Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS
AGREEMENT is made the 21st day of February 2008, between US Gold Corporation, a Colorado corporation (the “Employer”)
and Perry Ing (the “Employee”).

 

WHEREAS,
the Employer desires to secure the employment of the Employee; and

 

WHEREAS,
the Employee desires to be employed by the Employer;

 

NOW
THEREFORE, in consideration of the mutual covenants contained in this
Agreement, the Employer and the Employee agree as follows:

 

ARTICLE 1

TERM OF EMPLOYMENT

 

1.1                                 Employment.  Effective with the date of this Agreement, the
Employer agrees to employ the Employee and the Employee agrees to be employed
by the Employer upon the terms and conditions hereinafter set forth.

 

1.2                                 Term.  The employment of the Employee by the
Employer as provided herein shall commence on March 3rd, 2008
(the “Commencement Date”) and shall terminate on February 28, 2011, unless
this Agreement is terminated earlier in accordance with Article 4 herein,
or unless the term of this Agreement is extended in writing by the Employee and
the Employer.  The Employer and the
Employee agree that on or about September 1, 2010, they shall discuss
whether or not to extend the term of this Agreement.

 

1.3                                 Office and
Support.  The Employee shall be provided
an office to be located in Toronto, Ontario, and reasonable and necessary
support staff (determined upon agreement of the Employer and the Employee) at
that location and/or through other office location(s) of the Employer.

 

1.4                                 Place of
Performance.  In
connection with the Employee’s employment by the Employer, the Employee shall
be based out of Toronto, Ontario except for required travel on the Employer’s
business to an extent reasonable and necessary for the performance of the
duties of the Employee.

 

ARTICLE 2

DUTIES OF THE EMPLOYEE

 

2.1                                 Duties.

 

                                                2.1.1        The Employee shall initially be employed
with the title of Vice President of Finance and shall succeed to the position
of Vice President and Chief Financial Officer upon the retirement of the
Employer’s existing Chief Financial Officer, William Pass, expected to be 

 

 

1

 

March 31,
2008.  In the capacity of Vice President
of Finance, Employee shall report to the Chief Financial Officer and in the
position of Vice President and Chief Financial Officer, shall be subject to the
general direction and control of, and shall report to, the Chairman and
CEO.  As Vice President and Chief
Financial Officer, the Employee shall have such duties as are customarily
performed by the vice president and chief financial officer, and such other
duties as may be assigned from time to time by the Board of Directors or the
Chairman and CEO.  The Employer and
Employee shall jointly prepare an addendum to this Agreement to be completed
within 30-60 days of the Commencement Date, which addendum shall provide a
mutually agreed description of the Employee’s duties.

 

                2.1.2        The Employer shall pay for educational undertakings required
to meet these duties.

 

                2.1.3        The Employee shall also serve as the chief financial officer
of Lexam Explorations Inc. (“Lexam”), such service to occupy no more than
twenty (20) days of the Employee’s time per year.  The Employee may also provide accounting or
financial services to McEwen Capital in an amount up to 20 additional days per
year, so long as such additional service does not interfere with his duties to
the Employer.   In recognition of this
arrangement, Employer shall compensate Employee at the full rate set forth in Section 3.1
of this Agreement and Lexam and McEwen Capital shall each reimburse the
Employer for an amount equal to 10% of such compensation (including any
payments on account of termination from employment) for the services to be
provided to those entities.  Such
reimbursement shall be made not less frequently than semi-annually upon
presentation of an invoice from Employer.

 

2.2           Extent of Duties.  The Employee shall devote substantially his
full time, best efforts, attention and energies to the business of the
Employer.  During the term of this
Agreement, the Employee shall not be employed with or provide services to any
person, firm or entity other than the Employer, Lexam and McEwen Capital;
provided, however, that Employee may participate in charitable, civic and
benevolent organizations and provided further that Employee may participate in
investments for his own account or for the account of entities in which he has
an interest, so long as none of these endeavors interfere with his obligations
to the Employer.

 

2.3           Disclosure of Information.

 

2.3.1        The Employee acknowledges that all
records, data, materials and information and copies thereof and all information
relating to any trade secrets, products, procedures, customers, suppliers,
services, pricing policies and practice, cost structure, business, prospects
and business opportunities and plans of the Employer and all financial
information and other information relating to the business and affairs of the
Employer (all of which are hereinafter collectively called the “Confidential Information”) disclosed to,
obtained or acquired by the Employee, is and shall remain the exclusive
property of the Employer, the disclosure of which to the competitors thereof or
to the general public would be highly detrimental to the best interests of the
Employer.  Therefore, the Employee agrees
that:

 

(i)                                     The Employee
will hold in strictest confidence and not disclose, reproduce, publish or use
in any manner during his employment or at any time after termination for any 

 

2

 

reason, without the express authorization of the Chairman and CEO or
Board of Directors of the Employer, any Confidential Information, except as
such disclosure or use may be required in connection with the Employee’s work
for the Employer.

 

(ii)                                  Upon request or
upon the date of termination of the Employee’s employment, the Employee will
deliver to the Employer, and not retain or deliver to anyone else, any and all
Confidential Information and all notes, memoranda, documents and in general,
any and all materials, electronic or written, and any and all material or
property relating to the Employer’s business.

 

2.3.2        In the event of a breach or threatened
breach by the Employee of the provisions of this Article 2.3, the Employer
shall be entitled to a restraining order or an injunction (i) restraining
the Employee from disclosing, in whole or in part, any Confidential Information
or from rendering any services to any person, firm, corporation, association or
other entity to whom such Confidential Information, in whole or in part, has
been disclosed or is threatened to be disclosed; and/or (ii) requiring
that the Employee deliver to the Employer all Confidential Information,
documents, notes, memoranda and any and all discoveries or other material upon
termination of the Employee’s employment with the Employer.  Nothing herein shall be construed as
prohibiting the Employer from pursuing other remedies available to the Employer
for such breach or threatened breach, including the recovery of damages from
the Employee.  The Employee’s obligations
in this Article 2.3 shall survive the termination of the Employee’s
employment with the Employer, howsoever caused.

 

ARTICLE 3

COMPENSATION OF THE EMPLOYEE

 

3.1           Salary and Perquisites.  (a) For his services under this Agreement,
the Employee shall be entitled to receive a salary at the rate of Cnd $150,000
per annum; (b) the salary provided shall be paid in equal semi-monthly
installments in accordance with the Employer’s normal practices; (c) the
Employee shall also be entitled to participate in any other compensation and
perquisite plans provided by the Employer to executive employees of the
Employer, subject to the applicable terms of such compensation and perquisite
plan as are determined in the discretion of the Employer in relation to the
Employee; and (d) Employer shall make and remit all required withholding
and employment taxes on any compensation paid or payable to Employee hereunder.

 

3.2           Vacation and Public Holidays.  The Employee shall be entitled to four (4) weeks
paid vacation per year of employment (accrued on a monthly basis) provided that
the Employee shall schedule such vacation time with the agreement of the
Chairman and CEO and shall use his best efforts to schedule such vacation time
so as not to substantially interfere with the Employer’s business.  Vacation must be taken within 24 months of
the date upon which such vacation accrued to the Employee, and any vacation not
taken by such date shall be forfeited subject to the requirements of the
Ontario Employment Standards Act.  The Employee shall also be entitled to take
all paid public holidays customarily extended by the Employer to executive
employees of the Employer.

 

 

3

 

3.3           Medical, Health and Dental Insurance
Coverage.  The Employer shall provide
medical, health and dental insurance coverage to the Employee and his spouse
with coverage generally consistent with that extended by the Employer to other
executive employees of the Employer. 
Such coverage shall be subject to the conditions set out in the
applicable plans and/or insurance contracts.

 

3.4           Expense Reimbursement.  The Employee shall be entitled to prompt
reimbursement for all reasonable and allocable expenses incurred by the
Employee in the performance of his duties hereunder.  The Employee shall provide the Employer with
proper receipts and substantiation for such expenses.  The Employer shall advance reasonable
estimates of such expenses upon request of the Employee.

