Exhibit 10.3

 

REGISTRATION RIGHTS AGREEMENT

 

dated as of

 

October 30, 2020
among

 

GATOS SILVER, INC.

 

and

 

THE STOCKHOLDERS THAT ARE SIGNATORIES HERETO

 

 

 

TABLE OF CONTENTS

  

 

 

  Page     Article 1
Definitions     Section 1.01. Definitions 1     Section 1.02. Other Definitional
and Interpretative Provisions 4     Article 2
Registration Rights     Section 2.01. Demand Registration 5     Section 2.02.
Piggyback Registration 6     Section 2.03. Lock-Up Agreements 7    
Section 2.04. Registration Procedures 7     Section 2.05. Indemnification by the
Company 10     Section 2.06. Indemnification by Participating Stockholders 11  
  Section 2.07. Conduct of Indemnification Proceedings 11     Section 2.08.
Contribution 12     Section 2.09. Participation in Public Offering 13    
Section 2.10. Other Indemnification 13     Section 2.11. Cooperation by the
Company 13     Section 2.12. No Transfer of Registration Rights 13     Article 3
Miscellaneous     Section 3.01. Binding Effect; Assignability; Benefit 13    
Section 3.02. Notices 13     Section 3.03. Waiver; Amendment; Termination 14    
Section 3.04. Governing Law 15     Section 3.05. Jurisdiction 15    
Section 3.06. Waiver of Jury Trial 15     Section 3.07. Specific Performance 15
    Section 3.08. Counterparts; Effectiveness 15     Section 3.09. Entire
Agreement 15     Section 3.10. Severability 16

  

 

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (as it may be amended from time to time in
accordance with the terms hereof, this “Agreement”), dated as of October 30,
2020, is made by and among Gatos Silver, Inc., a Delaware corporation (the
“Company”), and the stockholders that are or become signatories hereto (each a
“Stockholder” and collectively, the “Stockholders”).

 

RECITALS

 

WHEREAS, the Company is proposing to sell Shares to the public in an initial
public offering (the “IPO”); and

 

WHEREAS, subject to the terms and conditions herein, the Stockholders and the
Company desire to enter into this Agreement to provide for certain rights and
obligations of the Stockholders and the Company.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual promises,
covenants and agreements of the parties hereto, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

 

Article 1
Definitions

 

Section 1.01. Definitions. As used in this Agreement, the following terms have
the following meanings:

 

“Affiliate” means (a) with respect to any Electrum Party, any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person, (b) with respect to the MERS Party, any
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person and (c) with respect to any
other Person, any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such Person. It being understood
and agreed that, for purposes hereof, (i) each Electrum Party shall be deemed to
be an Affiliate of every other Electrum Party, (ii) neither the Company nor any
subsidiary of the Company shall be deemed to be an Affiliate of any Stockholder,
and, (iii) except as set forth in clause (i) above, no Stockholder shall be
deemed to be an Affiliate of any other Stockholder.

 

“Board of Directors” means the Board of Directors of the Company.

 

“Business Day” means any day other than a Saturday, Sunday or day on which
banking institutions in New York, New York are authorized or obligated by law or
executive order to close.

 

“Common Equivalents” means (i) with respect to Common Stock, the number of
Shares and (ii) with respect to any Company Securities that are convertible into
or exchangeable for Common Stock, the number of Shares issuable in respect of
the conversion or exchange of such securities into Common Stock.

 

“Common Stock” means the common stock of the Company, par value $0.001 per
share, and any and all securities of any kind whatsoever of the Company that may
be issued by the Company after the date hereof in respect of, in exchange for,
or in substitution of, Common Stock, pursuant to any stock dividends, splits,
reverse splits, combinations, reclassifications, recapitalizations,
reorganizations and the like occurring after the date hereof.

 

 

 

 

“Company Securities” means (i) the Common Stock, (ii) securities convertible
into or exchangeable for Common Stock and (iii) any options, warrants or other
rights to acquire Common Stock.

 

“Electrum Parties” means, collectively, Electrum Silver US LLC, Electrum Silver
US II LLC, Tigris Financial Group Ltd., GRAT Holdings LLC and Manul Capital
Management LLC and any Affiliates of the foregoing to whom Common Stock is
Transferred by a Stockholder (as defined in the Shareholders Agreement) after
the IPO Date in accordance with the Shareholders Agreement.

 

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

 

“FINRA” means the Financial Industry Regulatory Authority.

 

“Fully-Diluted” means all outstanding Shares, all Shares issuable in respect of
all outstanding securities convertible into or exchangeable for Common Stock and
all Shares issuable in respect of all outstanding options, warrants and other
rights to acquire Common Stock; provided that, if any of the foregoing Company
Securities are subject to vesting, such Company Securities subject to vesting
shall be included in the definition of “Fully-Diluted” only upon and to the
extent of such vesting.

 

“IPO Date” means the date on which the IPO is consummated.

 

“MERS Party” means Municipal Employees’ Retirement System of Michigan and any
Affiliates of the foregoing to whom Common Stock is Transferred by a Stockholder
(as defined in the Shareholders Agreement) after the IPO Date in accordance with
the Shareholders Agreement.

