0000921895-12-000078.txt : 20120109 0000921895-12-000078.hdr.sgml : 20120109 20120109172915 ACCESSION NUMBER: 0000921895-12-000078 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20120109 DATE AS OF CHANGE: 20120109 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SMG Indium Resources Ltd. CENTRAL INDEX KEY: 0001426506 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS METAL ORES [1090] IRS NUMBER: 510662991 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-86227 FILM NUMBER: 12518310 BUSINESS ADDRESS: STREET 1: 103 CARNEGIE CENTER STREET 2: SUITE 101 CITY: PRINCETON STATE: NJ ZIP: 08540 BUSINESS PHONE: 609-987-8437 MAIL ADDRESS: STREET 1: 103 CARNEGIE CENTER STREET 2: SUITE 101 CITY: PRINCETON STATE: NJ ZIP: 08540 FORMER COMPANY: FORMER CONFORMED NAME: Specialty Metals Group Indium Corp. DATE OF NAME CHANGE: 20080207 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Raging Capital Management, LLC CENTRAL INDEX KEY: 0001444376 IRS NUMBER: 204306350 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: TEN PRINCETON AVENUE CITY: ROCKY HILL STATE: NJ ZIP: 08553 BUSINESS PHONE: 6099100954 MAIL ADDRESS: STREET 1: TEN PRINCETON AVENUE CITY: ROCKY HILL STATE: NJ ZIP: 08553 SC 13D/A 1 sc13da107738018_01052012.htm AMENDMENT NO. 1 TO THE SCHEDULE 13D sc13da107738018_01052012.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D
(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
§ 240.13d-2(a)

(Amendment No. 1)1

SMG Indium Resources Ltd.
(Name of Issuer)
 
Common Stock Purchase Warrants
Common Stock
 
(Title of Class of Securities)
 
78454K110
78454K102
(CUSIP Number)
 
STEVEN WOLOSKY, ESQ.
OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
Park Avenue Tower
65 East 55th Street
New York, New York 10022
(212) 451-2300
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

January 5, 2012
(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ¨.

Note:  Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See § 240.13d-7 for other parties to whom copies are to be sent.


_______________
1              The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
 
 
1

 
CUSIP NO. 78454K110, 78454K102
 
1
NAME OF REPORTING PERSON
 
Raging Capital Fund, LP
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (b) o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
WC
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
 
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
- 0 -
8
SHARED VOTING POWER
 
892,958 Warrants
2,118,583 Shares of Common Stock(1)
9
SOLE DISPOSITIVE POWER
 
- 0 -
10
SHARED DISPOSITIVE POWER
 
892,958 Warrants
2,118,583 Shares of Common Stock(1)
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
892,958 Warrants
2,118,583 Shares of Common Stock(1)
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
13.2% of the Outstanding Warrants
21.8% of the Outstanding Shares of Common Stock(1)
14
TYPE OF REPORTING PERSON
 
PN
 
(1)           Consist of (a) 1,225,625 shares of Common Stock and (b) 892,958 shares of Common Stock issuable upon the exercise of Warrants owned by Raging Capital Fund.

 
2

 
CUSIP NO. 78454K110, 78454K102
 
1
NAME OF REPORTING PERSON
 
Raging Capital Fund (QP), LP
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (b) o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
WC
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
 
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
- 0 -
8
SHARED VOTING POWER
 
1,074,384 Warrants
3,816,101 Shares of Common Stock(1)
9
SOLE DISPOSITIVE POWER
 
- 0 -
10
SHARED DISPOSITIVE POWER
 
1,074,384 Warrants
3,816,101 Shares of Common Stock(1)
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
1,074,384 Warrants
3,816,101 Shares of Common Stock(1)
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
15.9% of the Outstanding Warrants
38.5% of the Outstanding Shares of Common Stock(1)
14
TYPE OF REPORTING PERSON
 
PN
 
(1)           Consist of (a) 2,741,717 shares of Common Stock and (b) 1,074,384 shares of Common Stock issuable upon the exercise of Warrants owned by Raging Capital Fund QP.

 
3

 
CUSIP NO. 78454K110, 78454K102
 
1
NAME OF REPORTING PERSON
 
Raging Capital Management, LLC
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (b) o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
AF
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
 
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
- 0 -
8
SHARED VOTING POWER
 
1,967,342 Warrants(1)
5,934,684 Shares of Common Stock(2)
9
SOLE DISPOSITIVE POWER
 
- 0 -
10
SHARED DISPOSITIVE POWER
 
1,967,342 Warrants(1)
5,934,684 Shares of Common Stock(2)
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
1,967,342 Warrants(1)
5,934,684 Shares of Common Stock(2)
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
29.1% of the Outstanding Warrants(1)
55.0% of the Outstanding Shares of Common Stock(2)
14
TYPE OF REPORTING PERSON
 
OO
 
 (1)           Consist of 1,967,342 Warrants owned collectively by Raging Capital Fund and Raging Capital Fund QP.

(2)           Consist of (a) 3,967,342 shares of Common Stock owned collectively by Raging Capital Fund and Raging Capital Fund QP and (b) 1,967,342 shares of Common Stock issuable upon the exercise of Warrants owned collectively by Raging Capital Fund and Raging Capital Fund QP.

 
4

 
CUSIP NO. 78454K110, 78454K102
 
1
NAME OF REPORTING PERSON
 
William C. Martin
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (b) o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
PF, AF
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
 
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
7,028 Warrants(1)
19,056 Shares of Common Stock(2)
8
SHARED VOTING POWER
 
1,967,342 Warrants(a)
5,934,684 Shares of Common Stock(b)
9
SOLE DISPOSITIVE POWER
 
7,028 Warrants(1)
19,056 Shares of Common Stock(2)
10
SHARED DISPOSITIVE POWER
 
1,967,342 Warrants(a)
5,934,684 Shares of Common Stock(b)
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
1,974,370 Warrants(1)(a)
5,953,740 Shares of Common Stock(2)(b)
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
29.2% of the Outstanding Warrants(1)(a)
55.1% of the Outstanding Shares of Common Stock(2)(b)
14
TYPE OF REPORTING PERSON
 
IN
 
(1)           Consist of 7,028 Warrants owned by Mr. Martin.

