Document:

bonz_ex101.htm

PRELIMINARY GEOLOGIC

 

REPORT ON THE

 

TARANTULA/HULL

 

PROJECT

 

MARTINEZ (CONGRESS) MINING DISTRICT,

YAVAPAI COUNTY, ARIZONA

 

Prepared For:

 

Bonanza Goldfields Corporation

 

2415 E. Camelback Rd.

 

Suite 700

 

Phoenix, AZ 85016

 

By:

 

William C. Berridge, P.G., President/CEO

 

Arne F. Stenseth, Geochemist

 

December 8, 2011

 

	
1020 West Wickenburg Way, Suite E-9

Wickenburg, AZ 85390-3290

	

 

 

  

  

  

 

	
 

	 

 

 

	CONTENTS	 	Page	 
	 	 	 	 
	SUMMARY	 	 	1	 
	INTRODUCTION	 	 	2	 
	LOCATION AND ACCESS	 	 	2	 
	PHYSIOGRAPHY AND CLIMATE	 	 	3	 
	MAP COVERAGE	 	 	3	 
	LAND STATUS AND CLAIM DATA 	 	 	6	 
	HISTORY, PAST PRODUCTION, AND DEVELOPMENT 	 	 	10	 
	REGIONAL SETTING AND ANALOGOUS DEPOSITS	 	 	19	 
	LOCAL GEOLOGY	 	 	23	 
	LITHOLOGIES 	 	 	26	 
	STRUCTURES	 	 	26	 
	MINERALOGY AND ALTERATION	 	 	27	 
	ORE CHARACTER, GRADES, AND VOLUME	 	 	28	 
	CONCLUSIONS AND RECOMMENDATIONS  	 	 	31	 
	SELECTED REFERENCES	 	 	33	 
	STATEMENT OF QUALIFICATIONS, WILLIAM C. BERRIDGE 	 	 	35	 
	STATEMENT OF QUALIFICATIONS, ARNE F. STENSETH	 	 	36	 

 

	ILLUSTRATIONS 	 	Page	 
	 	 	 	 	 
	Figure 1. Regional Location Map	 	 	4	 
	Figure 2. Location Map of the Tarantula Project/Congress Mine Area	 	 	5	 
	Figure 3. Claim Map of the Tarantula Project Area	 	 	8	 
	Figure 4. Aerial Photograph of the Tarantula Project Area	 	 	9	 
	Figure 5. Major Tectonic Blocks and Block Bounding Shear Zones in Central Arizona	 	 	21	 
	Figure 6. Chaparral Shear Zone Model 	 	 	22	 
	Figure 7. View of Large NW-SE Trending Quartz Vein	 	 	24	 
	Figure 8. View of Large E-W Trending Quartz Vein	 	 	25	 

 

  

  

  

	 	 	 	 	 
	ILLUSTRATIONS, CONTINUED	 	 	 	 
	 	 	 	 	 
	Plate 1. Regional Geologic Map of the Congress/Rich Hill Area (available in ARI office)	 	 	 	 
	Plate 2. Claim Map of the Tarantula Project Area (Scale 1”:2,000')    	 	 	 	 
	Plate 3. Drainage Boundary Map of the Tarantula Project Area (Scale 1”:2,000')     	 	 	 	 
	Addendum 1. Analyses of Rock Chip Samples from Tarantula Project    	 	 	 	 
	 	 	 	 	 

 

 

  

  

  

 

 

	
SUMMARY

 

A preliminary geologic evaluation was conducted on the Tarantula Property which is owned by Bonanza Goldfields Corporation (BONZ). The property is located approximately 3.2 miles north-northwest of Congress, Arizona, and consists of approximately 435 acres of unpatented lode mining claims and 160 acres of patented lode mining claims which occupy the east-central portion of the Date Creek Mountains in Yavapai County, Arizona. The Tarantula Property is situated in the Martinez (Congress) Mining District and is approximately 2 miles northwest of the historic Congress Mine, the largest mine in the district and the second largest primary gold producer in Arizona.

 

The Congress Mine has produced over 400,000 ounces of gold from three main veins, the Congress, Niagra, and Queen of the Hills. The average amount of gold recovered from the Congress vein was 0.70 ounces per ton (opt), with 0.415 opt Au recovered from the Niagra vein, and approximately 0.40 opt Au recovered from the Queen of the Hills vein.

 

Most of the gold production came from quartz fissure veins that closely followed “greenstone” (andesite or diabase) dikes that occurred along east-west and northwest-southeast trending structures in early Proterozoic granitic rocks. The veins ranged from a few inches to several feet in width, with strike lengths up to 4,000 feet and were followed down-dip to depths exceeding 4,000 feet. The mineralogy of the veins consists of auriferous quartz with silver and varying amounts of sulfides, primarily pyrite with smaller amounts of galena, chalcopyrite, and sphalerite, and locally molybdenite.

 

Hematite is locally prevalent as masses and relic structures formed from oxidation of the pyrite. The highest grade ores (< 1 opt Au) were reportedly associated with the highest concentrations of pyrite, with the gold being very fine-grained and occurring within the sulfides, as opposed to being free-milling in the quartz.

 

Auriferous quartz and quartz-sulfide veins occur on the Tarantula Property and many exhibit the same characteristics as those in the Congress Mine and other mines in the area. These veins ranged up to several feet in width and have strike lengths ranging from hundreds to thousands of feet, with unknown depths.

 

Preliminary rock chip geochemical channel sampling of some quartz veins located on the patented claims (held by BONZ) by Brian R. Bond, M.Sc., Consulting Geologist, and returned gold values which exceeded the 3,000 ppb detection limit from Skyline Labs.

 

ARI staking crews discovered numerous large quartz veins up to 4 feet wide and hundreds of feet long on the unpatented claims. These veins also have many of the same characteristics of the past producing veins in the district, and have yet to be explored.

 

 

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The geologic setting of the property is favorable for the concentration of placer gold in the local gravels that occur in drainage channels and elevated benches and for lode gold that occurs within the early Proterozoic granitic rocks as auriferous quartz fissure veins with locally abundant sulfides and iron oxides.

 

Although some preliminary testing has been done on portions of the property, the majority of the land package has virgin placer gravels and large quartz veins that have never been explored or tested. Additional exploration (mapping, sampling, bulk-sampling geophysics, drilling, etc.) must be conducted in order to determine the areal extent, volumes, grades, and values of auriferous quartz veins and gravels within the expanded claim block.

 

The large land package with widespread areas of anomalous gold values; proximity to the Congress Mine; large iron oxide rich quartz veins which exhibit mineralogic and structural similarities to the Congress, Niagra, Queen of the Hills, Golden Wave and other mineralized, economic vein systems in the area; and the presence of placer gold in widespread gravels indicates that the Tarantula Property may host a large, potentially economic gold deposit and undoubtedly represents an excellent exploration target with potential for both placer and lode gold production from auriferous placers and veins.

 

Small-scale production can probably be achieved quite rapidly, while the expanded exploration phase is being conducted. This production will help offset the required exploration costs and will provide valuable information for designing a larger processing facility as warranted by exploration results.

 

	
INTRODUCTION

 

LOCATION AND ACCESS:

 

The Hull Lode/Tarantula Placer property (Figures 1, 2, 3) consists of 8 patented lode mining claims and 30 unpatented lode mining claims covering an area of approximately 600 acres within Sections 9, 10. 15, and 16, Township 10 North, Range 6 West, Gila and Salt River Base Meridian (G&SRM), Yavapai County, Arizona.

 

The project area is approximately 4 miles north of Congress, Arizona, along the eastern flank of the Date Creek Mountains, in west-central Arizona. The property (Figures 1 and 2) is easily accessible from Wickenburg, Arizona via approximately 17 miles of paved roads and 2 miles of graded gravel roads.

 

 

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PHYSIOGRAPHY AND CLIMATE:

 

The topography ranges from low-relief alluvial fans and pediments to rugged peaks and ridges. Elevations range from 3,360 feet to 4,160 feet above sea level (Figure 3).

 

The climate is moderate with warm summers and cool winters, and year-round operations may be conducted. The area receives only limited rainfall (usually between 10 and 15 inches per year) with most occurring during the summer monsoon (June 15 to September 30) and in the winter.

 

Vegetation is sparse to moderate and is typical of the Southwestern Desert scrub biotic community within the lower Sonoran life-zone. Shrubs and trees include brittlebrush, palo verde, ocotillo, century plant, and catclaw. Local cacti include saguaro, cholla, barrel, prickly pear, and beavertail.

 

The unpatented portions of the project area are under the jurisdiction of the United States Bureau of Land Management, located in Phoenix, Arizona.

 

	
MAP COVERAGE

 

The property occupies an area of approximately 600 acres on the Congress 7.5' topographic quadrangle, 1969, scale 1:24,000 and the O'Neill Pass 7.5' quadrangle, 1969, scale 1:24,000. This area is also covered by the Bradshaw Mountains 30 x 60' topographic quadrangle, 1981, scale 1:100,000 (metric); the Congress 30' topographic quadrangle, 1903, scale 1:125,000; and the Prescott 1 x 2 degree (AMS) quadrangle, 1970, scale 1:250,000.

 

The general geology of the area is shown on the Geologic Highway Map of Arizona, 1998, scale 1:1,000,000 and the Geologic Map of Yavapai County 1958, scale 1:375,000 provided by the Arizona Geological Survey.

 

More detailed coverage is provided by Brian R. Bond (2011), consulting geologist, who conducted preliminary geologic mapping on a portion of the project area at a scale of 1”=500', and by William C. Berridge, P.G. (2011) who prepared a regional drainage pattern map which covers approximately 9 square miles of the eastern Date Creek Mountains, including the entire project area, at a scale of 1”=500'.

 

  

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LAND STATUS/CLAIM DATA

 

The property (Figure 3) consists of 8 patented lode mining claims and 30 unpatented lode mining claims which cover approximately 160 acres of private land and 435 acres of BLM land in Sections 9, 10, 15, and 16, Township 10 North, Range 6 West, Gila and Salt River Base Meridian, Yavapai County, West-Central Arizona.

 

Bonanza Goldfields Corporation (OTCBB:BONZ), Bonanza, owns the Hull patented lode mining claim and has optioned 7 other patented lode mining claims, the Lincoln, Granite Reef, Granite Reef Extension, Prescott, State, Dakota, and Planet Mier from Jubal Ahlstrom of Wickenburg, Arizona.

 

In addition to holding approximately 160 acres of patented mining claims, Bonanza holds 30 contiguous unpatented lode mining claims (DCM 1- 24, DCM 6 Extension, DCM 12 Extension, and Hawk 1-4) which cover approximately 435 acres in Sections 10, 15, and 16, T10N, R6W, G&SRM.

 

The unpatented lode mining claims have been recorded with the Yavapai County Recorder's Office in Prescott, Arizona and the United States Bureau of Land Management (BLM) in Phoenix, Arizona. At the time of this report, all of these claims have an active status and are in good standing according to the BLM which has jurisdiction over the claims.

 

The claims are more specifically described as follows:

 

Bonanza Goldfields Corporation Tarantula Project

 

Unpatented Lode Mining Claims

 

(Approximately 435 Acres)

 

	
Claim Name

	 	
Book/Page

(Yavapai County Recorder's Office)

	 	 	
AMC Number

(BLM Serial Number)

	 
	
DCM 1

	 	 	4836	 	 	 	920	 	 	 	411442	 
	
DCM 2

	 	 	4836	 	 	 	921	 	 	 	411443	 
	
DCM 3

	 	 	4836	 	 	 	922	 	 	 	411444	 
	
DCM 4

	 	 	4836	 	 	 	923	 	 	 	411445	 
	
DCM 5

	 	 	4836	 	 	 	924	 	 	 	411446	 
	
DCM 6

	 	 	4836	 	 	 	925	 	 	 	411447	 
	
DCM 6 Extension

	 	 	4845	 	 	 	317	 	 	 	412202	 
	
DCM 7

	 	 	4836	 	 	 	926	 	 	 	411448	 
	
DCM 8

	 	 	4836	 	 	 	927	 	 	 	411449	 

 

  

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DCM 9

	 	 	4836	 	 	 	928	 	 	 	411450	 
	
DCM 10

	 	 	4836	 	 	 	929	 	 	 	411451	 
	
DCM 11

	 	 	4836	 	 	 	930	 	 	 	411452	 
	
DCM 12

	 	 	4836	 	 	 	931	 	 	 	411453	 
	
DCM 12 Extension

	 	 	4845	 	 	 	316	 	 	 	412203	 
	
DCM 13

	 	 	4836	 	 	 	932	 	 	 	411454	 
	
DCM 14

	 	 	4836	 	 	 	933	 	 	 	411455	 
	
DCM 15

	 	 	4836	 	 	 	934	 	 	 	411456	 
	
DCM 16

	 	 	4836	 	 	 	935	 	 	 	411457	 
	
DCM 17

	 	 	4836	 	 	 	936	 	 	 	411458	 
	
DCM 18

	 	 	4836	 	 	 	937	 	 	 	411459	 
	
DCM 19

	 	 	4836	 	 	 	938	 	 	 	411460	 
	
DCM 20

	 	 	4836	 	 	 	939	 	 	 	411461	 
	
DCM 21

	 	 	4836	 	 	 	940	 	 	 	411462	 
	
DCM 22

	 	 	4836	 	 	 	941	 	 	 	411463	 
	
DCM 23

	 	 	4836	 	 	 	942	 	 	 	411464	 
	
DCM 24

	 	 	4836	 	 	 	943	 	 	 	411465	 
	
Hawk 1

	 	 	4836	 	 	 	944	 	 	 	411466	 
	
Hawk 2

	 	 	4836	 	 	 	945	 	 	 	411467	 
	
Hawk 3

	 	 	4836	 	 	 	946	 	 	 	411468	 
	
Hawk 4

	 	 	4836	 	 	 	947	 	 	 	411469	 

The DCM 1-18 and DCM 6 Extension and DCM 12 Extension lode mining claims are located in Section 10, T10N, R6W; the DCM 19-24 lode mining claims are located in Section 15, T10N, R6W; and the Hawk 1-4 lode mining claims are located in Section 16, T10N, R6W, G&SRM.

 

  

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HISTORY, PAST PRODUCTION AND DEVELOPMENT OF THE

MARTINEZ (CONGRESS) DISTRICT

 

The Martinez Mining District is located at the southeast margin of the Date Creek Mountains in southern Yavapai County, Arizona, approximately 3 miles north of the town of Congress, Arizona. The district covers the east-central portion of Township 10 North and Range 6 West, Gila and Salt River Base Meridian (Rehrig and Wilson, 1985).

 

CONGRESS MINE:

 

In the early 1870's, Ben Bartlett staked a claim on gold-bearing quartz vein and set up a small mining operation on the site that would become the Congress Mine. This operation was subsequently abandoned according to some sources (Wikipedia, 2011).

 

In 1883, this site was rediscovered by prospector Dennis May, who developed the mine and then sold it in 1887 to Joseph “Diamond Joe” Reynolds for $65,000.00. Reynolds purchased the property on advice from Frank M. Murphy, a mining promoter from Prescott, Arizona, who was subsequently named as Mine Superintendent by Reynolds (W. F. Staunton, 1926).

 

From March, 1889 through August, 1891, Reynolds developed the property, sunk a shaft and built a 20 stamp mill and Frue Vanner tables for concentration. No plates were used in the mill as there was practically no free gold in the ore, with all of the values being concentrated in sulfides, primarily marcasite. After Mr. Reynolds death in August, 1891, active operations were suspended, except for a certain amount of development work and enlargement of the mill. The mill was enlarged to 40 stamps and more Frue Vanners were added and shaft #2 was sunk to 1,000', but no stoping was done below the 650' level. Production during the period from March 3, 1889 through August 31, 1891 amounted to 4,693 tons of ore for a net return of $592,074.89 (W. F. Staunton, 1926).

 

In March, 1894, the Congress Gold Mining Company purchased the property from the Reynolds estate and active operations were resumed. The principals of the company, when incorporated in 1895, were C. D. Arms, E. B. Gage (President), and Frank M. Murphy (Wikipedia, 2011).

 

On April 5, 1901, the Congress Gold Mining Company was sold to a syndicate headed by J. W. Mackay for $5,000,000 and the company was reorganized as the Congress Consolidated Mines Company, Limited, with E. B. Gage continuing as President. In May, 1901, the Congress Mine was visited by President William McKinley who was on a tour of the country. President McKinley was accompanied by, among others, Nathan Oakes Murphy, the former Arizona Territorial Governor and his brother Frank M. Murphy, who was one of the former owners of the Congress Mine and also

builder of the Santa Fe, Prescott and Phoenix Railway (W. F. Staunton, 1926; Wikipedia, 2011)

 

  

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In 1902, a competing New York syndicate acquired claims adjacent to the Congress Mine that were previously ignored by the mining engineers of the Congress Gold Company as being devoid of precious metals. This oversight led to the development of the Senate Mine, also known as the Congress Extension. Additional gold-bearing quartz veins were also discovered in areas previously overlooked by the Congress Gold Mining Company, by their own shareholders. These new discoveries led the Congress Consolidated Mines Company, Limited to explore areas within their existing shafts for new gold-bearing quartz veins (Wikipedia, 2011).

 

In 1905, this exploration was successful and led to the discovery of a new vein in the #5 shaft, and by 1906, the Congress Mine was again in full production.

