Document:

FOURTH
AMENDMENT TO INVESTMENT AGREEMENT

     

    FOURTH
AMENDMENT TO INVESTMENT AGREEMENT dated as of July 14, 2010 (this “Amendment”) between
Allis-Chalmers Energy Inc., a Delaware corporation (the “Company”), and Lime
Rock Partners V, L.P., a Cayman Islands exempted limited partnership (the “Investor”).

     

    BACKGROUND

    

    WHEREAS,
the Company and the Investor (each a “Party,” and together,
the “Parties”)
previously entered into an Investment Agreement, dated May 20, 2009, as amended
by the First Amendment thereto, dated June 25, 2009, the Second Amendment
thereto, dated September 1, 2009 and the Third Amendment thereto, dated
January 5, 2010 (the “Investment
Agreement”); and

     

    WHEREAS,
the Parties wish to further amend the Investment Agreement in order to effect
certain modifications deemed desirable by each of the Parties;

     

    NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained in
the Investment Agreement and this Fourth Amendment, the receipt and sufficiency
of which are hereby acknowledged, the Parties hereby agree to amend the
Investment Agreement as follows:

     

    1.           Capitalized
terms used but not defined in this Amendment shall have the respective meanings
given to such terms in the Investment Agreement.  Each reference to
“hereof,” “hereunder,” “hereby” and “this Agreement” in the Investment Agreement
shall, from and after the date of this Amendment, refer to the Investment
Agreement as amended by this Amendment.

     

    2.           Section 8.1 of the
Investment Agreement is hereby amended by amending and restating subsection
8.1(d) as
follows:  “(d)  In the event that the Closings occur
simultaneously, if the Investor shall be entitled to designate four Initial
Investor Nominees pursuant to Section 8.2(a) based on the Common Stock of the
Company (counting any shares of Preferred Stock on an as converted basis) to be
owned by the Investor 13(d) Group after the Closings, then prior to such
Closings, the Investor shall provide to the Company the names of two Initial
Investor Designees, each of whom shall be reviewed promptly by the Nominating
Committee, and on the date of such Closings, the Company shall cause to be
elected or appointed to the Board such Initial Investor Designees, subject to
the satisfaction of all legal and governance requirements regarding service as a
director of the Company and, if not already received, the reasonable approval of
the Nominating Committee.  The Company shall take all actions
necessary to ensure that on the date of such Closings the Board shall have at
least two vacancies.  By October 15, 2010, the Investor shall provide
to the Company the names of two additional Initial Investor Designees, each of
whom shall be reviewed promptly by the Nominating Committee, and as soon as
reasonably practicable thereafter, the Company shall cause to be elected or
appointed to the Board such additional Initial Investor Designees, subject to
the satisfaction of all legal and governance requirements regarding service as a
director of the Company and, if not already received, the reasonable approval of
the Nominating Committee.  The Company shall take all actions
necessary to ensure that on October 15, 2010 the Board shall have at least two
additional vacancies.”

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    This
Amendment may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures were on the same
instrument.

     

    [Signature page
follows]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the Parties hereto have caused this Amendment to be duly
executed by their respective authorized officers as of the date first written
above.

    

    
      
        
          
            
              	 	
                      ALLIS-CHALMERS
      ENERGY INC.

                    
	 	 
	 	
                      By:

                    	
                      /s/ Theodore F. Pound
III

                    
	 	
                      Name:  Theodore
      F. Pound III

                    
	 	
                      Title:  General
      Counsel and Secretary

                    
	 	 
      
	 	
                      LIME
      ROCK PARTNERS V, L.P.

                    
	 	 
      
	 	
                      By:

                    	
                      Lime
      Rock Partners GP V, L.P., its

                      general
      partner

                    
	 	 
      
	 	
                      By:

                    	
                      LRP
      GP V, Inc., its general partner

                    
	 	 
      
	 	
                      By:

                    	
                      /s/ Kris Agarwal

                    
	 	
                      Name:
      Kris Agarwal

                    
	 	
                      Title:
      Authorized
SignatoryUnassociated Document

    FORM
OF WARRANT AGREEMENT

    

    This
Warrant Agreement (the “Agreement”) made as of _____,
2010, between SMG Indium Resources Ltd., a Delaware corporation, with offices at
41 University Drive, Suite 400, Newton, Pennsylvania 18940 (the “Company”), and Continental
Stock Transfer & Trust Company, a New York corporation, with offices at 17
Battery Place, New York, New York 10004 (the “Warrant Agent”).