 

“Other Stockholders” means all Stockholders other than the Electrum Parties and
the MERS Party.

 

“Person” means an individual, partnership, limited liability company,
corporation, trust, other entity, association, estate, unincorporated
organization or a government or any agency or political subdivision thereof.

 

“Public Offering” means an underwritten public offering of Registrable
Securities pursuant to an effective registration statement under the Securities
Act, other than pursuant to a registration statement on Form S-4 or Form S-8 or
any similar or successor form.

 

“Registrable Securities” means, at any time, any Shares until (i) a registration
statement covering such Shares has been declared effective by the SEC and such
Shares have been disposed of pursuant to such effective registration statement,
(ii) such Shares are sold under circumstances in which all of the applicable
conditions of Rule 144 (or any similar provisions then in force) under the
Securities Act are met or (iii) such Shares are otherwise Transferred, the
Company has delivered a new certificate or other evidence of ownership for such
Shares not bearing a restricted legend and such Shares may be resold without
subsequent registration under the Securities Act.

 

2 

 

 

“Registration Expenses” means any and all expenses incident to the performance
of or compliance with any registration or marketing of Company Securities,
including all (i) registration and filing fees, and all other fees and expenses
payable in connection with the listing of securities on any securities exchange
or automated interdealer quotation system, (ii) fees and expenses of compliance
with any securities or “blue sky” laws (including reasonable fees and
disbursements of counsel in connection with “blue sky” qualifications of the
securities registered), (iii) expenses in connection with the preparation,
printing, mailing and delivery of any registration statements, prospectuses and
other documents in connection therewith and any amendments or supplements
thereto, (iv) security engraving and printing expenses, (v) internal expenses of
the Company (including all salaries and expenses of its officers and employees
performing legal or accounting duties), (vi) reasonable fees and disbursements
of counsel for the Company and customary fees and expenses for independent
certified public accountants retained by the Company (including the expenses
relating to any comfort letters or costs associated with the delivery by
independent certified public accountants of any comfort letters requested
pursuant to Section 2.04(h)), (vii) reasonable fees and expenses of any special
experts retained by the Company (including independent mining consultants) in
connection with such registration, (viii) reasonable fees, out-of-pocket costs
and expenses of the Stockholders, including one counsel for all of the
Stockholders participating in the offering selected (A) by the Electrum Parties,
in the case of any offering in which any of the Electrum Parties participates,
or (B) if no Electrum Parties participate and if the MERS Party participates,
then the MERS Party, (ix) fees and expenses in connection with any review by
FINRA of the underwriting arrangements or other terms of the offering, and all
fees and expenses of any “qualified independent underwriter,” including the fees
and expenses of any counsel thereto, (x) fees and disbursements of underwriters
customarily paid by issuers or sellers of securities, but excluding any
underwriting fees, discounts and commissions attributable to the sale of
Registrable Securities, (xi) costs of printing and producing any agreements
among underwriters, underwriting agreements, any “blue sky” or legal investment
memoranda and any selling agreements and other documents in connection with the
offering, sale or delivery of the Registrable Securities, (xii) transfer agents’
and registrars’ fees and expenses and the fees and expenses of any other agent
or trustee appointed in connection with such offering, (xiii) expenses relating
to any analyst or investor presentations or any “road shows” undertaken in
connection with the registration, marketing or selling of the Registrable
Securities, (xiv) fees and expenses payable in connection with any ratings of
the Registrable Securities, including expenses relating to any presentations to
rating agencies and (xv) all out-of pocket costs and expenses incurred by the
Company or its appropriate officers in connection with their compliance with
Section 2.04(m).

 

“Rule 144” means Rule 144 (or any successor provisions) under the Securities
Act.

 

“SEC” means the Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Shares” means shares of Common Stock.

 

“Shareholders Agreement” means the shareholders agreement entered into among the
Company, the Electrum Parties and the MERS Party dated as October 30, 2020.

 

“Transfer” means (a) a direct or indirect transfer, sale, exchange, assignment,
pledge, hypothecation or other encumbrance or other disposition of Common Stock,
or any legal or beneficial interest therein, including the grant of an option or
other right or the grant of any interest that would result in a Stockholder no
longer having the power to vote, or cause to be voted, such Stockholder’s Common
Stock, whether directly or indirectly, whether voluntarily, involuntarily or by
operation of law or (b) any agreement to take or commit to any of the foregoing
actions; and “Transferred,” “Transferee,” “Transferor,” and “Transferability”
shall each have a correlative meaning. For the avoidance of doubt, a transfer,
sale, exchange, assignment, pledge, hypothecation or other encumbrance or other
disposition of an interest in any Stockholder, or direct or indirect parent
thereof, all or substantially all of whose assets are, directly or indirectly,
Company Shares shall constitute a “Transfer” of Common Stock for purposes of
this Agreement. For the avoidance of doubt, a transfer, sale, exchange,
assignment, pledge, hypothecation or other encumbrance or other disposition of
an interest in any Stockholder, or direct or indirect parent thereof, which has
substantial assets in addition to Common Stock shall not constitute a “Transfer”
of Common Stock for purposes of this Agreement.