 

3.5           Stock Options.  Subject to the decision of the Board of
Directors of the Employer to grant such stock options, and effective upon the
date of such decision, the Employee shall be granted stock options to purchase
150,000 shares of common stock of the Employer. 
The options shall be exercisable for a period of ten years from the date
of grant and shall vest in three equal, annual installments beginning with the
first anniversary of the Commencement Date and continuing on subsequent
anniversaries so long as an Employee remains employed by the Employer.  The exercise price for each such stock option
shall be equal to the closing sales price of the common shares of the Employer
on the American Stock Exchange (AMEX) on the Employee’s first day of active
employment with the Employer.  The options
shall be granted pursuant to, and subject to the conditions of, the US Gold
Corporation Equity Incentive Plan, as the same may be amended from time to
time.

 

ARTICLE 4

TERMINATION OF EMPLOYMENT

 

4.1           TERMINATION.  This Agreement and the Employee’s employment
hereunder may be terminated only as follows:

 

4.1.1        Death.  This Agreement shall automatically terminate
upon the death of the Employee during the term of this Agreement.  In such event, the Employer shall pay to the
Employee’s estate (i) any unpaid wages earned by the Employee to the date
of his death, (ii) any accrued and unpaid vacation pay earned by the
Employee, and (iii) an amount equal to six (6) months of the Employee’s
base salary then in effect, such amount to be paid within three months after
the date of the Employee’s death.  Upon
payment of such amounts, the Employer shall have no further obligations to the
Employee.

 

4.1.2        Disability.  This Agreement shall not terminate
upon the temporary disability of the Employee. 
The Employer may terminate this Agreement upon the permanent disability
of the Employee, defined as a condition which prevents the Employee from
performing his duties to the Employer on a regular basis for a period of more
than 3 months with or without reasonable accommodation, subject to the
requirements of the Ontario Human Rights Code.  In the event that the Employee’s employment
terminates due to a permanent disability of the Employee under this Article 4.1.2
during the term of this Agreement, the Employer shall pay the Employee an
amount equal to the lesser of (a) one (1) year of the Employee’s base
salary; and (b) the amount 

 

 

4

 

of
the Employee’s base salary in respect of the period between the date of
termination of employment due to such permanent disability and February 28,
2011, in either event, payable within three months after the date of such
termination.  Upon payment of such
amount, the Employer shall have no further obligations to the Employee.

 

4.1.3        Termination by the Employer for Cause.  The Employer may terminate the Employee’s
employment hereunder at any time without notice for “Cause.”  For purposes of this Agreement, “Cause” shall
mean: (1) the willful and continued failure by the Employee substantially
to perform his duties hereunder (other than any such failure resulting from the
Employee’s permanent disability as defined in Article 4.1.2 herein), after
demand for substantial performance is delivered by the Employer that
specifically identifies the manner in which the Employer believes the Employee
has not substantially performed his duties and giving 30 days to the Employee
to cure such failure; (2) the willful engaging by the Employee in
misconduct which is materially injurious to the Employer, other than business
decisions made in good faith; (3) the willful violation by the Employee of
the provisions of this Agreement, (4) dishonesty of the Employee, (5) the
Employee’s commission of an offence under the Criminal
Code, (6) the termination of the Employee’s active
membership in the Institute of Chartered Accountants of Ontario, or (7) loss
of Employee’s ability to practice before the United States Securities and
Exchange Commission, the Ontario Securities Commission or any successor to
either of the foregoing.  In the event of
a termination for Cause, the Employer shall pay to the Employee any unpaid
wages earned by the Employee to the date of his termination and any accrued and
unpaid vacation pay earned by the Employee. 
All stock options held by the Employee at the termination date shall
immediately cease and terminate on that date. 
The Employer shall have no further obligations to the Employee.

 

4.1.4        Termination by the Employer Without
Cause.  Notwithstanding anything else
in this Agreement, the Employer may terminate the Employee’s employment without
Cause by providing the Employee with either one (not both) of the following: (a) one
(1) year’s notice or payment of the Employee’s base salary for one year in
lieu of such notice or, (b) payment of the Employee’s base salary for the
period between the date of termination of the Employee’s employment and February 28,
2011, if such period is less than one (1) year.

 

4.1.5        Termination by the Employee.  The Employee may terminate this Agreement
without advance notice upon the occurrence of any of the following events:

 

(i)                                     the sale by the
Employer of substantially all of its assets to a single purchaser or to a group
of affiliated purchasers;

 

(ii)                                  the sale,
exchange or other disposition in one transaction or a series of related
transactions, of at least 50% of the outstanding voting shares of the Employer;

 

(iii)                               a decision by
the Employer to terminate its business and liquidate its assets;

 

(iv)                              the merger or
consolidation of the Employer with another entity or any other type of
reorganization where the Employer is not the surviving entity; or

 

(v)                                 a fundamental
change in the Employee’s scope of authority or duties without his written
consent, or the Employee is required to report to any other person or committee
other than the Board of Directors and the Chairman of the Board.

 

5

 

In
the event that the Employee terminates this Agreement for any reason
articulated above, the Employer shall pay to the Employee an amount equal to
the lesser of (a) one year of Employee’s base salary; and (b) the
amount of Employee’s base salary in respect of the period between the date of
termination of such employment and February 28, 2011.  Upon payment of such amount, the Employer shall
have no further obligation to the Employee.

 

4.1.6.       Other Termination by the Employee.  The Employee may terminate this Agreement for
reasons other than as provided in Article 4.1.5 herein, by providing at
least 120 days’ prior written notice to the Employer.  Subject to the requirements of the Employment Standards Act, the Employer may in its discretion
waive all or part of such period of notice. 
In the event of such termination of employment, the Employer shall pay
to the Employee any unpaid wages earned by the Employee to the date of
termination plus any accrued and unpaid vacation pay earned by the Employee.

 

4.1.7        Notice of Termination to be in
Writing.  Any termination of the
Employee’s employment by the Employer or by the Employee shall be communicated
by written notice of termination to the other party.

 

ARTICLE 5

INDEMNIFICATION

 

5.1           Indemnification.  The Employer agrees to execute an
indemnification agreement with Employee not later than the Commencement Date in
the form attached hereto as Exhibit A and incorporated herein by
reference.

 

ARTICLE 6

GENERAL
PROVISIONS

 

6.1           Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the Province of Ontario and the laws
of Canada in force therein.

 

6.2           Entire Agreement.  This Agreement supersedes any and all other
agreements, whether oral or in writing, between the parties with respect to the
employment of the Employee by the Employer. 
Each party to this Agreement acknowledges that no representations,
inducements, promises, or agreements, orally or otherwise, have been made by
either party, or anyone acting on behalf of any party, that are not embodied in
this Agreement, and that no agreement, statement, or proxies not contained in
this Agreement shall be valid or binding.

 

6.3           Assignment.  The Employee may not assign his rights and
obligations under this Agreement to any person or entity except with the
express consent in writing of the Employer. 
Subject to the Employee’s rights under Article 4.1.5 herein, the Employer
may assign its rights and obligations under this Agreement to any affiliate of
the Employer or successor to the Employer’s business by providing notice of
such assignment in writing to the Employee.

 

6

 

6.4           Notices.  For purposes of this Agreement, notices,
demands and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered personally
or by registered mail, return receipt requested, postage prepaid, or by fax or
e-mail with receipt confirmation followed by mail delivery, addressed as
follows:

 

	
  If to the Employee:

  	
   

  	
  Perry Ing

  
	
   

  	
   

  	
  504-393 King Street W.

  
	
   

  	
   

  	
  Toronto, ON, M5V 3G8

  
	
   

  	
   

  	
  Phone (647) 300-2198

  
	
   

  	
   

  	
   

  
	
  If to the Employer:

  	
   

  	
  Robert R. McEwen

  
	
   

  	
   

  	
  Chairman and CEO

  
	
   

  	
   

  	
  US Gold Corporation

  
	
   

  	
   

  	
  99 George St., 3rd
  Floor

  
	
   

  	
   

  	
  Toronto, Ontario, M5A 2N4

  
	
   

  	
   

  	
  Fax (647) 258-0408

  
	
   

  	
   

  	
  e-mail: rob@usgold.com

  

 

or
such other address as either party may have furnished to the other in writing
in accordance herewith.  Such notice
shall be deemed effective upon personal delivery or three days following
delivery by certified mail at the addresses set forth above.

 

6.5           Severability.  If any provision of this Agreement is
rendered unenforceable by any court of competent jurisdiction, such
unenforceability shall not affect the enforceability of any other provision of
this Agreement.

