Attached files
| file | filename |
|---|---|
| S-1/A - SMG Industries Inc. | v187047_s1a.htm |
| EX-4.2 - SMG Industries Inc. | v187047_ex4-2.htm |
| EX-1.1 - SMG Industries Inc. | v187047_ex1-1.htm |
| EX-4.4 - SMG Industries Inc. | v187047_ex4-4.htm |
| EX-4.1 - SMG Industries Inc. | v187047_ex4-1.htm |
| EX-4.3 - SMG Industries Inc. | v187047_ex4-3.htm |
| EX-3.4 - SMG Industries Inc. | v187047_ex3-4.htm |
| EX-4.5 - SMG Industries Inc. | v187047_ex4-5.htm |
| EX-5.1 - SMG Industries Inc. | v187047_ex5-1.htm |
| EX-23.1 - SMG Industries Inc. | v187047_ex23-1.htm |
EXHIBIT
10.1
AMENDED
AND RESTATED
MANAGEMENT
SERVICES AGREEMENT
This Amended and Restated Management
Services Agreement (this “Agreement”), by and between SMG Indium Resources Ltd.,
a Delaware corporation (the “Company”) and Specialty Metals Group Advisors LLC,
a Delaware limited liability company (the “Manager”), entered into as of ______,
2010 and effective immediately upon the effectiveness of the initial public
offering of the Company (the “IPO”).
AGREEMENT
In consideration of the mutual
promises, covenants and conditions hereinafter set forth, the parties hereto
mutually agree as follows:
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1.
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Retention of
Manager.
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a.
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Duties of
Manager. The
Company hereby retains Manager to actively assist in the management of the
Company’s operations. Manager accepts such appointment and
agrees to discharge faithfully and diligently the duties set forth herein
and implement the policies established by the Company’s board of directors
(the “Board of Directors”), including, but not limited to, the
following:
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i.
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Use
commercially reasonable efforts to negotiate, arrange, and execute for and
on the Company’s behalf, through industry-standard tenders, the purchase
and stockpile of 99.97% purity or better indium over a prudent period of
time. The Manager, on the Company’s behalf, may enter into
long-term and or short-term supply contracts with indium
suppliers;
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ii.
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Provide
to the Board of Directors delivery and payment particulars with respect to
each purchase and sale of indium;
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iii.
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Use
commercially reasonable efforts to negotiate and arrange for the
transportation and storage of the Company’s indium stockpile at
third-party facilities located in the United States, Canada and or the
United Kingdom, in accordance with standard industry terms. The
Manager is not required to retain a custodian on our
behalf;
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iv.
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Use
commercially reasonable efforts to negotiate and arrange for indemnities
or insurance on the Company’s indium stockpile, in accordance with
standard industry practices by either the third-party storage facility’s
insurance policy, a separately purchased insurance policy or
both;
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v.
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Conduct
limited inspections of the indium delivered to the Company regarding the
99.97% purity or better requirements, based on the
following:
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1.
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if
indium is purchased from a supplier known to be a regular indium industry
supplier, the Manager will not be responsible for conducting any chemical
assays or other tests designed to verify that such indium meets the 99.97%
purity or better requirements as established by Regular Industry
Practice. For the purposes of this Agreement, Regular Industry
Practice means purchasing, storing or selling the metal indium containing
a 99.97% purity level or better, delivered in the form of Ingots, which
are individually wrapped in transparent polyethylene bags having a minimum
thickness of 0.004 inches;
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2.
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if
indium is purchased from a third-party supplier that is not known to be a
regular indium industry supplier, the Manager, at its discretion, may
hire, at the Company’s expense, an independent lab to perform random assay
tests using glow-discharge mass spectrometry (“GDMS”) to verify the purity
of the indium;
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vi.
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At
the Manager’s discretion, negotiate and arrange for the lending and/or
sale of indium from the Company’s stockpile to: (1) generate cash to
satisfy the Company’s operating expenses (2) facilitate the Manager’s
ability to negotiate long-term and or short-term supply contracts with
potential indium suppliers to acquire an indium stockpile (3) take
advantage of periodic shortages in the indium market based on market
conditions that the Manager deems favorable to the
Company;
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vii.