 

3 

 

 

(a)            Each of the following terms is defined in the Section set forth
opposite such term:

 

Term  Section  Company  Preamble  Damages  2.05  Demand Registration  2.01(a)
Indemnified Party  2.07  Indemnifying Party  2.07  Inspectors  2.04(g) IPO 
Preamble  Maximum Offering Size  2.01(c) Piggyback Registration  2.02(a)
Records  2.04(g) Registering Stockholders  2.01(a) Requesting Stockholder 
2.01(a) Shelf Registration  2.01(f) Stockholder  Preamble 

 

Section 1.02. Other Definitional and Interpretative Provisions.

 

(a)            The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.

 

(b)            The words “hereof,” “herein,” “hereunder” and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and any subsection and Section references are to this Agreement
unless otherwise specified.

 

(c)            The term “including” is not limiting and means “including without
limitation.”

 

(d)            The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.

 

(e)            Whenever the context requires, any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms.

 

4 

 

 

Article 2
Registration Rights

 

Section 2.01. Demand Registration.

 

(a)      If at any time following the expiration of the period during which the
managing underwriters for the IPO shall prohibit the Company from effecting any
other public sale or distribution of Registrable Securities, the Company shall
receive a request from either the Electrum Parties or the MERS Party (that party
shall be referred to herein as the “Requesting Stockholder”) that the Company
effected the registration under the Securities Act of all or any portion of such
Requesting Stockholder’s Registrable Securities, and specifying the intended
method of disposition thereof, then the Company shall promptly give notice of
such requested registration (each such request shall be referred to herein as a
“Demand Registration”) at least 2 Business Days prior to the anticipated pricing
date of the offering relating to such Demand Registration to the other
Stockholders and thereupon shall use its best efforts to effect, as
expeditiously as possible, the registration under the Securities Act of:

 

(i)            all Registrable Securities for which the Requesting Stockholders
have requested registration under this Section 2.01; and

 

(ii)            subject to the restrictions set forth in Sections 2.01(d) and
2.02, all other Registrable Securities of the same class as those requested to
be registered by the Requesting Stockholders that any Stockholders with rights
to request registration under Section 2.01 (all such Stockholders, together with
the Requesting Stockholders, and any Stockholders participating in a Piggyback
Registration pursuant to Section 2.02, the “Registering Stockholders”) have
requested the Company to register by request received by the Company within 1
Business Day after such Stockholders receive the Company’s notice of the Demand
Registration;

 

all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so to be
registered; provided that, subject to Section 2.01(c), the Company shall not be
obligated to effect more than three Demand Registrations within a 12-month
period.

 

(b)            The Company shall be liable for and pay all Registration Expenses
in connection with any Demand Registration, regardless of whether such
Registration is effected.

 

(c)            A Demand Registration shall not be deemed to have occurred:

 

(i)            unless the registration statement relating thereto (A) has become
effective under the Securities Act and (B) has remained effective for a period
of at least 180 days (or such shorter period in which all Registrable Securities
of the Registering Shareholders included in such registration have actually been
sold thereunder); provided that such registration statement shall not be
considered a Demand Registration if, after such registration statement becomes
effective, (1) such registration statement is interfered with by any stop order,
injunction or other order or requirement of the SEC or other governmental agency
or court and (2) less than 75% of the Registrable Securities included in such
registration statement have been sold thereunder; or

 

(ii)            if the Maximum Offering Size is reduced in accordance with
Section 2.01(d) such that less than 66 2/3% of the Registrable Securities of the
Requesting Shareholders sought to be included in such registration are included.

 

5 

 

 

(d)            If a Demand Registration involves an underwritten Public Offering
and the managing underwriter advises the Company and the Requesting Stockholders
that, in its view, the number of shares of Registrable Securities requested to
be included in such registration (including any securities that the Company
proposes to be included that are not Registrable Securities) exceeds the largest
number of shares that can be sold without having an adverse effect on such
offering, including the price at which such shares can be sold (the “Maximum
Offering Size”), the Company shall include in such registration, in the priority
listed below, up to the Maximum Offering Size:

 

(i)            first, all Registrable Securities of a party with rights under
Section 2.01 (allocated, if necessary for the offering not to exceed the Maximum
Offering Size, pro rata among such entities on the basis of the relative number
of Registrable Securities so requested to be included in such registration by
each such Stockholder); and

 

(ii)            second, all Registrable Securities requested to be included in
such registration by any other Registering Stockholder or Person, including the
Company (allocated, if necessary for the offering not to exceed the Maximum
Offering Size, pro rata among such other Stockholders on the basis of the
relative number of Registrable Securities so requested to be included in such
registration by each such Stockholder).

 

(e)            Upon notice to each Requesting Stockholder, the Company may
postpone effecting a registration pursuant to this Section 2.01 on one occasion
during any period of six consecutive months for a reasonable time specified in
the notice but not exceeding 90 days (which period may not be extended or
renewed), if (i) an investment banking firm of recognized national standing
shall advise the Company and the Requesting Stockholders in writing that
effecting the registration would materially and adversely affect an offering of
securities of such Company the preparation of which had then been commenced or
(ii) the Company is in possession of material non-public information the
disclosure of which during the period specified in such notice the Company
reasonably believes would not be in the best interests of the Company.