 

6.6           Section Headings.  The section headings used in this Agreement
are for convenience only and shall not affect the construction of any terms of
this Agreement.

 

6.7           Amendments.  This Agreement may be amended only by written
agreement signed by both the Employer and the Employee.

 

6.9           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall constitute an original but all of which, when
taken together, shall constitute only one legal instrument.  This Agreement shall become effective when an
original or copy thereof bears the signatures of both parties hereto.  It shall not be necessary in making proof of
this Agreement to produce or account for more than one such counterpart
instrument.

 

6.10         Arbitration.  The Employer and the Employee agree that any
issue or dispute arising out of or relating to the application, interpretation,
effect or alleged violation of the Agreement shall be finally settled by
arbitration in the City of Toronto in the Province of Ontario in accordance
with the then existing National Arbitration
Rules of the ADR Institute of Canada, Inc. and the arbitration award may be entered in any
court having jurisdiction thereof.  The
prevailing party in such arbitration proceeding shall be entitled to
reimbursement of its reasonable legal fees and costs by the non-prevailing
party, as determined by the arbitrator(s). 
Each party shall pay fifty percent (50%) of all fees and costs of the
arbitrator(s) as well as all the fees and costs of its own 

 

 

7

 

counsel
and witnesses, and all other fees and costs associated with the preparation and
presentation of the party’s case, unless the arbitrator(s) decide
otherwise.

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.

 

	
  EMPLOYER:

  
	
  US
  Gold Corporation, a Colorado corporation

  
	
   

  
	
  By:

  	
  /s/
  Robert R. McEwen

  
	
  Robert
  R. McEwen, Chairman of the

  
	
  Board
  of Directors and Chief Executive Officer

  
	
   

  
	
  EMPLOYEE:

  
	
  Perry
  Ing

  
	
   

  
	
  /s/
  Perry Ing

  

 

 

8

 

EXHIBIT A

 

INDEMNIFICATION AGREEMENT

 

This
Agreement is made effective as of the        day
of
                    
200    , by and between US Gold Corporation, a Colorado
Corporation (“the Company”), and the undersigned director and/or officer of the
Company (the “Indemnitee”) with reference to the following facts:

 

The
Indemnitee is currently serving as a director and/or officer of the Company and
the Company wishes the Indemnitee to continue in such capacity, and, if
requested in the future, to serve in such other positions with the Company and
its subsidiaries as the Company may determine. 
The Indemnitee is willing, under certain circumstances, to continue
serving as a director and/or officer of the Company.

 

The
Indemnitee does not regard the indemnities available under the Company’s
Articles of Incorporation (the “Articles of Incorporation”) and Bylaws (the “Bylaws”)
as adequate to protect the Indemnitee against the risks of personal liability
associated with the Indemnitee’s service to the Company.  In this connection the Company and the
Indemnitee now agree they should enter into this Indemnification Agreement in
order to provide greater protection to Indemnitee against such risks of service
to the Company.

 

In
order to induce the Indemnitee to continue to serve as a director and/or
officer of the Company and in consideration of the Indemnitee’s continued
service, the Company hereby agrees to indemnify the Indemnitee as follows:

 

1
..            Indemnity.  The Company will indemnify the Indemnitee,
his executors, administrators or assigns, for any Expenses (as defined below)
which the Indemnitee is or becomes legally obligated to pay in connection with
any Proceeding.  As used in this
Agreement the term “Proceeding” includes any threatened, pending or completed
claim, action, suit or proceeding, whether brought by or in the right of the
Company or otherwise and whether of a civil, criminal, administrative or
investigative nature, in which the Indemnitee may be or may have been involved  as a party or otherwise, by reason of the
fact that Indemnitee is or was a director or officer of the Company, by reason
of any actual or alleged error or misstatement or misleading statement made or
suffered by the Indemnitee, by reason of any action taken by him or of any
inaction on his part while acting as such director or officer, or by reason of
the fact that he was serving at the request of the Company as a director,
trustee, officer, fiduciary, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise; provided, that in each
such case Indemnitee acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Company, and, in
the case of a criminal proceeding, had no reasonable cause to believe that his
conduct was unlawful.  As used in this
Agreement, the term “other enterprise” includes (without limitation) employee
benefit plans and administrative committees thereof, and the term “fines”
includes (without limitations) any excise tax assessed with respect to any
employee benefit plan.

 

 

A-1

 

2.             Expenses.  As used in this Agreement, the term “Expenses”
includes, without limitation, damages, judgments, fines, penalties, settlements
and costs, reasonable attorneys’ fees and disbursements and costs of attachment
or similar bonds, and investigations in connection with investigating,
defending, being a witness or participating in any Proceeding, and any expenses
of establishing a right to indemnification under this Agreement.

 

3.             Enforcement.  If a claim or request under this Agreement is
not paid by the Company, or on its behalf, within thirty days after a written
claim or request has been received by the Company, the Indemnitee may at any time
thereafter bring suit against the Company to recover the unpaid amount of the
claim or request and if successful in whole or in part, the Indemnitee shall be
entitled to be paid also the Expenses of prosecuting such suit.

 

4.             Subrogation.  In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of the Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights; provided, however, that neither this right
of subrogation nor the exclusion set forth in Section 5(b) below
shall apply to any right of recovery of the Indemnitee or any payment received
by the Indemnitee from an entity that is the primary employer of the Indemnitee
or on whose behalf the Indemnitee serves as a director and/or officer of the
Company or an affiliate of any such entity.

 

5.             Exclusions.  The Company shall not be liable under the
Agreement to make any payment in connection with any claim made against the
Indemnitee:

 

(a)           to the extent that
payment is actually made to the Indemnitee under a valid, enforceable and
collectible insurance policy;

 

(b)           to the extent that
the Indemnitee is indemnified and actually paid otherwise than pursuant to this
Agreement, subject to Section 4;

 

(c)           in connection with a
judicial action by or in the right of the Company, in respect of any claim, issue
or matter as to which the Indemnitee shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the Company unless,
and only to the extent that, any court in which such action was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, the Indemnitee is fairly and
reasonably entitled to indemnity for such expenses as such court shall deem
proper;

 

(d)           if it is proved by
final judgment in a court of law or other final adjudication to have been based
upon or attributable to the Indemnitee’s having gained any personal profit or
advantage to which he was not legally entitled;

 

(e)           for a disgorgement
of profits made from the purchase and sale by the Indemnitee of securities
pursuant to Section 16(b) of the Securities Exchange Act of 1934 and
amendments thereto or similar provisions of any state statutory law or common
law;

 

 

A-2

 

(f)            brought about or
contributed to by the dishonesty of the Indemnitee; provided, however,
notwithstanding the foregoing, the Indemnitee shall be protected under this
Agreement as to any claims upon which suit may be brought against him by reason
of any alleged dishonesty on his part, unless a judgment or other final
adjudication thereof adverse to the Indemnitee shall establish that he
committed (i) acts of active and deliberate dishonesty, (ii) with
actual dishonest purpose and intent, (iii) which acts were material to the
cause of action so adjudicated; or

 

(g)           for any judgment,
fine or penalty which the Company is prohibited by applicable law from paying
as indemnity or for any other reason.

 

6.             Indemnification of Expenses of
Successful Party.  Notwithstanding any
other provision of this Agreement, to the extent that the Indemnitee has been
successful on the merits or otherwise in defense of any Proceeding or in
defense of any claim, issue or matter therein, including dismissal without
prejudice, Indemnitee shall be indemnified against any and all Expenses
incurred in connection therewith.

 

7.             Partial Indemnification.  If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for a portion of
any Expenses, but not for the total amount thereof, the Company shall indemnify
the Indemnitee for the portion of such Expenses to which the Indemnitee is
entitled.

 

8.             Advance of Expenses.  Expenses reasonably and necessarily incurred
by the Indemnitee in connection with any Proceeding, except the amount of any
settlement, shall be paid by the Company in advance upon request of the
Indemnitee that the Company pay such Expenses. 
The Indemnitee hereby undertakes to repay to the Company the amount of any
Expenses theretofore paid by the Company to the extent that it is ultimately
determined that such Expenses were not reasonable or that the Indemnitee is not
entitled to indemnification in respect thereof.