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Arrange,
negotiate and execute any additional documents regarding the acquisition,
storage, insuring and disposition of indium on the Company’s behalf,
including, but not limited to, corporate, title, environmental, financial
documents and other material agreements regarding the acquisition,
storage, insuring and disposition of indium on the Company’s
behalf;
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viii.
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On
a quarterly basis, prepare a report (the “Quarterly Report”) to be made
available to the Company and the Board of Directors regarding the net
market value (the “NMV”) of each share of the Company’s common
stock. NMV shall be determined by multiplying the number of
kilograms of indium held by or for the Company by the last spot price for
indium published by Metal Bulletin posted on Bloomberg L.P. for the month,
plus cash and any other Company assets, less any and all of the Company’s
outstanding payables, indebtedness and any other liabilities, divided by
the total number of outstanding common
shares.
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ix.
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Prepare,
or cause to be prepared, any and all regulatory filing materials, reports
to the Company’s stockholders, and other reports to the Board of Directors
as may be reasonably requested from time to time;
and
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x.
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Furnish
office facilities, service and supplies and generally oversee with the
Management’s staff and independent contractors, management of the
Company’s business and affairs.
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b.
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Duties of
Company.
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i.
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The
Company shall pay all fees and expenses in accordance with the operation
of the Company and services performed by the Manager pursuant to this
Agreement, except where expressly assumed by the
Manager.
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ii.
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In
the event the Manager elects to purchase indium on the Company’s behalf,
pursuant to long-term or short-term contracts with an indium supplier, the
Company shall have funds reserved to satisfy such purchase price and shall
pay such purchase price.
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iii.
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In
the event the Manager elects to lend or sell indium on the Company’s
behalf, pursuant to long-term or short-term contracts with an indium
customer, the Company shall have the required amount of indium reserved to
satisfy the delivery commitments pursuant to such
contracts.
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2.
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Fees and
Expenses.
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a.
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Management
Fee. In consideration for providing the services
hereunder, the Manager shall receive from the Company, and the Company
shall pay to the Manager, regardless of its ability to successfully
purchase and stockpile the metal indium, a fee equal to 1/6th
of 1% per month of the NMV (2% per annum). For purposes of this
Section 2, the Management Fee shall be determined by (x) multiplying the
number of kilograms of indium held by the Company by the last spot price
for indium published by Metal Bulletin posted on Bloomberg L.P. for the
month, plus cash and any other Company assts, less any and all of the
Company’s outstanding payables, indebtness and any other liabilities, (y)
multiplied by 1/6th
of 1%. Such Management Fee shall be determined on the last day
of each month and payable on or before the 10th
day following the end of such
month.
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b.
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Transaction
Fee. In the event the company successfully consummates
any offering of the Company’s equity or debt securities in excess of
$25,000,000 (excluding the IPO), then the Manager shall be entitled to a
transaction fee of $200,000 for services rendered in connection with such
offering. Such transaction fee shall be payable on or before
the tenth day following the consummation of the
offering.
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c.
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Expenses. The
Company shall be responsible for the payment of any and all fees and
expenses incurred by the Manager in connection with the services performed
by the Manager on behalf of the Company. Except as otherwise
agreed to by the Manager, the Company will expressly assume the following
expenses:
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i.
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brokerage
and trading commissions;
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ii.
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all
fees associated with the performance of assay testing by independent
laboratories;
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iii.
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warehouse
or storage facilities costs, transportation costs, storage and
transportation insurance fees, commission fees, security services costs,
and other charges arising upon the holding, purchase, lending or sale of
indium or other Company assets;
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iv.
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office
facility fees (including office rental, services and
supplies);
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v.
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directors
and officers liability and key man insurance
policies;
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vi.
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legal
and audit fees, including SEC related
fees;
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vii.
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corporate
finance offering costs;
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viii.
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fees
payable for listings, the maintenance of listings and filings or other
requirements of stock exchanges on which any of the Company’s securities
are listed or quoted;
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ix.
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cost
associated with printing and mailing financial reports and materials for
Stockholders’ meetings, valuations, reporting to Stockholders, securities
regulatory filings and any other purposes required by
law;
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x.
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fees
payable to any registrar and transfer agent of the common stock or other
securities;
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xi.
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all
taxes (including income, capital and sales taxes);
and
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xii.