    

    WHEREAS,
the Company has undertaken a public offering (the “Public Offering”) of units of
the Company (the “Units”), each Unit consisting
of one share of common stock, par value $.001 per share, of the Company (the
“Common Stock”) and one
warrant exercisable for one share of Common Stock, and in connection therewith,
has determined to issue and deliver (i) 9,000,000 Warrants (the “Public Warrants”) to the
public investors and (ii) 450,000 Warrants to Sunrise Securities Corp. and
Rodman & Renshaw, LLC (the “Representatives”) or its
designees (the “Representatives’ Warrants”
and, together with the Public Warrants, the “Warrants”), in each case
subject to adjustments as described herein;

    

    WHEREAS,
the Company has filed, with the Securities and Exchange Commission (the “Commission”), a registration
statement, No. 333-165930, on Form S-1 (the “Registration Statement”) for
the registration, under the Securities Act of 1933, as amended (the “Act”), of, among other
securities, the Public Warrants and the Representative’s Warrants and the Common
Stock issuable upon exercise of the Public Warrants and the Representative’s
Warrants;

    

    WHEREAS,
the Company desires the Warrant Agent to act on behalf of the Company, and the
Warrant Agent is willing to so act, in connection with the issuance,
registration, transfer, exchange, redemption, exercise and cancellation of the
Warrants;

    

    WHEREAS,
the Company desires to provide for the form and provisions of the Warrants, the
terms upon which they shall be issued and exercised, and the respective rights,
limitation of rights and immunities of the Company, the Warrant Agent and the
holders of the Warrants; and

    

    WHEREAS,
all acts and things have been done and performed which are necessary to make the
Warrants, when executed on behalf of the Company and countersigned by or on
behalf of the Warrant Agent, as provided herein, the legally valid and binding
obligations of the Company, and to authorize the execution and delivery of this
Agreement.

    

    NOW,
THEREFORE, in consideration of the mutual agreements herein contained, the
parties hereto agree as follows:

    

    1. Appointment of Warrant
Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company for the Warrants, and the
Warrant Agent hereby accepts such appointment and agrees to perform the same in
accordance with the terms and conditions set forth in this
Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    2. Warrants.

    

    2.1 Form of Public
Warrant. Each Warrant shall be issued in registered form only, shall be
in substantially the form of Warrant attached hereto as Exhibit A, the
provisions of which are incorporated herein, and shall be signed by, or bear the
facsimile signature of, (i) the Chairman of the Board, the Chief Executive
Officer or the President, and (ii) the Treasurer, Secretary or Assistant
Secretary of the Company, and shall bear a facsimile of the Company’s seal. In
the event the person whose facsimile signature has been placed upon any Warrant
shall have ceased to serve in the capacity in which such person signed the
Warrant before such Warrant is issued, it may be issued with the same effect as
if he or she had not ceased to be such at the date of issuance.

    

    2.2 Form of Representatives’
Warrant. The Representatives’ Warrants will be issued in the same form as
the Public Warrants, except that each of the Representatives’ Warrants, (i) is
exercisable at a price equal to 110% of the exercise price of the Public
Warrants, (ii) subject to certain limited exceptions described below, will not
be transferable or salable for a period of one year after the date of the final
prospectus included in the Registration Statement, (ii) will be exercisable on a
cashless basis in accordance with Section 3.1(b) hereof, (iv) will not be
redeemable by the Company, and (v) may be exercised for unregistered shares so
long as a registration statement relating to the Common Stock issuable upon
exercise of the warrants is not effective and current.

    

    2.3 Effect of
Countersignature. Unless and until countersigned by the Warrant Agent
pursuant to this Warrant Agreement, a Warrant shall be invalid and of no effect
and may not be exercised by the holder thereof.

    

    2.4 Registration.

    

    2.4.1
Warrant
Register. The Warrant Agent shall maintain books (“Warrant Register”), for the
registration of the original issuance and registration of transfers of the
Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall
issue and register the Warrants in the names of the respective holders thereof
in such denominations and otherwise in accordance with instructions delivered to
the Warrant Agent by the Company.

    

    2.4.2
Registered
Holder. Prior to due presentment for registration of transfer of any
Warrant, the Company and the Warrant Agent may deem and treat the person in
whose name such Warrant shall be registered upon the Warrant Register (“Registered Holder”), as the
absolute owner of such Warrant and of each Warrant represented thereby
(notwithstanding any notation of ownership or other writing on the warrant
certificate made by anyone other than the Company or the Warrant Agent), for the
purpose of any exercise thereof, and for all other purposes, and neither the
Company nor the Warrant Agent shall be affected by any notice to the
contrary.

    

    2.5 Detachability of
Warrants. The securities comprising the Units may trade separately
beginning on the 90th day
after the effective date of the registration statement unless the
Representatives determines that an earlier date is acceptable, but in no event
will the Representatives permit separate trading of the common stock and
warrants until the business day following the earlier to occur of (i) the
expiration or termination of the underwriters’ over-allotment option or (ii) its
exercise in full (the “Detachment
Date”).