 

Such
advances shall be made by the Company unless: (a) the Board of Directors
determines, by a majority vote of a quorum of disinterested directors based on
clear and convincing evidence known to the Board of Directors at the time such
determination is made, that the Indemnitee would not be entitled to
indemnification under applicable law, or (b) if such a quorum is not
obtainable or a quorum of disinterested directors so directs, independent legal
counsel determines, based on clear and convincing evidence known to the counsel
at the time such determination is made, that Indemnitee would not be entitled
to indemnification under applicable law.

 

9.             Notice and Defense of Claim.  The Indemnitee, as a condition precedent to
his right to be indemnified under this Agreement, shall give to the Company
notice in writing as soon as practicable of any claim made against him for
which indemnity will or could be sought under this Agreement.  Notice to the Company shall be given at its
principal office, shall be directed to the Corporate Secretary (or such other
address as the Company shall designate in writing to the Indemnitee) and shall
be effective only upon actual receipt. 
In addition, the 

 

 

A-3

 

Indemnitee
shall give the Company such information and cooperation as it may reasonably
require and as shall be within the Indemnitee’s power.

 

With
respect to any such Proceeding: (a) the Company will be entitled to
participate therein at its own expense; and (b) except as otherwise
provided below, to the extent that it may wish, the Company jointly with any
other indemnifying party similarly notified will be entitled to assume the
defense thereof, with counsel reasonably satisfactory to Indemnitee.  After notice from the Company to Indemnitee,
given within a reasonable time, of its election so to assume the defense
thereof, the Company will not be liable to Indemnitee under this Agreement for
any legal or other expenses subsequently incurred by Indemnitee in connection
with the defense of such Proceeding except as otherwise provided below.  Indemnitee shall have the right to employ his
own counsel in such Proceeding but the fees and expenses of such counsel
incurred after notice from the Company of its assumption of the defense thereof
shall be at the expense of Indemnitee unless (i) the employment of counsel
by Indemnitee has been authorized by the Company, or (ii) Indemnitee shall
have obtained the written opinion of reputable counsel with expertise in such
matters (such counsel to be reasonably satisfactory to a majority of
disinterested directors) that there may be one or more defenses available to
Indemnitee that could reasonably be expected to result in a conflict of
interest between the Company and Indemnitee in the conduct of the defense of
such action, in each of which cases the reasonable fees and expenses of
Indemnitee’s counsel shall be at the expense of the Company.  The Company shall not be entitled to assume
the defense of any Proceeding brought by or on behalf of the Company or that is
the subject of the opinion provided by Indemnitee under clause (ii) above.

 

The
Company shall not be liable to indemnify Indemnitee under this Agreement for
any amounts paid in settlement of any Proceeding effected without its prior
written consent.  Indemnitee shall
execute and deliver such agreements, releases and other documents as the
Company may reasonably request to effect a settlement of any Proceeding.  Without Indemnitee’s consent, the Company
shall not enter into any settlement that provides for any action by Indemnitee
other than the payment of amounts against which Indemnitee is entitled to
indemnification hereunder.  In the event
that the Company proposes to settle any Proceeding by the payment of damages
against which Indemnitee is entitled to indemnification hereunder and in an
amount that the plaintiff has indicated would be acceptable, and the Indemnitee
refuses to enter into a reasonable settlement agreement, the Company shall not
thereafter be responsible for any costs of defense or the amount by which any
judgment or settlement thereafter paid exceeds the damages that the Company
proposed to pay in settlement.  Neither
the Company nor Indemnitee will unreasonably withhold their consent to any
proposed settlement.

 

10.           No Employment Agreement.  Nothing contained herein shall be deemed to
create a contract of employment between the Company and Indemnitee.

 

11.           Counterparts.  This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one instrument.

 

12.           Indemnification Hereunder Not
Exclusive.  Nothing herein shall be
deemed to diminish or otherwise restrict the Indemnitee’s right to
indemnification under any provision of the Articles of Incorporation or Bylaws
of the Company and amendments thereto or under law.

 

A-4

 

13.           Governing Law.  This Agreement shall be governed by and
construed in accordance with Colorado law without giving effect to the
principles of conflicts of laws.

 

14.           Coverage.  The provisions of this Agreement shall apply
with respect to the Indemnitee’s service in any of the capacities described in Section 1
above prior to as well as after the date of this Agreement.  The right of Indemnitee to be indemnified
hereunder shall continue after the termination of Indemnitee’s service as an
officer and/or director of the Company with respect to all periods prior to
such termination.

 

15.           Amendments; Waivers.  No supplement, modification or amendment of
this Agreement shall be binding- unless executed in writing by both of the
parties hereto.  No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.

 

16.           Binding Effect.  This Agreement shall be binding upon and
inure to the benefit of and be enforceable by both of the parties hereto and
their respective successors, assignees (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company), heirs,
executors and personal and legal representatives.

 

17.           Severability.  If any provision of this Agreement (including
any provision within a single section, paragraph or sentence) is held by a
court of competent jurisdiction to be invalid. void or otherwise unenforceable
in any respect, the validity and enforceability of any such provision in every
other respect and of the remaining provisions of this Agreement shall not be in
any way impaired and shall remain enforceable to the full extent permitted by
law.

 

18.           Notices.  All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when delivered in person
(by express courier or otherwise), by telecopier or three days after being
deposited in the United States mail, certified mail, return receipt requested,
first class postage prepaid, as follows:

 

	
  If to the Company:

  	
   

  	
  Name: US Gold Corporation

  
	
   

  	
   

  	
  Address: 2201 Kipling St.,
  Suite 100

  
	
   

  	
   

  	
  Lakewood, Colorado 80215

  
	
   

  	
   

  	
  Tele No.: 303-238-1437

  
	
   

  	
   

  	
   

  
	
  If to Indemnitee:

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
  Tele No.:

  

 

 

A-5

 

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

 

	
  US
  GOLD CORPORATION

  
	
   

  
	
  By:

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
   

  
	
  INDEMNITEE

  
	
   

  
	
  By:

  	
   

  
	
   

  	
  Printed
  Name:

  

 

 

A-6EXHIBIT 10.41

 

SCHEDULE
II

TO

INCREMENTAL
TERM SUPPLEMENT

 

COVENANTS RELATING TO TERM B FACILITY

 

 

Section 1.01                  Taxes and Claims.  Each of the Company and the Restricted
Subsidiaries shall pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (a) all material taxes, assessments and
governmental charges levied or imposed upon the Company or any Restricted
Subsidiary or upon the income, profits or property of the Company or any
Restricted Subsidiary and (b) all material lawful claims for labor,
materials and supplies, which, if unpaid, might by law become a Lien upon the
property of the Company or any Restricted Subsidiary; provided that none
of the Company and the Restricted Subsidiaries shall be required to pay any
such tax, assessment, charge or claim as to which the Company and the
Restricted Subsidiaries have a good faith basis to believe is not due and owing
and, to the extent then appropriate, the payment thereof is being contested in
good faith and by proper proceedings, provided that it maintains adequate
reserves in accordance with GAAP with respect thereto.

 

Section 1.02                  Maintenance of Properties.  The Company shall cause all material
properties owned by or leased to it or any Restricted Subsidiary and necessary in
the conduct of its business or the business of such Restricted Subsidiary to be
maintained and kept in normal condition, repair and working order, ordinary
wear and tear excepted; provided that nothing in this Section 1.02
shall prevent the Company or any Restricted Subsidiary from discontinuing the
use, operation or maintenance of any of such properties, or disposing of any of
them, if such discontinuance or disposal is, in the judgment of the Board of
Directors or the board of directors of the Restricted Subsidiary concerned, or
of any officer (or other agent employed by the Company or any Restricted
Subsidiary) of the Company or such Restricted Subsidiary having managerial
responsibility for any such property, desirable in the conduct of the business
of the Company or any Restricted Subsidiary of the Company and if such
discontinuance or disposal is not adverse in any material respect to the Incremental Term
Lenders.

 

Section 1.03                  Corporate Existence.  Subject
to Section 1.07 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect its
corporate existence and that of each Restricted Subsidiary and the corporate
rights (charter and statutory), corporate licenses and corporate franchises of
the Company and its Restricted Subsidiaries, except where a failure to do so,
singly or in the aggregate, is not likely to have a materially adverse effect
upon the business, assets, financial condition or results of operations of the
Company and the Restricted Subsidiaries taken as a whole determined on a
consolidated basis in accordance with GAAP; provided that the Company
shall not be required to preserve any such existence (except of the Company),
right, license or franchise if the Board of Directors or the board of directors of the Restricted Subsidiary concerned,
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company or such 

 

 

Restricted
Subsidiary and that the loss thereof is not disadvantageous in any material
respect to the Incremental Term
Lenders.