 

From 1894 – 1910, there was a total of 7 shafts developed on the property as follows:

 

3 on the Congress Vein (#1 to an 1,100' depth; #2 to a 1,700' depth; and #3 to a 4,000' depth)

 

3 on the Niagra Vein (#4 to a 1,000' depth; #5 to a 2,050' depth; and #6 to an 1,800' depth)

 

1 on the Queen of the Hills Vein (#7 to 200' below tunnel level)

 

The mine was in production until March, 1911. Production during this second period from March, 1894 to December, 1910, yielded a net return of $7,057,422.75 from gross returns of $7,649,497.64. During this period, 692,332 tons were mined from the Congress Vein (370,022 tons of 0.70 opt Au), Niagra Vein (293,215 tons of 0.415 opt Au, and Queen of the Hills Vein (20,125 tons of 0.40 opt Au) which yielded 388,477 ounces of gold, and 345,598 ounces of silver. The ores averaged $11.81/ton at a $20.67/oz gold price and a $0.60/oz silver price. The tailings averaged $1.20 per ton at those prices (W. F. Staunton, 1926; Rehrig and Wilson, 1985; Herald and Russ, 1985), so the gross value of the ore averaged $13.01 per ton.

 

In 1911, the Congress Mine operated for only 3 months before closing down. During this same time, surrounding claims continued to be worked, although not as successfully as the Congress had been. The owners of the Congress Mine property began to sell off parts of the property, and mining rights to the dumps and tailings, to other mining companies (Wikipedia, 2011).

 

In 1912, the Development Company of America (the parent company of the Congress Consolidated Mines Company, Limited) sold the Congress Mine to a mining conglomerate owned by the Guggenheim family, which owned numerous other mining properties in Arizona (Wikipedia, 2011).

 

From 1912 through 1935, production was limited to small lessees and attempts to rework old tailings and dumps, and also robbing pillars from underground workings. An estimated 50,000 tons of dump and tailings were processed (Herald and Russ, 1985).

 

  

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In 1937, the Congress Mine was re-opened and produced approximately 24,000 oz Au before being shut down during World War II. A 300 tpd counter-current cyanide mill was erected in 1937, along with a power plant (Herald and Russ, 1985).

 

From 1938 to 1942, approximately 385,505 tons of material was processed, including 276,372 tons of tailings and 106,629 tons of dumps. The mill head from these materials averaged 0.094 opt Au. The recovery rate from this operation was approximately 69% (Herald and Russ, 1985).

 

From 1889 through 1950, the Martinez District is credited with a total production of 990,000 tons from which 432,500 oz Au, 466,000 oz Ag, 201,000 lbs Cu, and 1,600 lbs Pb were produced (Rehrig and Wilson, 1985).

 

In 1965, D. W. Jaquays acquired part of the old Congress Mine property and established the Congress Consolidated Gold Mining Company (Pay Dirt, September 1984). The company enlarged their holdings in the district and built a cyanide heap leach plant that produced about 4,000 oz Au in the late 1970's (Rehrig and Wilson, 1985).

 

On March 5,1980, Ken Phillips, P. E. wrote in a letter to Salisbury Adams that the Congress Consolidated Gold Mining Company was reworking some of the old dumps and planning to begin mining operations in the future (Written communication between Salisbury Adams and Ken Phillips, Arizona Department of Mineral Resources).

 

In 1981, the Congress Consolidated Gold Mining Company optioned their property to a small Oklahoma City based oil company called Magic Circle Energy Corporation. Magic Circle drilled approximately 100 core holes and discovered extensions of the Old Congress mine veins. This discovery is reported to contain approximately 350,000 tons of reserves with an average grade of 0.28 oz/ton Au (Pay Dirt, September 1984; Rehrig and Wilson, 1985).

 

From 1984 – 1988, Magic Circle Energy Corporation entered into a J. V. Agreement with Echo Bay Mines, Limited, Edmonton, Alberta, develop the reserves previously delineated by drilling. Echo Bay agreed to spend $7,250,000 in development costs in order to earn a 51% interest in the property. In September, 1984, Echo Bay reportedly had 2 geologists and 2 drill rigs working on the property (Pay Dirt, September 1984; Rehrig and Wilson, 1985).

 

In 1988, Echo Bay closed down their operations and indicated that they had mined out the ore body and had been unsuccessful in finding additional ore (ASARCO file note by James D. Sell, April 18, 1988).

 

  

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In 1989, Malartic Hygrade Gold Mines purchased the Congress Mine from Echo Bay Mining Company. In 1990, the company constructed and opened a 500 tpd underground mining operation and milling facility. A total of 80 people were employed, including 23 at the mine and 57 at the mill and office. The mill processed approximately 350 tpd through the crushing circuit and the finely ground ore was processed in aqueous calcium cyanide leach tanks and a CIL (carbon-in-leach) circuit which produced gold and silver saturated carbon. The carbon was then processed in the stripping building with a hot (205° F) caustic cyanide solution that removed gold and silver from the carbon. Gold and silver were electroplated from the cyanide canister and melted to produce doré bars that were shipped to a refinery. (The Wickenburg Sun, August 7, 1991).

 

In June, 1991, Malartic Hygrade Gold Mines changed their name to Republic Goldfields, Inc. and continued to operate the Congress Mine until 1992 when the mining operation was shut down and the mill continued to process ore that was stockpiled at the site (personal communication with Danny Walker, ex-Republic Goldfields, Inc. employee at Congress Mine, November, 2011).

 

CONGRESS EXTENSION (SENATE) MINE:

 

The Congress Extension Mine, also known as the Senate Mine was first operated in the 1920's by means of a 950' shaft and 9 levels which extended approximately 100' east and west of the shaft. The property is located in Section 15, Township 10 North, Range 6 West, G&SRM. It is approximately 0.5 miles west of the Congress mine but is separated from the

 

Congress and Niagra Veins by alluvium which covers any outcrops.

 

The relationship between the Congress Extension and the Congress and Niagra Veins is unknown, but the character of the ore in these deposits is very similar.

 

Small but steady production was achieved from approximately 1923 until approximately 1936, and the ore averaged $8.50 to $17.50 dollars per ton at a gold price of $20.67/oz Au.

 

The vein strikes east-west in massive, unfoliated granite and dips 35- 40 degrees north. The orebody was a flat lens about 3' in thickness, and the vein is massive, locally shattered, whole quartz with bunches and disseminations of pyrite and some chalcopyrite. The oxidized vein material contains abundant limonite and some copper oxides. Yearly production is estimated to have been 35 to 85 tons from 1921 – 1936.

 

GOLDEN WAVE (REES, REESE, CORONADO) MINE:

 

The property is approximately 3 miles north-northeast of Tenderfoot Hill and 1.3 miles north-northwest of the Congress Mine. There are two main inclined shafts (southern shaft and northern shaft) which are located at an elevation of 3,900' in Section 11, Township 10 North, Range 6 West, G&SRM (USGS, 2011; Rehrig and Wilson, 1985).

 

When in operation from 1934 – 1938, the property consisted of 13 claims (2 patented lode claims and 11 unpatented lode claims) which extended west and northwest from the main shafts toward the Piedmont Mine in Section 10.

 

  

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The main (southern) inclined shaft is 1,180' deep with drifts to the southeast and northwest at the 300' and 500' levels. A 500' crosscut estends from the bottom to the surface. The northern inclined shaft is 300' deep and is developed by a number of levels, many of which were inaccessible in 1936 because of caving. There are also additional shafts on the property which range from 50' to 300' in depth (USGS, 2011; Rehrig and Wilson, 1985).

 

The mine workings accessed a quartz vein which ranged in thickness from 2 to 4 feet. The vein occurred along a diorite dike that intruded massive, unfoliated Precambrian granite. The vein strikes northwest and dips approximately 30° northeast. It is reportedly more oxidized and altered in the northwestern portion of the property. At the southern end of the property, the quartz vein contains auriferous iron, lead, copper, and minor zinc sulfides, and the best ore reportedly occurs with hematite and limonite (Rehrig and Wilson, 1985; USGS, 2011).

 

In March, 1936, shipments of ore were made from the auriferous quartz vein in the upper part of the southern inclined shaft which averaged $9 to $15 per ton in Au values (at $35.00/oz Au) or approximately 0.26 to 0.43 opt Au. Later mining activity was centered on the 6” to 18” thick vein in the northern inclined shaft which averaged $40 to $60 per ton in Au values (at $35.00/oz Au), or approximately 1.14 to1.71 opt Au.

 

Considerable amounts of Au also occurred in the fractured parts of the rocks adjacent to the vein, as fines from the waste dump reportedly ran up to $8 per ton Au (at $35.00/oz Au), or approximately 0.23 opt Au. Between March, 1935, and August, 1936, an estimated 700.7 tons of ore were produced at the mine which yielded approximately 425 oz Au valued at $14,877.00 at a gold price of $35.00 per ounce (Rehrig and Wilson, 1985).

 

James Rees, owner of the Golden Wave mine, died on April 12, 1940. 

 

CONGRESS COPPER-MOLY PORPHYRY PROPERTY:

 

The Congress Copper-Moly Porphyry property is located in the southern foothills of the Date Creek Mountains in Section 20, Township 10 North, Range 6 West, G&SRM. The property is approximately 2 miles southwest of the Hawk #1-4 claim block, which is part of Bonanza Goldfields Corporation's Tarantula Project claims.

 

The property is characterized by at least eleven breccia pipes that intrude Precambrian granites and granitic gneisses. These pipes are locally

mineralized and contain anomalous amounts of copper, molybdenum, gold, arsenic, and antimony.

 

  

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As described below, the property has been the subject of numerous previous evaluations, and the exploration data from these various programs is currently being evaluated by Auric Resources International, Inc., Wickenburg, Arizona.

 

In 1959, the Congress Copper-Moly porphyry was staked by Ike Kusisto. The property was staked again in 1974 – 1975 by W. D. Roper and partners Burns Clark and his brother. They drilled 2 or 3 diamond drill holes (DDH's) to an approximate depth of 200'. In 1976, Exxon acquired the property from W. D. Roper and drilled 2 – 4 DDH's.

 

From 1981 to 1988, Rich Lundin and Wombat Mining Company held the property and named it the Golden Horseshoe Group. They took 16 rock chip samples and contacted Barry Watson at U. S. Borax to see if there was any interest in taking on the project.

 

In 1991, the property was staked by Thornwell “Thorny” Rogers as the Sue claims. In March, 1992, Thorny Rogers submitted the property to Homestake Mining's Sam Monteleone who took 39 rock chip samples and turned the project down. Rogers then contacted Dave Cockrum of Noranda who sampled the property and also turned it down. Rogers contacted Kennecott Corporation's Joe Wilkins who collected 9 rock chip samples and turned the project down.

 

In July and August, 1992, Rogers contacted Robert Suda at Cominco American Resources, Inc. Suda collected 5 rock chip samples, reviewed and returned the data, and concluded that the property was too small. Rogers also contacted Randal White at Phelps Dodge. White took 12 rock chip samples, reviewed the data, and turned the project down.

 

In April and May, 1993, Thorny Rogers contacted Cambior Exploration WA who took 42 rock chip samples, reviewed the data, and turned the property down.

 

In March, 1995, Rich Lundin prepared geology maps with alteration patterns and sample locations of BHP samples. In April, 1997, Lundin and Virgil Barczak drilled 1, 100' hole and obtained analytical data from samples.

 

In May, 1997, Rich Lundin and his partner contacted American Copper and Nickel Company who took 20 rock chip samples from the property.

 

Source: Personal communications with, and Arizona Department of Mines and Mineral Resources (ADMMR) data received from, Nyal Niemuth, Arizona Geological Survey, September, 2011.

 

  

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TARANTULA PROJECT PATENTED CLAIMS:

 

Bonanza Goldfields Corporation owns the patented Hull claim and holds options on the Granite Reef, Granite Reef Extension, State, Dakota, Lincoln, Prescott, and Planet Mier patents.

 

In 1918, the Granite Reef Gold Mining Company was the owner-operator of the Granite Reef claims. No development of production records were available for this report (USGS, 2011).

 

On October 22, 1918, S. F. Dennison, administrator of the estate of the late George W. Hull filed a petition in superior court to dissolve the Granite Reef Gold Mining Company. The petition stated that the company was formed at Jerome in 1900 with Mr. Hull being the principal stockholder, and that at a meeting of the shareholders on October 15, 1918, the shareholders voted to formally dispose of the company. The Granite Reef Gold Mining Company owned a group of 13 claims in the Congress district, this being its only asset (Prescott Journal Miner, October 23, 1918).

 

George W. Hull was a well-known millionaire mining magnate in Arizona. In addition to the Hull Lode and the other claims owned by the Granite Reef Gold Mining Company, Hull was a principal in copper mining operations in the famous mining town of Jerome, Arizona, where he was also the mayor.

 

1924 was the first year of production from the George Washington, Lincoln, and Emil Hermsdorf claims (collectively known as the Hermsdorf Mine). In the Hermsdorf mine, a quartz vein which cuts massive, unfoliated Precambrian granite and dips shallowly north is accessed from a shaft located alongside a creek in the center of the south 1/2 of Section 10, Township 10 North, Range 6 West, G&SRM (USGS, 2011). This mine is reported to have produced a small quantity of gold, silver, and copper ores. Mineralization consisted of auriferous pyrite, and/or auriferous galena and chalcopyrite which occur in a quartz vein following an andesite dike which dips shallowly north (Ross and Dewitt, 1981; USGS, 2011). 1935 was the last year of production from the Hermsdorf Mine. No production records were available for this report. Apparently, Emil Hermsdorf operated the mine from 1924 – 1935. Hermsdorf died on June 30, 1939 (Wickenburg Sun, June 30, 1939).

 

On April 7, 1954, patents for the Hermsdorf Mine were issued to the Robert M. Adams Company. The Adams were a prominent family involved with the discovery of the Cuyuna Iron Range and development of the Minnesota iron ore deposits (Wikipedia, 2011; Star Tribune, Minneapolis, Minnesota, 2004).

 

On March 5, 1980, Salisbury Adams, the son of Robert M. Adams, of Wayzata, Minnesota, contacted Ken Phillips, a mining engineer with the Arizona Department of Mineral Resources, regarding his family's ownership of the Hermsdorf Mine. Adams was looking for information on the property

(Personal communication between Salisbury Adams and Ken Phillips, Arizona Department of Mineral Resources).

 

  

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Salisbury Adams earned a B. S. degree in Metallurgy from the University of Minnesota and a law degree from Harvard (Minnesota Legislative Reference Library, 2011).

 

On March 24, 1980, Ken Phillips of the Arizona Department of Mineral Resources replied to Mr. Adams, stating that ADMR had no specific information on the properties. Speaking of the claims in question, Mr Phillips told Mr. Adams, “However, their proximity to important past producers of gold and the present interest in precious metals may warrant further investigation of the properties mineral potential.” Mr. Phillips added, “In summary, the history of the area, regional geology, and current metal prices, warrant taking a look at the property and adjacent land for its mineral potential.”

 

On April 8, 1980, Salisbury Adams replied to Ken Phillips and indicated that he had been contacted by Charles R. Butler who was representing the Congress Consolidated Gold Mining company and that they wanted to lease the 3 patented claims that comprise the Hermsdorf Mine for an initial period of 5 years and as long as production continues, for a 5% NSR (less haulage and milling costs). (Personal communication between Salisbury Adams and Ken Phillips, Arizona Department of Mineral Resources).

 

In 2006, Jubal Ahlstrom and his partner Richard Thomas, operating as Judgetown, LLC, acquired the Granite Reef, Granite Reef Extension, Hull, Prescott, Dakota, State, and Planet Mier patented claims. In 2008, Judgetown acquired the Lincoln (Yavapai County Assessors Office, 2011).

 

From 2006 to 2011, Ahlstrom and Thomas developed roads, shipped granite boulders as landscaping rock, blasted quartz veins on the surface, conducted limited drilling on quartz veins, set up a crushing plant, and did small scale testing of the placer gravels on the claims.

 

On January 1, 2011, Bonanza Goldfields Corporation purchased the Hull patented lode claim from Judgetown, LLC, and obtained an option to purchase the additional patented claims. Bonanza entered into an agreement with Woodrow Smith III and others to provide a custom made wash plant to conduct additional testing of the placer gravels on the patented claims. Initially, water from a well on the Planet Mier patent was hauled to the plant site on the Hull lode by an independent contractor, but this proved to be too costly.

 

Universal Drilling (Doug Roberts) was contracted to drill a well on the Hull patented claim. The well produces approximately 3 gpm and water is pumped into a fresh water storage pond by a solar-powered submersible pump.

 

  

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The wash plant had some design deficiencies and was unsuitable for testing the placer gravels without costly modifications and the installation of additional recovery equipment. In addition, the personnel running the plant were unqualified, having no previous education or experience in proper placer sampling techniques, no background in the geology of placer or lode gold deposits, no professional exploration experience, no qualifications for providing chain-of-custody control methods, sampling protocol, or QA/QC documentation, and utilized questionable labs for analysis; therefore, the sample results obtained cannot be utilized for this report.

 

The old wash plant will be removed and a new placer sampling plant and recovery equipment will be installed and operated by trained personnel under the supervision of ARI.

 

TARANTULA PROJECT UNPATENTED CLAIMS:

 

Bonanza Goldfields Corporation owns 30 unpatented lode mining claims, DCM #1-24, DCM #6 Extension, DCM #12 Extension, and Hawk #1- 4.