 

(f)            At any time following the consummation of the IPO, upon the
request of the Electrum Parties, the Company shall use its best efforts to file
a “shelf” registration statement (the “Shelf Registration”) with respect to the
Registrable Securities on an appropriate form pursuant to Rule 415 (or any
similar provision that may be adopted by the SEC) under the Securities Act and
to cause such Shelf Registration to become effective and to keep such Shelf
Registration in effect until the Stockholders no longer hold any Registrable
Securities. Any offer or sale of Registrable Securities pursuant to the Shelf
Registration in any underwritten Public Offering shall be deemed to be a Demand
Registration subject to the provisions of Section 2.01(a).

 

Section 2.02. Piggyback Registration. 

 

(a)      If the Company proposes to register any Company Securities under the
Securities Act (other than a registration on Form S-8, S-4 or F-4, or any
successor forms, relating to Shares issuable upon exercise of employee stock
options or in connection with any employee benefit or similar plan of the
Company or in connection with a direct or indirect acquisition by the Company of
another Person), whether or not for sale for its own account, the Company shall
each such time give prompt notice at least 2 Business Days prior to the
anticipated pricing date of the offering relating to such registration to each
Stockholder, which notice shall set forth such Stockholder’s rights under this
Section 2.02 and shall offer such Stockholder the opportunity to include in such
registration statement the number of Registrable Securities of the same class or
series as those proposed to be registered as each such Stockholder may request
(a “Piggyback Registration”), subject to the provisions of Section 2.02(b). Upon
the request of any such Stockholder made within 1 Business Day after the receipt
of notice from the Company (which request shall specify the number of
Registrable Securities intended to be registered by such Stockholder), the
Company shall use its reasonable best efforts to effect the registration under
the Securities Act of all Registrable Securities that the Company has been so
requested to register by all such Stockholders, to the extent requisite to
permit the disposition of the Registrable Securities so to be registered;
provided that (i) if such registration involves an underwritten Public Offering,
all such Stockholders requesting to be included in the Company’s registration
must sell their Registrable Securities to the underwriters selected as provided
in Section 2.04(f) on the same terms and conditions as apply to the Company or
the Requesting Stockholders, as applicable, and (ii) if, at any time after
giving notice of its intention to register any Company Securities pursuant to
this Section 2.02(a) and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to register such securities, the Company shall give
notice to all such Stockholders and, thereupon, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration. No registration effected under this Section 2.02 shall relieve the
Company of its obligations to effect a Demand Registration to the extent
required by Section 2.01. The Company shall pay all Registration Expenses in
connection with each Piggyback Registration.

 

6 

 

 

(b)            If a Piggyback Registration involves an underwritten Public
Offering (other than any Demand Registration, in which case the provisions with
respect to priority of inclusion in such offering set forth in
Section 2.01(d) shall apply) and the managing underwriter advises the Company
that, in its view, the number of Registrable Securities that the Company and
such Stockholders intend to include in such registration exceeds the Maximum
Offering Size, the Company shall include in such registration, in the following
priority, up to the Maximum Offering Size:

 

(i)            first, so much of the Registrable Securities proposed to be
registered for the account of the Company as would not cause the offering to
exceed the Maximum Offering Size;

 

(ii)            second, all Registrable Securities of a party with rights under
Section 2.01 (allocated, if necessary for the offering not to exceed the Maximum
Offering Size, pro rata among such Stockholders on the basis of the relative
number of shares of Registrable Securities so requested to be included in such
registration by each); and

 

(iii)           third, all Registrable Securities requested to be included in
such registration by any Stockholders who do not have Demand Registration rights
pursuant to Section 2.01 (allocated, if necessary for the offering not to exceed
the Maximum Offering Size, pro rata among such Stockholders on the basis of the
relative number of shares of Registrable Securities so requested to be included
in such registration by each such Stockholder).

 

Section 2.03. Lock-Up Agreements. If any registration of Registrable Securities
shall be effected in connection with a Public Offering, neither the Company nor
any Stockholder who is a director or executive officer of the Company shall
effect any public sale or distribution, including any sale pursuant to Rule 144,
of Registrable Securities during the period beginning 14 days prior to the
anticipated pricing of the offering until 180 days following the pricing of the
offering (subject to customary exceptions to be agreed upon with the
lead-managing underwriter for the Public Offering).

 

Section 2.04. Registration Procedures. Whenever Stockholders request that any
Registrable Securities be registered pursuant to Section 2.01 or 2.02, subject
to the provisions of such Sections, the Company shall use its reasonable best
efforts to effect the registration and the sale of such Registrable Securities
in accordance with the intended method of disposition thereof as quickly as
practicable, and, in connection with any such request:

 

(a)            The Company shall as expeditiously as possible prepare and file
with the SEC a registration statement on any form for which the Company then
qualifies or that counsel for the Company shall deem appropriate and which form
shall be available for the sale of the Registrable Securities to be registered
thereunder in accordance with the intended method of distribution thereof, and
use its reasonable best efforts to cause such filed registration statement to
become and remain effective for a period of not less than 180 days, or in the
case of a shelf registration statement, one year (or such shorter period in
which all of the Registrable Securities of the Stockholders included in such
registration statement shall have actually been sold thereunder).

