borrower fails to obtain the insurance called
for by Section 6.5 or fails to pay any premium thereon or fails to pay any other
amount which a Borrower is obligated to pay under this Agreement or any other
Loan Document, Lender may obtain such insurance or make such payment, and all
amounts so paid by Lender are Lender Expenses and immediately due and payable,
bearing interest at the then highest applicable rate, and secured by the
Collateral.  Lender will make reasonable efforts to provide Parent
with notice of Lender obtaining such insurance at the time it is obtained or
within a reasonable time thereafter.  No payments by Lender are deemed
an agreement to make similar payments in the future or Lender’s waiver of any
Event of Default.

       

      9.4        Application
of Payments and Proceeds.  No Borrower shall have any right to
specify the order or the accounts to which Lender shall allocate or apply any
payments required to be made by a Borrower to Lender or otherwise received by
Lender under this Agreement when any such allocation or application is not
specified elsewhere in this Agreement.  If an Event of Default has
occurred and is continuing, Lender may apply any funds in its possession,
whether from Borrower account balances, payments, proceeds realized as the
result of any collection of Accounts or other disposition of the Collateral, or
otherwise, to the Obligations in such order as Lender shall determine in its
sole discretion.  Any surplus shall be paid to Parent or other Persons
legally entitled thereto; each Borrower shall remain liable to Lender for any
deficiency.  If Lender, in its good faith business judgment, directly
or indirectly enters into a deferred payment or other credit transaction with
any purchaser at any sale of Collateral, Lender shall have the option,
exercisable at any time, of either reducing the Obligations by the principal
amount of the purchase price or deferring the reduction of the Obligations until
the actual receipt by Lender of cash therefor.

       

      9.5        Lender’s
Liability for Collateral.  So long as Lender complies with
reasonable practices regarding the safekeeping of the Collateral in the
possession or under the control of Lender, Lender shall not be liable or
responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage
to the Collateral; (c) any diminution in the value of the Collateral; or (d) any
act or default of any carrier, warehouseman, bailee, or other
Person.  The Credit Parties bear all risk of loss, damage or
destruction of the Collateral.

       

      9.6        No
Waiver; Remedies Cumulative.  Lender’s failure, at any time or
times, to require strict performance by Borrowers of any provision of this
Agreement or any other Loan Document shall not waive, affect, or diminish any
right of Lender thereafter to demand strict performance and compliance herewith
or therewith.  No waiver hereunder shall be effective unless signed by
Lender and then is only effective for the specific instance and purpose for
which it is given.  Lender’s rights and remedies under this Agreement
and the other Loan Documents are cumulative.  Lender has all rights
and remedies provided under the Code, by law, or in equity.  Lender’s
exercise of one right or remedy is not an election, and shall not preclude
Lender from exercising any other remedy under this Agreement or other remedy
available at law or in equity, and Lender’s waiver of any Event of Default is
not a continuing waiver.  Lender’s delay in exercising any remedy is
not a waiver, election, or acquiescence.

       

      9.7        Demand
Waiver.  Each Borrower, for itself an on behalf of each
Subsidiary, waives demand, notice of default or dishonor, notice of payment and
nonpayment, notice of any default, nonpayment at maturity, release, compromise,
settlement, extension, or renewal of accounts, documents, instruments, chattel
paper, and guarantees held by Lender on which a Borrower is liable.

       

      
        
           

        

        
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      9.8        Borrower
Liability.  Except as otherwise set forth herein, either
Borrower may, acting singly, request the Growth Capital Advance
hereunder.  Each Borrower hereby appoints the other as agent for the
other for all purposes hereunder, including with respect to requesting the
Growth Capital Advance hereunder.  Each Borrower hereunder shall be
jointly and severally obligated to repay the Growth Capital Advance made
hereunder, and all other Obligations due or to become due hereunder, regardless
of which Borrower actually receives said Growth Capital Advance, as if each
Borrower hereunder directly received the Growth Capital Advance.  Each
Borrower waives (a) any suretyship defenses available to it under the Code or
any other applicable law, including, without limitation, the benefit of
California Civil Code Section 2815 permitting revocation as to future
transactions and the benefit of California Civil Code Sections 1432, 2809, 2810,
2819, 2839, 2845, 2847, 2848, 2849, 2850, and 2899 and 3433, and (b) any right
to require Lender to: (i) proceed against any Borrower or any other person; (ii)
proceed against or exhaust any security; or (iii) pursue any other
remedy.  Lender may exercise or not exercise any right or remedy it
has against any Borrower or any security it holds (including the right to
foreclose by judicial or non-judicial sale) without affecting any Borrower’s
liability.  Notwithstanding any other provision of this Agreement or
other related document, each Borrower irrevocably waives all rights that it may
have at law or in equity (including, without limitation, any law subrogating
Borrower to the rights of Lender under this Agreement) to seek contribution,
indemnification or any other form of reimbursement from any other Borrower, or
any other Person now or hereafter primarily or secondarily liable for any of the
Obligations, for any payment made by Borrower with respect to the Obligations in
connection with this Agreement or otherwise and all rights that it might have to
benefit from, or to participate in, any security for the Obligations as a result
of any payment made by Borrower with respect to the Obligations in connection
with this Agreement or otherwise.  Any agreement providing for
indemnification, reimbursement or any other arrangement prohibited under this
Section shall be null and void.  If any payment is made to a Borrower
in contravention of this Section, such Borrower shall hold such payment in trust
for Lender and such payment shall be promptly delivered to Lender for
application to the Obligations, whether matured or unmatured.

       

      10         NOTICES

       

      All
notices, consents, requests, approvals, demands, or other communication by any
party to this Agreement or any other Loan Document must be in writing and shall
be deemed to have been validly served, given, or delivered: (a) upon the earlier
of actual receipt and three (3) Business Days after deposit in the U.S. mail,
first class, registered or certified mail return receipt requested, with proper
postage prepaid; (b) upon transmission, when sent by electronic mail or
facsimile transmission; (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid; or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address, facsimile number, or email address indicated
below.  Lender or Borrowers may change their mailing or electronic
mail address or facsimile number by giving the other party written notice
thereof in accordance with the terms of this Section 10.

       

      
        	 	
                If
      to a Borrower:

              	
                c/o
      WAFERGEN BIO-SYSTEMS, INC.

              

      

      7400
Paseo Padre Parkway

      Fremont,
CA  94555

      Attn:  Chief
Financial Officer

      Fax:  (510)
793-8993

      Email:
don.huffman@wafergen.com

       

      
        	 	
                If
      to Lender:

              	
                OXFORD
      FINANCE CORPORATION

              

      

      133 N.
Fairfax Street

      Alexandria,
VA 22314

      Attn: Tim
A. Lex, Chief Operating Officer

      Fax:
(703) 519-5225

      Email:
tlex@oxfordfinance.com

       

      11         CHOICE OF LAW, VENUE, JURY
TRIAL WAIVER AND JUDICIAL REFERENCE

       

      California
law governs the Loan Documents without regard to principles of conflicts of
law.  Borrowers and Lender each submit to the exclusive jurisdiction
of the State and Federal courts in San Diego County, California; provided,
however, that nothing in this Agreement shall be deemed to operate to preclude
Lender from bringing suit or taking other legal action in any other jurisdiction
to realize on the Collateral or any other security for the Obligations, or to
enforce a judgment or other court order in favor of Lender.  Each
Borrower expressly submits and consents in advance to such jurisdiction in any
action or suit commenced in any such court, and each Borrower hereby waives any
objection that it may have based upon lack of personal jurisdiction, improper
venue, or forum non conveniens and hereby consents to the granting of such legal
or equitable relief as is deemed appropriate by such court.  Each
Borrower hereby waives personal service of the summons, complaints, and other
process issued in such action or suit and agrees that service of such summons,
complaints, and other process may be made by registered or certified mail
addressed to Borrowers at the address set forth in Section 10 of this Agreement
and that service so made shall be deemed completed upon the earlier to occur of
a Borrower’s actual receipt thereof or three (3) days after deposit in the U.S.
mails, proper postage prepaid.