 

Section 1.04                  Use of
Proceeds.  Use the proceeds
of the Incremental Term Facility (i) to repay all amounts outstanding
under the Term A-2 Facility, (ii) to make, if approved by
the Board of Directors, a one-time special dividend by the Company to Parent
Corp. in the aggregate amount of up to $3,000,000,000, which Parent Corp.
intends to use to make, if approved by its board of directors, a one-time
special dividend to its shareholders in an aggregate amount of up to
$3,000,000,000, and (iii) to pay fees and expenses incurred in connection
with the transactions contemplated in the Incremental Term Supplement.  Any remaining balance shall be used for
general corporate purposes not in contravention of any Law or of any Loan
Document.

 

Section 1.05                  Indebtedness.  The Company shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, incur, create, issue,
assume, guarantee or otherwise become liable for, contingently or otherwise, or
become responsible for the payment of, contingently or otherwise, any
Indebtedness (other than Indebtedness of the Company owed to any Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary owed to any other
Restricted Subsidiary) unless, after giving effect thereto, (a) the Cash
Flow Ratio shall be less than or equal to the amount set forth in Annex I
hereto applicable on such date and (b) the Senior Secured Leverage Ratio
is less than or equal to 4.5 to 1, provided  that, the Company
shall not permit any Restricted Subsidiary to create, incur or suffer to exist
any Indebtedness except:

 

(i)                       obligations
under or in respect of interest rate Swap Contracts up to, together with any
such obligations of the Company, an aggregate notional principal amount not to
exceed at any time an amount equal to the Commitments of all the Lenders in the
aggregate at such time;

 

(ii)                    Guarantees and
letters of credit permitted by Section 7.13 of the Credit
Agreement;

 

(iii)                 Indebtedness
issued and outstanding on the date of this Incremental Term Supplement to the
extent set forth on Schedule 7.12 to the Credit Agreement and any
renewals, extensions or refundings thereof in a principal amount not to exceed
the amount so renewed, extended or refunded;

 

(iv)                Indebtedness
incurred as consideration for any acquisition permitted under the Incremental
Term Supplement and consisting solely of a deferred or contingent obligation to
deliver common stock of the Parent Corp.;

 

(v)                   Monetization
Indebtedness; provided that, the Company shall provide to the
Administrative Agent prompt written notice of any such Monetization
Indebtedness incurred by a Restricted Subsidiary together with a brief
description of the terms thereof; and

 

(vi)                Other Indebtedness
of any Restricted Subsidiary, to the extent not otherwise permitted by clauses (i) through
(v) of this Section 1.05, so long as the aggregate principal
amount of all such Indebtedness outstanding at any one time pursuant to this
clause (vi) shall not exceed the sum of $400,000,000.

 

2

 

Section 1.06                  Liens.  The Company shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, create, incur, assume or
suffer to exist any Lien of any kind, except for Permitted Liens, on or with
respect to any of its property or assets, whether owned at the date of this
Incremental Term Supplement or thereafter acquired, or any income, profits or
proceeds therefrom, or assign or otherwise convey any right to receive income thereon,
unless (x) in the case of any Lien securing Indebtedness that is
subordinated in right of payment to the Facilities, the Facilities are secured
by a Lien on such property, assets or proceeds that is senior in priority to
such Lien and (y) in the case of any other Lien, the Facilities are
equally and ratably secured; provided that, any Lien securing a Facility
shall equally and ratably secure each other Facility.  In addition, neither the Company nor any
Restricted Subsidiary will enter into or permit to exist any undertaking by it
or affecting any of its properties whereby the Company or such Restricted
Subsidiary shall agree with any Person (other than the Lenders or the
Administrative Agent) not to create or suffer to exist any Liens in favor of any
other Person, provided that the foregoing restriction shall not apply to
any such undertaking contained in any indenture or other agreement (i) governing
any Permitted Debt or Indebtedness outstanding at the date hereof and
identified on Schedule 7.12 to the Credit Agreement, or (ii) governing
specific property to be sold pursuant to an executed agreement with respect to
an asset sale permitted hereunder, or (iii) constituting a customary
restriction on assignment, subletting, or other transfer contained in leases,
licenses, franchises and other similar agreements entered into in the
ordinary course of business or otherwise creating a Permitted Lien (provided
that any restriction referred to in clauses (ii) or (iii) is limited
to the property or asset subject to such sale, lease, license, franchise
or other similar agreement or Permitted Lien, as the case may be).

 

Section 1.07                  Dispositions.  The Company and the Restricted Subsidiaries,
taken as a whole, shall not sell, assign, transfer, lease, convey, or otherwise
dispose of all or substantially all of their assets to, any Person, unless:

 

(a)  the Person to
which such sale, assignment, transfer, lease, conveyance or disposition shall
have been made, is a corporation organized and existing under the laws of the
United States, any state thereof or the District of Columbia and shall assume
by supplemental agreement hereto all the obligations of the Company under the
Credit Agreement;

 

(b)  immediately
before and immediately after such transaction, and after giving effect thereto,
no Default shall have occurred and be continuing;

 

(c)  immediately
after such transaction, and after giving effect thereto, (i) the Person to
which such sale, assignment, transfer, lease or conveyance or disposition shall
have been made (the “successor”), shall have a Cash Flow Ratio less than or
equal to the amount set forth in Annex I hereto applicable on such date
and (ii) the Senior Secured Leverage Ratio is less than or equal to 4.5 to
1; and

 

(d)  the Company has
delivered to the Administrative Agent, on behalf of the Incremental Term
Lenders, an Officer’s Certificate and an opinion of counsel, each
stating that such transfer and such supplemental agreement, if one is required
by this Section 1.07, comply with this Section 1.07 and
that all conditions precedent herein provided for relating to such transaction
have been complied with.

 

3

 

Section 1.08                  Limitation on
Investments in Unrestricted Subsidiaries and Affiliated Entities. The Company
shall not, and shall not permit any Restricted Subsidiary to, directly or
indirectly, (a) make any Investment or (b) allow any Restricted
Subsidiary to become an Unrestricted Subsidiary (a “redesignation of a
Restricted Subsidiary”), in each case, unless (i) no Default shall have
occurred and be continuing or shall occur as a consequence of such Investment
or such redesignation of a Restricted Subsidiary and after giving effect
thereto, (A) the Cash Flow Ratio is less than or equal to the amount set
forth in Annex I hereto applicable on such date and (B) the Senior
Secured Leverage Ratio is less than or equal to 4.5 to 1.  In the event that any Restricted Subsidiary
that is a Pledgor under the Pledge Agreement is re-designated by the Company as
an Unrestricted Subsidiary in accordance with this Section 1.08,
such Restricted Subsidiary’s Security Interest and obligations under Articles
1, 3 and 4 of the Pledge Agreement shall terminate with respect to the
Incremental Term Facility on the date of such re-designation; provided
that such termination shall become effective only in the event that such
Security Interest shall have terminated with respect to each other Facility
under the Credit Agreement in accordance with Section 7.15 of the
Pledge Agreement.

 

The foregoing provisions of this Section 1.08 shall not
prohibit (x) any renewal or reclassification of any Investment existing on
the date hereof or (y) trade credit extended on usual and customary terms
in the ordinary course of business.

 

Section 1.09                  Limitation On
Restricted Payments.  Except as
otherwise provided in this Section 1.09, the Company shall not, and
shall not permit any Restricted Subsidiary to, make any Restricted Payment if (a) at
the time of such proposed Restricted Payment, a Default shall have occurred and
be continuing or shall occur as a consequence of such Restricted Payment or (b) immediately
after giving effect to such Restricted Payment, the aggregate amount of all
Restricted Payments that shall have been made on or after July 1, 1988
would exceed the sum of:

 

(a)  $25,000,000,
plus

 

(b)  an amount equal
to the difference between (i) the Cumulative Cash Flow Credit and (ii) 1.2
multiplied by Cumulative Interest Expense.