 

7 

 

 

(b)            Prior to filing a registration statement or prospectus or any
amendment or supplement thereto, the Company shall, if requested, furnish to
each participating Stockholder and each underwriter, if any, of the Registrable
Securities covered by such registration statement copies of such registration
statement as proposed to be filed, and thereafter the Company shall furnish to
such Stockholder and underwriter, if any, such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto and documents incorporated by reference therein),
the prospectus included in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424, Rule 430A, Rule 430B or Rule 430C under the Securities Act
and such other documents as such Stockholder or underwriter may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Stockholder. Each Stockholder shall have the right to request that
the Company modify any information contained in such registration statement,
amendment and supplement thereto pertaining to such Stockholder and the Company
shall use its reasonable best efforts to comply with such request; provided,
however, that the Company shall not have any obligation so to modify any
information if the Company reasonably expects that so doing would cause the
prospectus to contain an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.

 

(c)            After the filing of the registration statement, the Company shall
(i) cause the related prospectus to be supplemented by any required prospectus
supplement, and, as so supplemented, to be filed pursuant to Rule 424 under the
Securities Act, (ii) comply with the provisions of the Securities Act with
respect to the disposition of all Securities covered by such registration
statement during the applicable period in accordance with the intended methods
of disposition by the Stockholders thereof set forth in such registration
statement or supplement to such prospectus and (iii) promptly notify each
Stockholder holding Registrable Securities covered by such registration
statement of any stop order issued or threatened by the SEC or any state
securities commission and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered.

 

(d)            The Company shall use its reasonable best efforts to (i) register
or qualify the Registrable Securities covered by such registration statement
under such other securities or “blue sky” laws of such jurisdictions in the
United States as any Registering Stockholder holding such Registrable Securities
reasonably (in light of such Stockholder’s intended plan of distribution)
requests and (ii) cause such Registrable Securities to be registered with or
approved by such other governmental agencies or authorities as may be necessary
by virtue of the business and operations of the Company and do any and all other
acts and things that may be reasonably necessary or advisable to enable such
Stockholder to consummate the disposition of the Registrable Securities owned by
such Stockholder; provided that the Company shall not be required to (A) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 2.04(d), (B) subject itself to taxation
in any such jurisdiction or (C) consent to general service of process in any
such jurisdiction.

 

8 

 

 

(e)            The Company shall immediately notify each Registering Stockholder
holding such Registrable Securities covered by such registration statement, at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, of the occurrence of an event requiring the preparation of a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading and promptly prepare and make available to each such Stockholder and
file with the SEC any such supplement or amendment.

 

(f)            The Electrum Parties shall have the right, in their sole
discretion, to select an underwriter or underwriters in connection with any
Public Offering resulting from the exercise by the Electrum Parties of a Demand
Registration. The Company shall select an underwriter or underwriters in
connection with any other Public Offering. In connection with any Public
Offering, the Company shall enter into customary agreements (including an
underwriting agreement in customary form) and take such all other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities in any such Public Offering, including the engagement of
a “qualified independent underwriter” in connection with the qualification of
the underwriting arrangements with FINRA.

 

(g)            Upon execution of confidentiality agreements in form and
substance reasonably satisfactory to the Company, the Company shall make
available for inspection by any Stockholder and any underwriter participating in
any disposition pursuant to a registration statement being filed by the Company
pursuant to this Section 2.04 and any attorney, accountant or other professional
retained by any such Stockholder or underwriter (collectively, the
“Inspectors”), all financial and other records (including technical
information), pertinent corporate documents and properties of the Company
(collectively, the “Records”) as shall be reasonably necessary or desirable to
enable them to exercise their due diligence responsibility, and cause the
Company’s officers, directors and employees to supply all information reasonably
requested by any Inspectors in connection with such registration statement.
Records that the Company determines, in good faith, to be confidential and that
it notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in such registration statement or (ii) the
release of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction. Each Stockholder agrees that information
obtained by it as a result of such inspections shall be deemed confidential and
shall not be used by it or its Affiliates as the basis for any market
transactions in the Registrable Securities unless and until such information is
made generally available to the public. Each Stockholder further agrees that,
upon learning that disclosure of such Records is sought in a court of competent
jurisdiction, it shall give notice to the Company and allow the Company, at its
expense, to undertake appropriate action to prevent disclosure of the Records
deemed confidential.

 

(h)            The Company shall furnish to each Registering Stockholder and to
each such underwriter, if any, a signed counterpart, addressed to such
Registering Stockholder or underwriter, of (i) an opinion or opinions of counsel
to the Company and (ii) a comfort letter or comfort letters from the Company’s
independent public accountants, each in customary form and covering such matters
of the kind customarily covered by opinions or comfort letters, as the case may
be, as a majority of such Stockholders or the managing underwriter therefor
reasonably requests.

 

(i)            The Company shall otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement or such other document that shall satisfy the provisions of
Section 11(a) of the Securities Act and the requirements of Rule 158 thereunder.