       

      
        
           

        

        
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      TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH BORROWER AND LENDER EACH WAIVE THEIR RIGHT TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE
LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH
OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR ALL
PARTIES TO ENTER INTO THIS AGREEMENT.  EACH PARTY HAS REVIEWED THIS
WAIVER WITH ITS COUNSEL.

       

      WITHOUT
INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial by jury is
not enforceable, the parties hereto agree that any and all disputes or
controversies of any nature between them arising at any time shall be decided by
a reference to a private judge, mutually selected by the parties (or, if they
cannot agree, by the Presiding Judge of the San Diego County, California
Superior Court) appointed in accordance with California Code of Civil Procedure
Section 638 (or pursuant to comparable provisions of federal law if the dispute
falls within the exclusive jurisdiction of the federal courts), sitting without
a jury, in San Diego County, California; and the parties hereby submit to the
jurisdiction of such court.  The reference proceedings shall be
conducted pursuant to and in accordance with the provisions of California Code
of Civil Procedure §§ 638 through 645.1, inclusive.  The private judge
shall have the power, among others, to grant provisional relief, including
without limitation, entering temporary restraining orders, issuing preliminary
and permanent injunctions and appointing receivers.  All such
proceedings shall be closed to the public and confidential and all records
relating thereto shall be permanently sealed.  If during the course of
any dispute, a party desires to seek provisional relief, but a judge has not
been appointed at that point pursuant to the judicial reference procedures, then
such party may apply to the San Diego County, California Superior Court for such
relief.  The proceeding before the private judge shall be conducted in
the same manner as it would be before a court under the rules of evidence
applicable to judicial proceedings.  The parties shall be entitled to
discovery which shall be conducted in the same manner as it would be before a
court under the rules of discovery applicable to judicial
proceedings.  The private judge shall oversee discovery and may
enforce all discovery rules and order applicable to judicial proceedings in the
same manner as a trial court judge.  The parties agree that the
selected or appointed private judge shall have the power to decide all issues in
the action or proceeding, whether of fact or of law, and shall report a
statement of decision thereon pursuant to the California Code of Civil Procedure
§ 644(a).  Nothing in this paragraph shall limit the right of any
party at any time to exercise self-help remedies, foreclose against collateral,
or obtain provisional remedies.  The private judge shall also
determine all issues relating to the applicability, interpretation, and
enforceability of this paragraph.

       

      12         GENERAL
PROVISIONS

       

      12.1      Successors
and Assigns.  This Agreement binds and is for the benefit of
the successors and permitted assigns of each party.  No Borrower may
assign this Agreement or any rights or obligations under it without Lender’s
prior written consent (which may be granted or withheld in Lender’s
discretion).  Lender has the right, without the consent of or notice
to any Borrower, to sell, transfer, negotiate, or grant participation in all or
any part of, or any interest in, Lender’s obligations, rights, and benefits
under this Agreement and the other Loan Documents; provided that, so long as no
Event of Default has occurred and is continuing, the Lender may not sell,
transfer, or assign its rights in this Agreement to a competitor of any Borrower
(known by Lender to be such a competitor).

       

      12.2      Indemnification.  Each
Borrower agrees to indemnify, defend and hold Lender and its directors,
officers, employees, agents, attorneys, or any other Person affiliated with or
representing Lender (each, an “Indemnified Person”) harmless
against:  (a) all obligations, demands, claims, and liabilities
(collectively, “Claims”)
claimed or asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all losses or expenses (including
Lender Expenses) in any way suffered, incurred, or paid by such Indemnified
Person as a result of, following from, consequential to, or arising from
transactions between Lender and any Borrower (including reasonable attorneys’
fees and expenses), except for Claims and/or losses directly caused by such
Indemnified Person’s gross negligence or willful misconduct or in connection
with any Claims by Borrower brought against such Indemnified Person arising from
such Indemnified Person’s breach of its obligations under this Agreement or any
Loan Document.

       

      
        
           

        

        
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      12.3      Time
of Essence.  Time is of the essence for the performance of all
Obligations in this Agreement.

       

      12.4      Severability
of Provisions.  Each provision of this Agreement is severable
from every other provision in determining the enforceability of any
provision.

       

      12.5      Correction
of Loan Documents.  Lender may correct patent errors and fill
in any blanks in this Agreement and the other Loan Documents consistent with the
agreement of the parties.

       

      12.6      Amendments
in Writing; Integration.  All amendments to this Agreement must
be in writing and signed by both Lender and Borrowers.  This Agreement
and the Loan Documents represent the entire agreement about this subject matter
and supersede prior negotiations or agreements.  All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement and the Loan Documents merge
into this Agreement and the Loan Documents.

       

      12.7      Counterparts.  This
Agreement may be executed in any number of counterparts and by different parties
on separate counterparts, each of which, when executed and delivered, are an
original, and all taken together, constitute one Agreement.

       

      12.8      Survival.  All
covenants, representations and warranties made in this Agreement continue in
full force until this Agreement has terminated pursuant to its terms and all
Obligations (other than inchoate indemnity obligations and any other obligations
which, by their terms, are to survive the termination of this Agreement) have
been satisfied.  The obligation of Borrowers in Section 12.2 to
indemnify Lender shall survive until the statute of limitations with respect to
such claim or cause of action shall have run.

       

      12.9      Confidentiality.  In
handling any confidential information, Lender shall exercise the same degree of
care that it exercises for its own proprietary information, but disclosure of
information may be made: (a) to Lender’s Subsidiaries or Affiliates; (b) to
prospective transferees or purchasers (other than a competitor of any Borrower,
known to be such by Lender; provided that an Event of Default has not then
occurred and is not then continuing) of any interest in the Credit Extensions
(provided, however, Lender shall use commercially reasonable efforts to obtain
such prospective transferee’s or purchaser’s agreement to the terms of this
provision); (c) as required by law, regulation, subpoena, or other order;
(d) to Lender’s regulators or as otherwise required in connection with
Lender’s examination or audit; (e) as Lender considers appropriate in exercising
remedies under the Loan Documents; and (f) to third-party service providers of
Lender so long as such service providers have executed a confidentiality
agreement with Lender with terms no less restrictive than those contained
herein.  Confidential information does not include information that
either: (i) is in the public domain or in Lender’s possession when disclosed to
Lender, or becomes part of the public domain after disclosure to Lender; or (ii)
is disclosed to Lender by a third party, if Lender does not know that the third
party is prohibited from disclosing the information.

       

      Lender
may use confidential information for any purpose, including, without limitation,
for the development of client databases, reporting purposes, and market
analysis, so long as Lender does not disclose a Borrower’s identity or the
identity of any person associated with Borrowers unless otherwise expressly
permitted by this Agreement.  The provisions of the immediately
preceding sentence shall survive the termination of this Agreement.