     

    
      
         

      

      
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    3. Terms and Exercise of
Warrants.

    

    3.1 Warrant Price. Each
Public Warrant shall, when countersigned by the Warrant Agent, entitle the
registered holder thereof, subject to the provisions of such Public Warrant and
of this Agreement, to purchase from the Company the number of shares of Common
Stock stated therein, at the price of $5.75 per whole share, subject to the
adjustments provided in Section 4 hereof and in the last sentence of this
Section 3.1. Each Representative’s Warrant shall, when countersigned by the
Warrant Agent, entitle the registered holder thereof, subject to the provisions
of such Representative’s Warrant and of this Agreement, to purchase from the
Company the number of shares of Common Stock stated therein, at the price of
$5.50 per whole share, subject to the adjustments provided in Section 4 hereof
and in the last sentence of this Section 3.1. The term “Warrant Price” as used in this
Agreement refers to the price per share at which Common Stock may be purchased
at the time a Warrant is exercised. The Company, in its sole discretion, may
lower the Warrant Price at any time prior to the Expiration Date (as defined
below); provided, however, that any change in the Warrant Price must apply
equally to all of the Warrants, and provided further that any amendment to the
term of the Representative’s Warrants shall be subject to any limitations and
conditions that may be imposed by FINRA Corporate Finance Rule 2710, and
provided further that any reduction in Warrant Price shall remain in effect for
at least twenty (20) business days.

     

    3.2 Duration of Warrants.
Except as set forth in this Section 3.2, a Warrant may be exercised only during
the period (“Exercise
Period”) commencing immediately upon the effectiveness of the
Registration Statement, and terminating at 5:00 p.m., New York City time, on the
earlier to occur of (i) _______, 2015 and (ii) the date fixed for redemption of
the Warrants as provided in Section 6 of this Agreement (“Expiration Date”). Except with
respect to the right to receive the Redemption Price (as set forth in Section 6
hereunder), each Warrant not exercised on or before the Expiration Date shall
become void, and all rights thereunder and all rights in respect thereof under
this Agreement shall cease at the close of business on the Expiration Date. The
Company, in its sole discretion, may extend the duration of the Warrants by
delaying the Expiration Date; provided, however, that any such extension of the
duration of the Warrants shall apply equally to all of the Warrants, except that
any amendment to the terms of the Representative’s Warrants shall be subject to
any limitations and conditions that may be imposed by FINRA Corporate Finance
Rule 2710. Should the Company wish to extend the Expiration Date of the
Warrants, the Company shall provide at least twenty (20) days advance notice to
the NASDAQ Stock Market, LLC (or the principal trading market for the Warrants)
of such extension.

     

     Notwithstanding
the foregoing, a Warrant can expire unexercised regardless of whether a
registration statement is current under the Act with respect to the Common Stock
issuable upon exercise of the Warrants.

     

    
      
         

      

      
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    3.3 Exercise of
Warrants.

    

    3.3.1
Payment.
Subject to the provisions of the Warrant and this Warrant Agreement, a Warrant,
when countersigned by the Warrant Agent, may be exercised by the registered
holder thereof by surrendering it, at the office of the Warrant Agent, or at the
office of its successor as Warrant Agent, in the Borough of Manhattan, City and
State of New York, with the subscription form, as set forth in the Warrant, duly
executed, and by paying in full, the Warrant Price for each whole share of
Common Stock as to which the Warrant is exercised and any and all applicable
taxes due in connection with the exercise of the Warrant, the exchange of the
Warrant for the Common Stock, and the issuance of the Common Stock, as
follows:

    

     (a)
good certified check or good bank draft payable to the order of the Company (or
as otherwise agreed to by the Company); or

    

     (b)
with respect to any Representatives’ Warrants, by surrendering such
Representatives’ Warrants for that number of shares of Common Stock equal to the
quotient obtained by dividing (x) the product of the number of shares of Common
Stock underlying the Representatives’ Warrants, multiplied by the difference
between the Warrant Price and the Fair Market Value (as defined below) by (y)
the Fair Market Value. Solely for purposes of this Section 3.3.1(b), the “Fair
Market Value” shall mean the average reported last sale price of the Common
Stock for the five trading days ending on the trading day prior to the date on
which the Representatives’ Warrants are exercised.

    

    3.3.2
Issuance of
Certificates. As soon as practicable after the exercise of any Warrant
and the clearance of the funds in payment of the Warrant Price, the Company
shall issue to the registered holder of such Warrant a certificate or
certificates representing the number of full shares of Common Stock to which he,
she or it is entitled, registered in such name or names as may be directed by
him, her or it, and, if such Warrant shall not have been exercised in full, a
new countersigned Warrant for the number of shares as to which such Warrant
shall not have been exercised.