(2)           Consist of (a) 7,028 shares of Common Stock, (b) 7,028 shares of Common Stock issuable upon the exercise of Warrants owned by Mr. Martin, and (c) 5,000 shares of Common Stock issuable upon the exercise of Stock Options owned by Mr. Martin.

(a)           Consist of 1,967,342 Warrants owned collectively by Raging Capital Fund and Raging Capital Fund QP.

(b)           Consist of (a) 3,967,342 shares of Common Stock owned collectively by Raging Capital Fund and Raging Capital Fund QP and (b) 1,967,342 shares of Common Stock issuable upon the exercise of Warrants owned collectively by Raging Capital Fund and Raging Capital Fund QP.

 
5

 
CUSIP NO. 78454K110, 78454K102
 
The following constitutes Amendment No. 1 to the Schedule 13D filed by the undersigned (“Amendment No. 1”).  This Amendment No. 1 amends the Schedule 13D as specifically set forth herein.

Item 1.
Security and Issuer.

Item 1 is hereby amended and restated to read as follows:
 
This statement relates to the following securities (collectively, the “Securities”) of SMG Indium Resources Ltd. (the “Issuer”):
 
 
(a)
Common Stock Purchase Warrants (the “Warrants”) - Each Warrant entitles the holder to purchase one share of Common Stock at a price of $5.75.
 
 
(b)
Common Stock, par value $0.001 per share (the “Common Stock”).
 
Since the filing of the initial Schedule 13D, all shares of Common Stock and Warrants comprising Units owned by the Reporting Persons were separated from the Units.  Accordingly, the Reporting Persons no longer own any Units of the Issuer.
 
The Securities reported herein are subject to a certain lock-up agreement with the Issuer.  A copy of this agreement is attached as an exhibit to the initial Schedule 13D.  The address of the principal executive offices of the Issuer is 41 University Drive, Suite 400, Newtown, Pennsylvania 18940.
 
Item 2.
Identity and Background.
 
Item 2(b) is hereby amended and restated to read as follows:
 
(b)           The address of the principal office of each of the Reporting Persons is Ten Princeton Avenue, Rocky Hill, New Jersey 08553.
 
Item 3.
Source and Amount of Funds or Other Consideration.
 
Item 3 is hereby amended to add the following:
 
On January 5, 2012, Raging Capital Fund entered into a Stock Subscription Agreement with the Issuer (the “Raging Capital Fund Subscription Agreement”) pursuant to which Raging Capital Fund purchased 332,667 shares of Common Stock for a purchase price of $3.75 per share, or an aggregate purchase price of $1,247,501.25.  The 332,667 shares of Common Stock purchased by Raging Capital Fund were acquired with its working capital.
 
On January 5, 2012, Raging Capital Fund QP entered into a Stock Subscription Agreement with the Issuer (the “Raging Capital Fund QP Subscription Agreement”) pursuant to which Raging Capital Fund QP purchased 1,667,333 shares of Common Stock for a purchase price of $3.75 per share, or an aggregate purchase price of $6,252,498.75.  The 1,667,333 shares of Common Stock purchased by Raging Capital Fund QP were acquired with its working capital.
 
Item 5.
Interest in Securities of the Issuer.
 
Items 5(a) - (c) are hereby amended and restated to read as follows:
 
(a)           The aggregate percentages of Securities reported owned by the Reporting Persons is based upon 6,758,101 Warrants and 8,832,301 shares of Common Stock outstanding as of January 5, 2012.  Such number of Warrants and shares of Common Stock outstanding is based upon information the Reporting Persons obtained from the Issuer.
 
 
6

 
CUSIP NO. 78454K110, 78454K102
 
As of the close of business on January 6, 2012, Raging Capital Fund beneficially owned (a) 892,958 Warrants, constituting approximately 13.2% of the Warrants outstanding, and (b) 2,118,583 shares of Common Stock (consisting of 1,225,625 shares owned by Raging Capital Fund and 892,958 shares issuable upon the exercise of Warrants owned by Raging Capital Fund), constituting approximately 21.8% of the shares of Common Stock outstanding.  By virtue of their relationships with Raging Capital Fund discussed in further detail in Item 2, each of Raging Capital and Mr. Martin may be deemed to beneficially own the Securities owned by Raging Capital Fund.
 
As of the close of business on January 6, 2012, Raging Capital Fund QP beneficially owned (a) 1,074,384 Warrants, constituting approximately 15.9% of the Warrants outstanding, and (b) 3,816,101 shares of Common Stock (consisting of 2,741,717 shares owned by Raging Capital Fund QP and 1,074,384 shares issuable upon the exercise of Warrants owned by Raging Capital Fund QP), constituting approximately 38.5% of the shares of Common Stock outstanding.  By virtue of their relationships with Raging Capital Fund QP discussed in further detail in Item 2, each of Raging Capital and Mr. Martin may be deemed to beneficially own the Securities owned by Raging Capital Fund QP.
 
As of the close of business on January 6, 2012, Mr. Martin beneficially owned (a) 7,028 Warrants, and (b) 19,056 shares of Common Stock (consisting of 7,028 shares owned by Mr. Martin, 7,028 shares issuable upon the exercise of Warrants owned by Mr. Martin, and 5,000 shares issuable upon the exercise of Stock Options owned by Mr. Martin).  Together with the Securities beneficially owned by the Raging Funds that Mr. Martin may also be deemed to beneficially own, Mr. Martin’s aggregate beneficial ownership of Securities is as follows: (y) 1,974,370 Warrants, constituting approximately 29.2% of the Warrants outstanding, and (z) 5,953,740 shares of Common Stock, constituting approximately 55.1% of the shares of Common Stock outstanding.
 