       

      12.10    Attorneys’
Fees, Costs and Expenses.  In any action or proceeding between
a Borrower and Lender arising out of or relating to the Loan Documents, the
prevailing party shall be entitled to recover its reasonable attorneys’ fees and
other costs and expenses incurred, in addition to any other relief to which it
may be entitled.

       

      
        
           

        

        
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      12.11    Electronic
Execution of Documents.  The words “execution,” “signed,”
“signature” and words of like import in any Loan Document shall be deemed to
include electronic signatures or the keeping of records in electronic form, each
of which shall be of the same legal effect, validity and enforceability as a
manually executed signature or the use of a paper-based recordkeeping systems,
as the case may be, to the extent and as provided for in any applicable law,
including, without limitation, any state law based on the Uniform Electronic
Transactions Act.

       

      12.12    Captions.  The
headings used in this Agreement are for convenience only and shall not affect
the interpretation of this Agreement.

       

      12.13    Construction
of Agreement.  The parties mutually acknowledge that they and
their attorneys have participated in the preparation and negotiation of this
Agreement.  In cases of uncertainty this Agreement shall be construed
without regard to which of the parties caused the uncertainty to
exist.

       

      12.14    Relationship.  The
relationship of the parties to this Agreement is determined solely by the
provisions of this Agreement.  The parties do not intend to create any
agency, partnership, joint venture, trust, fiduciary or other relationship with
duties or incidents different from those of parties to an arm’s-length
contract.

       

      12.15    Third
Parties.  Nothing in this Agreement, whether express or
implied, is intended to: (a) confer any benefits, rights or remedies under or by
reason of this Agreement on any persons other than the express parties to it and
their respective permitted successors and assigns; (b) relieve or discharge the
obligation or liability of any person not an express party to this Agreement; or
(c) give any person not an express party to this Agreement any right of
subrogation or action against any party to this Agreement.

       

      13          DEFINITIONS

       

      13.1      Definitions.  As
used in the Loan Documents, the word “shall” is mandatory, the word “may” is
permissive, the word “or” is not exclusive, the words “includes” and “including”
are not limiting, the singular includes the plural, and numbers denoting amounts
that are set off in brackets are negative.  As used in this Agreement,
the following capitalized terms have the following meaning:

       

      “Account” is any “account” as
defined in the Code with such additions to such term as may hereafter be made,
and includes, without limitation, all accounts receivable and other sums owing
to a Borrower.

       

      “Account Debtor” is any
“account debtor” as defined in the Code with such additions to such term as may
hereafter be made.

       

      “Affiliate” is, with respect to
any Person, each other Person that owns or controls directly or indirectly the
Person, any Person that controls or is controlled by or is under common control
with the Person, and each of that Person’s senior executive officers, directors,
partners and, for any Person that is a limited liability company, that Person’s
managers and members.

       

      “Agreement” is defined in the
preamble hereof.

       

      “Borrower” is defined in the
preamble hereof.

       

      “Borrower’s Books” are all of
each Borrower’s books and records including ledgers, federal and state tax
returns, records regarding such Borrower’s assets or liabilities, the
Collateral, business operations or financial condition, and all computer
programs or storage or any equipment containing such information.

       

      “Borrowing Resolutions” are,
with respect to any Person, those resolutions adopted by such Person’s Board of
Directors and delivered by such Person to Lender approving the Loan Documents to
which such Person is a party and the transactions contemplated thereby, together
with a certificate executed by its secretary on behalf of such Person certifying
that (a) such Person has the authority to execute, deliver, and perform its
obligations under each of the Loan Documents to which it is a party,
(b) that attached as Exhibit A to such certificate is a true, correct, and
complete copy of the resolutions then in full force and effect authorizing and
ratifying the execution, delivery, and performance by such Person of the Loan
Documents to which it is a party, (c) the name(s) of the Person(s) authorized to
execute the Loan Documents on behalf of such Person, together with a sample of
the true signature(s) of such Person(s), and (d) that Lender may
conclusively rely on such certificate unless and until such Person shall have
delivered to Lender a further certificate canceling or amending such prior
certificate.

       

      
        
           

        

        
          - 18
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      “Business Day” is any day that
is not a Saturday, Sunday or a day on which Lender is closed.

       

      “Cash Equivalents” means
(a) marketable direct obligations issued or unconditionally guaranteed by
the United States or any agency or any State thereof having maturities of not
more than one (1) year from the date of acquisition; (b) commercial paper
maturing no more than one (1) year after its creation and having the highest
rating from either Standard & Poor’s Ratings Group or Moody’s Investors
Service, Inc.; (c) Lender’s certificates of deposit issued maturing no more than
one (1) year after issue; and (d) money market funds at least ninety-five
percent (95%) of the assets of which constitute Cash Equivalents of the kinds
described in clauses (a) through (c) of this definition.

       

      “Change in Control” means any
event, transaction, or occurrence as a result of which (a) any “person” (as such
term is defined in Sections 3(a)(9) and 13(d)(3) of the Exchange Act), other
than a trustee or other fiduciary holding securities under an employee benefit
plan of a Borrower, is or becomes a beneficial owner (within the meaning Rule
13d-3 promulgated under the Exchange Act), directly or indirectly, of securities
of a Borrower, representing forty-nine percent (49%) or more of the combined
voting power of such Borrower’s then outstanding securities; or (b) during any
period of twelve consecutive calendar months, individuals who at the beginning
of such period constituted the Board of Directors of a Borrower (together with
any new directors whose election by the Board of Directors of such Borrower was
approved by a vote of not less than two-thirds of the directors then still in
office who either were directors at the beginning of such period  or
whose election or nomination for election was previously so approved) cease for
any reason other than death or disability to constitute a majority of the
directors then in office.

       

      “Closing Date” is defined in
the preamble of this Agreement.

       

      “Code” is the Uniform
Commercial Code, as the same may, from time to time, be enacted and in effect in
the State of California; provided, that, to the extent that the Code is used to
define any term herein or in any Loan Document and such term is defined
differently in different Articles or Divisions of the Code, the definition of
such term contained in Article or Division 9 shall govern; provided further,
that in the event that, by reason of mandatory provisions of law, any or all of
the attachment, perfection, or priority of, or remedies with respect to,
Lender’s Lien on any Collateral is governed by the Uniform Commercial Code in
effect in a jurisdiction other than the State of California, the term “Code” shall mean the Uniform
Commercial Code as enacted and in effect in such other jurisdiction solely for
purposes on the provisions thereof relating to such attachment, perfection,
priority, or remedies and for purposes of definitions relating to such
provisions.

       

      “Collateral” is any and all
properties, rights and assets of each Borrower described on Exhibit
A.

       

      “Collateral Account” is any
Deposit Account, Securities Account, or Commodity Account.

       

      “Commodity Account” is any
“commodity account” as defined in the Code with such additions to such term as
may hereafter be made.

       

      “Compliance Certificate” is
that certain certificate in the form attached hereto as Exhibit
B.

       

      “Contingent Obligation” is, for
any Person, any direct or indirect liability, contingent or not, of that Person
for (a) any indebtedness, lease, dividend, letter of credit or other obligation
of another Person such as an obligation directly or indirectly guaranteed,
endorsed, co-made, discounted or sold with recourse by that Person, or for which
that Person is directly or indirectly liable; (b) any obligations for undrawn
letters of credit for the account of that Person; and (c) all obligations from
any interest rate, currency or commodity swap agreement, interest rate cap or
collar agreement, or other agreement or arrangement designated to protect a
Person against fluctuation in interest rates, currency exchange rates or
commodity prices; but “Contingent Obligation” does not include endorsements in
the ordinary course of business.  The amount of a Contingent
Obligation is the stated or determined amount of the primary obligation for
which the Contingent Obligation is made or, if not determinable, the maximum
reasonably anticipated liability for it determined by the Person in good faith;
but the amount may not exceed the maximum of the obligations under any guarantee
or other support arrangement.