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all
other fees and expenses related to running and operating the Company,
unless specifically excluded
herein.
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2.
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Term. Unless
earlier terminated pursuant to Section 3 below, this Agreement shall
remain in effect for a term of five (5) years, or _____, 2010. This
Agreement may be renewed on terms mutually acceptable to each party upon
90 days written notice prior to the expiration of such
term.
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3.
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Termination.
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a.
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By Both
Parties. This Agreement may be terminated by mutual
consent of the parties upon 90 days written
notice.
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b.
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By the Company For
Cause. The Company may terminate this Agreement for
Cause by action of the Board of Directors upon written notice to the
Manager at any time. “Cause” shall
mean:
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i.
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If
any member of the Manager (x) has been convicted of, or entered into a
plea of guilty or nolo contendere for a felony or other serious crime or
crime involving moral turpitude, or any knowing violation of any federal
or state banking, securities or tax law or regulation (y) is determined by
a court of law to have committed a willful act of embezzlement, fraud or
dishonesty (with respect to the Company or any of its affiliates or any of
their customers or suppliers) which may adversely affect the Company’s
financial, market, reputation and other interests in any material manner;
or
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ii.
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Manager’s
repeated material non-compliance or breach of this Agreement, in
connection with Manager’s duties hereunder, after written notice thereof
from the Board of Directors, and such material non-compliance has not been
cured within 90 days after Manger’s receipt of notice thereof from the
Board of Directors.
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Notwithstanding
the foregoing, the Manager shall not be terminated for Cause pursuant to this
Section 3(b) without (i) reasonable notice to Manager setting forth the reasons
for the Company’s intention to terminate for Cause, and (ii) an opportunity for
Manager, together with counsel, if any, to be heard before the Board of
Directors.
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c.
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By
Manager.
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i.
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Manager
may terminate this Agreement by written notice to the Board of Directors
if (x) either Ailon Z. Grushkin, Richard Biele or Alan Benjamin is
terminated as a director or executive officer position held with the
Company, without the prior written consent of such respective individual,
other than for Cause and (y) the Board of Directors has not, within 30
days of such removal, given notice of termination of this Agreement
pursuant to Section 3(b).
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ii.
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Manager
may terminate this Agreement upon 30 days written notice to the Board of
Directors if there is a Change in Control of the Company. For
purposes of this Agreement, Change in Control shall mean (i) the
acquisition of 50% or more of the then outstanding voting stock of the
Company in a single transaction or series of transactions, (ii) members of
the incumbent Board of Directors cease to constitute a majority of the
Board of Directors without the approval of the remaining members of the
Board of Directors or (iii) reorganization, merger or consolidation where
all or substantially all holders of the outstanding voting stock of the
Company do not, after such reorganization, merger or consolidation, own
more than 50% of the then outstanding voting stock of the resulting
entity.
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d.
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Liquidation,
Dissolution or Bankruptcy of the Company. This Agreement
shall terminate upon the completion of the dissolution, liquidation,
winding-up, bankruptcy, sale of substantially all of the assets, sale of
the business or insolvency proceeding commenced by, or on behalf of, the
Company.
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4.
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Effects of
Termination.
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a.
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Company Termination
(other than for Cause); Manager Termination. If (A)
Manager is terminated by the Company (other than for Cause) or (B) Manager
terminates the Agreement pursuant to Section 3(c) then the Manager shall
receive that portion of the Management Fee payable to the effective date
of termination plus an additional amount equal
to:
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i.
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one
year’s Management Fee calculated based upon (y) an average of the
Company’s monthly NMV over the previous twelve (12) month period prior to
termination (z) multiplied by twelve (12);
or
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ii.
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in
the event that this Agreement is terminated prior to twelve (12) months of
service, the Manager shall be entitled to an additional Management Fee
calculated based upon (y) an average of the Company’s monthly NMV over the
previous months of service (z) multiplied by the number of months of
service.
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b.
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Company Termination
for Cause. If Manager is terminated by the Company for
Cause pursuant to Section 3(b), no further payments of the Management Fee
shall be paid after the effectiveness of termination under Section 3(b) is
given by the Board of Directors to the
Manager.
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5.
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Non-Competition;
Confidentiality; Disclosure of
Information.
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a.