    

    3.3.3
Valid Issuance.
All shares of Common Stock issued upon the proper exercise of a Warrant in
conformity with this Agreement shall be validly issued, fully paid and
nonassessable.

    

    3.3.4
Date of
Issuance. Each person or entity in whose name any such certificate for
shares of Common Stock is issued shall, for all purposes, be deemed to have
become the holder of record of such shares on the date on which the Warrant was
surrendered and payment of the Warrant Price was made, irrespective of the date
of delivery of such certificate, except that, if the date of such surrender and
payment is a date when the stock transfer books of the Company are closed, such
person shall be deemed to have become the holder of such shares at the close of
business on the next succeeding date on which the stock transfer books are
open.

    

    4. Adjustments.

    

    4.1 Stock Dividends -
Split-Ups. If, at any time during the Exercise Period, and subject to the
provisions of Section 4.6 below, the number of outstanding shares of Common
Stock is increased by a stock dividend payable in shares of Common Stock, or by
a split-up of shares of Common Stock, or other similar event, then, on the
effective date of such stock dividend, split-up or similar event, the number of
shares of Common Stock issuable on exercise of each Warrant shall be increased
in proportion to such increase in outstanding shares of Common
Stock.

     

    
      
         

      

      
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    4.2 Extraordinary
Dividends. If the Company, at any time during the Exercise Period, shall
pay a dividend or make a distribution in cash, securities or other assets to the
holders of Common Stock (or other shares of the Company’s capital stock into
which the Warrants are convertible), other than (i) as described in Sections
4.1, 4.3 or 4.5, (ii) regular quarterly or other periodic dividends, (iii) in
connection with the Company’s liquidation and the distribution of its assets
(any such non-excluded event being referred to herein as an “Extraordinary Dividend”), then
the Warrant Price shall be decreased, effective immediately after the effective
date of such Extraordinary Dividend, by the amount of cash and/or the fair
market value (as determined by the Company’s Board of Directors, in good faith)
of any securities or other assets paid on each share of Common Stock in respect
of such Extraordinary Dividend.

    

    4.3 Aggregation of
Shares. If after the date hereof, and subject to the provisions of
Section 4.6, the number of outstanding shares of Common Stock is decreased by a
consolidation, combination, reverse stock split or reclassification of shares of
Common Stock or other similar event, then, on the effective date of such
consolidation, combination, reverse stock split, reclassification or similar
event, the number of shares of Common Stock issuable on exercise of each Warrant
shall be decreased in proportion to such decrease in outstanding shares of
Common Stock.

    

    4.4 Adjustments in Exercise
Price. Whenever the number of shares of Common Stock purchasable upon the
exercise of the Warrants is adjusted, as provided in Sections 4.1, 4.2 and 4.3
above, the Warrant Price shall be adjusted (to the nearest cent) by multiplying
such Warrant Price, immediately prior to such adjustment, by a fraction, (i) the
numerator of which shall be the number of shares of Common Stock purchasable
upon the exercise of the Warrants immediately prior to such adjustment, and (ii)
the denominator of which shall be the number of shares of Common Stock so
purchasable immediately thereafter.

    

    4.5 Replacement of Securities
upon Reorganization, etc. In case of any reclassification or
reorganization of the outstanding shares of Common Stock (other than a change
covered by Sections 4.1, 4.2 or 4.3 hereof or one that solely affects the par
value of such shares of Common Stock), or, in the case of any merger or
consolidation of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the continuing corporation and
that does not result in any reclassification or reorganization of the
outstanding shares of Common Stock), or, in the case of any sale or conveyance
to another corporation or entity of the assets or other property of the Company
as an entirety or substantially as an entirety, in connection with which the
Company is dissolved, the Warrant holders shall thereafter have the right to
purchase and receive, upon the basis and upon the terms and conditions specified
in the Warrants and in lieu of the shares of Common Stock of the Company
immediately theretofore purchasable and receivable upon the exercise of the
rights represented thereby, the kind and amount of shares of stock or other
securities or property (including cash) receivable upon such reclassification,
reorganization, merger or consolidation, or upon a dissolution following any
such sale or transfer, that the Warrant holder would have received if such
Warrant holder had exercised his, her or its Warrant(s) immediately prior to
such event; and if any reclassification also results in a change in shares of
Common Stock covered by Sections 4.1, 4.2 or 4.3, then such adjustment shall be
made pursuant to Sections 4.1, 4.2, 4.3, 4.4 and this Section 4.5. The
provisions of this Section 4.5 shall similarly apply to successive
reclassifications, reorganizations, mergers or consolidations, sales or other
transfers.