       

      
        
           

        

        
          - 19
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      “Control Agreement” is any
control agreement entered into among the depository institution at which a
Borrower maintains a Deposit Account or the securities intermediary or commodity
intermediary at which a Borrower maintains a Securities Account or a Commodity
Account, the relevant Borrower, and Lender pursuant to which Lender obtains
control (within the meaning of the Code) over such Deposit Account, Securities
Account, or Commodity Account.

       

      “Copyrights” are any and all
copyright rights, copyright applications, copyright registrations and like
protections in each work or authorship and derivative work thereof, whether
published or unpublished and whether or not the same also constitutes a trade
secret.

       

      “Credit Extension” is any
Growth Capital Advance, or any other extension of credit by Lender for a
Borrower’s benefit.

       

      “Default Rate” is defined in
Section 2.2(b).

       

      “Deposit Account” is any
“deposit account” as defined in the Code with such additions to such term as may
hereafter be made.

       

      “Designated Deposit Account” is
Parent’s deposit account, account number 1095300525, maintained with Bank of
America or such other account designated in writing by Parent to
Lender.

       

      “Disbursement Letter” is that
certain form attached hereto as Exhibit
D.

       

      “Dollars,” “dollars” and “$” each mean lawful money of
the United States.

       

      “Equipment” is all “equipment”
as defined in the Code with such additions to such term as may hereafter be
made, and includes without limitation all machinery, fixtures, goods, vehicles
(including motor vehicles and trailers), and any interest in any of the
foregoing.

       

      “ERISA” is the Employee
Retirement Income Security Act of 1974, and its regulations.

       

      “Event of Default” is defined
in Section 8.

       

      “Final Payment” means a fee
(in addition to and not a substitution for any other payment due hereunder) in
the amount of Ninety Five Thousand Dollars ($95,000).

       

      “Funding Date” is the date on
which any Growth Capital Advance is made to or on account of
Borrowers.

       

      “GAAP” is generally accepted
accounting principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other Person as may be
approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.

       

      “General Intangibles” is all
“general intangibles” as defined in the Code in effect on the date hereof with
such additions to such term as may hereafter be made, and includes without
limitation, all Intellectual Property, claims, income and other tax refunds,
security and other deposits, payment intangibles, contract rights, options to
purchase or sell real or personal property, rights in all litigation presently
or hereafter pending (whether in contract, tort or otherwise), insurance
policies (including without limitation key man, property damage, and business
interruption insurance), payments of insurance and rights to payment of any
kind.

       

      
        
           

        

        
          - 20
-

          
            

          

        

        
           

        

      

       

      “Governmental Approval” is any
consent, authorization, approval, order, license, franchise, permit,
certificate, accreditation, registration, filing or notice, of, issued by, from
or to, or other act by or in respect of, any Governmental
Authority.

       

      “Governmental Authority” is any
nation or government, any state or other political subdivision thereof, any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative functions of or pertaining to government, any securities exchange
and any self-regulatory organization.

       

      “Growth Capital Advance” is
defined in Section 2.1.1(a).

       

      “Growth Capital Amortization
Date” means July 1, 2011.

       

      “Indebtedness” is (a)
indebtedness for borrowed money or the deferred price of property or services,
such as reimbursement and other obligations for surety bonds and letters of
credit, (b) obligations evidenced by notes, bonds, debentures or similar
instruments, (c) capital lease obligations, and (d) Contingent
Obligations.

       

      “Indemnified Person” is defined
in Section 12.2.

       

      “Insolvency Proceeding” is any
proceeding by or against any Person under the United States Bankruptcy Code, or
any other bankruptcy or insolvency law, including assignments for the benefit of
creditors, compositions, extensions generally with its creditors, or proceedings
seeking reorganization, arrangement, or other relief.

       

      “Intellectual Property” means
all of each Borrower’s right, title, and interest in and to the
following:

       

      (a)          its
Copyrights, Trademarks and Patents;

       

      (b)          any
and all trade secrets and trade secret rights, including, without limitation,
any rights to unpatented inventions, know-how, operating manuals;

       

      (c)          any
and all source code;

       

      (d)          any
and all design rights which may be available to such Borrower;

       

      (e)          any
and all claims for damages by way of past, present and future infringement of
any of the foregoing, with the right, but not the obligation, to sue for and
collect such damages for said use or infringement of the Intellectual Property
rights identified above; and

       

      (f)          all
amendments, renewals and extensions of any of the Copyrights, Trademarks or
Patents.

       

      “Interest Only Period” means
the period of time commencing on the Funding Date through the day before the
Growth Capital Amortization Date.

       

      “Inventory” is all “inventory”
as defined in the Code in effect on the date hereof with such additions to such
term as may hereafter be made, and includes without limitation all merchandise,
raw materials, parts, supplies, packing and shipping materials, work in process
and finished products, including without limitation such inventory as is
temporarily out of a Borrower’s custody or possession or in transit and
including any returned goods and any documents of title representing any of the
above.

       

      “Investment” is any beneficial
ownership interest in any Person (including stock, partnership interest or other
securities), and any loan, advance or capital contribution to any
Person.

       

      
        
           

        

        
          - 21
-

          
            

          

        

        
           

        

      

       

      “Key Person” is any of WGI’s
Chief Executive Officer or Chief Financial Officer, who are, as of the Closing
Date, Alnoor Shivji and Donald D. Huffman, respectively, or any of Parent’s
Chief Executive Officer or Chief Financial Officer, who are, as of the Closing
Date, Alnoor Shivji and Donald D. Huffman, respectively.

       

      “Lender” is defined in the
preamble hereof.

       

      “Lender Expenses” are all audit
fees and expenses, costs, and expenses (including reasonable attorneys’ fees and
expenses) for preparing, amending, negotiating, administering, defending and
enforcing the Loan Documents (including, without limitation, those incurred in
connection with appeals or Insolvency Proceedings) or otherwise incurred with
respect to a Borrower.

       

      “LIBOR Rate” means, an interest
rate per annum (rounded
upward, if necessary, to the nearest 1/10,000th of one percent (0.0001%)) equal
to LIBOR on the Funding Date.

       

      “LIBOR Margin” is twelve and
seventy one one hundredths percent (12.71%).

       

      “LIBOR” means the rate of
interest per annum determined by Lender to be the per annum rate of interest at
which deposits in United States Dollars are offered to Lender in the London
interbank market (rounded upward, if necessary, to the nearest 1/10,000th of one
percent (0.0001%)) in which Lender customarily participates at 11:00 a.m.
(local time in such interbank market) for a 3-month period and published in The
Wall Street Journal two (2) Business Days prior to the making of the Growth
Capital Advance and in an amount approximately equal to the amount of the Growth
Capital Advance.

       

      “Lien” is a claim, mortgage,
deed of trust, levy, charge, pledge, security interest or other encumbrance of
any kind, whether voluntarily incurred or arising by operation of law or
otherwise against any property.

       

      “Loan Documents” are,
collectively, this Agreement, the Perfection Certificate, the Promissory Note,
the Warrant, the Disbursement Letter, the WaferGen Malaysia Share Pledge
Documents, the Post-Closing Letter, each Control Agreement, any other note, or
notes or guaranties executed by a Borrower or any Subsidiary, and any other
present or future agreement between a Borrower and/or any Subsidiary for the
benefit of Lender in connection with this Agreement, all as amended, restated,
or otherwise modified.