(b)           Each of the Raging Funds shares with Raging Capital and Mr. Martin the power to vote and dispose of the Securities directly owned, respectively, by the Raging Funds.  Mr. Martin has the sole power to vote and dispose of the Securities directly owned by Mr. Martin.
 
(c)           See Item 3 for a description of all transactions in the Securities during the past sixty days by the Reporting Persons.
 
The filing of this Schedule 13D shall not be construed as an admission that the Reporting Persons are, for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, the beneficial owners of any of the Securities reported herein.  Each of the Reporting Persons specifically disclaims beneficial ownership of the Securities reported herein that are not directly owned by such Reporting Person.
 
Item 6.
Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.
 
Item 6 is hereby amended to add the following:
 
See Item 3 for a description of the Raging Capital Fund Subscription Agreement and the Raging Capital Fund QP Subscription Agreement, copies of which are attached as exhibits hereto and incorporated herein by reference.
 
Item 7.
Material to be Filed as Exhibits.
 
Item 7 is hereby amended to add the following exhibits:
 
 
99.1
Stock Subscription Agreement, dated as of January 5, 2012, by and between SMG Indium Resources Ltd. and Raging Capital Fund, LP.
 
 
99.2
Stock Subscription Agreement, dated as of January 5, 2012, by and between SMG Indium Resources Ltd. and Raging Capital Fund (QP), LP.
 
 
99.3
Power of Attorney.
 
 
7

 
CUSIP NO. 78454K110, 78454K102
 
SIGNATURES
 
After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.
 
Dated:  January 9, 2012
 
 
Raging Capital Fund, LP
   
 
By:
Raging Capital Management, LLC
General Partner
   
 
By:
/s/ Frederick C. Wasch
   
Name:
Frederick C. Wasch
   
Title:
Attorney-in-fact for William C. Martin, Managing Member


 
Raging Capital Fund (QP), LP
     
 
By:
Raging Capital Management, LLC
General Partner
   
 
By:
/s/ Frederick C. Wasch
   
Name:
Frederick C. Wasch
   
Title:
Attorney-in-fact for William C. Martin, Managing Member


 
Raging Capital Management, LLC
   
 
By:
/s/ Frederick C. Wasch
   
Name:
Frederick C. Wasch
   
Title:
Attorney-in-fact for William C. Martin, Managing Member


 
/s/ Frederick C. Wasch
 
Frederick C. Wasch as attorney-in-fact for William C. Martin

 
8

 
EX-99.1 2 ex991to13da107738018_010512.htm RAGING CAPITAL FUND SUBSCRIPTION AGREEMENT ex991to13da107738018_010512.htm
Exhibit 99.1
 
STOCK SUBSCRIPTION AGREEMENT
 
THIS STOCK SUBSCRIPTION AGREEMENT, dated as of January 5, 2012 (this “Agreement”), is entered into by and between SMG Indium Resources Ltd., a Delaware corporation (the “Company”), and the subscriber listed on the signature page hereto, an individual or entity with principal offices at the address listed on the signature page hereto (the “Subscriber”).
 
WITNESSETH
 
WHEREAS, the Company desires to issue and sell to the Subscriber, and the Subscriber desires to subscribe to and accept from the Company the number of shares of common stock, par value $.001 per share (the “Common Stock”), of the Company listed on the signature page hereto upon the terms and subject to the conditions hereinafter set forth.
 
NOW, THEREFORE, in consideration of the above, the parties hereby agree as follows:
 
1.           The Company agrees to issue and sell to the Subscriber, and the Subscriber agrees to subscribe to and purchase from the Company, 332,667 shares of Common Stock (the “Restricted Stock”), for a purchase price of $3.75 per share1, or an aggregate purchase price of $1,247,501.25 (the “Purchase Price”).
 
2.           In consideration of the issuance of the Restricted Stock, the Subscriber agrees to pay the aggregate Purchase Price by wire transfer of immediately available funds to an account designated by the Company.  At such time the payment is made, the Company agrees to deliver to the Subscriber a certificate (the “Certificate”) representing the shares of Common Stock being subscribed to and paid for by the Subscriber, which shares of Common Stock represented by the Certificate shall be duly authorized, validly issued, fully paid and nonassessable.  The Certificate shall be properly legended to reflect that the shares of Restricted Stock represented by the Certificate are not registered under the Securities Act of 1933, as amended (the “Act”) and are subject to the terms of this Agreement.
 
3.           Company’s Representations and Warranties.  The Company represents and warrants to the Subscriber:
 
(a)           Organization; Authority.  The Company is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transaction contemplated hereby and otherwise to carry out its obligations hereunder.
 
(b)           Due Authorization.  That the Restricted Stock, when issued, will be duly authorized, validly issued, fully paid and nonassessable.
 
4.           Subscriber’s Representations and Warranties.  The Subscriber represents and warrants to the Company that:
 
(a)           Organization; Authority. Such Subscriber is either (i) an individual or (ii) an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, in either case with full right and, as applicable, individual, corporate, partnership trust or other power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and performance by such Subscriber of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate, partnership, trustee, limited liability company or similar action, as applicable, on the part of such Subscriber.  This Agreement has been duly executed by such Subscriber, and when delivered by such Subscriber in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Subscriber, enforceable against it in accordance with its terms.


1 The purchase price of $3.75 per common share was determined by taking the average of (i) $3.74 per common share, a ten percent premium to the Company's common stock's closing bid price of $3.40 on January 3, 2012 and (ii) the Company's Net Market Value last reported on December 31, 2011 of $3.76 per common share.
 