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Non–Competition and
Non-Solicitation. Without the prior written consent of
the Board of Directors, Manager shall not, and they shall cause their,
affiliates to not, directly or indirectly, so long as the Manager is
retained hereunder and until the one-year anniversary of any termination
of this Agreement:
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i.
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interfere
with, disrupt or attempt to disrupt any then existing relationship,
contractual or otherwise, between the Company or its subsidiaries and any
of their customers, suppliers, clients, executives, employees, vendors,
licensees or business relations or other persons with whom the Company or
its subsidiaries deal or in any way disparage the Company to any of the
foregoing; or
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ii.
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solicit
for employment, attempt to employ or assist any other entity in employing
or soliciting for employment any employee or executive who at the
termination date was employed by the Company or its
subsidiaries.
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b.
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Intellectual Property
Rights. Manager hereby acknowledges that any material
produced by or upon the instructions of Manger during the term that
benefits the Company shall be “works for hire” to the extent applicable
and belong to the Company to the extent such materials are in the nature
of inventions or other items of intellectual property. Manager
agrees to take any and all steps reasonably requested by the Company to
ensure that title thereto shall be fully vested in the Company and agrees
to make no claim to personal ownership
thereof.
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c.
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Confidentiality. During
the term of Manager’s retention hereunder and thereafter, and except as
required by any court, supervisory authority or administrative agency or
as may, in the opinion of Manger’s counsel, be otherwise required by
applicable law, Manager shall not, without the consent of the Board of
Directors or a person authorized thereby, disclose to any person, other
than a then-current employee of the Company or a person to whom disclosure
is reasonably necessary or appropriate in connection with the performance
by them of the obligations hereunder, any confidential or proprietary
information of the Company, including any vendor from which the Company
purchases, or potentially purchases, indium from, and customers, or
potential customers, in which the Company may sell indium to, obtained by
them during the term of this Agreement, unless such information has become
a matter of public knowledge at the time of such
disclosure.
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6.
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Indemnification.
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a.
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The
Company agrees to indemnify Manager and hold Manager harmless against any
and all losses, claims, damages, liabilities and costs (and all actions in
respect thereof and any legal or other expenses in giving testimony or
furnishing documents in response to a subpoena or otherwise), including,
without limitation, the costs of investigating, preparing or defending any
such action or claim, whether or not in connection with litigation in
which Manager is a party, as and when incurred, directly or indirectly
caused by, relating to, based upon or arising out of any work performed by
Manager in connection with this Agreement to the full extent permitted by
the New York Business Corporation Law and by the Certificate of
Incorporation and By-Laws of the Company, as may be amended from time to
time.
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b.
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The
indemnification provision of this Section 7 shall be in addition to any
obligations which the Company may otherwise have to
Manager.
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c.
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The
Company agrees to indemnify Manager and hold Manager harmless against any
and all loss of opportunity whereby the value of any of the Company’s
assets or value of any particular indium, monetary or currency investment
could have been increased, or any decline in value of any of the Company’s
assets unless such decline is the result of the Manager’s gross
negligence, willful misconduct or willful failure to comply with express
directions given by resolution of the Board of Directors or the Company’s
stockholders.
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d.
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If
any action, proceeding or investigation is commenced as to which Manager
proposes to demand such indemnification, Manager shall notify the Company
with reasonable promptness. Manager shall have the right to
retain counsel of Management’s own choice to represent Manager, and the
Company shall pay all reasonable fees and expenses of such counsel; and
such counsel shall, to the fullest extent consistent with such counsel’s
professional responsibilities, cooperate with the Company and any counsel
designated by the Company. The Company shall be liable for any
settlement of any claim against Manager made with the Company’s written
consent, which consent shall not be unreasonably withheld or delayed, to
the fullest extent permitted by the New York Business Corporation Law and
the Certificate of Incorporation and By-Laws of the Corporation, as may be
amended from time to time. No such settlement of any claim
shall be made by Manager without the written consent of the Company, which
consent shall not be unreasonably withheld or
delayed.
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7.