       

      “Material Adverse Change” is
(a) a material impairment in the perfection or priority of Lender’s Lien in the
Collateral or in the value of such Collateral; (b) a material adverse change in
the business, operations, or condition (financial or otherwise) of a Borrower;
or (c) a material impairment of the prospect of repayment of any portion of the
Obligations.

       

      “Maturity Date” is December 1,
2013, or such earlier date as the Growth Capital Advance or any portion of the
Obligations is accelerated, whether by prepayment or otherwise.

       

      “Obligations” are Borrowers’
obligation to pay when due any debts, principal, interest, Lender Expenses and
other amounts a Borrower owes Lender now or later, whether under this Agreement,
the Loan Documents (other than the Warrant), or otherwise, including, without
limitation, the Final Payment, the Prepayment Fee, all obligations relating to
letters of credit (including reimbursement obligations for drawn and undrawn
letters of credit), cash management services, and foreign exchange contracts, if
any, and including interest accruing after Insolvency Proceedings begin and
debts, liabilities, or obligations of a Borrower assigned to Lender, and the
performance of each Borrower’s duties under the Loan Documents.

       

      “Operating Documents” are, for
any Person, such Person’s formation documents, as certified with the Secretary
of State of such Person’s state of formation on a date that is no earlier than
thirty (30) days prior to the Closing Date, and, (a) if such Person is a
corporation, its bylaws in current form, (b) if such Person is a limited
liability company, its limited liability company agreement (or similar
agreement), and (c) if such Person is a partnership, its partnership agreement
(or similar agreement), each of the foregoing with all current amendments or
modifications thereto; provided that, for purposes of this Agreement, “Operating
Documents” with respect to WaferGen Malaysia shall include WaferGen Malaysia’s
organizational and/or constitutional documents, and such other documents or
instruments as Lender may reasonably request with respect to the WaferGen
Malaysia Share Pledge Documents.

       

      
        
           

        

        
          - 22
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      “Parent” is defined in the
preamble hereof.

       

      “Patents” means all patents,
patent applications and like protections including without limitation
improvements, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same.

       

      “Perfection Certificate” is
defined in Section 5.1.

       

      “Permitted Distributions”
means:

       

      (a)          purchases
of capital stock from former employees, consultants and directors pursuant to
repurchase agreements or other similar agreements in an aggregate amount not to
exceed One Hundred Thousand Dollars ($100,000) in any fiscal year, provided that
at the time of such purchase no Event of Default has occurred and is
continuing;

       

      (b)          distributions
or dividends consisting solely of a Borrower's capital stock;

       

      (c)          purchases
for value of any rights distributed in connection with any stockholder rights
plan;

       

      (d)          purchases
of capital stock or options to acquire such capital stock with the proceeds
received from a substantially concurrent issuance of capital stock or
convertible securities;

       

      (e)          purchases
of capital stock pledged as collateral for loans to employees; and

       

      (f)          purchases
of capital stock in connection with the exercise of stock options or stock
appreciation rights by way of cashless exercise or in connection with the
satisfaction of withholding tax obligations.

       

      “Permitted Indebtedness”
is:

       

      (g)          Each
Borrower’s Indebtedness to Lender under this Agreement and any other Loan
Document or other Indebtedness to Lender;

       

      (h)         any
Indebtedness existing on the Closing Date and shown on the Perfection
Certificate;

       

      (i)    
      Subordinated Debt;

       

      (j)   
       unsecured Indebtedness to trade
creditors incurred in the ordinary course of business;

       

      (k)          capitalized
leases and purchase money Indebtedness not to exceed Two Hundred Fifty Thousand
Dollars ($250,000) in the aggregate in any fiscal year secured by Permitted
Liens; and

       

      (l)     
     refinanced Permitted Indebtedness, provided that
the amount of such Indebtedness is not increased except by an amount equal to a
reasonable premium or other reasonable amount paid in connection with such
refinancing and by an amount equal to any existing, but unutilized, commitment
thereunder.

       

      “Permitted Investments”
are:

       

      (m)         Investments
shown on the Perfection Certificate and existing on the Closing
Date;

       

      (n)          Investments
permitted by Parent’s investment policy, as amended from time to time, provided
that such investment policy (and any amendment thereto) has been approved by
Lender;

       

      
        
           

        

        
          - 23
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      (o)          Investments
(i) by Borrowers in Subsidiaries not to exceed One Hundred Thousand Dollars
($100,000) in the aggregate in any fiscal year; and (ii) by Subsidiaries (x) in
other Subsidiaries not to exceed One Hundred Thousand Dollars ($100,000) in the
aggregate in any fiscal year, or (y) in a Borrower.  Notwithstanding
the foregoing, commencing only from and after September 1, 2011, Borrowers may
make Investments in (x) WaferGen Malaysia not to exceed One Million Two Hundred
Thousand Dollars ($1,200,000) in the aggregate in any fiscal year and (y)
WaferGen Luxemburg not to exceed Two Million Dollars ($2,000,000) in the
aggregate through the period ending on January 1, 2013; and not to exceed
Five Hundred Thousand Dollars ($500,000) in the aggregate in any other fiscal
year thereafter; provided the limitations of this subsection (c) shall not apply
with respect to Investments by Borrowers in WaferGen Malaysia and WaferGen
Luxemburg at any time during which Borrowers maintain at least Five Million
Dollars ($5,000,000) in a Deposit Account over which a Control Agreement exists
in favor of Lender;

       

      (p)          Investments
consisting of Collateral Accounts in the name of a Borrower or any Subsidiary so
long as Lender has a first priority, perfected security interest in such
Collateral Accounts;

       

      (q)          Investments
(including debt obligations) received in connection with the bankruptcy or
reorganization of customers or suppliers and in settlement of delinquent
obligations of, and other disputes with, customers or suppliers arising in the
ordinary course of business;

       

      (r)   
       Investments permitted in connection
with Transfers permitted under Section 7.1;

       

      (s)          Investments
permitted by Section 7.3; and

       

      (t)    
      joint ventures or strategic alliances in the
ordinary course of Parent’s business consisting of the non-exclusive licensing
of technology, the development of technology or the providing of technical
support, provided that any cash investments by a Borrower do not exceed One
Hundred Thousand Dollars ($100,000) in the aggregate in any fiscal
year.

       

      Notwithstanding
the foregoing, Permitted Investments shall not include, and Borrowers and each
Subsidiary are prohibited from purchasing, purchasing participations in,
entering into any type of swap or other equivalent derivative transaction, or
otherwise holding or engaging in any ownership interest in any type of debt
instrument, including, without limitation, any corporate or municipal bonds with
a long-term nominal maturity for which the interest rate is reset through a
dutch auction and more commonly referred to as an “auction rate security;”
provided that, the Borrowers and any Subsidiary may be permitted to enter into
foreign exchange or currency swap agreements in the ordinary course of its
business, provided that the aggregate exposure thereunder shall not exceed One
Hundred Thousand Dollars ($100,000) at any time during any fiscal
year.