 

9 

 

 

(j)            The Company may require each Stockholder promptly to furnish in
writing to the Company such information regarding the distribution of the
Registrable Securities as the Company may from time to time reasonably request
and such other information as may be legally required in connection with such
registration.

 

(k)            Each Stockholder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 2.04(e),
such Stockholder shall forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such Stockholder’s receipt of the copies of the supplemented or
amended prospectus contemplated by Section 2.04(e), and, if so directed by the
Company, such Stockholder shall deliver to the Company all copies, other than
any permanent file copies then in such Stockholder’s possession, of the most
recent prospectus covering such Registrable Securities at the time of receipt of
such notice. If the Company shall give such notice, the Company shall extend the
period during which such registration statement shall be maintained effective
(including the period referred to in Section 2.04(a)) by the number of days
during the period from and including the date of the giving of notice pursuant
to Section 2.04(e) to the date when the Company shall make available to such
Stockholder a prospectus supplemented or amended to conform with the
requirements of Section 2.04(e).

 

(l)            The Company shall use its reasonable best efforts to list all
Registrable Securities covered by such registration statement on any securities
exchange or quotation system on which any of the Registrable Securities are then
listed or traded.

 

(m)            The Company shall have appropriate officers of the Company
(i) prepare and make presentations at any “road shows” and before analysts and
rating agencies, as the case may be, (ii) take other actions to obtain ratings
for any Registrable Securities and (iii) otherwise use their reasonable best
efforts to cooperate as reasonably requested by the underwriters in the
offering, marketing or selling of the Registrable Securities.

 

Section 2.05. Indemnification by the Company. The Company agrees to indemnify
and hold harmless each Stockholder beneficially owning any Registrable
Securities covered by a registration statement, its officers, directors,
employees, partners and agents, and each Person, if any, who controls such
Stockholder within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable expenses of investigation and
reasonable attorneys’ fees and expenses) (“Damages”) caused by or relating to
any untrue statement or alleged untrue statement of a material fact contained in
any registration statement or prospectus relating to the Registrable Securities
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) or any preliminary prospectus or free writing prospectus
(as defined in Rule 405 under the Securities Act), or caused by or relating to
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such Damages are caused by or related to any such untrue
statement or omission or alleged untrue statement or omission so made based upon
information furnished in writing to the Company by such Stockholder or on such
Stockholder’s behalf expressly for use therein. The Company also agrees to
indemnify any underwriters of the Registrable Securities, their officers and
directors and each Person who controls such underwriters within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act on
substantially the same basis as that of the indemnification of the Stockholders
provided in this Section 2.05.

 

10 

 

 

Section 2.06. Indemnification by Participating Stockholders. Each Stockholder
holding Registrable Securities included in any registration statement agrees,
severally but not jointly, to indemnify and hold harmless the Company, its
officers, directors and agents and each Person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the Company
to such Stockholder, but only with respect to information furnished in writing
by such Stockholder or on such Stockholder’s behalf expressly for use in any
registration statement or prospectus relating to the Registrable Securities, or
any amendment or supplement thereto, or any preliminary prospectus. Each such
Stockholder also agrees to indemnify and hold harmless underwriters of the
Registrable Securities, their officers and directors and each Person who
controls such underwriters within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act on substantially the same basis
as that of the indemnification of the Company provided in this Section 2.06. As
a condition to including Registrable Securities in any registration statement
filed in accordance with Article 2, the Company may require that it shall have
received an undertaking reasonably satisfactory to it from any underwriter to
indemnify and hold it harmless to the extent customarily provided by
underwriters with respect to similar securities. No Stockholder shall be liable
under this Section 2.06 for any Damages in excess of the net proceeds realized
by such Stockholder in the sale of Registrable Securities of such Stockholder to
which such Damages relate.

 

Section 2.07. Conduct of Indemnification Proceedings. If any proceeding
(including any governmental investigation) shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to this Article 2,
such Person (an “Indemnified Party”) shall promptly notify the Person against
whom such indemnity may be sought (the “Indemnifying Party”) in writing and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Party, and shall assume the
payment of all fees and expenses; provided that the failure of any Indemnified
Party so to notify the Indemnifying Party shall not relieve the Indemnifying
Party of its obligations hereunder except to the extent that the Indemnifying
Party is materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) in the
reasonable judgment of such Indemnified Party representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that, in connection with any proceeding
or related proceedings in the same jurisdiction, the Indemnifying Party shall
not be liable for the reasonable fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) at any time for all such
Indemnified Parties, and that all such fees and expenses shall be reimbursed as
they are incurred. In the case of any such separate firm for the Indemnified
Parties, such firm shall be designated in writing by the Indemnified Parties.
The Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent, or if
there be a final judgment for the plaintiff, the Indemnifying Party shall
indemnify and hold harmless such Indemnified Parties from and against any loss
or liability (to the extent stated above) by reason of such settlement or
judgment. Without the prior written consent of the Indemnified Party, no
Indemnifying Party shall effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Party from all liability arising out of such proceeding.