 

There has been no known past production or development work done on the DCM #1-24 and Hawk #1-4 claim blocks. These blocks were staked in 2011 to cover possible extensions of known veins that occur within the patented claim boundaries in Sections 9, 10, 11, 15, and 16 Township 10 North, Range 6 West, G&SRM.

 

During the course of staking the claims, the Auric Resources International, Inc. (ARI) crews discovered numerous quartz veins that have been previously undeveloped, including some large veins with abundant iron oxide relic structures, disseminations, and masses (sulfide alteration products) that represent excellent exploration targets. An initial program of recon geologic mapping of the lithologies, veins, and structures and rock chip geochemical sampling will be conducted by ARI to assess priorities for continued development work.

 

The DCM #6 Extension and DCM #12 Extension claims were staked to cover the northwestern extension of the Golden Wave (Rees, Reese) vein that extends from the patented claims in Section 9 into Section 10, Township 10 North, Range 6 West, G&SRM. The northernmost portion of this vein was accessed by the Piedmont Mine shaft which was developed on unpatented land when previously worked in the late 1930's and 1940's. The Piedmont Mine is now part of the Bonanza Goldfields Corporation Tarantula Project claim project which includes both patented and unpatented claims.

 

The Piedmont Mine (Congress West, West Congress) property is located approximately 0.4 miles northwest of the patented Golden Wave mine in the NE and SE 1/4 's of Section 10, Township 10 North, Range 6 West, G&SRM. The first production was reportedly in 1936 and the last in 1940, but there are apparently no records available for this period of time (USGS, 2011).

 

  

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The owner of the Piedmont Mine in 1939 was John M. Price, who was also the coroner in Congress, Arizona, at the time. He certified the death of Emil Hermsdorf on June 30, 1939. Hermsdorf died of natural causes while at his mining camp at the patented Hermsdorf Mine (Adams Claims), in the center of the south half of section 10, Township 10 North, Range 6 West, G&SRM (USGS, 2011; Wickenburg Sun, June 30, 1939).

 

In 1940, the operator of the Piedmont Mine was Mr. Stansbury. The mine produced gold, silver, and copper from an east-west to northeast trending vein which cuts massive, unfoliated Precambrian granite, and usually follows andesite and other mafic dikes which dip shallowly to the north. The vein was apparently accessed by an adit and also an exploration pit (USGS, 2011).

 

	
REGIONAL SETTING AND ANALOGOUS DEPOSITS

 

The Tarantula Project property (Figure 3 and Figure 4) is located in the east-central portion of the Date Creek Mountains, approximately 3.2 miles north of Congress, Arizona, in Yavapai County, Arizona. The southeastern portion of the claim block is approximately 2 miles northwest of the Congress Mine.

 

The Date Creek Mountains consist mainly of coarse-grained biotite granites and granodiorites of early Proterozoic age which have intruded a sequence of early Proterozoic metavolcanic and metasedimentary rocks of the Yavapai Supergroup that occur within the Hualapai-Bagdad tectonostratigraphic block (Figure 5 and Figure 6) of the orogenic tract referred to as the Yavapai Province (Karlstrom, 1989; Anderson, 1989; Karlstrom and Bowring, 1988; Berg and Karlstrom, 1992).

 

According to Herald and Russ, 1985, the granitic rocks contain swarms of coeval pegmatite and aplite dikes comprising up to 15% of the rock units and locally contain lenses of partially digested metasedimentary rocks (gneisses, biotite, schists, quartzites, etc.).

 

At least four types of younger dikes intrude the early Proterozoic granitic rocks, including, from oldest to youngest: east-west trending diabase dikes, northwest trending andesite dikes, northeast trending latite porphyry dikes and northeast trending rhyolite dikes.

 

The early Proterozoic granodiorite intrusive in the eastern portion of the Date Creek Mountains is considered by some to be equivalent to the 1.7 GA Yarnell Granodiorite that hosts economic gold mineralization at the Yarnell Mine in the Weaver Mountains. At the Yarnell Mine, ninety-six reverse circulation drill holes have defined a mineral inventory of 6.8 million tons at a grade of 0.038 opt gold with a 1.45:1 waste to ore ratio (Miller, Page and Sell, in Karlstrom, K. E., 1991).

 

  

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The regional setting of the Tarantula Project property is similar to that of the other mines in the Martinez district, including the Congress, Congress Extension (Senate), Niagra, Golden Wave (Rees), and others. These mines were all developed to exploit auriferous quartz veins which occurred as flat-lying or tabular lenses that paralleled mafic (diabasic or andesitic) dikes, with shallow dips, that trended east-west, northwest-southeast, and occasionally northeast-southwest, and cut massive, unfoliated granitic rocks (Herald and Russ, 1985; USGS, 2011).

 

  

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LOCAL GEOLOGY

 

Mr. Brian R. Bond, M. Sc., consulting geologist, Montrose, Colorado, was contracted by Auric Resources International, Incorporated (ARI), to conduct recon geologic mapping and rock chip geochemical sampling on the original Tarantula Project property in June, 2011. At that time, the project consisted of the Hull patented lode claim and adjoining claims (held under option by Bonanza Goldfields Corporation). This work was preliminary in scope since it was completed prior to ARI's staking of the DCM #1-24, DCM #6 Extension, DCM #12 Extension, and Hawk #1-4 unpatented lode mining claims on behalf on Bonanza Goldfields Corporation.

 

In September and October, 2011, the ARI staking crew found numerous, potentially auriferous quartz veins on the new claims, including two major veins which were discovered on the DCM #3, 9, and 10 claims. The largest of these quartz veins trends northwest to southeast and ranges in size up to 4 feet in width and 300 feet in length (Figure 7). The second largest quartz vein discovered trends east-west on DCM #9 and possibly #10, and ranges in size up to 2 feet in width and 200 feet in length (Figure 8).

 

While these large quartz veins are excellent exploration targets, they remain unexplored until additional geologic mapping and geochemical sampling can be conducted.

 

In addition, the Piedmont Mine which is located within the boundaries of the DCM #6 Extension and DCM #12 Extension (according to USGS data) has yet to be located on the ground. The mine consists of an adit and an exploration pit which is located approximately 0.4 miles northwest of the Golden Wave patented claims in Section 11 and extending into Section 10, Township 10 North, Range 6 West, G&SRM (USGS, 2011).

 

The development work at the Piedmont Mine may be caved and/or overgrown with vegetation since it hasn't been operated since 1940 and it is located on the side of a mountain with steep topography. However, the ARI staking crew found vein quartz with abundant iron oxides after sulfides as float downhill from the area where the mine is reported to be located by the USGS. The mine will undoubtedly be found and sampled when the next stage of mapping and sampling is conducted on the DCM claims by ARI personnel.

 

  

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LITHOLOGIES:

 

Brian Bond's 1”-500' recon geologic mapping of the Tarantula Project's patented claims found two phases of granitic rocks to be present within the patented claim boundaries. The first phase was a pink, coarse-grained, equigranular muscovite granite that predominates in the area. The second was a white, coarse-grained biotite granite that is prevalent in the vicinity of the mine workings on the Hull patented lode claim. Thin pegmatite dikes intrude both granitic rocks.

 

In addition, Bond's recon mapping found “a sliver of metavolcanic rocks exposed in one trench on the Hull claim and a thin strip of metasedimentary rocks that outcrop by the road east of the Granite Reef patented lode claims.”

 

Auriferous gravels (as determined by limited, small-scale sampling by the owner of the patented claims) were found by Mr. Bond to be present in stream channels and terraces on the Hull and Lincoln patented lode claims. The alluvium is generally 3 feet or less in thickness and consists of sand, gravels, cobbles, and boulders derived from the weathering of the early Proterozoic granitic rocks in the surrounding areas (Bond, 2011).

 

STRUCTURES:

 

The majority of the veins, which were historically mined, strike northwest along a regional lineament. There is minor (20’-25’), left-lateral, offset along an E-W shear zone which outcrops on the roads above the main mine workings on the Hull patented lode claim (Bond, 2011).

 

Faults trending N-S, WNW and ENE also host veins. A 50’ wide shear zone is exposed along the main access road, in the center of the Dakota claim; it strikes N-S (Bond, 2011).

 

Foliations in the early Proterozoic igneous rocks in the Congress Mine area is generally indistinct and variable, but locally the rocks have an east-west strike and northerly dip. Inclusions of older metamorphic rocks within the granite have a N 35° W foliation, coincident with the regional grain of the area (Herald and Russ, 1985).

 

According to Herald and Russ, 1985, there are at least 6 periods of fault movement in the area of the Congress Mine. These periods (ranging from oldest to youngest) include:

 

	
1.  

	
Minor pre-mineral thrusting from the north in Precambrian granite dipping 20-25° north (Congress Vein);

	
2.  

	
Pre-mineral west-northwest faults, dipping 40-45° north (Niagra Vein);

	
3.  

	
Minor post-mineral movement on west-northwest thrust faults;

	
4.  

	
Cenozoic normal faults, striking N 20° W to N 30° W;

	
5.  

	
Cenozoic normal faults, striking N 30° E to N 50° E;

	
6.  

	
Basin and Range faulting, striking N 10° W to N 20° W.

 

  

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The minor east-west trending, north dipping thrust faults appear to be the oldest of the six main periods of faulting and thrusting is suggested as the simplest explanation for the shallowly dipping “greenstones” (i.e. andesite or diabase dikes) in the area. The amount of displacement isn't known, but is probably small (Herald and Russ, 1985).

 

MINERALOGY AND ALTERATION:

 

Hydrothermal alteration is zoned, relative to mineralized faults and shear zones in the granite. Sericitization is strong to pervasive, adjacent to veins and the structures hosting them. Quartz veins typically have sericitized haloes up to several feet thick. The intensity of sericitization decreases outward from fluid conduits and is overprinted by argillization. Minor epidote is also present, peripheral to argillization (Bond, 2011).

 

The auriferous quartz veins at the Congress and Niagra Mines are composed primarily of veins quartz with variable but generally small amounts of carbonate. The only megascopically identifiable sulfides are pyrite, galena, chalcopyrite, and occasionally molybdenite in trace amounts. Reddish brown hematite is locally abundant as an oxidation product of the pyrite. Gold generally occurs as micron-sized particles in the pyrite and silver is also present in the veins (Herald and Russ, 1985).

 

There are two main types (A and B) of mineralization observed at the Congress and Niagra Mines as follows:

 

A) Discrete veins of massive quartz ranging from 1' to 14' in thickness, with minor amounts of sulfides, generally contain the higher grades of mineralization.

 

B) Quartz stringer zones consisting of 20% to 30% quartz veinlets flooding altered wall rock. These zones are generally lower grade to barren, and they usually envelope the main quartz vein in the hanging and footwalls.

 

The highest grade (greater than 1 opt Au) ores are associated with Type A mineralization in parts of the veins that typically contain from 10% to 25% sulfides over thicknesses of 2 feet or more. The common denominator observed in both types of mineralization is the presence of both quartz and pyrite (Herald and Russ, 1985).

 

The most common alteration associated with mineralization is chloritic and propylitic. Argillic alteration is common but doesn not appear to be associated with mineralization, only with post-ore structures. The argillic alteration is vey pale green to white and is restricted to structures. The chloritic alteration assemblage consists of chlorite, quartz, and pyrite, and typically grades in propylitic alteration with the addition of epidote. The chloritic/propylitic alteration generally extends from a few inches to 50 feet away from the veins, with the average distance being approximately 15 feet or less. Alteration intensity decreases away from the vein. Both the chloritic and propylitic alteration assemblages may contain clay, K-feldspar, magnetite, biotite, sericite, and minor fluorite (Herald and Russ, 1985).

 

  

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ORE CHARACTER, GRADES, AND VOLUMES:

 

Native gold occurs with quartz veining, as well as, strongly sericitized shear zones. Gold associated with quartz veining is present as clots and also plates pyrite casts. Gold in strongly sericitized shear zones occurs as porous rods (Bond, 2011).

 

Primary sulfides have been almost completely oxidized. Traces of arsenopyrite are locally preserved where encased by silica. Auriferous pyrite, auriferous galena and chalcopyrite have been reported from the Hermsdorf, George Washington and Lincoln lodes. The intensity of manganese oxides increases proximal to veining, suggesting that sphalerite is also present at depth. Disseminated manganese oxides after sphalerite (?) were observed in sample GR-7 (Bond, 2011).

 

The intensity of hematite and limonite staining also increases towards veining and shearing. Hematite casts after pyrite were observed in conjunction with quartz veining. Jarosite was only observed at one location, in conjunction with visible gold and quartz veining (sample site GR-15).

 

A limited amount of reliable analytical data is available (see Addendum). Unfortunately, the locations of the few samples which were taken, previously, are unknown. Nevertheless, it is possible to make a few generalizations, after assays performed by Copper State Analytical Lab are discarded (Bond, 2011).

 

Rock from the Granite Reef claim ranges in gold content from <0.001 to 0.052 oz/ton, containing between 0.05 and 0.20 opt silver (see assays). Limonite associated with vein mineralization from the Hull Claim contains up to .761 opt Au and <0.05 opt silver. A sample of black sand from the Hull Claim assayed 2.585 opt Au and .45 opt Ag. Platinum and palladium concentrations are negligible (Bond, 2011).

 

Lead assays from the Hull claim ranged from 0.008-0.295% Pb. Trace amounts of copper and zinc were also measured. Threshold values of antimony were encountered. Arsenic is essentially absent, as are molybdenum and tungsten. Bismuth and gallium concentrations are highly anomalous Bond, 2011).

 

Placer gold has weathered from quartz veins and their alteration haloes. Gold is ubiquitous in alluvium from the property.

 

Auriferous quartz veins also occur on the property. Some of them have not been worked (Bond, 2011).

 

According to Rehrig and Wilson, 1985, the auriferous quartz veins in the Congress area generally fill fault fissures which strike east-west and dip at shallow angles northward. The Congress, Niagra, and Queen of the Hills veins have been the most prolific gold producers.

 

  

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The Congress fissure occurs within a 15' wide “greenstone” (andesite or diabase?) dike and dips 20° to 30° north. The vein fillings consist of massive, coarse-textured, grayish-white quartz that contains irregular masses, bands, and disseminations of fine-grained pyrite and locally galena.

 

Free-milling gold is uncommon in the veins. The course of the vein within the “greenstone” dike is quite irregular and the ore-bearing zones are generally flat-lying lenses located near the footwall that commonly terminate as stringer zones.

 

Other veins exist entirely within the granites or other Precambrian igneous rocks that are not associated with any “greenstone” dikes. These veins generally strike east-west (like the Congress structure), but have steeper dips (40° to 50°) to the north. They are characterized by more extensive development of quartz than that displayed at the Congress, are generally lower in grade, carry some galena, and have higher silver contents. The Niagra vein is an example of this type of vein, and it hosted a commercial orebody to a depth of 2,000 feet (Rehrig and Wilson, 1985).

 

Herald and Russ, 1985, describe the Niagra orebody as a classic fissure quartz vein deposit. The vein strikes N 45° W and dips 41° NE. The main ore shoot in the Niagra Mine is oblique to the strike and dip of the structure, trending east-west, with several subsidiary ore shoots deviating from the main shoot.

 

The most important structural controls for mineralization are pre-ore faulting and secondary permeability within the vein hosting structures. During mineralization events, hydrothermal solutions circulated through open portions of the east-west trending “greenstone” (andesite or diabase?) dikes and east-west trending, north-dipping faults. Undulations and dilations in the wallrocks along mineralized structures also increased permeability and, consequently, mineralization according to Herald and Russ, 1985.

 

Although wallrock chemistry doesn't appear to be as important as structures in controlling mineralization, the higher content of mafic minerals in the “greenstone” (andesite or diabase?) dikes may be partially responsible for the higher overall grade of the Congress vein. The pegmatitic wall rocks of the Niagra vein are generally less favorable for ore (pyrite) deposition than granitic wallrocks, and the higher the mafic content of the granitic rocks (granodiorites or diorites), the higher the gold content in the veins (Herald and Russ, 1985).

 

A limited amount of placer testing has previously been done on a small portion of the Tarantula Property, and some gold values have been reported by various sources, but additional, larger-scale bulk-sampling, processing and

actual gold recovery will need to be conducted in order to determine the average grades of the local placer gravels on the entire claim block.

 

Most of the previously reported grade estimates for the Tarantula placer materials have been based solely upon an arithmetic average of gold fire assay results, rather than an actual amount of physical gold (both coarse and fines) recovered from a known (measured) amount of bank-run placer material that was processed.

 

In placer gold deposits, average results which are calculated from fire assays are virtually meaningless and most often result in a substantial over­valuation of the placer ground. These assay results commonly include gold which is locked in rock particles (that require extensive fine grinding to liberate the gold); contained in sulfides; alloyed with other elements; or too finely divided to be recovered with standard gravity recovery equipment.

 

Additional detailed geologic mapping will be necessary to determine the areal extent and volume of potential placer gravels within the greatly expanded Tarantula Property. Upon completion of the geologic mapping and additional bulk sampling, a preliminary resource could then be determined for the property.

 

Preliminary recon geologic mapping and rock chip geochemical sampling has been conducted by Mr. Brian R. Bond, M.Sc., consulting geologist, on the Hull and Granite Reef patents. The initial fire assay results from 18 samples of the quartz veins are quite encouraging, with over 50% of the samples being highly anomalous in Au and 2 samples exceeding the maximum detection limit (< 3,000 ppb) for gold.