       

      “Permitted Liens”
are:

       

      (u)          (i)
Liens securing Permitted Indebtedness described under clause (b) of the
definition of “Permitted Indebtedness” or (ii) Liens arising under this
Agreement or other Loan Documents;

       

      (v)          Liens
for taxes, fees, assessments or other government charges or levies, either not
delinquent or being contested in good faith and for which Borrowers maintain
adequate reserves on their Books, provided that no
notice of any such Lien has been filed or recorded under the Internal Revenue
Code of 1986, as amended, and the Treasury Regulations adopted
thereunder;

       

      (w)         Liens
(including with respect to capital leases) securing Permitted Indebtedness
described under clause (e) of the definition of “Permitted Indebtedness” (i) on
property (including accessions, additions, parts, replacements, fixtures,
improvements and attachments thereto, and the proceeds thereof) acquired or held
by a Borrower or its Subsidiaries incurred for financing such property
(including accessions, additions, parts, replacements, fixtures, improvements
and attachments thereto, and the proceeds thereof) other than Accounts,
Inventory, and Equipment financed by the proceeds of a Credit Extension, or (ii)
existing on property (and accessions, additions, parts, replacements, fixtures,
improvements and attachments thereto, and the proceeds thereof) when acquired
other than Accounts, Inventory, and Equipment financed by the proceeds of a
Credit Extension, if the Lien is confined to such property (including
accessions, additions, parts, replacements, fixtures, improvements and
attachments thereto, and the proceeds thereof);

       

      
        
           

        

        
          - 24
-

          
            

          

        

        
           

        

      

       

      (x)          Liens
incurred in the extension, renewal or refinancing of the indebtedness secured by
Liens described in (a) through (c), but any extension, renewal or replacement
Lien must be limited to the property encumbered by the existing Lien and the
principal amount of the indebtedness it secures may not increase;

       

      (y)          leases
or subleases of real property granted in the ordinary course of a Borrower’s
business, and leases, subleases, non-exclusive licenses or sublicenses of
personal property (other than Intellectual Property) granted in the ordinary
course of such Borrower’s business, if the leases,
subleases, licenses and sublicenses do not prohibit granting Lender a security
interest therein;

       

      (z)          non-exclusive
licenses of Intellectual Property granted to third parties in the ordinary
course of business, and licenses of Intellectual Property that could not result
in a legal transfer of title of the licensed property that may be exclusive in
respects other than territory and that may be exclusive as to territory only as
to discreet geographical areas outside of the United States;

       

      (aa)        Liens
in favor of other financial institutions arising in connection with a Borrower’s
deposit or securities accounts held at such institutions;

       

      (bb)       Liens
of carriers, warehousemen, suppliers, or other Persons that are possessory in
nature arising in the ordinary course of business so long as such Liens attach
only to Inventory, securing liabilities in the aggregate amount not to exceed
One Hundred Thousand Dollars ($100,000) and which are not delinquent or remain
payable without penalty or which are being contested in good faith and by
appropriate proceedings which proceedings have the effect of preventing the
forfeiture or sale of the property subject thereto;

       

      (cc)        pledges
of cash collateral or other Liens in connection with credit card reserves and
deposits, not to exceed One Hundred Thousand Dollars ($100,000) in the aggregate
at any time; and

       

      (dd)       Liens
to secure payment of workers’ compensation, employment insurance, old-age
pensions, social security and other like obligations incurred in the ordinary
course of business (other than Liens imposed by ERISA).

       

      “Person” is any individual,
sole proprietorship, partnership, limited liability company, joint venture,
company, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, firm, joint stock company, estate,
entity or government agency.

       

      “Post-Closing Letter” is that
certain Post-Closing Letter dated as of December 7, 2010 by and among Borrowers
and Lender.

       

      “Prepayment Fee” is an
additional fee payable to the Lender in the amount equal to (x) three percent
(3.00%) of the principal amount of any portion of the Growth Capital Advance
prepaid if such prepayment occurs on or before the first anniversary of the
Closing Date; (y) two percent (2.00%) of the principal amount of any portion of
the Growth Capital Advance prepaid if such prepayment occurs after the first
anniversary of the Closing Date and on or before the second anniversary of the
Closing Date; and (y) one percent (1.00%) of the principal amount of any portion
of the Growth Capital Advance prepaid thereafter.

       

      “Promissory Note” means a
Promissory Note in substantially the form attached hereto as Exhibit
C.

       

      “Registered Organization” is
any “registered organization” as defined in the Code with such additions to such
term as may hereafter be made

       

      “Requirement of Law” is as to
any Person, the organizational or governing documents of such Person, and any
law (statutory or common), treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

       

      
        
           

        

        
          - 25
-

          
            

          

        

        
           

        

      

       

      “Responsible Officer” is any of
the Chief Executive Officer, President, Chief Financial Officer and Controller
of a Borrower.

       

      “Restricted License” is any
material license or other agreement with respect to which a Borrower is the
licensee (a) that prohibits or otherwise restricts such Borrower from
granting a security interest in such Borrower’s interest in such license or
agreement or any other property, or (b) for which a default under or
termination of could interfere with the Lender’s right to sell any
Collateral.

       

      “SEC” is the Securities
Exchange Commission or any successor or replacement Governmental
Authority.

       

      “Securities Account” is any
“securities account” as defined in the Code with such additions to such term as
may hereafter be made.

       

      “Shares” means with respect to
any Borrower or any Subsidiary (i) sixty-five percent (65%) of the issued and
outstanding capital stock, membership units or other securities owned or held of
record by it in any Subsidiary which (a) is not an entity organized under the
laws of the United States or any territory thereof and (b) does not at any time
have cash and/or book value assets in excess of Fifty Thousand Dollars
($50,000), and (ii) one hundred percent (100%) of the issued and outstanding
capital stock, membership units or other securities owned or held of record by
any Borrower in any Subsidiary of such Borrower which (a) is an entity organized
under the laws of the United States or any territory thereof or (b) is not an
entity organized under the laws of the United States or any territory thereof
and at any time has cash and/or book value assets in excess of Fifty Thousand
Dollars ($50,000).  Notwithstanding the forgoing, the term “Shares” in
respect of WaferGen Malaysia and WaferGen Luxemburg shall mean sixty-five
percent (65%) of the issued and outstanding capital stock, membership units or
other securities owned or held of record by Parent in WaferGen Malaysia or
WaferGen Luxemburg, respectively.

       

      “Subordinated Debt” is
(a) Indebtedness incurred by a Borrower subordinated to Borrowers’
Indebtedness owed to Lender and which is reflected in a written agreement in a
manner and form reasonably acceptable to Lender and approved by Lender in
writing, and (b) to the extent the terms of subordination do not change
adversely to Lender, refinancings, refundings, renewals, amendments or
extensions of any of the foregoing.

       

      “Subsidiary” is, as to any
Person, a corporation, partnership, limited liability company or other entity of
which shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, or both, by such
Person.  Unless the context otherwise requires, each reference to a
Subsidiary herein shall be a reference to a Subsidiary of Parent.

       

      “Trademarks” means any
trademark and servicemark rights, whether registered or not, applications to
register and registrations of the same and like protections, and the entire
goodwill of the business of a Borrower connected with and symbolized by such
trademarks.

       

      “Transfer” is defined in
Section 7.1.

       

      “WaferGen Luxemburg” means a
wholly owned Subsidiary of any Borrower, formed and operating under the laws of
the Grand Duchy of Luxemburg.

       

      “WaferGen Malaysia” means,
collectively, WGMB and WGRD.

       

      “WaferGen Malaysia Share Pledge
Documents” means the share pledge agreement and any related documents,
instruments or agreements required to effect the pledge of the Shares of
WaferGen Malaysia.