 
 

 
 
(b)           No Public Sale or Distribution. The Subscriber understands the Restricted Stock are “restricted securities” and have not been registered under the Act or any applicable state or foreign securities laws and is acquiring the Restricted Stock as principal for its own account and not with a view to or for distributing or reselling such Restricted Stock or any part thereof in violation of the Act or any applicable securities law, has no present intention of distributing any of such Restricted Stock in violation of the Act or any applicable securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Restricted Stock (this representation and warranty not limiting such Subscriber’s right to sell the Restricted Stock in compliance with applicable federal and state securities laws) in violation of the Act or any applicable securities law.  Such Subscriber is acquiring the Restricted Stock hereunder in the ordinary course of its business.
 
(c)           Accredited Investor Status. At the time the Subscriber was offered the Restricted Stock, it was, and at the date hereof it is either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Act.  The Subscriber is not required to be registered as a broker-dealer under Section 15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
 
(d)           Experience of Subscriber.  The Subscriber, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Restricted Stock, and has so evaluated the merits and risks of such investment.  The Subscriber is able to bear the economic risk of an investment in the Restricted Stock and, at the present time, is able to afford a complete loss of such investment.
 
(e)           Reliance on Exemptions. The Subscriber understands that the Restricted Stock is being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Subscriber’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Subscriber set forth herein in order to determine the availability of such exemptions and the eligibility of the Subscriber to acquire the Restricted Stock.
 
 
(f)           Information. William Martin is the managing member of Raging Capital Management, LLC, the general partner of the Subscriber.  Mr. Martin is also a director of the Company and a member of Specialty Metal Group Advisors, LLC (the “Manager”), the Company’s Manager.   As a director of the Company and a member of the Manager, Mr. Martin and Subscriber has access to all information, including but not limited to “insider information”, regarding the Company as of the date of this Agreement.  Furthermore, the Subscriber and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Restricted Stock which has been requested by the Subscriber.  The Subscriber and its advisors, if any, have been afforded the opportunity to ask questions of the Company.  The Subscriber further acknowledges that the Subscriber has reviewed all documents publicly filed with the Securities and Exchange Commission (the “SEC”) relating to the Company and its business.  The Subscriber understands that its investment in the Restricted Stock involves a high degree of risk.  Subscriber confirms it has received or have had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the Restricted Stock.
 
 
2

 
 
(g)           Independent Advice.  The Subscriber has carefully considered and has discussed with Subscriber’s legal, tax, accounting and financial advisors, to the extent the Subscriber has deemed necessary, the suitability of this investment Agreement for the Subscriber’s particular federal, state, local and foreign tax and financial situation and has independently determined that this investment is a suitable investment for the Subscriber.  Subscriber has relied solely on such advisors and not on any statements or representations of the Company or any of its agents.  Subscriber understands that Subscriber (and not the Company) shall be responsible for Subscriber’s own tax liability that may arise as a result of this investment.
 
(h)           No Governmental Review.  The Subscriber understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Restricted Stock or the fairness or suitability of the investment in the Restricted Stock nor have such authorities passed upon or endorsed the merits of the offering of the Restricted Stock.
 
(i)           Transfer or Resale. The Subscriber acknowledges that there exists no public market for the Restricted Stock and that no such public market may develop in the future.  The Subscriber understands that: (i) the Restricted Stock have not been and are not being registered under the Act, any state securities laws or the securities laws of any non-U.S. jurisdiction, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) the Subscriber shall have delivered to the Company (if requested by the Company) an opinion of counsel to the Subscriber, in a form reasonably acceptable to the Company, to the effect that such Restricted Stock to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) the Subscriber provides the Company with reasonable assurance that such Restricted Stock can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the Act (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Restricted Stock made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the Restricted Stock under circumstances in which the seller (or the Person (as defined below) through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Act) may require compliance with some other exemption under the Act or the rules and regulations of the SEC promulgated thereunder or other applicable rules and regulations; and (iii) neither the Company nor any other Person is under any obligation to register the Restricted Stock under the Act,  any state securities laws,  the securities laws of any non-U.S. jurisdiction or to comply with the terms and conditions of any exemption thereunder; provided however that the Company shall use its best efforts to seek to register the Restricted Stock under the Act or under comparable state or foreign securities laws.
 
(j)           Piggy-Back Registrations.   If at any time until two years after the date of this Agreement there is not an effective registration statement covering all of the Restricted Stock and the Company shall determine to prepare and file with the SEC a registration statement relating to an offering for its own account or the account of others under the Act of any of its equity securities, but excluding Forms S-4 or S-8 and similar forms which do not permit such registration, then the Company shall send to the Subscriber written notice of such determination and, if within ten calendar days after receipt of such notice, the Subscriber shall so request in writing, the Company shall include in such registration statement all or any part of the Restricted Stock the Subscriber requests to be registered, provided, however, such registration of the Restricted Stock shall be subject to (i) customary underwriter cutbacks applicable to all holders of registration rights, (ii) any contractual restrictions or cutbacks agreed to with new purchases of the Company’s equity securities, or (iii) any cutbacks in  accordance with guidance provided by the SEC (including, but not limited to, Rule 415 under the Act).  The obligations of the Company under this Section may be waived by the Subscriber. Notwithstanding anything to the contrary herein, the registration rights granted hereunder to the Subscriber shall not be applicable for such times as such Restricted Stock may be sold by the holder thereof without restriction pursuant to Section 144(b)(1) of the Act.  All expenses incurred by the Company, including, without limitation, all registration and filing fees, printing expenses (if required), fees and disbursements of counsel and independent public accountants for the Company are called “Registration Expenses.” All underwriting discounts and selling commissions applicable to the sale of registrable securities are called "Selling Expenses."  The Company will pay all Registration Expenses in connection with the registration statement under this Section.  Selling Expenses in connection with each registration statement shall be borne by the Subscriber and will be apportioned among all holders in proportion to the number of Restricted Stock included therein for a holder relative to all the securities included therein for all selling holders, or as all holders may agree.
 