     

    
      
         

      

      
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    4.6 Notices of Changes in
Warrant. Upon every adjustment of the Warrant Price or the number of
shares issuable upon exercise of a Warrant, the Company shall give written
notice thereof to the Warrant Agent, which notice shall state the Warrant Price
resulting from such adjustment and the increase or decrease, if any, in the
number of shares purchasable at such price upon the exercise of a Warrant,
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based. Upon the occurrence of any event specified in
Sections 4.1, 4.2, 4.3, 4.4 or 4.5 the Company shall give written notice to each
Warrant holder, at the last address set forth for such holder in the Warrant
Register, of the record date or the effective date of the event. Failure to give
such notice, or any defect therein, shall not affect the legality or validity of
such event.

    

    4.7 No Fractional Shares.
Notwithstanding any provision contained in this Agreement to the contrary, the
Company shall not issue fractional shares upon exercise of Warrants. If, by
reason of any adjustment made pursuant to this Section 4, the holder of any
Warrant would be entitled, upon the exercise of such Warrant, to receive a
fractional interest in a share, the Company shall, upon such exercise, round up
to the nearest whole number the number of the shares of Common Stock to be
issued to the Warrant holder.

    

    4.8 Form of Warrant. The
form of Warrant need not be changed because of any adjustment pursuant to this
Section 4, and Warrants issued after such adjustment may state the same Warrant
Price and the same number of shares as is stated in the Warrants initially
issued pursuant to this Agreement. However, the Company may, at any time, in its
sole discretion, make any change in the form of Warrant that the Company may
deem appropriate and that does not affect the substance thereof, and any Warrant
thereafter issued or countersigned, whether in exchange or substitution for an
outstanding Warrant or otherwise, may be in the form as so changed.

    

    5. Transfer and Exchange of
Warrants.

    

    5.1 Transfer of Warrants.
Prior to the Detachment Date, the Public Warrants may be transferred or
exchanged only together with the Unit in which such Warrant is included, and
only for the purpose of effecting, or in conjunction with, a transfer or
exchange of such Unit. Furthermore, each transfer of a Public Unit on the
register relating to such Units shall operate also to transfer the Warrants
included in such Unit. From and after the Detachment Date this Section 5.1 will
have no further force and effect.

     

    
      
         

      

      
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    5.2 Registration of
Transfer. The Warrant Agent shall register the transfer, from time to
time, of any outstanding Warrant into the Warrant Register, upon surrender of
such Warrant for transfer, properly endorsed with signatures properly guaranteed
and accompanied by appropriate instructions for transfer. Upon any such
transfer, a new Warrant representing an equal aggregate number of Warrants shall
be issued and the old Warrant shall be cancelled by the Warrant Agent. The
Warrants so cancelled shall be delivered by the Warrant Agent to the Company
from time to time upon the Company’s request.

    

    5.3 Procedure for Surrender of
Warrants. Warrants may be surrendered to the Warrant Agent, together with
a written request for exchange or transfer, and, thereupon, the Warrant Agent
shall issue in exchange therefor one or more new Warrants as requested by the
registered holder of the Warrants so surrendered, representing an equal
aggregate number of Warrants; provided, however, that in the event a Warrant
surrendered for transfer bears a restrictive legend, the Warrant Agent shall not
cancel such Warrant and shall issue new Warrants in exchange therefor until the
Warrant Agent has received an opinion of counsel for the Company stating that
such transfer may be made and indicating whether the new Warrants must also bear
a restrictive legend.

    

    5.3 Fractional Warrants.
The Warrant Agent shall not be required to effect any registration of transfer
or exchange which will result in the issuance of a warrant certificate for a
fraction of a warrant.

    

    5.4 Service Charges. No
service charge shall be made for any exchange or registration of transfer of
Warrants.

    

    5.5 Warrant Execution and
Countersignature. The Warrant Agent is hereby authorized to countersign
and to deliver, in accordance with the terms of this Agreement, the Warrants
required to be issued pursuant to the provisions of this Section 5, and the
Company, whenever required by the Warrant Agent, will supply the Warrant Agent
with Warrants duly executed on behalf of the Company for such
purpose.

    

    6. Redemption.

    

    6.1 Redemption. Subject
to Section 6.4 hereof, not less than all of the outstanding Warrants may be
redeemed, at the option of the Company, at any time after they become
exercisable and prior to their expiration, at the office of the Warrant Agent,
upon the notice referred to in Section 6.2 hereof, at a redemption price of $.01
per Warrant (the “Redemption
Price”), provided that (i) the last sales price of the Common Stock has
been equal to or greater than $8.00 per share (the “Trigger Price”) for any twenty
(20) trading days within a thirty (30) trading day period ending on the third
business day prior to the date on which notice of redemption is given and (ii)
the Public Warrants and the shares of Common Stock underlying such Warrants are
covered by an effective registration statement and a current prospectus from the
beginning of the measurement period through the date fixed for redemption. The
provisions of this Section 6.1 may not be modified, amended or deleted without
the prior written consent of the Representatives.