       

      
        
           

        

        
          - 26
-

          
            

          

        

        
           

        

      

       

      “Warrant” means the Warrant to
Purchase Stock issued by Parent to Lender as of the Closing Date.

       

      “WGMB” means WaferGen Malaysia
(Snd. Bhd.), a Subsidiary of Parent, one hundred percent (100%) of the ordinary
shares of which are owned by Parent.

       

      “WGRD” means WaferGen R&D
Malaysia (Snd. Bhd.), a wholly owned Subsidiary of Parent.

       

      [Balance of Page Intentionally Left
Blank]

       

      
        
           

        

        
          - 27
-

          
            

          

        

        
           

        

      

      IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed as of the Closing
Date.

       

      
        
          	
                  BORROWERS:

                	 
      
	 
      	 
      
	
                  WAFERGEN,
      INC.

                	 
      
	 
      	 
      
	
                  By

                	
                    

                	 
      
	 
      	 
      	 
      
	
                  Name:

                	
                    

                	 
      
	 
      	 
      	 
      
	
                  Title:

                	
                    

                	 
      
	 
      	 
      
	
                  WAFERGEN
      BIO-SYSTEMS, INC.

                	 
      
	 
      	 
      
	
                  By

                	
                    

                	 
      
	 
      	 
      	 
      
	
                  Name:

                	
                    

                	 
      
	 
      	 
      	 
      
	
                  Title:

                	
                    

                	 
      
	 
      	 
      
	
                  LENDER:

                	 
      
	 
      	 
      
	
                  OXFORD
      FINANCE CORPORATION

                	 
      
	 
      	 
      
	
                  By

                	
                    

                	 
      
	 
      	 
      	 
      
	
                  Name:

                	
                    

                	 
      
	 
      	 
      	 
      
	
                  Title:

                	
                    

                	 
      

        

      

       

      [Signature Page to Loan and Security
Agreement]

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      EXHIBIT A – COLLATERAL
DESCRIPTION

       

      The
Collateral consists of all of Borrowers’ right, title and interest in and to the
following personal property:

       

      All
goods, Accounts (including health-care receivables), Equipment, Inventory,
contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles, commercial tort claims, documents,
instruments (including any promissory notes), chattel paper (whether tangible or
electronic), cash, deposit accounts, fixtures, letters of credit rights (whether
or not the letter of credit is evidenced by a writing), securities, and all
other investment property, supporting obligations, and financial assets, whether
now owned or hereafter acquired, wherever located; and

       

      All
Borrower’s Books relating to the foregoing, and any and all claims, rights and
interests in any of the above and all substitutions for, additions, attachments,
accessories, accessions and improvements to and replacements, products, proceeds
and insurance proceeds of any or all of the foregoing.

       

      Notwithstanding
the foregoing, the Collateral does not include any of the following, whether now
owned or hereafter acquired: (i) more than sixty-five percent (65%) of the
issued and outstanding capital stock, membership units or other securities owned
or held of record by any Borrower in WaferGen Malaysia, WaferGen Luxemburg or
any other Subsidiary of a Borrower or Subsidiary which (a) is not an entity
organized under the laws of the United States or any territory thereof and (b)
does not at any time have cash and/or book value assets in excess of Fifty
Thousand Dollars ($50,000); (ii) property (including any attachments, accessions
or replacements) that is subject to a Lien that is permitted pursuant to clause
(a) or clause (c) of the definition of Permitted Liens, if the grant of a
security interest with respect to such property pursuant to this Agreement would
be prohibited by the agreement creating such Permitted Lien or would otherwise
constitute a default thereunder, provided that such property will be deemed
“Collateral” hereunder upon the termination and release of such Permitted Lien;
and (iii) any copyright rights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work, whether
published or unpublished; any patents, patent applications and like protections,
including improvements, divisions, continuations, renewals, reissues,
extensions, and continuations-in-part of the same; trademarks, trade names,
service marks, mask works, rights of use of any name or domain names and, to the
extent permitted under applicable law, any applications therefor, whether
registered or not; and the goodwill of the business of Borrower connected with
and symbolized thereby, know-how, operating manuals, trade secret rights,
clinical and non-clinical data, rights to unpatented inventions; and any claims
for damage by way of any past, present, or future infringement of any of the
foregoing (collectively, the “Intellectual Property”); provided, however, the
Collateral shall include all Accounts, license and royalty fees and other
revenues, proceeds, or income arising out of or relating to any of the
foregoing.

       

      Pursuant
to the terms of a certain negative pledge arrangement with Lender, Borrower has
agreed not to encumber any of its Intellectual Property.

       

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      EXHIBIT
B

       

      
        
          
             

          

          
            
            

            
              

            

          

          
             

          

        

      

      

      COMPLIANCE
CERTIFICATE

       

      
        
          	
                  TO:

                	
                  OXFORD
      FINANCE CORPORATION

                	
                  Date:  ___________________

                
	
                  FROM:

                	
                  WAFERGEN,
      INC.

                	 
      

  

      

      The
undersigned authorized officer of WAFERGEN, INC., for itself and on behalf of
WAFERGEN BIO-SYSTEMS, INC. (collectively, “Borrower”) hereby certifies that in
accordance with the terms and conditions of the Loan and Security Agreement
between Borrower and Lender (the “Agreement”),

       

      (i)
Borrower and its Subsidiaries are in complete compliance for the period ending
                     
 with all required covenants except as noted below and

       

      (ii) All
representations and warranties of Borrower and its Subsidiaries stated in the
Agreement are true and correct as of the date hereof. Attached are the required
documents, if any, supporting our certification(s). The Officer further
certifies that these are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) and are consistently applied from one period to the
next except as explained in an accompanying letter or footnotes.

       

      Please
indicate compliance status since the last Compliance Certificate by circling
Yes, No, or N/A under “Complies” column.

       

      
        
          
            	 
      	 
      	
                    
                      Reporting
      Covenant

                    

                  	 
      	
                    
                      Requirement

                    

                  	 
      	
                    
                      Complies

                    

                  
	
                    1)

                  	 
      	
                    Financial
      statements with Compliance Certificate

                  	 
      	
                    Quarterly
      within 45 days

                  	 
      	
                    Yes

                  	
                    No

                  	
                    N/A

                  
	
                    2)

                  	 
      	
                    Annual
      (CPA Audited) financial statements with Compliance
    Certificate

                  	 
      	
                    Within
      90 days after Fiscal Year End

                  	 
      	
                    Yes

                  	
                    No

                  	
                    N/A

                  
	
                    3)

                  	 
      	
                    Annual
      Financial Projections/Budget

                  	 
      	
                    Annually
      within 45 days of FYE and when revised

                  	 
      	
                    Yes

                  	
                    No

                  	
                    N/A

                  
	
                    4)

                  	 
      	
                    10-K
      and 10-Q Filings

                  	 
      	
                    Within
      5 days after filing with SEC

                  	 
      	
                    Yes

                  	
                    No

                  	
                    N/A

                  
	
                    5)

                  	 
      	
                    Account
      Statements (Bank, investment, etc.)

                  	 
      	
                    Monthly
      (and/or upon receipt) within 10 days

                  	 
      	
                    Yes

                  	
                    No

                  	
                    N/A

                  
	
                    6)

                  	 
      	
                    Total
      amount of Borrower’s cash and cash equivalents

                  	 
      	
                                           
      $________________

                  	 
      	 
      	 
      	 
      
	
                    7)

                  	 
      	
                    Total
      amount of Borrower’s cash and cash equivalents maintained with Bank of
      America as specified in Agreement.