 
3

 
 
(k)           Validity; Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of the Subscriber and constitutes the legal, valid and binding obligations of the Subscriber enforceable against the Subscriber in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
 
(l)           No Litigation.  There are no actions, suits, proceedings or investigations pending against Subscriber or Subscriber’s assets before any court or governmental agency (nor, to Subscriber’s knowledge, is there any threat thereof) which would impair in any way Subscriber’s ability to enter into and fully perform Subscriber’s commitments and obligations under this Agreement.
 
(m)           No Conflicts. The execution, delivery and performance by the Subscriber of this Agreement will not (i) result in a violation of the organizational documents of the Subscriber, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Subscriber is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Subscriber, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Subscriber to perform its obligations hereunder.
 
(n)           Brokers and Finders.  No Person acting on behalf or under the authority of such Subscriber is or will be entitled to any broker’s, finder’s, or similar fee or commission in connection with the investment or this Agreement.
 
 
4

 
 
(o)           No General Solicitation.  The Subscriber is not acquiring the Restricted Stock as a result of any form of general solicitation or general advertising (as those terms are used in Regulation D promulgated under the Act), including, without limitation, any article, notice, advertisement or other communication published in any newspaper, magazine or similar media or broadcast over television, radio or Internet or any seminar or meeting where the Subscriber was invited by general solicitation or general advertising.
 
5.           As evidence of the restriction on transfer, the following legend (or a substantially similar legend) will be placed on the Certificate or Certificates evidencing the Restricted Stock:
 
“THE REGISTERED HOLDER HEREOF HAS REPRESENTED TO THE ISSUER OF THE SHARES REPRESENTED HEREBY THAT IT HAS ACQUIRED SUCH SHARES FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION. ACCORDINGLY, SUCH SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES OR BLUE SKY LAWS, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS SUBSEQUENTLY REGISTERED THEREUNDER OR AN EXEMPTION FROM REGISTRATION THEREUNDER IS AVAILABLE.”
 
The Company may give appropriate stop-transfer instructions to any transfer agent for the Restricted Stock.
 
6.           Miscellaneous.
 
(a)           Headings; Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.
 
(b)           No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person or entity.
 
(c)           Further Assurances.  Each party shall use its reasonable best efforts to do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
 
(d)           Notice.  Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) business day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:
 
 
5

 
 
If to the Company:

 
Attention:
Ailon Z. Grushkin
 
Address:  
SMG Indium Resources Ltd.
 
100 Park Avenue, 16th Floor
 
New York, NY  10017
 
Facsimile:
212-656-1030

With a copy (for informational purposes only) to:

 
Attention:
David Selengut, Esq.
 
Address:
Ellenoff Grossman & Schole LLP
 
150 East 42nd Street, 11th Floor
 
New York, NY  10017
 
Facsimile:
212-370-7889

If to the Subscriber:

As listed on the signature page hereto.

With a copy (for informational purposes only) to:

 
Attention:
Frederick C. Wasch
 
Address:
Raging Capital Management, LLC
 
10 Princeton Avenue
 
Rocky Hill, NJ  08553


or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.
 
(e)           Governing Law; Jurisdiction; Jury Trial.  This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without reference to principles of conflicts of laws. Each of the parties hereto irrevocably consents to the exclusive jurisdiction and venue of the federal and state courts located in the County and State of New York.  Each party hereby and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
 
 
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(f)           Construction.  The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.  No specific representation or warranty shall limit the generality or applicability of a more general representation or warranty.  Each and every reference to share prices, shares of Common Stock and any other numbers in this Agreement that relate to the Common Stock shall be automatically adjusted for stock splits, stock combinations and other similar transactions that occur with respect to the Common Stock after the date of this Agreement.
 
(g)           Severability.  If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.  The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
 
(h)           Entire Agreement; Amendments.  Except for any non-disclosure agreement entered into by the Company and the Subscriber (or its affiliate), this Agreement supersedes all other prior oral or written agreements between the Subscriber, the Company, its subsidiaries, their affiliates and Persons acting on their behalf solely with respect to the matters contained herein and therein, and this Agreement contains the entire understanding of the parties solely with respect to the matters covered herein.  Except as specifically set forth herein, neither the Company nor the Subscriber makes any representation, warranty, covenant or undertaking with respect to such matters.  For clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and Subscriber.
 
(i)           Counterparts.  This Agreement may be executed in any number of counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party.  In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.  Execution and delivery of this Agreement by facsimile or other electronic signature is legal, valid and binding for all purposes.  The parties have executed this Agreement as of the date set forth above.
 
[Signature Page Follows]

[Remainder of page intentionally left blank.]
 
 
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[Signature Page to Stock Subscription Agreement]

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


COMPANY:
 
SMG INDIUM RESOURCES LTD.
 
 
By:
 
 
Name:
Ailon Z. Grushkin
 
Title:
President

SUBSCRIBER:   
   
     
     
Name of Subscriber:
 
Raging Capital Fund, LP
 
 
Signature of Authorized Signatory of Purchaser:
   
 
Name of Authorized Signatory:
 
William C. Martin
 
Title of Authorized Signatory:
 
Managing Member of Raging Capital Management, LLC, the General Partner
 
E-Mail Address of Subscriber:
 
 
 
Fax Number of Subscriber:
 
 
 
Address of Subscriber:
 
10 Princeton Avenue
 
 
   
 
  City:
 
Rocky Hill
  
State:
 
NJ
 
  ZIP:
 
08553
     
 
Shares of Restricted Stock:
 
332,667
 
Purchase Price:
 
$3.75
 
Aggregate Purchase Price:
 
$1,247,501.25

 
8





EX-99.2 3 ex992to13da107738018_010512.htm RAGING CAPITAL FUND QP SUBSCRIPTION AGREEMENT ex992to13da107738018_010512.htm
Exhibit 99.2
 
STOCK SUBSCRIPTION AGREEMENT
 
THIS STOCK SUBSCRIPTION AGREEMENT, dated as of January 5, 2012 (this “Agreement”), is entered into by and between SMG Indium Resources Ltd., a Delaware corporation (the “Company”), and the subscriber listed on the signature page hereto, an individual or entity with principal offices at the address listed on the signature page hereto (the “Subscriber”).
 