 

The trace element (Aqua Regia Digestion, ICP/MS analyses indicate anomalous values of Cu, Pb, Zn, Mo, Co, Ni, V, Fe, Mn, and Ba in several of the vein samples. The association and correlation between various trace elements and the auriferous quartz veins in the Date Creek Mountains is currently being compiled and evaluated by the ARI staff, and the results will be utilized in developing the upcoming recon and detailed geochem programs that will be conducted on the property.

 

  

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Most of the area that comprises the recently expanded Tarantula Property has never been explored or tested. Some of the large quartz veins (as shown in Figures 7 and 8), which were discovered by the ARI staking crew have never been mapped or sampled, although they exhibit many of the characteristics of the known mineralized quartz veins that have been economically mined in the Congress district.

 

An initial exploration program consisting of recon geologic mapping and geochemical sampling will be conducted on the newly acquired claims by ARI staff. Detailed surveying, geologic mapping, rock and soil geochemical sampling, ground and airborne geophysical surveying (magnetic, VLF, IP, etc.) and subsequent drilling will be undertaken in target areas which have

been determined to have the greatest potential for developing gold ores, after the initial phase of exploration has been completed. Upon completion of these activities, the gold resource assessments can be made for both the placer and lode gold deposits within the Tarantula Project claim block.

 

	
CONCLUSIONS AND RECOMMENDATIONS

 

The preliminary geologic evaluation of the Tarantula Project by Brian R. Bond, M.Sc., Consulting Geologist, verified the existence of potentially economic, quriferous quartz veins and alteration haloes similar to those mined, at the Congress, Congress Extension, Golden Wave, and other gold mines in the nearby vicinity. Mr. Bond also identified a small volume of auriferous placer gravels within the Hull patented lode (owned by BONZ) and Jubal Ahlstrom's seven additional patented lode claims (under option by BONZ).

 

Mr. Bond recommended that additional claims be staked to expand the land position and placer gravel resource volume to a size that would support a profitable placer operation and that water be obtained by pumping from wells rather than hauling by truck. Mr. Bond also recommended that modifications be made to the existing onsite wash plant in order to effectively recover placer gold.

 

A 285' well with a 7” surface casing and 4 1/2” PVC inside casing was subsequently drilled on the Hull patented lode claim by Mr. Doug Roberts of Universal Drilling, Wickenburg, Arizona. A solar-powered submersible pump and surface installation was put by Mr. Walt Kadle of Wickenburg Pump,

 

LLC, Wickenburg, Arizona, which provides approximately 3 gpm.

 

ARI personnel staked an additional 30 unpatented lode mining claims in Sections 10, 15, and 16, Township 10 North, Range 6 West, Gila & Salt River Meridian. During the course of claim staking, the ARI crews discovered numerous large quartz veins which exhibit many of the characteristics of the auriferous quarz veins at the Congress and other mines in the district. These veins have not previously been mined or even prospected in many locations.

 

The ARI crews also discovered areas of placer gravels with abundant cobbles of vein quartz which have never been mined. In addition, the new claims cover the area upon which the historic Piedmont Mine was located, although it hasn't yet been identified in the field because of heavy overgrowth.

 

The geologic setting of the Tarantula Property is favorable for the concentration of placer gold in the local gravels that occur in drainage channels and elevated benches and for lode gold that occurs within the early Proterozoic granitic rocks.

 

Although some preliminary testing has been done on portions of the property, additional exploration must be conducted, including recon geologic mapping and rock chip geochemical sampling; detailed geologic mapping and

soil geochemical sampling; ground and airborne geophysical surveying (VLF, magnetic, IP, etc.); and drilling.

 

  

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In addition, an extensive bulk-sampling program will have to be conducted. The results from these activities will be required in order to determine the areal extent, volumes, grades, and values of the auriferous veins and placer gravels within the expanded claim block.

 

Additional wells will be needed to produce a cumulative flow rate of 15-20 gpm as makeup water to support the bulk-sampling program of the placer gravels. These wells should be drilled on the Hull patented lode claim unless the other patented lode claims are purchased from Mr. Ahlstrom prior to the commencement of bulk-sampling, in which case one or more of those claims may provide a more suitable location for drilling.

 

ARI recommends that a 25-35 cubic yard per hour Goldfields Engineering placer plant with a grizzly/hopper, feed belt, conveyors, and either a trommel or wet, vibrating screen deck be utilized for the bulk-testing on the Tarantula Project.

 

The gold recovery circuit should consist of an extended sluice followed followed by a 42” x 42” IRD jig and at least two 24” centrifugal concentrators (Knelson, Neff, or Knudsen bowls) for recovering fine placer gold.

 

The exploration activities on the newly staked claims will be conducted under and approved Notice of Intent which will be filed with the USBLM district office in Phoenix, Arizona, and the permitting process time is expected to be 30 days or less.

 

The bulk testing program of placer gravels on the patented claims owned and controlled by BONZ may be conducted without any significant permitting requirements, providing that no chemicals are utilized in the processing and recovery operations and the operating personnel have received current first aid, safety and task training, as required under Mine Safety and Heath Administration (MSHA) regulations.

 

The office of Auric Resources International, Incorporated (ARI) located in Sunshine Plaza, Wickenburg, Arizona, is an approved Training Center (ID: 962894) by the National Safety Council (NSC) for Standard First Aid and CPR. These classes are conducted by ARI's Manager of Health and Safety, Dr. Daniel W. Koontz, a registered NSC-certified instructor.

 

In addition, ARI utilizes the services of a certified MSHA Instructor (Mr. Ted Holmes) and personnel from the Arizona State Mine Inspector's Office to provide all of the training required under MSHA regulations.

 

If the results from the expanded exploration and bulk-sampling programs indicate that a large-scale, commercial mining operation is economically viable on the Tarantula Property, a Mining Plan of Operation

 

  

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(MPO) would be required for development and mining activities on the BLM controlled surface (the new, unpatented lode mining claims), and various environmental studies would have to be undertaken for the project, including archeological, native plant, and biology surveys, along with increased bonding requirements to provide for surface restoration.

 

Permitting times are reduced if the milling and other processing activities are conducted on patented claims rather than unpatented claims on BLM surface. The larger the anticipated operation, the longer the permitting times and associated costs. Smaller operations require less costs and can be permitted much faster.

 

  

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SELECTED REFERENCES

 

Bergh, S.G., and Karlstrom, K.E., 1992, The Chaparral shear zone: Deformation partitioning and heterogeneous bulk crustal shortening during Proterozoic orogeny in central Arizona: Geological Society of America Bulletin, v. 104, p. 329-345.

 

Cox, R., Karlstrom, K.E. and Cullers, R.L., 1991, Rare-earth element chemistry of Early Proterozoic argillites, central Arizona: Constraints on stratigraphy, in Karlstrom, K.E., ed., Proterozoic geology and ore deposits of Arizona: Arizona Geologic Society Digest, v. 19, p. 57-66.

 

DeWitt, E., 1989, Geochemistry and Tectonic polarity of Early Proterozoic (1700-1750 Ma) plutonic rocks, north-central Arizona, in Jenney, J.P., and Reynolds, S.J., eds., Geologic evolution of Arizona: Arizona Geological Society Digest 17, p. 149-163.

 

DeWitt, E., 1991, unpublished mapping, in Miller, M.A., Page, T.C., and Sell, J.D., Geology and mineralization at the Yarnell gold deposit, Yavapai County, Arizona, in Karlstrom, K.E., ed., Proterozoic geology and ore deposits of Arizona: Arizona Geological Society Digest, v. 19, p. 301-308.

 

Herald, C.E. and Russ, M.D., 1985, Geology and mineralization of the Congress Mine: Arizona Geological Society, AGS Field Trip, April 20, 1985, 5 p.

 

Johnson, M.G., 1972, Placer gold deposits of Arizona: U.S. Geological Survey Bulletin 1355, p. 103.

 

Karlstrom, K.E., 1989, Early recumbent folding during Proterozoic orogeny in central Arizona: Geological Society of America Special Paper 235, p. 155- 171.

 

Karlstrom, K.E., and Bowring, S.A., 1988, Early Proterozoic assembly of tectonostratigraphic terranes in southwestern North America: Journal of Geology, v. 96, no. 5, p. 561-576.

 

Karlstrom, K.E., and Bowring, S.A., 1991, Styles and timing of Early Proterozoic deformation in Arizona: Constraints on tectonic models, in Karlstrom, K.E., ed., Proterozoic geology and ore deposits of Arizona: Arizona Geological Society Digest, v. 19, p. 1-10.

 

Lundin, R.J., 1981-1988, written communications, Golden Horseshoe Group (Congress Cu-Mo Porphyry), 18 p.

Lundin, R.J. and Barczak, V.J., 1997, Copper prospect in Yavapai County – the CBP group of claims (Congress Breccia Pipe, Congress Cu-Mo Porphyry), 3 p.

 

Miller, M.A., Page, T.C., and Sell, J.D., 1991, Geology and mineralization at the Yarnell gold deposit, Yavapai County Arizona, in Karlstrom, K.E., ed., Proterozoic geology and ore deposits of Arizona: Arizona Geological Society Digest, v. 19, p. 301-308.

 

Niemuth, N., 2011, personal communications, Congress Cu-Mo Porphyry Property: ADMMR database, 90 p.

 

Rehrig, W.A. and Wilson, R.T., 1985, Western Arizona Project: Applied Geologic Studies, Inc., 427 p.

 

Rogers, T., 1991, Congress Copper-Molybdenum Porphyry, 4 p.

 

Roth, F.A. And DeWitt, E., 1981, Congress Mine: Arizona Bureau of Geology and Mineral Technology, in USGS, Mineral Resources Data System (MRDS), 2011, 6 p.

 

  

33

  

Roth, F.A. And DeWitt, E., 1981, Golden Wave Mine: Arizona Bureau of Geology and Mineral Technology, in USGS, Mineral Resources Data System (MRDS), 2011, 5 p.

 

Roth, F.A. And DeWitt, E., 1981, Hermsdorf Mine: Arizona Bureau of Geology and Mineral Technology, in USGS, Mineral Resources Data System (MRDS), 2011, 5 p.

 

Staunton, W.F., 1926, The Congress Mine, Martinez Mining District, Yavapai County, Arizona, 5 p.

 

United States Geological Survey (USGS), 2011, Mineral Resources On-Line Spatial Data, Mineral Resources Data System (MRDS), 61 p.

 

Wilkins, J., 1992, Report on the Congress Cu-Mo prospect, Yavapai County, Arizona: Kennecott Corporation company report, 9 p.

 

Williams, M.L., 1991, Overview of Proterozoic metamorphism in Arizona, in Karlstrom, K.E., ed., Proterozoic geology and ore deposits of Arizona: Arizona Geological Society Digest, v. 19, p. 11-26.

 

Wilson, E.D., Cunningham, J.B., and Butler, G.M., 1934, Arizona lode gold mining: Arizona Bureau of Mines Bulletin 137, p. 261.

Wilson, E.D., Fansett, G.R., Johnson, C.H., and Roseveare, G.H., 1961, Gold placers and gold placering in Arizona: Arizona Bureau of Mines Bulletin 168, p. 124.

 

Wooden, J.L., and DeWitt, E., 1991, Pb isotopic evidence for the boundary between the early Proterozoic Mohave and Central Arizona crustal provinces in western Arizona, in Karlstrom, K.E., ed., Proterozoic geology and ore deposits of Arizona: Arizona Geological Society Digest 19, p. 27-50.

 

  

34

  

 

	
STATEMENT OF QUALIFICATIONS

 

I, William C. Berridge, of Wickenburg, Arizona, hereby certify that:

 

	
1.  

	
I am a graduate of Northern Arizona University with a Bachelor of Science Degree (1973) in Geology.

 

	
2.  

	
I have practiced my profession as a Geologist in the United States and Mexico for 38 years.

 

	
3.  

	
I am a registered Professional Geologist in the State of Wyoming, License Number PG-3142.

 

	
4.  

	
I am a Founding Registered Member of the Society for Mining, Metallurgy and Exploration (SME), member number 4122576.

 

	
5.  

	
I am a member in good standing of the Geological Society of America (GSA); the Canadian Institute of Mining, Metallurgy and Petroleum (CIM); the Geological Society of Nevada (GSN); and the Arizona Geological Society (AGS); and the Society of Mineral Analysts (SMA).

 

	
6.  

	
I am the President/CEO and Chairman of Auric Resources International, Inc. (ARI), a private Arizona corporation, with offices at 1020 W. Wickenburg Way, Ste. E-9, Wickenburg, Arizona 85390-3290.

 

	
7.  

	
I am a Manager of Johnson Mine, LLC; Desert Gold Mine, LLC; Buckhorn Mine, LLC; and Golden Vulture, LLC.

 

	
8.  

	
I am a Director and stockholder of Bonanza Goldfields Corporation, a public U. S. corporation that controls the subject property in this report.

 

 

 

  

35

  

 

	
STATEMENT OF QUALIFICATIONS

I, Arne F. Stenseth, of Wickenburg, Arizona, hereby certify that:

 

	
1.  

	
I am a graduate of the Montana College of Mineral Science and Technology with an American Chemical Society accredited Bachelor of Science Degree (1994) in Chemistry.

 

	
2.  

	
I have practiced my profession as a Geochemist and IT Specialist in the United States for 17 years.

 

	
3.  

	
I am a member in good standing of the Geochemistry Division of the American Chemical Society (ACS-GEOC), the International Association of GeoChemistry (IAGC), the Geochemical Society, and the Association of Applied Geochemists (AAG).

 

	
4.  

	
I am the Geochemist and IT Specialist at Auric Resources International, Inc. (ARI), a private Arizona corporation, with offices at 1020 W. Wickenburg Way, Ste. E-9, Wickenburg, Arizona 85390-3290.

 

	
5.  

	
I am a Founder and Managing Member of Gruvedrift Enterprises, LLC, a mineral exploration company.

 

 

 

  

36

  

 

 

  

37

  

 

  

38

  

 

  

39

  

 

  

40

  

 

  

41

  

 

 

 

42ex4-1.htm

Exhibit 4.1

 

VISION-SCIENCES, INC.

 

FORM OF INDENTURE

Dated as of                     

 

[Name of Trustee]

Trustee

 

 

 

  

  

  

 

TABLE OF CONTENTS

 

Page

 

	
ARTICLE I

	
DEFINITIONS AND INCORPORATION BY REFERENCE

	  	  	  
	
Section 1.1

	
Section 1.1. Definitions.

	
2

	
Section 1.2

	
Other Definitions.

	
2

	
Section 1.3

	
Incorporation by Reference of Trust Indenture Act.

	
2

	
Section 1.4

	
Rules of Construction.

	
2

	  	  	  
	
ARTICLE II

	
THE SECURITIES

	  	  	  
	
Section 2.1

	
Issuable in Series.

	
2

	
Section 2.2

	
Establishment of Terms of Series of Securities.

	
2

	
Section 2.3

	
Execution and Authentication.

	
2

	
Section 2.4

	
Registrar and Paying Agent.

	
2

	
Section 2.5

	
Paying Agent to Hold Money in Trust.

	
2

	
Section 2.6

	
Securityholder Lists.

	
2

	
Section 2.7

	
Transfer and Exchange.

	
2

	
Section 2.8

	
Mutilated, Destroyed, Lost and Stolen Securities.

	
2

	
Section 2.9

	
Outstanding Securities.

	
2

	
Section 2.10

	
Treasury Securities.

	
2

	
Section 2.11

	
Temporary Securities.

	
2

	
Section 2.12

	
Cancellation.

	
2

	
Section 2.13

	
Defaulted Interest.

	
2

	
Section 2.14

	
Global Securities.

	
2

	  	  	  
	
ARTICLE III

	
REDEMPTION

	  	  	  
	
Section 3.1

	
Notice to Trustee.

	
2

	
Section 3.2

	
Selection of Securities to be Redeemed.

	
2

	
Section 3.3

	
Notice of Redemption.

	
2

	
Section 3.4

	
Effect of Notice of Redemption.

	
2

	
Section 3.5

	
Deposit of Redemption Price.

	
2

	
Section 3.6

	
Securities Redeemed in Part

	
2

	  	  	  
	
ARTICLE IV

	
COVENANTS

	  	  	  
	
Section 4.1

	
Payment of Principal and Interest.

	
2

	
Section 4.2

	
SEC Reports.

	
2

	
Section 4.3

	
Compliance Certificate.

	
2

	
Section 4.4

	
Stay, Extension and Usury Laws.

	
2

	
Section 4.5

	
Corporate Existence.

	
2

	
Section 4.6

	
Taxes.

	
2

	  	  	  
	
ARTICLE V

	
SUCCESSORS

	  	  	  
	
Section 5.1

	
When Company May Merge, Etc.

	
2

	
Section 5.2

	
Successor Corporation Substituted.

	
2

 

  

i

  

 

	
ARTICLE VI

	
DEFAULTS AND REMEDIES

	  	  	  
	
Section 6.1

	
Events of Default.

	
2

	
Section 6.2

	
Acceleration of Maturity; Rescission and Annulment.

	
2

	
Section 6.3

	
Collection of Indebtedness and Suits for Enforcement by Trustee.

	
2

	
Section 6.4

	
Trustee May File Proofs of Claim.

	
2

	
Section 6.5

	
Trustee May Enforce Claims Without Possession of Securities.