                  	 
      	
                                           
      $________________

                  	 
      	
                    Yes

                  	
                    No

                  	
                    N/A

                  

          

        

      

       

      Deposit and Securities
Accounts   (Please list all accounts; attach
separate sheet if additional space needed)

       

      
        
          
            	 
      	 	
                    
                      Bank

                    

                  	 	
                    
                      Account
      Number

                    

                  	 	
                    
                      New

                      Account?

                    

                  	 	
                    
                      Acct
      Control

                      Agmt

                      in
      place?

                    

                  
	
                    1)

                  	 	 
      	 	 
      	 	
                    Yes

                  	
                    No

                  	 	
                    Yes

                  	
                    No

                  
	
                    2)

                  	 	 
      	 	 
      	 	
                    Yes

                  	
                    No

                  	 	
                    Yes

                  	
                    No

                  
	
                    3)

                  	 	 
      	 	 
      	 	
                    Yes

                  	
                    No

                  	 	
                    Yes

                  	
                    No

                  
	
                    4)

                  	 	 
      	 	 
      	 	
                    Yes

                  	
                    No

                  	 	
                    Yes

                  	
                    No

                  
	
                    5)

                  	 	 
      	 	 
      	 	
                    Yes

                  	
                    No

                  	 	
                    Yes

                  	
                    No

                  

          

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        Other
Matters

      

      
        	
                Have
      there been any changes in management?

              	
                Yes

              	
                No

              
	
                Have
      there been any transfers/sales/disposals/retirement of Collateral or
      IP?

              	
                Yes

              	
                No

              
	
                Have
      there been any new or pending claims or causes of action against Borrower
      in excess of $100,000?

              	
                Yes

              	
                No

              

      

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      
        Exceptions

        
          
            
              	
                      Please
      explain any exceptions with respect to the certification above: (If no
      exceptions exist, state “No exceptions.”  Attach separate sheet
      if additional space needed.)

                    	 
      	
                        

                    
	 
      	
                        

                    
	 
      	
                        

                    
	 
      	
                        

                    
	 
      	 
      

            

          

        

         

        
          
            
              	
                        

                    	 
      	
                        

                    	 
      	
                      LENDER’S
      USE ONLY

                    
	
                      SIGNATURE

                    	 
      	
                      DATE

                    	 
      	 
      
	 
      	 
      	 
      	 
      	
                      Received
      by:            ________________
      Verified

                    
	 
      	 
      	 
      	 
      	
                      by:       _____________________

                    
	 
      	 
      	 
      	 
      	 
      
	
                        

                    	 
      	 
      	 
      	
                      Date:________________  Date:
      ________________

                    
	
                      TITLE

                    	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                      Compliance
      Status  Yes                   No

                    
	 
      	 
      	 
      	 
      	 
      

            

          

        

        

          
            
               

            

            
              
              

              
                

              

            

            
               

            

          
  

      

      EXHIBIT
C

      
      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      
 

      SECURED
PROMISSORY NOTE

       

      
        
          	
                  $2,000,000

                	
                  Dated:
      December 7, 2010

                

        

      

       

      FOR VALUE
RECEIVED, the undersigned, WAFERGEN, INC., a Delaware corporation and WAFERGEN
BIO-SYSTEMS, INC., a Nevada corporation (collectively, “Borrower”), HEREBY
PROMISES TO PAY to the order of OXFORD FINANCE CORPORATION (“Lender”) the
principal amount of Two Million Dollars ($2,000,000) or such lesser amount as
shall equal the outstanding principal balance of the Growth Capital Advance made
to Borrower by Lender pursuant to the Loan Agreement (defined below), and to pay
all other amounts due with respect to the Growth Capital Advance on the dates
and in the amounts set forth in the Loan Agreement.  Capitalized
terms, unless defined in this Secured Promissory Note (this “Note”), shall have
the meaning given such capitalized term in the Loan Agreement.

       

      Interest
on the principal amount of this Note from the date of this Note shall accrue at
a fixed rate equal to the greater of (i) thirteen percent (13.00%) or (ii) the
LIBOR Rate, as of the Funding Date, plus the LIBOR Margin, per annum based on a
three hundred sixty (360) day year of twelve (12) thirty (30) day months or, if
applicable, the Default Rate.  Commencing on July 1, 2011, and
continuing on the first day of each successive calendar month thereafter,
Borrower shall make to Lender thirty (30) equal payments of principal and
accrued interest on the then outstanding principal amount. Any and all remaining
principal and interest shall be due and payable on the Maturity
Date.  In addition to the foregoing payments, on the Maturity Date (or
upon earlier repayment, whether as a result of acceleration or otherwise) the
Final Payment and the Prepayment Fee, as applicable (each as defined in and
subject to the terms and conditions of the Loan Agreement) shall be due and
payable by Borrower to Lender.

       

      Principal,
interest and all other amounts due with respect to the Growth Capital Advance,
are payable in lawful money of the United States of America to Lender as set
forth in the Loan Agreement. The principal amount of this Note and the interest
rate applicable thereto, and all payments made with respect thereto, shall be
recorded by Lender and, prior to any transfer hereof, endorsed on the grid
attached hereto which is part of this Note.

       

      This Note
is the Note referred to in, and is entitled to the benefits of, the Loan and
Security Agreement, dated as of December 7, 2010, to which Borrower and Lender
are parties (as amended from time to time, the “Loan Agreement”).  The
Loan Agreement, among other things, (a) provides for the making of this secured
Growth Capital Advance to Borrower, and (b) contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events.

       

      This Note
may not be prepaid except as provided in the Loan Agreement. This Note and the
obligation of Borrower to repay the unpaid principal amount of the Growth
Capital Advance, interest on the Growth Capital Advance and all other amounts
due Lender under the Loan Agreement is secured under the Loan
Agreement.

       

      Presentment
for payment, demand, notice of protest and all other demands and notices of any
kind in connection with the execution, delivery, performance and enforcement of
this Note are hereby waived.

       

      Borrower
shall pay all reasonable fees and expenses, including, without limitation,
reasonable attorneys’ fees and costs, incurred by Lender in the enforcement or
attempt to enforce any of Borrower’s obligations hereunder not performed when
due. This Note shall be governed by, and construed and interpreted in accordance
with, the laws of the State of California.

       

      [Balance of Page Intentionally Left
Blank]
  

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, the parties hereto have caused this Note to be executed as of
the Closing Date.

       

      
        
          	 
      	
                  WAFERGEN,
      INC.

                
	 
      	 
      
	 
      	
                  By:

                	
                    

                
	 
      	 
      	 
      
	 
      	
                  Name:

                	
                    

                
	 
      	 
      	 
      
	 
      	
                  Title

                	
                    

                
	 
      	 
      
	 
      	
                  WAFERGEN
      BIO-SYSTEMS, INC.

                
	 
      	 
      
	 
      	
                  By:

                	
                    

                
	 
      	 
      	 
      
	 
      	
                  Name:

                	
                    

                
	 
      	 
      	 
      
	 
      	
                  Title

                	
                    

                

        

      

       

      
        [Signature Page to Secured Promissory
Note]

      

      
      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      LOAN INTEREST RATE AND
PAYMENTS OF PRINCIPAL

       

      
        
          
            
              	
                      
                        Date

                      

                    	 	
                      
                        Principal

                        Amount

                      

                    	 	 	
                      
                        Interest
      Rate

                      

                    	 	 	
                      
                        Scheduled

                        Payment Amount

                      

                    	 	 	
                      
                        Notation
      By

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