WITNESSETH
 
WHEREAS, the Company desires to issue and sell to the Subscriber, and the Subscriber desires to subscribe to and accept from the Company the number of shares of common stock, par value $.001 per share (the “Common Stock”), of the Company listed on the signature page hereto upon the terms and subject to the conditions hereinafter set forth.
 
NOW, THEREFORE, in consideration of the above, the parties hereby agree as follows:
 
1.           The Company agrees to issue and sell to the Subscriber, and the Subscriber agrees to subscribe to and purchase from the Company, 1,667,333 shares of Common Stock (the “Restricted Stock”), for a purchase price of $3.75 per share1, or an aggregate purchase price of $6,252,498.75 (the “Purchase Price”).
 
2.            In consideration of the issuance of the Restricted Stock, the Subscriber agrees to pay the aggregate Purchase Price by wire transfer of immediately available funds to an account designated by the Company.  At such time the payment is made, the Company agrees to deliver to the Subscriber a certificate (the “Certificate”) representing the shares of Common Stock being subscribed to and paid for by the Subscriber, which shares of Common Stock represented by the Certificate shall be duly authorized, validly issued, fully paid and nonassessable.  The Certificate shall be properly legended to reflect that the shares of Restricted Stock represented by the Certificate are not registered under the Securities Act of 1933, as amended (the “Act”) and are subject to the terms of this Agreement.
 
3.           Company’s Representations and Warranties.  The Company represents and warrants to the Subscriber:

(a)           Organization; Authority.  The Company is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transaction contemplated hereby and otherwise to carry out its obligations hereunder.
 
(b)           Due Authorization.  That the Restricted Stock, when issued, will be duly authorized, validly issued, fully paid and nonassessable.
 
4.           Subscriber’s Representations and Warranties.  The Subscriber represents and warrants to the Company that:
 
(a)           Organization; Authority. Such Subscriber is either (i) an individual or (ii) an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, in either case with full right and, as applicable, individual, corporate, partnership trust or other power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and performance by such Subscriber of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate, partnership, trustee, limited liability company or similar action, as applicable, on the part of such Subscriber.  This Agreement has been duly executed by such Subscriber, and when delivered by such Subscriber in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Subscriber, enforceable against it in accordance with its terms.


1 The purchase price of $3.75 per common share was determined by taking the average of (i) $3.74 per common share, a ten percent premium to the Company's common stock's closing bid price of $3.40 on January 3, 2012 and (ii) the Company's Net Market Value last reported on December 31, 2011 of $3.76 per common share.
 
 
 

 
 
(b)           No Public Sale or Distribution. The Subscriber understands the Restricted Stock are “restricted securities” and have not been registered under the Act or any applicable state or foreign securities laws and is acquiring the Restricted Stock as principal for its own account and not with a view to or for distributing or reselling such Restricted Stock or any part thereof in violation of the Act or any applicable securities law, has no present intention of distributing any of such Restricted Stock in violation of the Act or any applicable securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Restricted Stock (this representation and warranty not limiting such Subscriber’s right to sell the Restricted Stock in compliance with applicable federal and state securities laws) in violation of the Act or any applicable securities law.  Such Subscriber is acquiring the Restricted Stock hereunder in the ordinary course of its business.
 
(c)           Accredited Investor Status. At the time the Subscriber was offered the Restricted Stock, it was, and at the date hereof it is either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Act.  The Subscriber is not required to be registered as a broker-dealer under Section 15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
 
(d)           Experience of Subscriber.  The Subscriber, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Restricted Stock, and has so evaluated the merits and risks of such investment.  The Subscriber is able to bear the economic risk of an investment in the Restricted Stock and, at the present time, is able to afford a complete loss of such investment.
 
(e)           Reliance on Exemptions. The Subscriber understands that the Restricted Stock is being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Subscriber’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Subscriber set forth herein in order to determine the availability of such exemptions and the eligibility of the Subscriber to acquire the Restricted Stock.
 
 
(f)           Information. William Martin is the managing member of Raging Capital Management, LLC, the general partner of the Subscriber.  Mr. Martin is also a director of the Company and a member of Specialty Metal Group Advisors, LLC (the “Manager”), the Company’s Manager.   As a director of the Company and a member of the Manager, Mr. Martin and Subscriber has access to all information, including but not limited to “insider information”, regarding the Company as of the date of this Agreement.  Furthermore, the Subscriber and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Restricted Stock which has been requested by the Subscriber.  The Subscriber and its advisors, if any, have been afforded the opportunity to ask questions of the Company.  The Subscriber further acknowledges that the Subscriber has reviewed all documents publicly filed with the Securities and Exchange Commission (the “SEC”) relating to the Company and its business.  The Subscriber understands that its investment in the Restricted Stock involves a high degree of risk.  Subscriber confirms it has received or have had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the Restricted Stock.
 