	
2

	
Section 6.6

	
Application of Money Collected.

	
2

	
Section 6.7

	
Limitation on Suits.

	
2

	
Section 6.8

	
Unconditional Right of Holders to Receive Principal and Interest.

	
2

	
Section 6.9

	
Restoration of Rights and Remedies.

	
2

	
Section 6.10

	
Rights and Remedies Cumulative.

	
2

	
Section 6.11

	
Delay or Omission Not Waiver.

	
2

	
Section 6.12

	
Control by Holders.

	
2

	
Section 6.13

	
Waiver of Past Defaults.

	
2

	
Section 6.14

	
Undertaking For Costs.

	
2

	  	  	  
	
ARTICLE VII

	
TRUSTEE

	  	  	  
	
Section 7.1

	
Duties of Trustee.

	
2

	
Section 7.2

	
Rights of Trustee.

	
2

	
Section 7.3

	
Individual Rights of Trustee.

	
2

	
Section 7.4

	
Trustee’s Disclaimer.

	
2

	
Section 7.5

	
Notice of Defaults.

	
2

	
Section 7.6

	
Reports by Trustee to Holders.

	
2

	
Section 7.7

	
Compensation and Indemnity.

	
2

	
Section 7.8

	
Replacement of Trustee.

	
2

	
Section 7.9

	
Successor Trustee by Merger, Etc.

	
2

	
Section 7.10

	
Eligibility; Disqualification.

	
2

	
Section 7.11

	
Preferential Collection of Claims Against Company.

	
2

	  	  	  
	
ARTICLE VIII

	
SATISFACTION AND DISCHARGE; DEFEASANCE

	  	  	  
	
Section 8.1

	
Satisfaction and Discharge of Indenture.

	
2

	
Section 8.2

	
Application of Trust Funds; Indemnification.

	
2

	
Section 8.3

	
Legal Defeasance of Securities of Any Series.

	
2

	
Section 8.4

	
Covenant Defeasance.

	
2

	
Section 8.5

	
Repayment to Company.

	
2

	  	  	  
	
ARTICLE IX

	
AMENDMENTS AND WAIVERS

	  	  	  
	
Section 9.1

	
Without Consent of Holders.

	
2

	
Section 9.2

	
With Consent of Holders.

	
2

	
Section 9.3

	
Limitations.

	
2

	
Section 9.4

	
Compliance with Trust Indenture Act.

	
2

	
Section 9.5

	
Revocation and Effect of Consents.

	
2

	
Section 9.6

	
Notation on or Exchange of Securities.

	
2

	
Section 9.7

	
Trustee Protected.

	
2

 

  

ii

  

 

	
ARTICLE X

	
MISCELLANEOUS

	  	  	  
	
Section 10.1

	
Trust Indenture Act Controls.

	
2

	
Section 10.2

	
Notices.

	
2

	
Section 10.3

	
Communication by Holders with other Holders.

	
2

	
Section 10.4

	
Certificate and Opinion as to Conditions Precedent.

	
2

	
Section 10.5

	
Statements Required in Certificate or Opinion.

	
2

	
Section 10.6

	
Rules by Trustee and Agents.

	
2

	
Section 10.7

	
Legal Holidays.

	
2

	
Section 10.8

	
No Recourse Against Others.

	
2

	
Section 10.9

	
Counterparts.

	
2

	
Section 10.10

	
Governing Laws.

	
2

	
Section 10.11

	
No Adverse Interpretation of Other Agreements.

	
2

	
Section 10.12

	
Successors.

	
2

	
Section 10.13

	
Severability.

	
2

	
Section 10.14

	
Table of Contents, Headings, Etc.

	
2

	
Section 10.15

	
Securities in a Foreign Currency or in ECU.

	
2

	
Section 10.16

	
Judgment Currency.

	
2

	  	  	  
	
ARTICLE XI

	
SINKING FUNDS

	  	  	  
	
Section 11.1

	
Applicability of Article.

	
2

	
Section 11.2

	
Satisfaction of Sinking Fund Payments with Securities.

	
2

	
Section 11.3

	
Redemption of Securities for Sinking Fund.

	
2

 

  

iii

  

 

Vision Sciences, Inc.

Reconciliation and tie between Trust Indenture Act of 1939 and

Indenture, dated as of                     

	  	  	  	  	  
	
Section. 310(a)(1)

	  	  	
7.10

	  
	
(a)(2)

	  	  	
7.10

	  
	
(a)(3)

	  	  	
Not Applicable

	
(a)(4)

	  	  	
Not Applicable

	
(a)(5)

	  	  	
7.10

	  
	
(b)

	  	  	
7.10

	  
	
Section. 311(a)

	  	  	
7.11

	  
	
(b)

	  	  	
7.11

	  
	
(c)

	  	  	
Not Applicable

	
Section. 312(a)

	  	  	
2.6

	  
	
(b)

	  	  	
10.3

	  
	
(c)

	  	  	
10.3

	  
	
Section. 313(a)

	  	  	
7.6

	  
	
(b)(1)

	  	  	
7.6

	  
	
(b)(2)

	  	  	
7.6

	  
	
(c)(1)

	  	  	
7.6

	  
	
(d)

	  	  	
7.6

	  
	
Section. 314(a)

	  	  	
4.2, 10.5

	  
	
(b)

	  	  	
Not Applicable

	
(c)(1)

	  	  	
10.4

	  
	
(c)(2)

	  	  	
10.4

	  
	
(c)(3)

	  	  	
Not Applicable

	
(d)

	  	  	
Not Applicable

	
(e)

	  	  	
10.5

	  
	
(f)

	  	  	
Not Applicable

	
Section. 315(a)

	  	  	
7.1

	  
	
(b)

	  	  	
7.5

	  
	
(c)

	  	  	
7.1

	  
	
(d)

	  	  	
7.1

	  
	
(e)

	  	  	
6.14

	  
	
Section. 316(a)

	  	  	
2.10

	  
	
(a)(1)(A)

	  	  	
6.12

	  
	
(a)(1)(B)

	  	  	
6.13

	  
	
(b)

	  	  	
6.8

	  
	
Section. 317(a)(1)

	  	  	
6.3

	  
	
(a)(2)

	  	  	
6.4

	  
	
(b)

	  	  	
2.5

	  
	
Section. 318(a)

	  	  	
10.1

	  

	  	  	  
	
Note:

	  	
This reconciliation and tie shall not, for any purpose, be deemed to be part of the Indenture.

 

  

iv

  

 

Indenture dated as of                     , 20__ between Vision Sciences, Inc., a Delaware corporation (“Company”), and [Name of Trustee], a                                          (“Trustee”).

 

Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Securities issued under this Indenture.

 

ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.1                      Definitions.

 

“Additional Amounts” means any additional amounts which are required hereby or by any Security, under circumstances specified herein or therein, to be paid by the Company in respect of certain taxes imposed on Holders specified therein and which are owing to such Holders.

 

“Affiliate” of any specified person means any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such person, whether through the ownership of voting securities or by agreement or otherwise.

 

“Agent” means any Registrar, Paying Agent or Service Agent.

 

“Authorized Newspaper” means a newspaper in an official language of the country of publication customarily published at least once a day for at least five days in each calendar week and of general circulation in the place in connection with which the term is used. If it shall be impractical in the opinion of the Trustee to make any publication of any notice required hereby in an Authorized Newspaper, any publication or other notice in lieu thereof that is made or given by the Trustee shall constitute a sufficient publication of such notice.

 

“Bearer” means anyone in possession from time to time of a Bearer Security.

 

“Bearer Security” means any Security, including any interest coupon appertaining thereto, that does not provide for the identification of the Holder thereof.

 

“Board of Directors” means the Board of Directors of the Company or any duly authorized committee thereof.

 

“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been adopted by the Board of Directors or pursuant to authorization by the Board of Directors and to be in full force and effect on the date of the certificate and delivered to the Trustee.

 

“Business Day” means, unless otherwise provided by Board Resolution, Officers’ Certificate or supplemental indenture hereto for a particular Series, any day except a Saturday, Sunday or a legal holiday in The City of New York or The City of Wilmington on which banking institutions are authorized or required by law, regulation or executive order to close.

 

“Company” means the party named as such above until a successor replaces it and thereafter means the successor.

 

“Company Order” means a written order signed in the name of the Company by two Officers, one of whom must be the Company’s principal executive officer, principal financial officer or principal accounting officer.

 

“Company Request” means a written request signed in the name of the Company by any Officer and delivered to the Trustee.

 

  

1

  

 

“Corporate Trust Office” means the office of the Trustee at which at any particular time its corporate trust business shall be principally administered.

 

“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.

 

“Depository” means, with respect to the Securities of any Series issuable or issued in whole or in part in the form of one or more Global Securities, the person designated as Depository for such Series by the Company, which Depository shall be a clearing agency registered under the Exchange Act; and if at any time there is more than one such person, “Depository” as used with respect to the Securities of any Series shall mean the Depository with respect to the Securities of such Series.

 

“Discount Security” means any Security that provides for an amount less than the stated principal amount thereof to be due and payable upon declaration of acceleration of the maturity thereof pursuant to Section 6.2.

 

“Dollars” means the currency of the United States of America.

 

“ECU” means the European Currency Unit as determined by the Commission of the European Union.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Foreign Currency” means any currency or currency unit issued by a government other than the government of the United States of America.

 

“Foreign Government Obligations” means with respect to Securities of any Series that are denominated in a Foreign Currency, (i) direct obligations of the government that issued or caused to be issued such currency for the payment of which obligations its full faith and credit is pledged or (ii) obligations of a person controlled or supervised by or acting as an agency or instrumentality of such government the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by such government, which, in either case under clauses (i) or (ii), are not callable or redeemable at the option of the issuer thereof.

 

“Global Security” or “Global Securities” means a Security or Securities, as the case may be, in the form established pursuant to Section 2.2 evidencing all or part of a Series of Securities, issued to the Depository for such Series or its nominee, and registered in the name of such Depository or nominee.

 

“Holder” or “Securityholder” means a person in whose name a Security is registered or the holder of a Bearer Security.

 

“Indenture” means this Indenture as amended or supplemented from time to time and shall include the form and terms of particular Series of Securities established as contemplated hereunder.

 

“interest” with respect to any Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity.

 

“Maturity,” when used with respect to any Security or installment of principal thereof, means the date on which the principal of such Security or such installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption, notice of option to elect repayment or otherwise.

 

“Officer” means the Chairman of the Board, any President, any Vice-President, the Chief Financial Officer, the Treasurer, the Secretary, any Assistant Treasurer or any Assistant Secretary of the Company.

 

“Officers’ Certificate” means a certificate signed by two Officers, one of whom must be the Company’s principal executive officer, principal financial officer or principal accounting officer.

 

  

2

  

 

“Opinion of Counsel” means a written opinion of legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company.

 

“person” means any individual, corporation, partnership, joint venture, association, limited liability company, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

 

“principal” of a Security means the principal of the Security plus, when appropriate, the premium, if any, on, and any Additional Amounts in respect of, the Security.

 

“Responsible Officer” means any officer of the Trustee in its Corporate Trust Office and also means, with respect to a particular corporate trust matter, any other officer to whom any corporate trust matter is referred because of his or her knowledge of and familiarity with a particular subject.

 

“SEC” means the Securities and Exchange Commission.

 

“Securities” means the debentures, notes or other debt instruments of the Company of any Series authenticated and delivered under this Indenture.

 

“Series” or “Series of Securities” means each series of debentures, notes or other debt instruments of the Company created pursuant to Sections 2.1 and 2.2 hereof.

 

“Significant Subsidiary” means (i) any direct or indirect Subsidiary of the Company that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act of 1933, as amended, as such regulation is in effect on the date hereof, or (ii) any group of direct or indirect Subsidiaries of the Company that, taken together as a group, would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act of 1933, as amended, as such regulation is in effect on the date hereof.

 

“Stated Maturity” when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable.

 

“Subsidiary” of any specified person means any corporation of which at least a majority of the outstanding stock having by the terms thereof ordinary voting power for the election of directors of such corporation (irrespective of whether or not at the time stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned by such person, or by one or more other Subsidiaries, or by such person and one or more other Subsidiaries.

 

“TIA” means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the date of this Indenture; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, “TIA” means, to the extent required by any such amendment, the Trust Indenture Act as so amended.

 

“Trustee” means the person named as the “Trustee” in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean or include each person who is then a Trustee hereunder, and if at any time there is more than one such person, “Trustee” as used with respect to the Securities of any Series shall mean the Trustee with respect to Securities of that Series.

 

“U.S. Government Obligations” means securities which are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, and which in the case of (i) and (ii) are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation evidenced by such depository receipt.

 

  

3

  

 

Section 1.2                      Other Definitions.

 

	
Term

	  	
Defined in Section

	
“Bankruptcy Law”

	  	  	
6.1

	  
	
“Custodian”

	  	  	
6.1

	  
	
“Event of Default”

	  	  	
6.1

	  
	
“Journal”

	  	  	
10.15

	  
	
“Judgment Currency”

	  	  	
10.16

	  
	
“Legal Holiday”

	  	  	
10.7

	  
	
“mandatory sinking fund payment”

	  	  	
11.1

	  
	
“Market Exchange Rate”

	  	  	
10.15

	  
	
“New York Banking Day”

	  	  	
10.16

	  
	
“optional sinking fund payment”

	  	  	
11.1

	  
	
“Paying Agent”

	  	  	
2.4

	  
	
“Registrar”

	  	  	
2.4

	  
	
“Required Currency”

	  	  	
10.16

	  
	
“Service Agent”

	  	  	
2.4

	  
	
“successor person”

	  	  	
5.1

	  

 

Section 1.3                      Incorporation by Reference of Trust Indenture Act.  Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings:

 

“Commission” means the SEC.

 

“indenture securities” means the Securities.

 

“indenture security holder” means a Securityholder.

 

“indenture to be qualified” means this Indenture.

 

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

 

“obligor” on the indenture securities means the Company and any successor obligor upon the Securities.

 

All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA and not otherwise defined herein are used herein as so defined.

 

Section 1.4                      Rules of Construction.  Unless the context otherwise requires:

 

(a)           a term has the meaning assigned to it;

 

(b)           an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles;

 

(c)           references to “generally accepted accounting principles” shall mean generally accepted accounting principles in effect as of the time when and for the period as to which such accounting principles are to be applied;

 

  

4

  

 

(d)           “or” is not exclusive;

 

(e)           words in the singular include the plural, and in the plural include the singular; and

 

(f)           provisions apply to successive events and transactions.

 

ARTICLE II

THE SECURITIES

 

Section 2.1                      Issuable in Series.  The aggregate amount of Securities that may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more Series. All Securities of a Series shall be identical except as may be set forth in a Board Resolution, a supplemental indenture or an Officers’ Certificate detailing the adoption of the terms thereof pursuant to the authority granted under a Board Resolution. In the case of Securities of a Series to be issued from time to time, the Board Resolution, Officers’ Certificate or supplemental indenture may provide for the method by which specified terms (such as interest rate, maturity date, record date or date from which interest shall accrue) are to be determined. Securities may differ between Series in respect of any matters, provided that all Series of Securities shall be equally and ratably entitled to the benefits of the Indenture.

 

Section 2.2                      Establishment of Terms of Series of Securities.  At or prior to the issuance of any Securities within a Series, the following shall be established (as to the Series generally, in the case of Subsection 2.2.1 and either as to such Securities within the Series or as to the Series generally in the case of Subsections 2.2.2 through 2.2.21) by a Board Resolution, a supplemental indenture or an Officers’ Certificate pursuant to authority granted under a Board Resolution:

 

2.2.1 the title of the Series (which shall distinguish the Securities of that particular Series from the Securities of any other Series);

 

2.2.2 the price or prices (expressed as a percentage of the principal amount thereof) at which the Securities of the Series will be issued;

 

2.2.3 any limit upon the aggregate principal amount of the Securities of the Series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the Series pursuant to Section 2.7, 2.8, 2.11, 3.6 or 9.6);

 

2.2.4 the date or dates on which the principal of the Securities of the Series is payable;

 

2.2.5 the rate or rates (which may be fixed or variable) per annum or, if applicable, the method used to determine such rate or rates (including, but not limited to, any commodity, commodity index, stock exchange index or financial index) at which the Securities of the Series shall bear interest, if any, the date or dates from which such interest, if any, shall accrue, the date or dates on which such interest, if any, shall commence and be payable and any regular record date for the interest payable on any interest payment date;

 

2.2.6 the place or places where the principal of and interest, if any, on the Securities of the Series shall be payable, or the method of such payment, if by wire transfer, mail or other means;

 

2.2.7 if applicable, the period or periods within which, the price or prices at which and the terms and conditions upon which the Securities of the Series may be redeemed, in whole or in part, at the option of the Company;

 

2.2.8 the obligation, if any, of the Company to redeem or purchase the Securities of the Series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the Series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;

 

  

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2.2.9 the dates, if any, on which and the price or prices at which the Securities of the Series will be repurchased by the Company at the option of the Holders thereof and other detailed terms and provisions of such repurchase obligations;

 

2.2.10 if other than denominations of $1,000 and any integral multiple thereof, the denominations in which the Securities of the Series shall be issuable;

 

2.2.11 the forms of the Securities of the Series in bearer or fully registered form (and, if in fully registered form, whether the Securities will be issuable as Global Securities);

 

2.2.12 if other than the principal amount thereof, the portion of the principal amount of the Securities of the Series that shall be payable upon declaration of acceleration of the maturity thereof pursuant to Section 6.2;

 

2.2.13 the currency of denomination of the Securities of the Series, which may be Dollars or any Foreign Currency, including, but not limited to, the ECU, and if such currency of denomination is a composite currency other than the ECU, the agency or organization, if any, responsible for overseeing such composite currency;

 

2.2.14 the designation of the currency, currencies or currency units in which payment of the principal of and interest, if any, on the Securities of the Series will be made;

 

2.2.15 if payments of principal of or interest, if any, on the Securities of the Series are to be made in one or more currencies or currency units other than that or those in which such Securities are denominated, the manner in which the exchange rate with respect to such payments will be determined;

 

2.2.16 the manner in which the amounts of payment of principal of or interest, if any, on the Securities of the Series will be determined, if such amounts may be determined by reference to an index based on a currency or currencies or by reference to a commodity, commodity index, stock exchange index or financial index;  

 

2.2.17 the provisions, if any, relating to any security provided for the Securities of the Series;

 

2.2.18 the provisions, if any, relating to the subordination of the debt securities;

 

2.2.19 any addition to or change in the Events of Default which applies to any Securities of the Series and any change in the right of the Trustee or the requisite Holders of such Securities to declare the principal amount thereof due and payable pursuant to Section 6.2;

 

2.2.20 any addition to or change in the covenants set forth in Articles IV or V which applies to Securities of the Series;

 

2.2.21 any other terms of the Securities of the Series (which terms shall not be inconsistent with the provisions of this Indenture, except as permitted by Section 9.1, but which may modify or delete any provision of this Indenture insofar as it applies to such Series); and

 

2.2.22 any depositories, interest rate calculation agents, exchange rate calculation agents or other agents with respect to Securities of such Series if other than those appointed herein.