 

11 

 

 

Section 2.08. Contribution. If the indemnification provided for in this
Article 2 is unavailable to the Indemnified Parties in respect of any Damages,
then each such Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such Damages (i) as between the Company and the Stockholders
holding Registrable Securities covered by a registration statement on the one
hand and the underwriters on the other, in such proportion as is appropriate to
reflect the relative benefits received by the Company and such Stockholders on
the one hand and the underwriters on the other, from the offering of the
Registrable Securities, or if such allocation is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits but also the relative fault of the Company and such Stockholders on the
one hand and of such underwriters on the other in connection with the statements
or omissions that resulted in such Damages, as well as any other relevant
equitable considerations and (ii) as between the Company on the one hand and
each such Stockholder on the other, in such proportion as is appropriate to
reflect the relative fault of the Company and of each such Stockholder in
connection with such statements or omissions, as well as any other relevant
equitable considerations. The relative benefits received by the Company and such
Stockholders on the one hand and such underwriters on the other shall be deemed
to be in the same proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and such Stockholders bear to the total underwriting discounts
and commissions received by such underwriters, in each case as set forth in the
table on the cover page of the prospectus. The relative fault of the Company and
such Stockholders on the one hand and of such underwriters on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company and such
Stockholders or by such underwriters. The relative fault of the Company on the
one hand and of each such Stockholder on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by such party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

 

The Company and the Stockholders agree that it would not be just and equitable
if contribution pursuant to this Section 2.08 were determined by pro rata
allocation (even if the underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Party as a result of the Damages
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 2.08, no underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any Damages that such underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission, and no Stockholder shall be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Securities of such Stockholder were offered to the public (less
underwriters’ discounts and commissions) exceeds the amount of any Damages that
such Stockholder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. Each Stockholder’s obligation to
contribute pursuant to this Section 2.08 is several in the proportion that the
proceeds of the offering received by such Stockholder bears to the total
proceeds of the offering received by all such Stockholders and not joint.

 

12 

 

 

Section 2.09. Participation in Public Offering. No Stockholder may participate
in any Public Offering hereunder unless such Stockholder (i) agrees to sell such
Stockholder’s Registrable Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and the provisions of
this Agreement in respect of registration rights.

 

Section 2.10. Other Indemnification. Indemnification similar to that specified
herein (with appropriate modifications) shall be given by the Company and each
Stockholder participating therein with respect to any required registration or
other qualification of securities under any federal or state law or regulation
or governmental authority other than the Securities Act.

 

Section 2.11. Cooperation by the Company. If any Stockholder shall transfer any
Registrable Securities pursuant to Rule 144, the Company shall cooperate, to the
extent commercially reasonable, with such Stockholder and shall provide to such
Stockholder such information as such Stockholder shall reasonably request.

 

Section 2.12. No Transfer of Registration Rights. None of the rights of
Stockholders under this Article 2 shall be assignable by any Stockholder to any
Person acquiring Securities in any Public Offering or pursuant to Rule 144,
except a transfer to an Affiliate of an Electrum Party or the MERS Party in
accordance with Article 4 of the Shareholders Agreement or in connection with
the transfer of all Common Stock held by the Electrum Parties or the MERS Party
to a third party.

 

Article 3
Miscellaneous

 

Section 3.01. Binding Effect; Assignability; Benefit.

 

(a)      This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, successors, legal representatives and
permitted assigns. Any Stockholder that ceases to own beneficially any Company
Securities shall cease to be bound by the terms hereof (other than (i) the
provisions of Sections 2.05, 2.06, 2.07, 2.08 and 2.10 applicable to such
Stockholder with respect to any offering of Registrable Securities completed
before the date such Stockholder ceased to own any Company Securities and
(ii) Sections 3.02, 3.04, 3.05, 3.06 and 3.07).

 

(b)      Nothing in this Agreement, expressed or implied, is intended to confer
on any Person other than the parties hereto, and their respective heirs,
successors, legal representatives and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.

 

Section 3.02. Notices. Unless otherwise specified herein, all notices, consents,
approvals, reports, designations, requests, waivers, elections and other
communications authorized or required to be given pursuant to this Agreement
shall be in writing and shall be given, made or delivered (and shall be deemed
to have been duly given, made or delivered upon receipt) by personal
hand-delivery, by facsimile transmission, by electronic mail, by mailing the
same in a sealed envelope, registered first-class mail, postage prepaid, return
receipt requested, or by air courier guaranteeing overnight delivery, addressed
to the Company, the Electrum Parties and the MERS Party at the address set forth
below or to the applicable Stockholder at the address indicated on Annex A
hereto (or at such other address for a Stockholder as shall be specified by like
notice):

 

13 

 

 

If to the Company, to:

 

Gatos Silver, Inc.
8400 E. Crescent Pkwy 

Suite 600
Greenwood Village, CO 80111
Attention: Roger Johnson
Fax: (303) 784-5351
E-mail: roger.johnson@ssmines.com

 

with a copy to:

 

Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017
Attention: Richard D. Truesdell, Jr.
Facsimile No.: (212) 701-5674
E-mail:      richard.truesdell@davispolk.com

 

with a copy to the Electrum Parties and the MERS Party at the address listed
below.