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Notices. Notices
delivered pursuant to this Agreement shall be in writing, and shall be
deemed to have been duly given when (a) delivered by hand; (b) sent by
facsimile (with receipt confirmed), provided that a copy is promptly
thereafter mailed by first-class prepaid certified mail, return receipt
requested; (c) received by the addressee, if sent with delivery receipt
requested by Express Mail, Federal Express, other express delivery service
or first-class prepaid certified mail, in each case to the appropriate
addresses and facsimile numbers set forth below, or to such other
address(es) or facsimile number(s) as a party may designate as to itself
by notice to the other party.
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If to the
Company:
SMG
Indium Resources Ltd.
176
LaGuardia Ave.
Staten
Island, New York 10314
Attention:
Ailon Z. Grushkin
Facsimile:
(718) 477-4344
If to the
Manger:
Specialty
Metals Group Advisors LLC
176
LaGuardia Ave.
Staten
Island, New York 10314
Attention:
Ailon Z. Grushkin
Facsimile:
(718) 477-4344
In each
case, with a copy to:
Ellenoff,
Grossman & Schole LLP
150 East
42nd
Street
New York,
NY 10017
Attention:
Barry Grossman
Facsimile: (212)
370-7889
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8.
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Governing
Law. This Agreement shall be governed by the laws of the
State of New York.
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9.
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Waiver of Jury
Trial. EACH PARTY TO THIS AGREEMENT UNCONDITIONALLY
WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS AGREEMENT, ANY
RELATED DOCUMENTS, ANY DEALINGS BETWEEN OR AMONG THEM RELATING TO THE
SUBJECT MATTER OF THIS AGREEMENT.
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10.
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Assignability. The
Company nor the Manager may not assign this Agreement without the prior
written consent of the respective party. Except as provided in
Section 1 of this Agreement, in the event that the Manger elects to
delegate any of its duties or obligations under this Agreement to any
third-party or independent contractor, the Manager shall do so at the
Manager’s own expense.
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11.
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Enforcement,
Separability. It is the desire and intent of the parties
hereto that the provisions of this Agreement shall be enforced to the
fullest extent permissible under the laws and public policies applied in
each jurisdiction in which enforcement is sought. Accordingly,
in case any provision of this Agreement shall be declared invalid, illegal
or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired
thereby. To the extent that a restriction contained in this
Agreement is more restrictive than permitted by the laws of any
jurisdiction where this Agreement may be subject to review and
interpretation, the terms of such restriction, for the purpose only of the
operation of such restriction in such jurisdiction, shall be the maximum
restriction allowed by the laws of such jurisdiction and such restriction
shall be deemed to have been revised accordingly
herein.
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12.
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Titles and
Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and
are not to be considered in construing this
Agreement.
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13.
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Counterparts. This
Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one
instrument. This Agreement and each other agreement or
instrument entered into in connection herewith or therewith or
contemplated hereby or thereby, and any amendments hereto or thereto, to
the extent signed and delivered by means of a electronically confirmed
facsimile transmission, shall be treated in all manners and respects as an
original agreement or instrument and shall be considered to have the same
binding legal effect as if it were the original signed version thereof
delivered in person.
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14.
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No Strict
Construction. The parties hereto have participated
jointly in the negotiating and drafting of this Agreement. In
the event an ambiguity or question of intent or interpretation arises,
this Agreement shall be construed as if drafted jointly by the parties
hereto, an no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions
of this Agreement.
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15.
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Miscellaneous. This
Agreement contains the entire agreement of the parties relating to the
subject matter hereof and supersedes any other agreements entered into
between the Manager and the Company prior to the date of this Agreement
relating thereto. This Agreement may not be altered, modified,
amended or terminated except by a written instrument signed by each of the
parties hereto. No term or provision hereof shall be deemed
waived and no breach consented to or excused, unless such waiver, consent
of excuse shall be in writing and signed by the party claimed to have
waived, consented or excused. A consent, waiver or excuse of
any breach shall not constitute a consent to, waiver of, or excuse of any
other or subsequent breach whether or not of the same kind of the original
breach.
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IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the day and year first above
written.
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SMG
INDIUM RESOURCES LTD.
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By:
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Name:
Ailon Z. Grushkin
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Title: President
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SPECIALTY
METALS GROUP
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ADVISORS
LLC
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By:
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Name: Ailon
Z. Grushkin
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Title: Manager
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Acknowledged
and Agreed:
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Richard
Biele
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Alan
Benjamin
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