 

All Securities of any one Series need not be issued at the same time and may be issued from time to time, consistent with the terms of this Indenture, if so provided by or pursuant to the Board Resolution, supplemental indenture or Officers’ Certificate referred to above, and the authorized principal amount of any Series may not be increased to provide for issuances of additional Securities of such Series, unless otherwise provided in such Board Resolution, supplemental indenture or Officers’ Certificate.

 

Section 2.3                      Execution and Authentication. Two Officers shall sign the Securities for the Company by manual or facsimile signature.

 

  

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If an Officer whose signature is on a Security no longer holds that office at the time the Security is authenticated, the Security shall nevertheless be valid.

 

A Security shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture.

 

The Trustee shall at any time, and from time to time, authenticate Securities for original issue in the principal amount provided in the Board Resolution, supplemental indenture hereto or Officers’ Certificate, upon receipt by the Trustee of a Company Order. Such Company Order may authorize authentication and delivery pursuant to oral or electronic instructions from the Company or its duly authorized agent or agents, which oral instructions shall be promptly confirmed in writing. Each Security shall be dated the date of its authentication unless otherwise provided by a Board Resolution, a supplemental indenture hereto or an Officers’ Certificate.

 

The aggregate principal amount of Securities of any Series outstanding at any time may not exceed any limit upon the maximum principal amount for such Series set forth in the Board Resolution, supplemental indenture hereto or Officers’ Certificate delivered pursuant to Section 2.2, except as provided in Section 2.8.

 

Prior to the issuance of Securities of any Series, the Trustee shall have received and (subject to Section 7.2) shall be fully protected in relying on: (a) the Board Resolution, supplemental indenture hereto or Officers’ Certificate establishing the form of Securities of that Series or of Securities within that Series and the terms of Securities of that Series or of Securities within that Series, (b) an Officers’ Certificate complying with Section 10.4, and (c) an Opinion of Counsel complying with Section 10.4.

 

The Trustee shall have the right to decline to authenticate and deliver any Securities of such Series: (a) if the Trustee, being advised by counsel, determines that such action may not lawfully be taken; or (b) if the Trustee in good faith by its board of directors or trustees, executive committee or a trust committee of directors and/or vice-presidents shall determine that such action would expose the Trustee to personal liability to Holders of any then outstanding Series of Securities.

 

The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Securities. An authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Company or an Affiliate of the Company.

 

Section 2.4                      Registrar and Paying Agent. The Company shall maintain, with respect to each Series of Securities, at the place or places specified with respect to such Series pursuant to Section 2.2, an office or agency where Securities of such Series may be presented or surrendered for payment (“Paying Agent”), where Securities of such Series may be surrendered for registration of transfer or exchange (“Registrar”) and where notices and demands to or upon the Company in respect of Securities of such Series and this Indenture may be served (“Service Agent”). The Registrar shall keep a register with respect to each Series of Securities and to their transfer and exchange. The Company will give prompt written notice to the Trustee of the name and address, and any change in the name or address, of each Registrar, Paying Agent or Service Agent. If at any time the Company shall fail to maintain any such required Registrar, Paying Agent or Service Agent or shall fail to furnish the Trustee with the name and address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.

 

The Company may also from time to time designate one or more co-registrars, additional paying agents or additional service agents and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligations to maintain a Registrar, Paying Agent and Service Agent in each place so specified pursuant to Section 2.2 for Securities of any Series for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the name or address of any such co-registrar, additional paying agent or additional service agent. The term “Registrar” includes any co-registrar; the term “Paying Agent” includes any additional paying agent; and the term “Service Agent” includes any additional service agent.

 

  

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The Company hereby appoints the Trustee the initial Registrar, Paying Agent and Service Agent for each Series unless another Registrar, Paying Agent or Service Agent, as the case may be, is appointed prior to the time Securities of that Series are first issued.

 

Section 2.5                      Paying Agent to Hold Money in Trust.  The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust, for the benefit of Securityholders of any Series of Securities, or the Trustee, all money held by the Paying Agent for the payment of principal of or interest on the Series of Securities, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary of the Company) shall have no further liability for the money. If the Company or a Subsidiary of the Company acts as Paying Agent, it shall segregate and hold all money held by it as Paying Agent in a separate trust fund for the benefit of Securityholders of any Series of Securities.

 

Section 2.6                      Securityholder Lists.  The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders of each Series of Securities and shall otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least ten days before each interest payment date and at such other times as the Trustee may request in writing a list, in such form and as of such date as the Trustee may reasonably require, of the names and addresses of Securityholders of each Series of Securities.

 

Section 2.7                      Transfer and Exchange.  Where Securities of a Series are presented to the Registrar or a co-registrar with a request to register a transfer or to exchange them for an equal principal amount of Securities of the same Series, the Registrar shall register the transfer or make the exchange if its requirements for such transactions are met. To permit registrations of transfers and exchanges, the Trustee shall authenticate Securities at the Registrar’s request. No service charge shall be made for any registration of transfer or exchange (except as otherwise expressly permitted herein), but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer tax or similar governmental charge payable upon exchanges pursuant to Sections 2.11, 3.6 or 9.6).

 

Neither the Company nor the Registrar shall be required (a) to issue, register the transfer of, or exchange Securities of any Series for the period beginning at the opening of business fifteen days immediately preceding the mailing of a notice of redemption of Securities of that Series selected for redemption and ending at the close of business on the day of such mailing, or (b) to register the transfer of or exchange Securities of any Series selected, called or being called for redemption as a whole or the portion being redeemed of any such Securities selected, called or being called for redemption in part.

 

Section 2.8                      Mutilated, Destroyed, Lost and Stolen Securities.  If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same Series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.

 

If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and make available for delivery, in lieu of any such destroyed, lost or stolen Security, a new Security of the same Series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.

 

In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.

 

  

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Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

 

Every new Security of any Series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that Series duly issued hereunder.

 

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

 

Section 2.9                      Outstanding Securities.  The Securities outstanding at any time are all the Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest on a Global Security effected by the Trustee in accordance with the provisions hereof and those described in this Section as not outstanding.

 

If a Security is replaced pursuant to Section 2.8, it ceases to be outstanding until the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser.

 

If the Paying Agent (other than the Company, a Subsidiary of the Company or an Affiliate of any thereof) holds on the Maturity of Securities of a Series money sufficient to pay such Securities payable on that date, then on and after that date such Securities of the Series cease to be outstanding and interest on them ceases to accrue.

 

A Security does not cease to be outstanding because the Company or an Affiliate of the Company holds the Security.

 

In determining whether the Holders of the requisite principal amount of outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, the principal amount of a Discount Security that shall be deemed to be outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the Maturity thereof pursuant to Section 6.2.

 

Section 2.10                      Treasury Securities.  In determining whether the Holders of the required principal amount of Securities of a Series have concurred in any request, demand, authorization, direction, notice, consent or waiver Securities of a Series owned by the Company or an Affiliate of the Company shall be disregarded, except that for the purposes of determining whether the Trustee shall be protected in relying on any such request, demand, authorization, direction, notice, consent or waiver only Securities of a Series that the Trustee knows are so owned shall be so disregarded.

 

Section 2.11                      Temporary Securities.  Until definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities upon a Company Order. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee, upon request, shall authenticate definitive Securities of the same Series and date of Maturity in exchange for temporary Securities. Until so exchanged, temporary Securities shall have the same rights under this Indenture as the definitive Securities.

 

Section 2.12                      Cancellation.  The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee shall cancel all Securities surrendered for transfer, exchange, payment, replacement or cancellation and shall destroy such canceled Securities (subject to the record retention requirement of the Exchange Act) and deliver a certificate of such destruction to the Company, unless the Company otherwise directs. The Company may not issue new Securities to replace Securities that it has paid or delivered to the Trustee for cancellation.

 

  

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Section 2.13                      Defaulted Interest.  If the Company defaults in a payment of interest on a Series of Securities, it shall pay the defaulted interest, plus, to the extent permitted by law, any interest payable on the defaulted interest, to the persons who are Securityholders of the Series on a subsequent special record date. The Company shall fix the record date and payment date. At least 30 days before the record date, the Company shall mail to the Trustee and to each Securityholder of the Series a notice that states the record date, the payment date and the amount of interest to be paid. The Company may pay defaulted interest in any other lawful manner.

 

Section 2.14                      Global Securities.

 

2.14.1 Terms of Securities. A Board Resolution, a supplemental indenture hereto or an Officers’ Certificate shall establish whether Securities of a Series shall be issued in whole or in part in the form of one or more Global Securities and the Depository for such Global Security or Securities.

 

2.14.2 Transfer and Exchange. Notwithstanding any provisions to the contrary contained in Section 2.7 of the Indenture and in addition thereto, any Global Security shall be exchangeable pursuant to Section 2.7 of the Indenture for Securities registered in the names of Holders other than the Depository for such Security or its nominee only if (i) such Depository notifies the Company that it is unwilling or unable to continue as Depository for such Global Security or if at any time such Depository ceases to be a clearing agency registered under the Exchange Act, and, in either case, the Company fails to appoint a successor Depository within 90 days of such event, (ii) the Company executes and delivers to the Trustee an Officers’ Certificate to the effect that such Global Security shall be so exchangeable or (iii) an Event of Default with respect to the Securities represented by such Global Security shall have happened and be continuing. Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for Securities registered in such names as the Depository shall direct in writing in an aggregate principal amount equal to the principal amount of the Global Security with like tenor and terms.

 

Except as provided in this Section 2.14.2, a Global Security may not be transferred except as a whole by the Depository with respect to such Global Security to a nominee of such Depository, by a nominee of such Depository to such Depository or another nominee of such Depository or by the Depository or any such nominee to a successor Depository or a nominee of such a successor Depository.

 

2.14.3 Legend. Any Global Security issued hereunder shall bear a legend in substantially the following form:

 

“This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is registered in the name of the Depository or a nominee of the Depository. This Security is exchangeable for Securities registered in the name of a person other than the Depository or its nominee only in the limited circumstances described in the Indenture, and may not be transferred except as a whole by the Depository to a nominee of the Depository, by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such a successor Depository.”

 

2.14.4 Acts of Holders. The Depository, as a Holder, may appoint agents and otherwise authorize participants to give or take any request, demand, authorization, direction, notice, consent, waiver or other action which a Holder is entitled to give or take under the Indenture.

 

2.14.5 Payments. Notwithstanding the other provisions of this Indenture, unless otherwise specified as contemplated by Section 2.2, payment of the principal of and interest, if any, on any Global Security shall be made to the Holder thereof.

 

2.14.6 Consents, Declaration and Directions. Except as provided in Section 2.14.5, the Company, the Trustee and any Agent shall treat a person as the Holder of such principal amount of outstanding Securities of such Series represented by a Global Security as shall be specified in a written statement of the Depository with respect to such Global Security, for purposes of obtaining any consents, declarations, waivers or directions required to be given by the Holders pursuant to this Indenture.

 

  

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2.14.7 CUSIP Numbers. The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other elements of identification printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.

 

ARTICLE III

REDEMPTION

 

Section 3.1                      Notice to Trustee.  The Company may, with respect to any Series of Securities, reserve the right to redeem and pay the Series of Securities or may covenant to redeem and pay the Series of Securities or any part thereof prior to the Stated Maturity thereof at such time and on such terms as provided for in such Securities. If a Series of Securities is redeemable and the Company wants or is obligated to redeem prior to the Stated Maturity thereof all or part of the Series of Securities pursuant to the terms of such Securities, it shall notify the Trustee of the redemption date and the principal amount of Series of Securities to be redeemed. The Company shall give the notice at least 45 days before the redemption date (or such shorter notice as may be acceptable to the Trustee).

 

Section 3.2                      Selection of Securities to be Redeemed.  Unless otherwise indicated for a particular Series by a Board Resolution, a supplemental indenture or an Officers’ Certificate, if less than all the Securities of a Series are to be redeemed, the Trustee shall select Securities of the Series to be redeemed in any manner that the Trustee deems fair and appropriate. The Trustee shall make the selection from Securities of the Series outstanding not previously called for redemption. The Trustee may select for redemption portions of the principal of Securities of the Series that have denominations larger than $1,000. Securities of the Series and portions of them it selects shall be in amounts of $1,000 or whole multiples of $1,000 or, with respect to Securities of any Series issuable in other denominations pursuant to Section 2.2.10, the minimum principal denomination for each Series and integral multiples thereof. Provisions of this Indenture that apply to Securities of a Series called for redemption also apply to portions of Securities of that Series called for redemption.

 

Section 3.3                      Notice of Redemption.  Unless otherwise indicated for a particular Series by a Board Resolution, a supplemental indenture hereto or an Officers’ Certificate, at least 30 days but not more than 60 days before a redemption date, the Company shall mail a notice of redemption by first-class mail to each Holder whose Securities are to be redeemed and if any Bearer Securities are outstanding, publish on one occasion a notice in an Authorized Newspaper.

 

The notice shall identify the Securities of the Series to be redeemed and shall state:

 

(a)           the redemption date;

 

(b)           the redemption price;

 

(c)           the name and address of the Paying Agent;

 

(d)           that Securities of the Series called for redemption must be surrendered to the Paying Agent to collect the redemption price;

 

(e)           that interest on Securities of the Series called for redemption ceases to accrue on and after the redemption date; and

 

(f)           any other information as may be required by the terms of the particular Series or Securities of a Series being redeemed.

 

At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at its expense.

 

  

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Section 3.4                      Effect of Notice of Redemption. Once notice of redemption is mailed or published as provided in Section 3.3, Securities of a Series called for redemption become due and payable on the redemption date and at the redemption price. A notice of redemption may not be conditional. Upon surrender to the Paying Agent, such Securities shall be paid at the redemption price plus accrued interest to the redemption date.

 

Section 3.5                      Deposit of Redemption Price. On or before the redemption date, the Company shall deposit with the Paying Agent money sufficient to pay the redemption price of and accrued interest, if any, on all Securities to be redeemed on that date.

 

Section 3.6                      Securities Redeemed in Part. Upon surrender of a Security that is redeemed in part, the Trustee shall authenticate for the Holder a new Security of the same Series and the same Maturity equal in principal amount to the unredeemed portion of the Security surrendered.

 

ARTICLE IV

COVENANTS

 

Section 4.1                      Payment of Principal and Interest.  The Company covenants and agrees for the benefit of the Holders of each Series of Securities that it will duly and punctually pay the principal of and interest, if any, on Securities of that Series in accordance with the terms of such Securities and this Indenture.

 

Section 4.2                      SEC Reports.  The Company shall deliver to the Trustee, within 15 days after it files them with the SEC, copies of the annual reports and of the information, documents, and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The Company also shall comply with the other provisions of TIA Section 314(a).

 

Section 4.3                      Compliance Certificate.  The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year of the Company, an Officers’ Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of such Officer’s knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which such Officer may have knowledge).

 

The Company will, so long as any of the Securities are outstanding, deliver to the Trustee, forthwith upon becoming aware of any Default or Event of Default, an Officers’ Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto.

 

Section 4.4                      Stay, Extension and Usury Laws.  The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture or the Securities; and the Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted.

 

Section 4.5                      Corporate Existence.  Subject to Article V, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate, partnership or other existence of each Significant Subsidiary in accordance with the respective organizational documents of each Significant Subsidiary and the rights (charter and statutory), licenses and franchises of the Company and its Significant Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any Significant Subsidiary, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries taken as a whole and that the loss thereof is not adverse in any material respect to the Holders.

 

  

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Section 4.6                      Taxes.  The Company shall, and shall cause each of its Significant Subsidiaries to, pay prior to delinquency all taxes, assessments and governmental levies, except as contested in good faith and by appropriate proceedings.