 

If to the Electrum Parties, to:

 

Tigris Financial Group Ltd.
535 Madison Avenue, 12th Floor 

New York, NY 10022
Attention: Andrew M. Shapiro
Fax: (646) 365-1637
Email: ashapiro@tigris.com

 

If to the MERS Party, to:

 

Municipal Employees’ Retirement System of Michigan
1134 Municipal Way 

Lansing, MI 48917
Attention: Brian LaVictoire
Fax: (517) 703-9722
Email: blavictoire@mersofmich.com

 

Any Person that becomes a Stockholder shall provide its address and fax number
to the Company, which shall promptly provide such information to each other
Stockholder.

 

Section 3.03. Waiver; Amendment; Termination.

 

(a)      Subject to Section 3.03(b), no provision of this Agreement may be
amended, waived or otherwise modified except by an instrument in writing
executed by the Company with approval of the Board of Directors and Stockholders
holding at least a majority of all Shares (as determined on a Common Equivalents
and Fully-Diluted basis), held by the parties hereto at the time of such
proposed amendment or modification. In addition, any party may waive any
provision of this Agreement with respect to itself by an instrument in writing
executed by the party against whom the waiver is to be effective.

 

14 

 

 

(b)            In addition, any amendment, waiver or modification of any
provision of this Agreement that would materially and adversely affect any
Stockholder in a manner that is disparate from the manner in which it affects
other Stockholders may be effected only with the consent of the Stockholder so
affected.

 

Section 3.04. Governing Law. This Agreement is governed by and will be construed
in accordance with the laws of the State of Delaware, excluding any
conflict-of-laws rule or principle (whether of Delaware or any other
jurisdiction) that might refer the governance or the construction of this
Agreement to the law of another jurisdiction.

 

Section 3.05. Jurisdiction. Each of the parties (a) consents to submit itself to
the personal jurisdiction of the Court of Chancery of the State of Delaware in
the event any dispute arises out of this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from such court and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any court other than the Court of Chancery of the State of
Delaware. Each Party hereby agrees that, to the fullest extent permitted by law,
service of any process, summons, notice or document by U.S. registered mail to
the respective addresses set forth in Section 3.02 shall be effective service of
process for any suit or proceeding in connection with this Agreement.

 

Section 3.06. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE
PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.
The Company or any Stockholder may file an original counterpart or a copy of
this Section 3.06 with any court as written evidence of the consent of any of
the Parties to the waiver of their rights to trial by jury.

 

Section 3.07. Specific Performance. It is hereby agreed and acknowledged that it
will be impossible to measure the money damages that would be suffered if the
parties fail to comply with any of the obligations imposed on them by this
Agreement and that, in the event of any such failure, an aggrieved party will be
irreparably damaged and will not have an adequate remedy at law. Each party
shall, therefore, be entitled (in addition to any other remedy to which such
party may be entitled at law or in equity) to seek injunctive relief, including
specific performance, to enforce such obligations, without the posting of any
bond, and if any action should be brought in equity to enforce any of the
provisions of this Agreement, none of the parties shall raise the defense that
there is an adequate remedy at law.

 

Section 3.08. Counterparts; Effectiveness. This Agreement may be executed in any
number of separate counterparts each of which when so executed shall be deemed
to be an original.

 

Section 3.09. Entire Agreement. This Agreement, the Stockholder Agreement and
the Subscription Agreement constitute the entire agreement among the parties
hereto and supersede all prior and contemporaneous agreements and
understandings, both oral and written, among the parties hereto with respect to
the subject matter hereof and thereof.

 

15 

 

 

Section 3.10. Severability. In the event that any provision of this Agreement
shall be invalid, illegal or unenforceable, such provision shall be construed by
limiting it so as to be valid, legal and enforceable to the maximum extent
provided by law and the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.

 

 

16 

 

 

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

  

  THE COMPANY:           GATOS SILVER, INC.         By: /s/ Roger Johnson  
Name: Roger Johnson   Title: Chief Financial Officer

  

  THE ELECTRUM PARTIES:     ELECTRUM SILVER US LLC         By: /s/ Andrew M.
Shapiro   Name: Andrew M. Shapiro   Title: Managing Director

 

 

  ELECTRUM SILVER US II LLC         By: /s/ Andrew M. Shapiro   Name: Andrew M.
Shapiro   Title: Managing Director

 

  TIGRIS FINANCIAL GROUP LTD.         By: /s/ Andrew M. Shapiro   Name: Andrew
M. Shapiro   Title: President

 

  GRAT HOLDINGS LLC         By: /s/ Andrew M. Shapiro   Name: Andrew M. Shapiro
  Title: President

 

  MANUL CAPITAL MANAGEMENT LLC         By: /s/ Andrew M. Shapiro   Name: Andrew
M. Shapiro   Title: President

 

[Signature Page to Registration Rights Agreement]

 

 

 

 

  THE MERS PARTY:           THE MUNICIPAL EMPLOYEES’ RETIREMENT SYSTEM OF
MICHIGAN         By: /s/ Brian LaVictoire   Name:  Brian LaVictoire   Title:
   Deputy General Counsel for Investments & Compliance

 

[Signature Page to Registration Rights Agreement]

 

 

 

 

Annex A

 

Other Stockholder Addresses