 

For
purposes of this Section 1.09, the amount of any Restricted
Payment, if other than cash, shall be based upon fair market value as
determined by the Board of Directors, whose good faith determination shall be
conclusive.

 

The
foregoing provisions of this Section 1.09 shall not prevent (i) the
payment of any dividend within 60 days after the date of declaration thereof,
if at such date of declaration such payment complied with the foregoing
provisions of this Section 1.09; and (ii) the retirement,
redemption, purchase, defeasance or other acquisition of any shares of the
Company’s Capital Stock or warrants, rights or options to acquire Capital Stock
of the Company in exchange for, or out of the proceeds of a sale (within one
year before or 180 days after such retirement, redemption, purchase, defeasance
or other acquisition) of, other shares of the Company’s Capital Stock or
warrants, rights or options to acquire Capital Stock of the Company.  For purposes of determining the aggregate
permissible amount of Restricted Payments in accordance with clause (b) of
the first paragraph of this Section 1.09, all amounts expended
pursuant to clause (i) of this paragraph shall be included and all amounts
expended or received pursuant to clause (ii) of this 

 

4

 

paragraph
shall be excluded; provided, however, that amounts paid pursuant
to clause (i) of this paragraph shall be included only to the extent that
such amounts were not previously included in calculating Restricted Payments.

 

For
the purposes of this Section 1.09, the net proceeds from the
issuance of shares of Capital Stock of the Company upon conversion of
Indebtedness shall be deemed to be an amount equal to (i) the accreted
value of such Indebtedness on the date of such conversion and (ii) the
additional consideration, if any, received by the Company upon such conversion
thereof, less any cash payment on account of fractional shares (such
consideration, if in property other than cash, to be determined by the Board of
Directors, whose good faith determination shall be conclusive and evidenced by
a board resolution).  If the Company
makes a Restricted Payment which, at the time of the making of such Restricted
Payment, would in the good faith determination of the Company be permitted under
the requirements of this Section 1.09, such Restricted Payment
shall be deemed to have been made in compliance with this Section 1.09
notwithstanding any subsequent adjustments made in good faith to the Company’s
financial statements affecting Cumulative Cash Flow Credit or Cumulative Interest
Expense for any period.

 

Section 1.10                  Transaction with Affiliated
Entities.  The Company shall not, and shall not permit
any of its Subsidiaries to, sell, lease, transfer or otherwise dispose of any
of its properties or assets to or purchase any property or assets from, or
enter into any contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, an Affiliated Entity of the Company that is not a
Subsidiary, having a value, or for consideration having a value, in excess of $10,000,000
individually or in the aggregate unless the Board of Directors shall make a
good faith determination that the terms of such transaction are, taken as a
whole, no less favorable to the Company or such Subsidiary, as the case may be,
than those which might be available in a comparable transaction with an
unrelated Person.  For purposes of
clarification, this Section 1.10 shall not apply to any Restricted
Payments permitted by Section 1.09 hereof.

 

Section 1.11                  Definitions. Unless otherwise
defined herein or the context otherwise requires, capitalized terms used in
this Schedule II which are not otherwise defined in this Schedule II
shall have the meanings provided in the Credit Agreement.  For purposes of this Schedule II:

 

“Acquired Indebtedness” means
Indebtedness of a Person (a) existing at the time such Person is merged
with or into the Company or a Subsidiary or becomes a Subsidiary or (b) assumed
in connection with the acquisition of assets from such Person.

 

“Affiliated Entity” means, with respect
to any specified Person, 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”, when used with respect to any specified
Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms “controlling”
and “controlled” have
meanings correlative to the foregoing.

 

“Average Life” means, at any date of
determination with respect to any debt security, the quotient obtained by
dividing (a) the sum of the products of (i) the number of years from
such date of determination to the dates of each successive scheduled principal
payment of such debt 

 

5

 

security and (ii) the amount of such
principal payment by (b) the sum of all such principal payments.

 

“Board of Directors” means the board of
directors of the Company or any duly authorized committee of such board.

 

“Capitalized Lease Obligation” means
any obligation of a Person to pay rent or other amounts under a lease with
respect to any property, whether real, personal or mixed, acquired or leased by
such Person and used in its business that is required to be accounted for as a
liability on the balance sheet of such Person in accordance with GAAP, and the
amount of such Capitalized Lease Obligation shall be the amount so required to
be accounted for as a liability.

 

“Capital Stock” means, with respect
to any Person, any and all shares, interests, participations or other
equivalents (however designated) of such Person’s capital stock whether now
outstanding or issued after the date of this Incremental Term Supplement,
including, without limitation, all Common Stock, Preferred Stock and
Disqualified Stock.

 

 “Cash
Flow Ratio” means, as at any date, the ratio of (a) the sum of the
aggregate outstanding principal amount of all Indebtedness of the Company and
the Restricted Subsidiaries determined on a consolidated basis, but excluding (i) all
interest rate Swap Contracts entered into by the Company or any Restricted
Subsidiary and one of the Lenders outstanding on such date, (ii) (without
duplication of Indebtedness supported by letters of credit) the aggregate
undrawn face amount of all letters of credit outstanding on such date, and (iii) Revolving
Credit Loans outstanding on such date, to (b) Annualized Operating Cash
Flow determined as at the last day of the most recent month for which financial
information is available.

 

“Common Stock” means, with respect to
any Person, any and all shares, interests and participations (however
designated and whether voting or non-voting) in such Person’s common equity,
whether now outstanding or issued after the date of this Incremental Term
Supplement, and includes, without limitation, all series and classes of such
common stock.

 

“Consolidated
Net Tangible Assets” of any Person means, as of any date, (a) all
amounts that would be shown as assets on a consolidated balance sheet of such
Person and its Restricted Subsidiaries prepared in accordance with GAAP, less (b) the
amount thereof constituting goodwill and other intangible assets as calculated
in accordance with GAAP.

 

“Cumulative
Cash Flow Credit” means the sum of:

 

(a)                                  cumulative
Operating Cash Flow during the period commencing on July 1, 1988 and
ending on the last day of the most recent month preceding the date of the
proposed Restricted Payment for which financial information is available or, if
cumulative Operating Cash Flow for such period is negative, minus the amount by
which cumulative Operating Cash Flow is less than zero, plus

 

(b)                                 the
aggregate net proceeds received by the Company from the issuance or sale (other
than to a Restricted Subsidiary) of its Capital Stock (other than Disqualified
Stock) on or after January 1, 1992, plus

 

6

 

(c)                                  the
aggregate net proceeds received by the Company from the issuance or sale (other
than to a Restricted Subsidiary) of its Capital Stock (other than Disqualified
Stock) on or after January 1, 1992, upon the conversion of, or exchange
for, Indebtedness of the Company or any Restricted Subsidiary or from the
exercise of any options, warrants or other rights to acquire Capital Stock of
the Company.

 

For
purposes of this definition, the net proceeds in property other than cash
received by the Company as contemplated by clauses (b) and (c) above
shall be valued at the fair market value of such property (as determined by the
Board of Directors, whose good faith determination shall be conclusive) at the
date of receipt by the Company.

 

For
purposes of this definition, “Operating Cash Flow” means, for any
period, the sum of the following for the Company and the Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP (except for the amortization of deferred installation income which
shall be excluded from the calculation of Operating Cash Flow for all purposes
of this definition): (a) aggregate operating revenues minus (b) aggregate
operating expenses (including technical, programming, sales, selling, general
and administrative expenses and salaries and other compensation, net of amounts
allocated to Affiliated Entities, paid to any general partner, director,
officer or employee of the Company or any Restricted Subsidiary, but excluding
interest, depreciation and amortization and the amount of non-cash compensation
in respect of the Company’s employee incentive stock programs for such period
(not to exceed in the aggregate for any calendar year 7% of the Operating Cash
Flow for the previous calendar year) and, to the extent otherwise included in
operating expenses, any losses resulting from a write-off or write-down of
Investments by the Company or any Restricted Subsidiary in Affiliated
Entities).  For purposes of determining
Operating Cash Flow, there shall be excluded all management fees until actually
paid to the Company or any Restricted Subsidiary in cash.

 

“Cumulative
Interest Expense” means, for the period commencing on July 1, 1988 and
ending on the last day of the most recent month preceding the proposed
Restricted Payment for which financial information is available, the aggregate
of the interest expense of the Company and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP, including
interest expense attributable to Capitalized Lease Obligations.