 

ARTICLE V

SUCCESSORS

 

Section 5.1                      When Company May Merge, Etc.  The Company shall not consolidate with or merge into, or convey, transfer or lease all or substantially all of its properties and assets to, any person (a “successor person”), and may not permit any person to merge into, or convey, transfer or lease its properties and assets substantially as an entirety to, the Company, unless:

 

(a)           the successor person (if any) is a corporation, partnership, trust or other entity organized and validly existing under the laws of any U.S. domestic jurisdiction and expressly assumes the Company’s obligations on the Securities and under this Indenture; and

 

(b)           immediately after giving effect to the transaction, no Default or Event of Default, shall have occurred and be continuing.

 

The Company shall deliver to the Trustee, prior to the consummation of the proposed transaction, an Officers’ Certificate to the foregoing effect and an Opinion of Counsel stating that the proposed transaction and such supplemental indenture comply with this Indenture.

 

Section 5.2                      Successor Corporation Substituted.  Upon any consolidation or merger, or any sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.1, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, lease, conveyance or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor person has been named as the Company herein; provided, however, that the predecessor Company in the case of a sale, lease, conveyance or other disposition shall not be released from the obligation to pay the principal of and interest, if any, on the Securities.

 

ARTICLE VI

DEFAULTS AND REMEDIES

 

Section 6.1                      Events of Default.  “Event of Default,” wherever used herein with respect to Securities of any Series, means any one of the following events, unless in the establishing Board Resolution, supplemental indenture or Officers’ Certificate, it is provided that such Series shall not have the benefit of said Event of Default:

 

(a)           default in the payment of any interest on any Security of that Series when it becomes due and payable, and continuance of such default for a period of 30 days (unless the entire amount of such payment is deposited by the Company with the Trustee or with a Paying Agent prior to the expiration of such period of 30 days); or

 

(b)           default in the payment of the principal of any Security of that Series at its Maturity; or

 

(c)           default in the deposit of any sinking fund payment, when and as due in respect of any Security of that Series; or

 

(d)           default in the performance or breach of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty that has been included in this Indenture solely for the benefit of Series of Securities other than that Series), which default continues uncured for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least a majority in principal amount of the outstanding Securities of that Series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or

 

  

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(e)           the Company or any of its Significant Subsidiaries pursuant to or within the meaning of any Bankruptcy Law:

 

(i)              commences a voluntary case,

 

(ii)              consents to the entry of an order for relief against it in an involuntary case,

 

(iii)              consents to the appointment of a Custodian of it or for all or substantially all of its property,

 

(iv)              ) makes a general assignment for the benefit of its creditors, or

 

(v)              generally is unable to pay its debts as the same become due; or

 

(f)           a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

 

(i)              is for relief against the Company or any of its Significant Subsidiaries in an involuntary case,

 

(ii)              appoints a Custodian of the Company or any of its Significant Subsidiaries or for all or substantially all of its property, or

 

(iii)              orders the liquidation of the Company or any of its Significant Subsidiaries, and the order or decree remains unstayed and in effect for 60 days; or

 

(g)           any other Event of Default provided with respect to Securities of that Series, which is specified in a Board Resolution, a supplemental indenture hereto or an Officers’ Certificate, in accordance with Section 2.2.18.

 

The term “Bankruptcy Law” means title 11, U.S. Code or any similar Federal or State law for the relief of debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

 

Section 6.2                      Acceleration of Maturity; Rescission and Annulment.  If an Event of Default with respect to Securities of any Series at the time outstanding occurs and is continuing (other than an Event of Default referred to in Section 6.1(e) or (f)) then in every such case the Trustee or the Holders of not less than a majority in principal amount of the outstanding Securities of that Series may declare the principal amount (or, if any Securities of that Series are Discount Securities, such portion of the principal amount as may be specified in the terms of such Securities) of and accrued and unpaid interest, if any, on all of the Securities of that Series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) and accrued and unpaid interest, if any, shall become immediately due and payable. If an Event of Default specified in Section 6.1(e) or (f) shall occur, the principal amount (or specified amount) of and accrued and unpaid interest, if any, on all outstanding Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.

 

At any time after such a declaration of acceleration with respect to any Series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the outstanding Securities of that Series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if:

 

  

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

 

(i)           all overdue interest, if any, on all Securities of that Series,

 

(ii)           the principal of any Securities of that Series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Securities,

 

(iii)           to the extent that payment of such interest is lawful, interest upon any overdue principal and overdue interest at the rate or rates prescribed therefor in such Securities, and

 

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

 

(b)           all Events of Default with respect to Securities of that Series, other than the non-payment of the principal of Securities of that Series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 6.13.

 

No such rescission shall affect any subsequent Default or impair any right consequent thereon.

 

Section 6.3                      Collection of Indebtedness and Suits for Enforcement by Trustee.  The Company covenants that if

 

(a)           default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or

 

(b)           default is made in the payment of principal of any Security at the Maturity thereof, or

 

(c)           default is made in the deposit of any sinking fund payment when and as due by the terms of a Security,

 

then, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal or any overdue interest, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

 

If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or deemed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated.

 

If an Event of Default with respect to any Securities of any Series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such Series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

 

Section 6.4                      Trustee May File Proofs of Claim.  In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise,

 

  

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(a)           to file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and

 

(b)           to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same, and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7.

 

Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

 

Section 6.5                      Trustee May Enforce Claims Without Possession of Securities.  All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.

 

Section 6.6                      Application of Money Collected.  Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

 

First: To the payment of all amounts due the Trustee under Section 7.7; and

 

Second: To the payment of the amounts then due and unpaid for principal of and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and interest, respectively; and

 

Third: To the Company.

 

Section 6.7                      Limitation on Suits. No Holder of any Security of any Series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless

 

(a)           such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that Series;

 

(b)           the Holders of not less than a majority in principal amount of the outstanding Securities of that Series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

 

  

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

 

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

 

(e)           no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the outstanding Securities of that Series;

 

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

 

Section 6.8                      Unconditional Right of Holders to Receive Principal and Interest.  Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of, premium and interest, if any, on such Security on the Stated Maturity or Stated Maturities expressed in such Security (or, in the case of redemption, on the redemption date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.

 

Section 6.9                      Restoration of Rights and Remedies.  If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.

 

Section 6.10                      Rights and Remedies Cumulative.  Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in Section 2.8, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

 

Section 6.11                      Delay or Omission Not Waiver.  No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

 

Section 6.12                      Control by Holders.  The Holders of a majority in principal amount of the outstanding Securities of any Series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such Series, provided that

 

(a)           such direction shall not be in conflict with any rule of law or with this Indenture,

 

(b)           the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and

 

(c)           subject to the provisions of Section 6.1, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer of the Trustee, determine that the proceeding so directed would involve the Trustee in personal liability.

 

  

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Section 6.13                      Waiver of Past Defaults.  The Holders of not less than a majority in principal amount of the outstanding Securities of any Series may on behalf of the Holders of all the Securities of such Series waive any past Default hereunder with respect to such Series and its consequences, except a Default (i) in the payment of the principal of or interest on any Security of such Series (provided, however, that the Holders of a majority in principal amount of the outstanding Securities of any Series may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration) and (ii) in respect of a covenant or provision hereof which cannot be modified or amended without the consent of the Holder of each outstanding Security of such Series affected. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

 

Section 6.14                      Undertaking For Costs.  All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the outstanding Securities of any Series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or interest on any Security on or after the Stated Maturity or Stated Maturities expressed in such Security (or, in the case of redemption, on the redemption date).

 

ARTICLE VII

TRUSTEE

 

Section 7.1                      Duties of Trustee.

 

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

 

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

 

(i)           The Trustee need perform only those duties that are specifically set forth in this Indenture and no others.

 

(ii)           In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon Officers’ Certificates or Opinions of Counsel furnished to the Trustee and conforming to the requirements of this Indenture; however, in the case of any such Officers’ Certificates or Opinions of Counsel which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall examine such Officers’ Certificates and Opinions of Counsel to determine whether or not they conform to the requirements of this Indenture.

 

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

 

(i)           This paragraph does not limit the effect of paragraph (b) of this Section.

 

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

 

(iii)           The Trustee shall not be liable with respect to any action taken, suffered or omitted to be taken by it with respect to Securities of any Series in good faith in accordance with the direction of the Holders of a majority in principal amount of the outstanding Securities of such Series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such Series.

 

  

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

 

(e)           The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against any loss, liability or expense.

 

(f)           The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

 

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

 

(h)           The Paying Agent, the Registrar and any authenticating agent shall be entitled to the protections, immunities and standard of care as are set forth in paragraphs (a), (b) and (c) of this Section with respect to the Trustee.

 

Section 7.2                      Rights of Trustee.

 

(a)           The Trustee may rely on and shall be protected in acting or refraining from acting upon any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document.

 

(b)           Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel.

 

(c)           The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. No Depository shall be deemed an agent of the Trustee and the Trustee shall not be responsible for any act or omission by any Depository.

 

(d)           The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers.

 

(e)           The Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

 

(f)           The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders of Securities unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.

 

Section 7.3                      Individual Rights of Trustee.  The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or an Affiliate of the Company with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. The Trustee is also subject to Sections 7.10 and 7.11.

 

  

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Section 7.4                      Trustee’s Disclaimer.  The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company’s use of the proceeds from the Securities, and it shall not be responsible for any statement in the Securities other than its authentication.

 

Section 7.5                      Notice of Defaults.  If a Default or Event of Default occurs and is continuing with respect to the Securities of any Series and if it is known to a Responsible Officer of the Trustee, the Trustee shall mail to each Securityholder of the Securities of that Series and, if any Bearer Securities are outstanding, publish on one occasion in an Authorized Newspaper, notice of a Default or Event of Default within 90 days after it occurs or, if later, after a Responsible Officer of the Trustee has knowledge of such Default or Event of Default. Except in the case of a Default or Event of Default in payment of principal of or interest on any Security of any Series, the Trustee may withhold the notice if and so long as its corporate trust committee or a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of Securityholders of that Series.

 

Section 7.6                      Reports by Trustee to Holders.  Within 60 days after May 15 in each year, the Trustee shall transmit by mail to all Securityholders, as their names and addresses appear on the register kept by the Registrar and, if any Bearer Securities are outstanding, publish in an Authorized Newspaper, a brief report dated as of such May 15, in accordance with, and to the extent required under, TIA Section 313.

 

A copy of each report at the time of its mailing to Securityholders of any Series shall be filed with the SEC and each stock exchange on which the Securities of that Series are listed. The Company shall promptly notify the Trustee when Securities of any Series are listed on any stock exchange.

 

Section 7.7                      Compensation and Indemnity.  The Company shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred by it. Such expenses shall include the reasonable compensation and expenses of the Trustee’s agents and counsel.

 

The Company shall indemnify the Trustee (including the cost of defending itself) against any loss, liability or expense incurred by it except as set forth in the next paragraph in the performance of its duties under this Indenture as Trustee or Agent. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. This indemnification shall apply to officers, directors, employees, shareholders and agents of the Trustee.

 

The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee or by any officer, director, employee, shareholder or agent of the Trustee through negligence or bad faith.

 

To secure the Company’s payment obligations in this Section, the Trustee shall have a lien prior to the Securities of any Series on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Securities of that Series.

 

When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.1(e) or (f) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law.

 

Section 7.8                      Replacement of Trustee.  A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section.

 

The Trustee may resign with respect to the Securities of one or more Series by so notifying the Company at least 30 days prior to the date of the proposed resignation. The Holders of a majority in principal amount of the Securities of any Series may remove the Trustee with respect to that Series by so notifying the Trustee and the Company. The Company may remove the Trustee with respect to Securities of one or more Series if:

 

  

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(a)           the Trustee fails to comply with Section 7.10;

 

(b)           the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;

 

(c)           a Custodian or public officer takes charge of the Trustee or its property; or

 

(d)           the Trustee becomes incapable of acting.

 

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Securities may appoint a successor Trustee to replace the successor Trustee appointed by the Company.

 

If a successor Trustee with respect to the Securities of any one or more Series does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least 10% in principal amount of the Securities of the applicable Series may petition any court of competent jurisdiction for the appointment of a successor Trustee.

 

If the Trustee with respect to the Securities of any one or more Series fails to comply with Section 7.10, any Securityholder of the applicable Series may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

 

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee subject to the lien provided for in Section 7.7, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee with respect to each Series of Securities for which it is acting as Trustee under this Indenture. A successor Trustee shall mail a notice of its succession to each Securityholder of each such Series and, if any Bearer Securities are outstanding, publish such notice on one occasion in an Authorized Newspaper. Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the Company’s obligations under Section 7.7 hereof shall continue for the benefit of the retiring trustee with respect to expenses and liabilities incurred by it prior to such replacement.

 

Section 7.9                      Successor Trustee by Merger, Etc.  If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee.

 

Section 7.10                      Eligibility; Disqualification.  This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a)(1), (2) and (5). The Trustee shall always have a combined capital and surplus of at least $25,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA Section 310(b).

 

Section 7.11                      Preferential Collection of Claims Against Company.  The Trustee is subject to TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated.

 

ARTICLE VIII

SATISFACTION AND DISCHARGE; DEFEASANCE

 

Section 8.1                      Satisfaction and Discharge of Indenture.  This Indenture shall upon Company Order cease to be of further effect (except as hereinafter provided in this Section 8.1), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when

 

(a)           either

 

  

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(i)           all Securities theretofore authenticated and delivered (other than Securities that have been destroyed, lost or stolen and that have been replaced or paid) have been delivered to the Trustee for cancellation; or

 

(ii)           all such Securities not theretofore delivered to the Trustee for cancellation

 

(1)           have become due and payable, or

 

(2)           will become due and payable at their Stated Maturity within one year, or

 

(3)           are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, or

 

(4)           are deemed paid and discharged pursuant to Section 8.3, as applicable;

 

and the Company, in the case of (1), (2) or (3) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust an amount sufficient for the purpose of paying and discharging the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and interest to the date of such deposit (in the case of Securities which have become due and payable on or prior to the date of such deposit) or to the Stated Maturity or redemption date, as the case may be;

 

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

 

(c)           the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.

 

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 7.7, and, if money shall have been deposited with the Trustee pursuant to clause (a) of this Section, the provisions of Sections 2.4, 2.7, 2.8, 8.1 8.2 and 8.5 shall survive.

 

Section 8.2                      Application of Trust Funds; Indemnification.

 

(a)           Subject to the provisions of Section 8.5, all money deposited with the Trustee pursuant to Section 8.1, all money and U.S. Government Obligations or Foreign Government Obligations deposited with the Trustee pursuant to Section 8.3 or 8.4 and all money received by the Trustee in respect of U.S. Government Obligations or Foreign Government Obligations deposited with the Trustee pursuant to Section 8.3 or 8.4, shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the persons entitled thereto, of the principal and interest for whose payment such money has been deposited with or received by the Trustee or to make mandatory sinking fund payments or analogous payments as contemplated by Sections 8.3 or 8.4.

 

(b)           The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against U.S. Government Obligations or Foreign Government Obligations deposited pursuant to Sections 8.3 or 8.4 or the interest and principal received in respect of such obligations other than any payable by or on behalf of Holders.

 

(c)           The Trustee shall deliver or pay to the Company from time to time upon Company Request any U.S. Government Obligations or Foreign Government Obligations or money held by it as provided in Sections 8.3 or 8.4 which, in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written certification thereof delivered to the Trustee, are then in excess of the amount thereof which then would have been required to be deposited for the purpose for which such U.S. Government Obligations or Foreign Government Obligations or money were deposited or received. This provision shall not authorize the sale by the Trustee of any U.S. Government Obligations or Foreign Government Obligations held under this Indenture.

 

  

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Section 8.3                      Legal Defeasance of Securities of Any Series.  Unless this Section 8.3 is otherwise specified, pursuant to Section 2.2.20, to be inapplicable to Securities of any Series, the Company shall be deemed to have paid and discharged the entire indebtedness on all the outstanding Securities of such Series on the 91st day after the date of the deposit referred to in subparagraph (d) hereof, and the provisions of this Indenture, as it relates to such outstanding Securities of such Series, shall no longer be in effect (and the Trustee, at the expense of the Company, shall, at Company Request, execute proper instruments acknowledging the same), except as to:

 

(a)           the rights of Holders of Securities of such Series to receive, from the trust funds described in subparagraph (d) hereof, (i) payment of the principal of and each installment of principal of and interest on the outstanding Securities of such Series on the Stated Maturity of such principal or installment of principal or interest and (ii) the benefit of any mandatory sinking fund payments applicable to the Securities of such Series on the day on which such payments are due and payable in accordance with the terms of this Indenture and the Securities of such Series;

 

(b)           the provisions of Sections 2.4, 2.7, 2.8, 8.2, 8.3 and 8.5; and

 

(c)           the rights, powers, trust and immunities of the Trustee hereunder;

 

(d)           provided that, the following conditions shall have been satisfied:

 

(e)           the Company shall have deposited or caused to be deposited irrevocably with the Trustee as trust funds in trust for the purpose of making the following payments, specifically pledged as security for and dedicated solely to the benefit of the Holders of such Securities (i) in the case of Securities of such Series denominated in Dollars, cash in Dollars (or such other money or currencies as shall then be legal tender in the United States) and/or U.S. Government Obligations, or (ii) in the case of Securities of such Series denominated in a Foreign Currency (other than a composite currency), money and/or Foreign Government Obligations, which through the payment of interest and principal in respect thereof, in accordance with their terms, will provide (and without reinvestment and assuming no tax liability will be imposed on such Trustee), not later than one day before the due date of any payment of money, an amount in cash, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge each installment of principal (including mandatory sinking fund or analogous payments) of and interest, if any, on all the Securities of such Series on the dates such installments of interest or principal are due;

 

(f)           such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Company is a party or by which it is bound;

 

(g)           no Default or Event of Default with respect to the Securities of such Series shall have occurred and be continuing on the date of such deposit or during the period ending on the 91st day after such date;

 

(h)           the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel to the effect that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the Securities of such Series will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred;

 

(i)           the Company shall have delivered to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of the Securities of such Series over any other creditors of the company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company;

 

  

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(j)           such deposit shall not result in the trust arising from such deposit constituting an investment company (as defined in the Investment Company Act of 1940, as amended), or such trust shall be qualified under such Act or exempt from regulation thereunder; and

 

(k)           the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the defeasance contemplated by this Section have been complied with.