 
2

 
 
(g)           Independent Advice.  The Subscriber has carefully considered and has discussed with Subscriber’s legal, tax, accounting and financial advisors, to the extent the Subscriber has deemed necessary, the suitability of this investment Agreement for the Subscriber’s particular federal, state, local and foreign tax and financial situation and has independently determined that this investment is a suitable investment for the Subscriber.  Subscriber has relied solely on such advisors and not on any statements or representations of the Company or any of its agents.  Subscriber understands that Subscriber (and not the Company) shall be responsible for Subscriber’s own tax liability that may arise as a result of this investment.
 
(h)           No Governmental Review.  The Subscriber understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Restricted Stock or the fairness or suitability of the investment in the Restricted Stock nor have such authorities passed upon or endorsed the merits of the offering of the Restricted Stock.
 
(i)           Transfer or Resale. The Subscriber acknowledges that there exists no public market for the Restricted Stock and that no such public market may develop in the future.  The Subscriber understands that: (i) the Restricted Stock have not been and are not being registered under the Act, any state securities laws or the securities laws of any non-U.S. jurisdiction, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) the Subscriber shall have delivered to the Company (if requested by the Company) an opinion of counsel to the Subscriber, in a form reasonably acceptable to the Company, to the effect that such Restricted Stock to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) the Subscriber provides the Company with reasonable assurance that such Restricted Stock can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the Act (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Restricted Stock made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the Restricted Stock under circumstances in which the seller (or the Person (as defined below) through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Act) may require compliance with some other exemption under the Act or the rules and regulations of the SEC promulgated thereunder or other applicable rules and regulations; and (iii) neither the Company nor any other Person is under any obligation to register the Restricted Stock under the Act,  any state securities laws,  the securities laws of any non-U.S. jurisdiction or to comply with the terms and conditions of any exemption thereunder; provided however that the Company shall use its best efforts to seek to register the Restricted Stock under the Act or under comparable state or foreign securities laws.
 
(j)           Piggy-Back Registrations.   If at any time until two years after the date of this Agreement there is not an effective registration statement covering all of the Restricted Stock and the Company shall determine to prepare and file with the SEC a registration statement relating to an offering for its own account or the account of others under the Act of any of its equity securities, but excluding Forms S-4 or S-8 and similar forms which do not permit such registration, then the Company shall send to the Subscriber written notice of such determination and, if within ten calendar days after receipt of such notice, the Subscriber shall so request in writing, the Company shall include in such registration statement all or any part of the Restricted Stock the Subscriber requests to be registered, provided, however, such registration of the Restricted Stock shall be subject to (i) customary underwriter cutbacks applicable to all holders of registration rights, (ii) any contractual restrictions or cutbacks agreed to with new purchases of the Company’s equity securities, or (iii) any cutbacks in  accordance with guidance provided by the SEC (including, but not limited to, Rule 415 under the Act).  The obligations of the Company under this Section may be waived by the Subscriber. Notwithstanding anything to the contrary herein, the registration rights granted hereunder to the Subscriber shall not be applicable for such times as such Restricted Stock may be sold by the holder thereof without restriction pursuant to Section 144(b)(1) of the Act.  All expenses incurred by the Company, including, without limitation, all registration and filing fees, printing expenses (if required), fees and disbursements of counsel and independent public accountants for the Company are called “Registration Expenses.” All underwriting discounts and selling commissions applicable to the sale of registrable securities are called "Selling Expenses."  The Company will pay all Registration Expenses in connection with the registration statement under this Section.  Selling Expenses in connection with each registration statement shall be borne by the Subscriber and will be apportioned among all holders in proportion to the number of Restricted Stock included therein for a holder relative to all the securities included therein for all selling holders, or as all holders may agree.
 
 
3

 
 
(k)           Validity; Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of the Subscriber and constitutes the legal, valid and binding obligations of the Subscriber enforceable against the Subscriber in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
 
(l)           No Litigation.  There are no actions, suits, proceedings or investigations pending against Subscriber or Subscriber’s assets before any court or governmental agency (nor, to Subscriber’s knowledge, is there any threat thereof) which would impair in any way Subscriber’s ability to enter into and fully perform Subscriber’s commitments and obligations under this Agreement.
 
(m)           No Conflicts. The execution, delivery and performance by the Subscriber of this Agreement will not (i) result in a violation of the organizational documents of the Subscriber, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Subscriber is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Subscriber, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Subscriber to perform its obligations hereunder.
 
(n)           Brokers and Finders.  No Person acting on behalf or under the authority of such Subscriber is or will be entitled to any broker’s, finder’s, or similar fee or commission in connection with the investment or this Agreement.
 
 
4

 
 
(o)           No General Solicitation.  The Subscriber is not acquiring the Restricted Stock as a result of any form of general solicitation or general advertising (as those terms are used in Regulation D promulgated under the Act), including, without limitation, any article, notice, advertisement or other communication published in any newspaper, magazine or similar media or broadcast over television, radio or Internet or any seminar or meeting where the Subscriber was invited by general solicitation or general advertising.
 
5.           As evidence of the restriction on transfer, the following legend (or a substantially similar legend) will be placed on the Certificate or Certificates evidencing the Restricted Stock:
 
“THE REGISTERED HOLDER HEREOF HAS REPRESENTED TO THE ISSUER OF THE SHARES REPRESENTED HEREBY THAT IT HAS ACQUIRED SUCH SHARES FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION. ACCORDINGLY, SUCH SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES OR BLUE SKY LAWS, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS SUBSEQUENTLY REGISTERED THEREUNDER OR AN EXEMPTION FROM REGISTRATION THEREUNDER IS AVAILABLE.”
 
The Company may give appropriate stop-transfer instructions to any transfer agent for the Restricted Stock.
 
6.           Miscellaneous.
 
(a)           Headings; Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.
 
(b)           No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person or entity.
 
(c)           Further Assurances.  Each party shall use its reasonable best efforts to do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
 
(d)           Notice.  Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) business day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:
 
 
5

 
 
If to the Company:

 
Attention:
Ailon Z. Grushkin
 
Address:  
SMG Indium Resources Ltd.
 