 

“Debt”
with respect to any Person means, without duplication, any liability, whether
or not contingent, (a) in respect of borrowed money or evidenced by bonds,
notes, debentures or similar instruments or letters of credit (or reimbursement
agreements with respect thereto), but excluding reimbursement obligations under
any surety bond, (b) representing the balance deferred and unpaid of the
purchase price of any property (including pursuant to Capitalized Lease
Obligations), except any such balance that constitutes a trade payable, (c) under
interest rate Swap Contracts entered into pursuant to the Credit Agreement, (d) under
any other agreement related to the fixing of interest rates on any
Indebtedness, such as an interest swap, cap or collar agreement (if and to the
extent any of the foregoing liabilities would appear as a liability upon a
balance sheet of such Person prepared on a consolidated basis in accordance
with GAAP) or (e) guarantees of items of other Persons which would be
included within this definition for such other Persons, whether or not the guarantee
would appear on such balance sheet.  “Debt”
shall not include (a) Disqualified Stock, (b) any liability for
federal, state or other taxes owed or owing by such Person or (c) any
accounts payable or other liability to trade 

 

7

 

creditors
arising in the ordinary course of business (including guarantees thereof or
instruments evidencing such liabilities).

 

“Disqualified
Stock” means any Capital Stock of the Company or any Restricted Subsidiary
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the maturity date of the Incremental Term
Facility.

 

“GAAP”,
as used in the definitions of “Cumulative Interest Expense” and “Operating Cash
Flow” (as used in the definition of “Cumulative Cash Flow Credit”) only, means
generally accepted accounting principles in the United States, consistently
applied, which were in effect as of August 15, 1997.

 

“Indebtedness”
with respect to any Person means the Debt of such Person; provided that,
for purposes of the definition of “Indebtedness” (including the term “Debt” to
the extent incorporated in such definition), the term “guarantee” shall not be
interpreted to extend to a guarantee under which recourse is limited to the
Capital Stock of an entity that is not a Restricted Subsidiary.

 

“Investment”
means any advance, loan, account receivable (other than an account receivable
arising in the ordinary course of business), or other extension of credit
(excluding, however, accrued and unpaid interest in respect of any advance,
loan or other extension of credit) or any capital contribution to (by means of
transfers of property to others, payments for property or services for the
account or use of others, or otherwise), any purchase or ownership of any stocks,
bonds, notes, debentures or other securities (including, without limitation,
any interests in any partnership, joint venture or joint adventure) of, or any
bank accounts with or guarantee of any Indebtedness or other obligations of,
any Unrestricted Subsidiary or Affiliated Entity that is not a Subsidiary; provided
that (a) the term “Investment” shall not include any transaction that
would otherwise constitute an Investment of the Company or a Subsidiary to the
extent that the consideration provided by the Company or such Subsidiary in
connection therewith shall consist of Capital Stock of the Company (other than
Disqualified Stock) and (b) the term “guarantee” shall not be interpreted
to extend to a guarantee under which recourse is limited to the Capital Stock
of an entity that is not a Restricted Subsidiary.

 

“Lease”
means any capital lease, operating lease, equipment lease, real property lease
or other lease.

 

“Mandatorily
Redeemable Preferred Stock” means the Company’s Series H Redeemable
Exchangeable Preferred Stock, Series M Redeemable Exchangeable Preferred
Stock and any series of preferred stock of the Company issued in exchange for,
or the proceeds of which are used to repurchase, redeem, defease or otherwise
acquire, all or any portion of the Series H Redeemable Exchangeable
Preferred Stock, Series M Redeemable Exchangeable Preferred Stock or any
other Mandatorily Redeemable Preferred Stock.

 

8

 

“Officers’
Certificate” means a certificate signed by (a) the Chairman, Chief
Executive Officer, a Vice Chairman, the President, a Vice President or the
Treasurer of the Company and (b) the Secretary or an Assistant Secretary
of the Company and delivered to the Administrative Agent on behalf of the
Incremental Term Lenders; provided, however, that such
certificate may be signed by two of the officers listed in clause (a) above
in lieu of being signed by one of such officers or directors listed in such
clause (a) and one of the officers listed in clause (b) above.

 

“Permitted Liens” means the following
types of Liens:

 

(a)                                  Liens existing on the date of this
Incremental Term Supplement;

 

(b)                                 Liens on shares of the Capital Stock of
an entity that is not a Restricted Subsidiary, which Liens solely secure a
guarantee by the Company or a Restricted Subsidiary, or both, of Indebtedness
of such entity;

 

(c)                                  Liens on Receivables and Related Assets
(and proceeds thereof) securing only Indebtedness otherwise permitted to be
incurred by a Securitization Subsidiary;

 

(d)                                 Liens granted in favor of the Company or
any Restricted Subsidiary;

 

(e)                                  Liens on shares of the Capital Stock of
a Subsidiary securing the Facilities or any renewal or replacement of any
Facility;

 

(f)                                    Liens securing Acquired Indebtedness
created prior to (and not in connection with or in contemplation of) the
incurrence of such Indebtedness by the Company or a Restricted Subsidiary; provided
that such Lien does not extend to any property or assets of the Company or any
Restricted Subsidiary other than the assets acquired in connection with the
incurrence of such Acquired Indebtedness;

 

(g)                                 Liens securing interest rate Swap
Contracts or “margin stock”, as defined in Regulations G and U of the Board of
Governors of the Federal Reserve System;

 

(h)                                 statutory Liens of landlords and
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other
like Liens arising in the ordinary course of business of the Company or any
Restricted Subsidiary and with respect to amounts not yet delinquent or being
contested in good faith by appropriate proceedings;

 

(i)                                     Liens for taxes, assessments, government
charges or claims not yet due or that are being contested in good faith by
appropriate proceedings;

 

(j)                                     zoning restrictions, easements,
rights-of-way, restrictions and other similar charges or encumbrances or minor
defects in title not interfering in any material respect with the business of
the Company or any of its Restricted Subsidiaries;

 

(k)                                  Liens arising by reason of any judgment,
decree or order of any court, arbitral tribunal or similar entity so long as
any appropriate legal proceedings that may have been initiated for the review
of such judgment, decree or order shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have expired;

 

9

 

(l)                                     Liens incurred or deposits made in the
ordinary course of business in connection with workers’ compensation,
unemployment insurance and other types of social security or similar
legislation;

 

(m)                               Liens securing the performance of bids,
tenders, leases, contracts, franchises, public or statutory obligations,
surety, stay or appeal bonds, or other similar obligations arising in the
ordinary course of business;

 

(n)                                 Leases under which the Company or any
Restricted Subsidiary is the lessee or the lessor;

 

(o)                                 Purchase money mortgages or other
purchase money liens (including without limitation any Capitalized Lease
Obligations) upon any fixed or capital assets acquired after the date of this
Incremental Term Supplement, or purchase money mortgages (including without
limitation Capitalized Lease Obligations) on any such assets hereafter acquired
or existing at the time of acquisition of such assets, whether or not assumed,
so long as (i) such mortgage or lien does not extend to or cover any other
asset of the Company or any Restricted Subsidiary and (ii) such mortgage
or lien secures the obligation to pay the purchase price of such asset,
interest thereon and other charges incurred in connection therewith (or the
obligation under such Capitalized Lease Obligation) only;

 

(p)                                 Liens securing reimbursement obligations
with respect to commercial letters of credit which encumber documents and other
property relating to such letters of credit and products and proceeds thereof;

 

(q)                                 Liens encumbering deposits made to
secure obligations arising from statutory, regulatory, contractual, or warranty
requirements of the Company or any of its Restricted Subsidiaries, including
rights of offset and set-off;

 

(r)                                    Liens to secure other Indebtedness; provided,
however, that the principal amount of any Indebtedness secured by such
Liens, together with the principal amount of any Indebtedness refinancing any
Indebtedness incurred under this clause (r) as permitted by clause (s) below
(and successive refinancings thereof), may not exceed 15% of the Company’s
Consolidated Net Tangible Assets as of the last day of the Company’s most
recently completed fiscal year for which financial information is available; and

 

(s)                                  any extension, renewal or replacement,
in whole or in part, of any Lien described in the foregoing clauses (a) through
(r); provided that any such extension, renewal or replacement shall be
no more restrictive in any material respect than the Lien so extended, renewed
or replaced and shall not extend to any additional property or assets.