 

Section 8.4                      Covenant Defeasance.  Unless this Section 8.4 is otherwise specified pursuant to Section 2.2.20 to be inapplicable to Securities of any Series, on and after the 91st day after the date of the deposit referred to in subparagraph (a) hereof, the Company may omit to comply with any term, provision or condition set forth under Sections 4.2, 4.3, 4.4, 4.5, 4.6, and 5.1 as well as any additional covenants contained in a supplemental indenture hereto for a particular Series of Securities or a Board Resolution or an Officers’ Certificate delivered pursuant to Section 2.2.20 (and the failure to comply with any such covenants shall not constitute a Default or Event of Default under Section 6.1) with respect to the Securities of such Series, provided that the following conditions shall have been satisfied:

 

(a)           With reference to this Section 8.4, the Company has deposited or caused to be irrevocably deposited (except as provided in Section 8.2(c)) with the Trustee as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities (i) in the case of Securities of such Series denominated in Dollars, cash in Dollars (or such other money or currencies as shall then be legal tender in the United States) and/or U.S. Government Obligations, or (ii) in the case of Securities of such Series denominated in a Foreign Currency (other than a composite currency), money and/or Foreign Government Obligations, which through the payment of interest and principal in respect thereof, in accordance with their terms, will provide (and without reinvestment and assuming no tax liability will be imposed on such Trustee), not later than one day before the due date of any payment of money, an amount in cash, sufficient, in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written certification thereof delivered to the Trustee, to pay principal and interest, if any, on and any mandatory sinking fund in respect of the Securities of such Series on the dates such installments of interest or principal are due;

 

(b)           Such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Company is a party or by which it is bound;

 

(c)           No Default or Event of Default with respect to the Securities of such Series shall have occurred and be continuing on the date of such deposit or during the period ending on the 91st day after such date;

 

(d)           the Company shall have delivered to the Trustee an Opinion of Counsel confirming that Holders of the Securities of such Series will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred;

 

(e)           the Company shall have delivered to the Trustee an Officers’ Certificate stating the deposit was not made by the Company with the intent of preferring the Holders of the Securities of such Series over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; and

 

(f)           The Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the defeasance contemplated by this Section have been complied with.

 

Section 8.5                      Repayment to Company.  The Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal and interest that remains unclaimed for two years. After that, Securityholders entitled to the money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person.

 

  

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ARTICLE IX

AMENDMENTS AND WAIVERS

 

Section 9.1                      Without Consent of Holders.  The Company and the Trustee may amend or supplement this Indenture or the Securities of one or more Series without the consent of any Securityholder:

 

(a)           to cure any ambiguity, defect or inconsistency;

 

(b)           to comply with Article V;

 

(c)           to provide for uncertificated Securities in addition to or in place of certificated Securities;

 

(d)           to make any change that does not adversely affect the rights of any Securityholder;

 

(e)           to provide for the issuance of and establish the form and terms and conditions of Securities of any Series as permitted by this Indenture;

 

(f)           to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more Series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee; or

 

(g)           to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA.

 

Section 9.2                      With Consent of Holders.  The Company and the Trustee may enter into a supplemental indenture with the written consent of the Holders of at least a majority in principal amount of the outstanding Securities of each Series affected by such supplemental indenture (including consents obtained in connection with a tender offer or exchange offer for the Securities of such Series), for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Securityholders of each such Series. Except as provided in Section 6.13, the Holders of at least a majority in principal amount of the outstanding Securities of each Series affected by such waiver by notice to the Trustee (including consents obtained in connection with a tender offer or exchange offer for the Securities of such Series) may waive compliance by the Company with any provision of this Indenture or the Securities with respect to such Series.

 

It shall not be necessary for the consent of the Holders of Securities under this Section 9.2 to approve the particular form of any proposed supplemental indenture or waiver, but it shall be sufficient if such consent approves the substance thereof. After a supplemental indenture or waiver under this section becomes effective, the Company shall mail to the Holders of Securities affected thereby and, if any Bearer Securities affected thereby are outstanding, publish on one occasion in an Authorized Newspaper, a notice briefly describing the supplemental indenture or waiver. Any failure by the Company to mail or publish such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture or waiver.

 

Section 9.3                      Limitations.  Without the consent of each Securityholder affected, an amendment or waiver may not:

 

(a)           change the amount of Securities whose Holders must consent to an amendment, supplement or waiver;

 

(b)           reduce the rate of or extend the time for payment of interest (including default interest) on any Security;

 

(c)           reduce the principal or premium on or change the Stated Maturity of any Security or reduce the amount of, or postpone the date fixed for, the payment of any sinking fund or analogous obligation;

 

  

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(d)           reduce the principal amount of Discount Securities payable upon acceleration of the maturity thereof;

 

(e)           waive a Default or Event of Default in the payment of the principal of, premium on or interest, if any, on any Security (except a rescission of acceleration of the Securities of any Series by the Holders of at least a majority in principal amount of the outstanding Securities of such Series and a waiver of the payment default that resulted from such acceleration);

 

(f)           make the principal of or interest, if any, on any Security payable in any currency other than that stated in the Security;

 

(g)           make any change in Sections 6.8, 6.13 or 9.3 (this sentence); or

 

(h)           waive a redemption payment with respect to any Security or change any of the provisions with respect to the redemption of any Securities.

 

Section 9.4                      Compliance with Trust Indenture Act.  Every amendment to this Indenture or the Securities of one or more Series shall be set forth in a supplemental indenture hereto that complies with the TIA as then in effect.

 

Section 9.5                      Revocation and Effect of Consents.  Until an amendment or waiver becomes effective, a consent to it by a Holder of a Security is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder’s Security, even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to his Security or portion of a Security if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective.

 

Any amendment or waiver once effective shall bind every Securityholder of each Series affected by such amendment or waiver unless it is of the type described in any of clauses (a) through (h) of Section 9.3. In that case, the amendment or waiver shall bind each Holder of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder’s Security.

 

Section 9.6                      Notation on or Exchange of Securities.  The Trustee may place an appropriate notation about an amendment or waiver on any Security of any Series thereafter authenticated. The Company in exchange for Securities of that Series may issue and the Trustee shall authenticate upon request new Securities of that Series that reflect the amendment or waiver.

 

Section 9.7                      Trustee Protected.  In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 7.1) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee shall sign all supplemental indentures, except that the Trustee need not sign any supplemental indenture that adversely affects its rights.

 

ARTICLE X

MISCELLANEOUS

 

Section 10.1                      Trust Indenture Act Controls.  If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required or deemed to be included in this Indenture by the TIA, such required or deemed provision shall control.

 

Section 10.2                      Notices.  Unless otherwise provided herein, any notice or communication by the Company or the Trustee to the other shall be in writing and delivered in person or by courier, telegraphed, telexed or by facsimile transmission or mailed by first-class mail as follows:

 

  

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if to the Company:

	  	
Vision-Sciences, Inc.

40 Ramland Road South

Orangeburg, New York 10962

Attention: Katherine L. Wolf,

Chief Financial Officer & Executive Vice President, Corporate Development

Facsimile: (845) 365-0620

	  	  
	  	  	  	  	  	  	  
	  	  	
with a copy to:

	  	
Cole, Schotz, Meisel, Forman & Leonard, P.A.

25 Main Street

Hackensack, New Jersey 07601

Attention:  Marc P. Press

Facsimile:  (201) 678-6271

	  	  
	  	  	  	  	  	  	  
	  	  	
if to the Trustee:

	  	
[Name of Trustee]

[Address]

	  	  
	  	  	  	  	
                                        

	  	  
	  	  	  	  	
                                        

	  	  
	  	  	  	  	
Attention:                     

	  	  

 

The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

 

Any notice or communication to a Securityholder shall be mailed by first-class mail to his address shown on the register kept by the Registrar and, if any Bearer Securities are outstanding, published in an Authorized Newspaper. Failure to mail a notice or communication to a Securityholder of any Series or any defect in it shall not affect its sufficiency with respect to other Securityholders of that or any other Series.

 

If a notice or communication is mailed in the manner provided above, within the time prescribed, it is duly given, whether or not the Securityholder receives it. If a notice or communication is delivered in person, by courier, telegraphed, telexed or by facsimile transmission (with confirmation of receipt) within the time prescribed, it is duly If the Company mails a notice or communication to Securityholders, it shall mail a copy to the Trustee and each Agent at the same time.

 

Section 10.3                      Communication by Holders with other Holders.  Securityholders of any Series may communicate pursuant to TIA Section 312(b) with other Securityholders of that Series or any other Series with respect to their rights under this Indenture or the Securities of that Series or all Series. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c).

 

Section 10.4                      Certificate and Opinion as to Conditions Precedent.  Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:

 

  

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(a)           an Officers’ Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

 

(b)           an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

 

Section 10.5                      Statements Required in Certificate or Opinion.  Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA Section 314(e) and shall include:

 

(a)           a statement that the person making such certificate or opinion has read such covenant or condition;

 

(b)           a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

 

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

 

(d)           a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.

 

Section 10.6                      Rules by Trustee and Agents.  The Trustee may make reasonable rules for action by or a meeting of Securityholders of one or more Series. Any Agent may make reasonable rules and set reasonable requirements for its functions.

 

Section 10.7                      Legal Holidays.  Unless otherwise provided by Board Resolution, Officers’ Certificate or supplemental indenture for a particular Series, a “Legal Holiday” is any day that is not a Business Day. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period.

 

Section 10.8                      No Recourse Against Others.  A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Securityholder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities.

 

Section 10.9                      Counterparts.  This Indenture may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

 

Section 10.10                     Governing Laws.  THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.

 

Section 10.11                     No Adverse Interpretation of Other Agreements.  This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

 

Section 10.12                     Successors.  All agreements of the Company in this Indenture and the Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor.

 

  

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Section 10.13                     Severability.  In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

Section 10.14                     Table of Contents, Headings, Etc.  The Table of Contents, Cross Reference Table, and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.

 

Section 10.15                     Securities in a Foreign Currency or in ECU.  Unless otherwise specified in a Board Resolution, a supplemental indenture hereto or an Officers’ Certificate delivered pursuant to Section 2.2 of this Indenture with respect to a particular Series of Securities, whenever for purposes of this Indenture any action may be taken by the Holders of a specified percentage in aggregate principal amount of Securities of all Series or all Series affected by a particular action at the time outstanding and, at such time, there are outstanding Securities of any Series which are denominated in a coin or currency other than Dollars (including ECUs), then the principal amount of Securities of such Series which shall be deemed to be outstanding for the purpose of taking such action shall be that amount of Dollars that could be obtained for such amount at the Market Exchange Rate at such time. For purposes of this Section 10.15, “Market Exchange Rate” shall mean the noon Dollar buying rate in New York City for cable transfers of that currency as published by the Federal Reserve Bank of New York; provided, however, in the case of ECUs, Market Exchange Rate shall mean the rate of exchange determined by the Commission of the European Union (or any successor thereto) as published in the Official Journal of the European Union (such publication or any successor publication, the “Journal”). If such Market Exchange Rate is not available for any reason with respect to such currency, the Trustee shall use, in its sole discretion and without liability on its part, such quotation of the Federal Reserve Bank of New York or, in the case of ECUs, the rate of exchange as published in the Journal, as of the most recent available date, or quotations or, in the case of ECUs, rates of exchange from one or more major banks in The City of New York or in the country of issue of the currency in question or, in the case of ECUs, in Luxembourg or such other quotations or, in the case of ECUs, rates of exchange as the Trustee, upon consultation with the Company, shall deem appropriate. The provisions of this paragraph shall apply in determining the equivalent principal amount in respect of Securities of a Series denominated in currency other than Dollars in connection with any action taken by Holders of Securities pursuant to the terms of this Indenture.

 

All decisions and determinations of the Trustee regarding the Market Exchange Rate or any alternative determination provided for in the preceding paragraph shall be in its sole discretion and shall, in the absence of manifest error, be conclusive to the extent permitted by law for all purposes and irrevocably binding upon the Company and all Holders.

 

Section 10.16                     Judgment Currency.  The Company agrees, to the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in respect of the principal of or interest or other amount on the Securities of any Series (the “Required Currency”) into a currency in which a judgment will be rendered (the “Judgment Currency”), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the day on which final unappealable judgment is entered, unless such day is not a New York Banking Day, then, the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the New York Banking Day preceding the day on which final unappealable judgment is entered and (b) its obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, any recovery pursuant to any judgment (whether or not entered in accordance with subsection (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable, and (iii) shall not be affected by judgment being obtained for any other sum due under this Indenture. For purposes of the foregoing, “New York Banking Day” means any day except a Saturday, Sunday or a legal holiday in The City of New York on which banking institutions are authorized or required by law, regulation or executive order to close.

 

  

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ARTICLE XI

SINKING FUNDS

 

Section 11.1                      Applicability of Article.  The provisions of this Article shall be applicable to any sinking fund for the retirement of the Securities of a Series, except as otherwise permitted or required by any form of Security of such Series issued pursuant to this Indenture.

 

The minimum amount of any sinking fund payment provided for by the terms of the Securities of any Series is herein referred to as a “mandatory sinking fund payment” and any other amount provided for by the terms of Securities of such Series is herein referred to as an “optional sinking fund payment.” If provided for by the terms of Securities of any Series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 11.2. Each sinking fund payment shall be applied to the redemption of Securities of any Series as provided for by the terms of the Securities of such Series.

 

Section 11.2                      Satisfaction of Sinking Fund Payments with Securities.  The Company may, in satisfaction of all or any part of any sinking fund payment with respect to the Securities of any Series to be made pursuant to the terms of such Securities (1) deliver outstanding Securities of such Series to which such sinking fund payment is applicable (other than any of such Securities previously called for mandatory sinking fund redemption) and (2) apply as credit Securities of such Series to which such sinking fund payment is applicable and which have been redeemed either at the election of the Company pursuant to the terms of such Series of Securities (except pursuant to any mandatory sinking fund) or through the application of permitted optional sinking fund payments or other optional redemptions pursuant to the terms of such Securities, provided that such Securities have not been previously so credited. Such Securities shall be received by the Trustee, together with an Officers’ Certificate with respect thereto, not later than 15 days prior to the date on which the Trustee begins the process of selecting Securities for redemption, and shall be credited for such purpose by the Trustee at the price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. If as a result of the delivery or credit of Securities in lieu of cash payments pursuant to this Section 11.2, the principal amount of Securities of such Series to be redeemed in order to exhaust the aforesaid cash payment shall be less than $100,000, the Trustee need not call Securities of such Series for redemption, except upon receipt of a Company Order that such action be taken, and such cash payment shall be held by the Trustee or a Paying Agent and applied to the next succeeding sinking fund payment, provided, however, that the Trustee or such Paying Agent shall from time to time upon receipt of a Company Order pay over and deliver to the Company any cash payment so being held by the Trustee or such Paying Agent upon delivery by the Company to the Trustee of Securities of that Series purchased by the Company having an unpaid principal amount equal to the cash payment required to be released to the Company.

 

Section 11.3                      Redemption of Securities for Sinking Fund.  Not less than 45 days (unless otherwise indicated in the Board Resolution, supplemental indenture hereto or Officers’ Certificate in respect of a particular Series of Securities) prior to each sinking fund payment date for any Series of Securities, the Company will deliver to the Trustee an Officers’ Certificate specifying the amount of the next ensuing mandatory sinking fund payment for that Series pursuant to the terms of that Series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting of Securities of that Series pursuant to Section 11.2, and the optional amount, if any, to be added in cash to the next ensuing mandatory sinking fund payment, and the Company shall thereupon be obligated to pay the amount therein specified. Not less than 30 days (unless otherwise indicated in the Board Resolution, Officers’ Certificate or supplemental indenture in respect of a particular Series of Securities) before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 3.2 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 3.3. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 3.4, 3.5 and 3.6.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.

	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	
VISION-SCIENCES, INC.

	  	  
	  	  	  	  	  	  	  
	  	  	
By:

	  	
 ____________________________________

	  	  
	  	  	  	  	  	  	  
	  	  	
Name:

	  	  	  	  
	  	  	
Its:

	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	
[NAME OF TRUSTEE]

	  	  
	  	  	  	  	  	  	  
	  	  	
By:

	  	
 __________________________________

	  	  
	  	  	  	  	  	  	  
	  	  	
Name:

	  	  	  	  
	  	  	
Its:

	  	  	  	  
	  	  	  	  	  	  	  

 

 

 

 

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