     

    
      
         

      

      
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    6.2 Date Fixed for, and Notice
of, Redemption. In the event the Company shall elect to redeem all of the
Warrants, the Company shall fix a date for the redemption (the “Redemption Date”), which shall
be prior to the expiration of the Warrants. Notice of redemption shall be mailed
by first class mail, postage prepaid, by the Company not less than thirty (30)
days prior to the date fixed for redemption to the registered holders of the
Warrants to be redeemed at their last addresses as they shall appear on the
Warrant Register. Any notice mailed in the manner herein provided shall be
conclusively presumed to have been duly given on the date sent, whether or not
the registered holder received such notice. In the event of any adjustment to
the Warrant Price or the number of shares of Common Stock issuable on exercise
of each Warrant as provided in Section 4, a proportional adjustment shall be
made to the Trigger Price.

    

    6.3 Exercise After Notice of
Redemption. The Warrants may be exercised in accordance with Section 3 of
this Warrant Agreement at any time after notice of redemption shall have been
given by the Company pursuant to Section 6.2 hereof and prior to the time and
date fixed for redemption. On and after the redemption date, the record holder
of the Warrants shall have no further rights except to receive, upon surrender
of the Warrants, the Redemption Price.

    

    6.4 No Other Rights to Cash
Payment. Except for a redemption in accordance with this Section 6, no
holder of any Warrant shall be entitled to any cash payment whatsoever from the
Company in connection with the ownership, exercise or surrender of any Warrant
under this Agreement, regardless of whether a registration statement is current
under the Act with respect to the Common Stock issuable upon exercise of the
Warrants.

    

    7. Other Provisions Relating to
Rights of Holders of Warrants.

    

    7.1 No Rights as
Stockholder. A Warrant does not entitle the registered holder thereof to
any of the rights of a stockholder of the Company, including, without
limitation, the right to receive dividends, or other distributions, exercise any
preemptive rights to vote or to consent or to receive notice as stockholders in
respect of the meetings of stockholders or the election of directors of the
Company or any other matter.

    

    7.2 Lost, Stolen, Mutilated, or
Destroyed Warrants. If any Warrant is lost, stolen, mutilated or
destroyed, the Company and the Warrant Agent may, on such terms as to indemnity
or otherwise as they may in their discretion impose (which terms shall, in the
case of a mutilated Warrant, include the surrender thereof), issue a new Warrant
of like denomination, tenor and date as the Warrant so lost, stolen, mutilated
or destroyed. Any such new Warrant shall constitute a substitute contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated
or destroyed Warrant shall be at any time enforceable by anyone.

    

    7.3 Reservation of Common
Stock. The Company shall at all times reserve and keep available a number
of its authorized but unissued shares of Common Stock that will be sufficient to
permit the exercise in full of all outstanding Warrants issued pursuant to this
Agreement.

     

    
      
         

      

      
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    7.4 Registration of Common
Stock. The Company agrees that, prior to the commencement of the Exercise
Period, it shall file with the Commission a post-effective amendment to the
Registration Statement, or a new registration statement, for the registration
under the Act of, and it shall take such action as is necessary to qualify for
sale in those states in which the Public Warrants and the Representative’s
Warrants were initially offered by the Company, the Common Stock issuable upon
exercise of the Public Warrants and the Representative’s Warrants. In either
case, the Company will use its best efforts to cause the same to become
effective on or prior to the commencement of the Exercise Period, to maintain
the effectiveness of such registration statement and to ensure that a current
prospectus is on file with the Commission until the expiration or redemption of
the Warrants in accordance with the provisions of this Agreement; provided,
however, that the Company shall not be obligated to deliver shares of Common
Stock issuable upon exercise of the Public Warrants, and shall not have
penalties nor be liable to the Warrant holder for failure to deliver shares, if
a registration statement is not effective or a current prospectus is not on file
with the Commission at the time of exercise of the Public Warrant by a holder.
In addition, the Company agrees to use its reasonable efforts to register such
securities under the blue sky laws of the states of residence of the exercising
warrant holders to the extent an exemption is not available. The provisions of
this Section 7.4 may not be modified, amended or deleted without the prior
written consent of the Representative.

    

    7.5 Delivery of Prospectus or
Notice. Upon the exercise of any Warrant, if the Company requests, the
Warrant Agent shall deliver to the holder of such Warrant, prior to or
concurrently with the delivery of the shares of Common Stock issuable upon such
exercise, in accordance with the Company’s request, either (i) a prospectus
relating to the shares of Common Stock deliverable upon exercise of the Warrants
and complying in all material respects with the Act or (ii) the notice referred
to in Rule 173 under the Act.