 

“Preferred Stock”
means, with respect to any Person, any and all shares, interests,
participations or other equivalents (however designated) of such Person’s preferred
or preference stock, whether now outstanding or issued after the date of this
Incremental Term Supplement, and includes, without limitation, all classes and
series of preferred or preference stock.

 

“Receivables
and Related Assets” means (a) accounts receivable, instruments,
chattel paper, obligations, general intangibles, equipment and other similar
assets, including interests in 

 

10

 

merchandise
or goods, the sale or Lease of which gives rise to the foregoing, related
contractual rights, guarantees, insurance proceeds, collections and other
related assets, (b) equipment, (c) inventory and (d) proceeds of
all of the foregoing.

 

“Refinancing
Indebtedness” means Indebtedness of the Company incurred to redeem,
repurchase, defease or otherwise acquire or retire for value other Indebtedness
that is subordinate in right of payment to the Incremental Term Facility, so
long as any such new Indebtedness (a) is made subordinate to the
Incremental Term Facility at least to the same extent as the Indebtedness being
refinanced and (b) does not have (i) an Average Life less than the
Average Life of the Indebtedness being refinanced, (ii) a final scheduled
maturity earlier than the final scheduled maturity of the Indebtedness being
refinanced, or (iii) permit redemption at the option of the holder earlier
than the earlier of (A) the final scheduled maturity of the Indebtedness
being refinanced or (B) any date of redemption at the option of the holder
of the Indebtedness being refinanced.

 

“Restricted
Payment” means:

 

(a)                                  any
Stock Payment by the Company or a Restricted Subsidiary;

 

(b)                                 any
direct or indirect payment by the Company or a Restricted Subsidiary to redeem,
purchase, defease or otherwise acquire or retire for value, prior to any
scheduled maturity, scheduled repayment or scheduled sinking fund payment, any
Indebtedness of the Company that is subordinate in right of payment to the
Incremental Term Facility; provided, however, that any direct or
indirect payment by the Company or a Restricted Subsidiary to redeem, purchase,
defease or otherwise acquire or retire for value, prior to any scheduled
maturity, scheduled repayment or scheduled sinking fund payment, any
Indebtedness that is subordinate in right of payment to the Incremental Term
Facility shall not be a Restricted Payment if either (i) after giving
effect thereto, the ratio of the Senior Indebtedness of the Company and the
Restricted Subsidiaries to Annualized Operating Cash Flow determined as of the
last day of the most recent month for which financial information is available
is less than or equal to 5 to 1 or (ii) such subordinate Indebtedness is
redeemed, purchased, defeased or otherwise acquired or retired in exchange for,
or out of (x) the proceeds of a sale (within one year before or 180 days
after such redemption, purchase, defeasance, acquisition or retirement) of
Refinancing Indebtedness or Capital Stock of the Company or warrants, rights or
options to acquire Capital Stock of the Company or (y) any source of funds
other than the incurrence of Indebtedness; or

 

(c)                                  any
direct or indirect payment by the Company or a Restricted Subsidiary to redeem,
purchase, defease or otherwise acquire or retire for value any Disqualified
Stock at its mandatory redemption date or other maturity date if and to the
extent that Indebtedness is incurred to finance such redemption, purchase,
defeasance or other acquisition or retirement; provided, however,
that the redemption, purchase, defeasance or other acquisition or retirement of
Mandatorily Redeemable Preferred Stock at its mandatory redemption or other
maturity date shall not be a Restricted Payment if and to the extent any
Indebtedness incurred to finance all or a portion of the purchase or redemption
price does not have a final scheduled maturity date, or permit redemption at
the option of the holder thereof, earlier than the final scheduled maturity of
the Incremental Term Facility.

 

11

 

Notwithstanding
the foregoing, Restricted Payments shall not include (i) payments by any
Restricted Subsidiary to the Company or any other Restricted Subsidiary or (ii) any
Investment or designation of a Restricted Subsidiary as an Unrestricted
Subsidiary permitted under Section 1.08 of this Schedule II.

 

“Securitization
Subsidiary” means a Restricted Subsidiary that is established for the
limited purpose of acquiring and financing Receivables and Related Assets and
engaging in activities ancillary thereto; provided that (a) no
portion of the Indebtedness of a Securitization Subsidiary is guaranteed by or
is recourse to the Company or any other Restricted Subsidiary (other than
recourse for customary representations, warranties, covenants and indemnities,
none of which shall relate to the collectibility of the Receivables and Related
Assets) and (b) none of the Company or any other Restricted Subsidiary has
any obligation to maintain or preserve such Securitization Subsidiary’s
financial condition.

 

“Senior
Indebtedness” means, with respect to any Person, all principal of, premium,
if any, and interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to such Person whether or
not a claim for post filing interest is allowed in such proceedings) with
respect to all Indebtedness of such Person; provided that Senior
Indebtedness shall not include (a) any Indebtedness of such Person that,
by its terms or the terms of the instrument creating or evidencing such
Indebtedness, is expressly subordinate in right of payment to the Incremental
Term Facility, (b) any guarantee of Indebtedness of any subsidiary of such
Person if recourse against such guarantee is limited to the Capital Stock of
such subsidiary, (c) any obligation of such Person to any subsidiary of
such Person or, in the case of a Restricted Subsidiary, to the Company or any
other Subsidiary or (d) any Indebtedness of such Person (and any accrued
and unpaid interest in respect thereof) which is subordinate or junior in any
respect to any other Indebtedness or other obligation of such Person.

 

“Senior
Secured Leverage Ratio” shall mean, as at any date, the ratio of (i) the
Total Outstandings on such date (excluding Revolving Credit Loans outstanding
on such date and (without
duplication of Indebtedness supported by letters of credit) the aggregate
undrawn face amount of all letters of credit outstanding on such date)
to (ii) Annualized Operating Cash Flow (for purposes of this definition,
as defined in the Credit Agreement) determined as at the last day of the month
covered by the then most recent Compliance Certificate delivered to the Lenders
pursuant to Section 7.01(d) of the Credit Agreement, a copy of
which has been delivered to the Administrative Agent (and any change in such ratio
as a result of a change in the amount of Total Outstandings shall be effective
as of the date such change shall occur and any change in such ratio as a result
of a change in the amount of Annualized Operating Cash Flow shall be effective
as of the date of receipt by the Administrative Agent of the Compliance
Certificate delivered pursuant to Section 7.01(d) of the
Credit Agreement reflecting such change).

 

“Stock
Payment” means, with respect to any Person, the payment or declaration of
any dividend, either in cash or in property (except dividends payable in common
stock or common shares of Capital Stock of such Person), or the making by such
Person of any other distribution, on account of any shares of any class of its
Capital Stock, now or hereafter outstanding, or the redemption, purchase,
retirement or other acquisition or retirement for value by such Person,
directly or indirectly, of any shares of any class of its Capital Stock, now or
hereafter 

 

12

 

outstanding,
other than the redemption, purchase, defeasance or other acquisition or
retirement for value of any Disqualified Stock at its mandatory redemption date
or other maturity date.

 

13

 

Annex I

to Schedule II

 

CASH FLOW RATIO

 

	
  Period

  	
   

  	
  Ratio

  
	
   

  	
   

  	
   

  
	
  From
  and including the Closing Date to and including December 31, 2006

  	
   

  	
  7.50 to 1

  
	
   

  	
   

  	
   

  
	
  From
  and including January 1, 2007 to and including March 31, 2007

  	
   

  	
  7.25 to 1

  
	
   

  	
   

  	
   

  
	
  From
  and including April 1, 2007 to and including September 30, 2007

  	
   

  	
  7.00 to 1

  
	
   

  	
   

  	
   

  
	
  From
  and including October 1, 2007 to and including December 31, 2007

  	
   

  	
  6.50 to 1

  
	
   

  	
   

  	
   

  
	
  From
  and including January 1, 2008 to and including December 31, 2008

  	
   

  	
  6.00 to 1

  
	
   

  	
   

  	
   

  
	
  From
  and including January 1, 2009 to and including December 31, 2009

  	
   

  	
  5.50 to 1

  
	
   

  	
   

  	
   

  
	
  On
  and after January 1, 2010

  	
   

  	
  5.00 to 1

  

 

14

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