100 Park Avenue, 16th Floor
 
New York, NY  10017
 
Facsimile:
212-656-1030

With a copy (for informational purposes only) to:

 
Attention:
David Selengut, Esq.
 
Address:
Ellenoff Grossman & Schole LLP
 
150 East 42nd Street, 11th Floor
 
New York, NY  10017
 
Facsimile:
212-370-7889

If to the Subscriber:

 
As listed on the signature page hereto.

With a copy (for informational purposes only) to:

 
Attention:
Frederick C. Wasch
 
Address:
Raging Capital Management, LLC
 
10 Princeton Avenue
 
Rocky Hill, NJ  08553


or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.
 
(e)           Governing Law; Jurisdiction; Jury Trial.  This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without reference to principles of conflicts of laws. Each of the parties hereto irrevocably consents to the exclusive jurisdiction and venue of the federal and state courts located in the County and State of New York.  Each party hereby and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
 
 
6

 
 
(f)           Construction.  The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.  No specific representation or warranty shall limit the generality or applicability of a more general representation or warranty.  Each and every reference to share prices, shares of Common Stock and any other numbers in this Agreement that relate to the Common Stock shall be automatically adjusted for stock splits, stock combinations and other similar transactions that occur with respect to the Common Stock after the date of this Agreement.
 
(g)           Severability.  If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.  The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
 
(h)           Entire Agreement; Amendments.  Except for any non-disclosure agreement entered into by the Company and the Subscriber (or its affiliate), this Agreement supersedes all other prior oral or written agreements between the Subscriber, the Company, its subsidiaries, their affiliates and Persons acting on their behalf solely with respect to the matters contained herein and therein, and this Agreement contains the entire understanding of the parties solely with respect to the matters covered herein.  Except as specifically set forth herein, neither the Company nor the Subscriber makes any representation, warranty, covenant or undertaking with respect to such matters.  For clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and Subscriber.
 
(i)           Counterparts.  This Agreement may be executed in any number of counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party.  In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.  Execution and delivery of this Agreement by facsimile or other electronic signature is legal, valid and binding for all purposes.  The parties have executed this Agreement as of the date set forth above.
 
[Signature Page Follows]

[Remainder of page intentionally left blank.]

 
7

 
 
[Signature Page to Stock Subscription Agreement]

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


COMPANY:
 
SMG INDIUM RESOURCES LTD.
 
 
By:
 
 
Name:
Ailon Z. Grushkin
 
Title:
President

SUBSCRIBER:   
   
     
     
Name of Subscriber:
 
Raging Capital Fund (QP), LP
 
 
Signature of Authorized Signatory of Purchaser:
 
 
 
Name of Authorized Signatory:
 
William C. Martin
 
Title of Authorized Signatory:
 
Managing Member of Raging Capital Management, LLC, the General Partner
 
E-Mail Address of Subscriber:
 
 
 
Fax Number of Subscriber:
 
 
 
Address of Subscriber:
 
10 Princeton Avenue
 
 
   
  
City:
 
Rocky Hill
  
State:
 
NJ
  
ZIP:
 
08553
     
 
Shares of Restricted Stock:
 
1,667,333
 
Purchase Price:
 
$3.75
 
Aggregate Purchase Price:
 
$6,252,498.75

 
8

 
EX-99.3 4 ex993to13da107738018_010512.htm POWER OF ATTORNEY ex993to13da107738018_010512.htm
Exhibit 99.3
 
POWER OF ATTORNEY
 
Know all by these presents, that each of the undersigned hereby constitutes and appoints Frederick C. Wasch signing singly, the undersigned's true and lawful attorney-in-fact to:
 
1.            Execute for and on behalf of the undersigned all documents relating to the business of Raging Capital Management, LLC, Raging Capital Fund, LP and Raging Capital Fund (QP), LP, including, but not limited to, all filings with the Securities and Exchange Commission, any stock exchange and any other regulatory, administrative or similar authority, and all memoranda, correspondence, communications or the like, except that such attorney-in­fact shall have no power to execute any document that has the effect of creating a financial commitment or financial obligation of Raging Capital Management, LLC, Raging Capital Fund, LP or Raging Capital Fund (QP), LP or their affiliates.
 
2.           Do and perform any and all acts for and on behalf of the undersigned that may be necessary or desirable to complete and execute any such document, complete and execute any amendment or amendments thereto, and timely file such document with the appropriate authority.
 
3.           Take any other action of any type whatsoever in connection with the foregoing which, in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact's discretion.
 
Each of the undersigned hereby grants to such attorney-in-fact full power and authority to do and perform any and every act and thing whatsoever requisite, necessary, or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that such attorney-in-fact, or such attorney-in­fact's substitute or substitutes, shall lawfully do or cause to be done by virtue of this Power of Attorney and the rights and powers herein granted. Each of the undersigned acknowledges that the foregoing attorney-in-fact, in serving in such capacity at the request of the undersigned, is not assuming any of the undersigned's responsibilities to comply with any rules or regulations including federal securities laws.
 
This Power of Attorney shall remain in full force and effect until December 31, 2012 unless earlier revoked by the undersigned in a signed writing delivered to the foregoing attorney­in-fact.
 
[Signatures on Following Page]
 
 
 

 
 
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this lst day of September, 2011.
 

 
Raging Capital Fund, LP
   
 
 
By:
Raging Capital Management, LLC
General Partner
   
 
By:
William C. Martin
Managing Member


 
Raging Capital Fund (QP), LP
     
 
By:
Raging Capital Management, LLC
General Partner
   
 
By:
William C. Martin
Managing Member


 
Raging Capital Management, LLC
   
 
By:
William C. Martin
Managing Member


 
/s/ William C. Martin
 
William C. Martin