    

    7.6 Limitation on Monetary
Damages. In no event shall the registered holder of a Public Warrant be
entitled to receive monetary damages for failure to settle any Warrant exercise
if the Common Stock issuable upon exercise of the Public Warrants has not been
registered with the Securities and Exchange Commission pursuant to an effective
registration statement or if a current prospectus is not available for delivery
by the Warrant Agent, provided the Company has fulfilled its obligations under
Section 7.4 to use its best efforts to effect the registration under the Act of
the Common Stock issuable upon exercise of the Warrants.

    

    8. Concerning the Warrant Agent
and Other Matters.

    

    8.1 Payment of Taxes. The
Company will, from time to time, promptly pay all taxes and charges that may be
imposed upon the Company or the Warrant Agent in respect of the issuance or
delivery of shares of Common Stock upon the exercise of Warrants, but the
Company shall not be obligated to pay any transfer taxes in respect of the
Warrants or such shares.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    

    8.2 Resignation, Consolidation,
or Merger of Warrant Agent.

    

    8.2.1
Appointment of
Successor Warrant Agent. The Warrant Agent, or any successor to it
hereafter appointed, may resign its duties and be discharged from all further
duties and liabilities hereunder after giving sixty (60) days’ notice in writing
to the Company. If the office of the Warrant Agent becomes vacant by resignation
or incapacity to act or otherwise, the Company shall appoint, in writing, a
successor Warrant Agent in place of the Warrant Agent. If the Company shall fail
to make such appointment within a period of thirty (30) days after it has been
notified in writing of such resignation or incapacity by the Warrant Agent or by
the holder of the Warrant (who shall, with such notice, submit his, her or its
Warrant for inspection by the Company), then the holder of any Warrant may apply
to the Supreme Court of the State of New York for the County of New York for the
appointment of a successor Warrant Agent. Any successor Warrant Agent, whether
appointed by the Company or by such court, shall be a corporation organized and
existing under the laws of the State of New York, in good standing and have its
principal office in the Borough of Manhattan, City and State of New York, and be
authorized under such laws to exercise corporate trust powers and subject to
supervision or examination by federal or state authorities. After appointment,
any successor Warrant Agent shall be vested with all the authority, powers,
rights, immunities, duties and obligations of its predecessor Warrant Agent with
like effect as if originally named as Warrant Agent hereunder, without any
further act or deed; but, if for any reason it becomes necessary or appropriate,
the predecessor Warrant Agent shall execute and deliver, at the expense of the
Company, an instrument transferring to such successor Warrant Agent all the
authority, powers, and rights of such predecessor Warrant Agent hereunder; and,
upon request of any successor Warrant Agent, the Company shall make, execute,
acknowledge, and deliver any and all instruments in writing for more fully and
effectually vesting in and confirming to such successor Warrant Agent all such
authority, powers, rights, immunities, duties and obligations.

    

    8.2.2
Notice of Successor
Warrant Agent. In the event a successor Warrant Agent shall be appointed,
the Company shall give notice thereof to the predecessor Warrant Agent and the
transfer agent for the Common Stock not later than the effective date of any
such appointment.

    

    8.2.3
Merger or
Consolidation of Warrant Agent. Any corporation into which the Warrant
Agent may be merged or with which it may be consolidated or any corporation
resulting from any merger or consolidation to which the Warrant Agent shall be a
party shall be the successor Warrant Agent under this Agreement without any
further act on the part of the Company or the Warrant Agent.

    

    8.3 Fees and Expenses of Warrant
Agent.

    

    8.3.1
Remuneration.
The Company agrees to pay the Warrant Agent reasonable remuneration for its
services as Warrant Agent hereunder as set forth on Exhibit B hereto and
will reimburse the Warrant Agent upon demand for all expenditures that the
Warrant Agent may reasonably incur in the execution of its duties
hereunder.

    

    8.3.2
Further
Assurances. The Company agrees to perform, execute, acknowledge and
deliver, or cause to be performed, executed, acknowledged and delivered, all
such further and other acts, instruments and assurances as may reasonably be
required by the Warrant Agent for the carrying out or performing of the
provisions of this Agreement.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

    8.4 Liability of Warrant
Agent.

    

    8.4.1
Reliance on Company
Statement. Whenever, in the performance of its duties under this Warrant
Agreement, the Warrant Agent shall deem it necessary or desirable that any fact
or matter be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a statement signed by the Chief Executive Officer,
Chairman of the Board of Directors or President of the Company and delivered to
the Warrant Agent. The Warrant Agent may rely upon such statement for any action
taken or suffered in good faith by it pursuant to the provisions of this
Agreement.

    

    8.4.2
Indemnity. The
Warrant Agent shall be liable hereunder only for its own gross negligence,
willful misconduct or bad faith. The Company agrees to indemnify the Warrant
Agent and save it harmless against any and all liabilities, including judgments,
costs and reasonable counsel fees, for anything done or omitted by the Warrant
Agent in the execution of this Warrant Agreement, except as a result of the
Warrant Agent’s gross negligence, willful misconduct or bad faith.

    

    8.4.3
Exclusions. The
Warrant Agent shall have no responsibility with respect to the validity of this
Warrant Agreement or with respect to the validity or execution of any Warrant
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Warrant; nor shall it be responsible to make any adjustments required
under the provisions of Section 4 hereof or responsible for the manner, method
or amount of any such adjustment or the ascertaining of the existence of facts
that would require any such adjustment; nor shall it, by any act hereunder, be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock to be issued pursuant to this
Agreement or any Warrant or as to whether any shares of Common Stock will when
issued be valid and fully paid and nonassessable.

    

    8.5 Acceptance of Agency.
The Warrant Agent hereby accepts the agency established by this Warrant
Agreement and agrees to perform the same upon the terms and conditions herein
set forth and, among other things, shall account promptly to the Company with
respect to Warrants exercised and concurrently account for, and pay to the
Company, all moneys received by the Warrant Agent for the purchase of shares of
the Company’s Common Stock through the exercise of Warrants.

    

    9. Miscellaneous
Provisions.

    

    9.1 Successors. All the
covenants and provisions of this Warrant Agreement by or for the benefit of the
Company or the Warrant Agent shall bind and inure to the benefit of their
respective successors and assigns.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    9.2 Notices. Any notice,
consent or request to be given in connection with any of the terms or provisions
of this Agreement shall be in writing and shall be sent express mail or similar
overnight courier service, by certified mail (return receipt requested), by hand
delivery or by facsimile transmission:

    

    If to the
Company, to:

     

    
      	 	 	
              SMG
      Indium Resources Ltd.

            
	 	 	
              41
      University Drive, Suite 400

            
	 	 	
              Newtown,
      Pennsylvania 18940

            
	 	 	
              Attn:
      Ailon Z. Grushkin

            

    

     

     If
to the Warrant Agent, to:

     

    
      	 	 	
              Continental
      Stock Transfer & Trust Company

            
	 	 	
                    
                17
      Battery Place

              

            
	 	 	
                    
                New
      York, New York 10004

              

            
	 	 	
                    
                Attn:
      Compliance Department

              

            
	 	 
	 	      
              with
      a copy in each case (which shall not constitute notice)
      to:

            

    

     

    
      	 	 	
                    
                Ellenoff
      Grossman & Schole LLP

              

            
	 	 	
                    
                150
      East 42nd
      Street

              

            
	 	 	
                    
                New
      York, New York 10017

              

            
	 	 	
                    
                Attn:
      Barry I. Grossman, Esq.

              

            
	 	 	 
	 	      
              and

            	 
	 	 	 
	 	 	      
              Mintz
      Levin Cohn Ferris Glovsky & Popeo, P.C.

            
	 	 	      
              666
      Third Avenue

            
	 	 	      
              New
      York, New York 10017

            
	 	 	      
              Attn:
      Kenneth R. Koch, Esq.

            
	 	 	 
	 	      
              and

            	 
	 	 	 
	 	 	      
              Sunrise
      Securities Corp.

            
	 	 	      
              600
      Lexington Avenue, 4th
      Floor

            
	 	 	      
              New
      York, New York 10022

            
	 	 	      
              Attn:
      Nathan Low

            
	 	 	 
	 	      
              and

            	 
	 	 	 
	 	 	
              Rodman & Renshaw, LLC

              1251
      Avenue of the Americas, 20th
      Floor

              New
      York, New York 10020

            
	 	 	
              Attn:
      ●

              Fax:
      ●

            

    

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    Any
notice, sent pursuant to this Agreement shall be effective, if delivered by
hand, upon receipt thereof by the party to whom it is addressed, if sent by
overnight courier, on the next business day of the delivery to the courier, and
if sent by registered or certified mail on the third day after registration or
certification thereof.

    

    9.3 Applicable Law. The
validity, interpretation, and performance of this Agreement and of the Warrants
shall be governed in all respects by the laws of the State of New York, without
giving effect to the conflict of laws principles thereof. The Company and the
Warrant Agent each hereby agrees that any action, proceeding or claim against it
arising out of or relating in any way to this Agreement shall be brought and
enforced in the courts of the State of New York or the United States District
Court for the Southern District of New York, and irrevocably submits to such
jurisdiction, which jurisdiction shall be exclusive. The Company and the Warrant
Agent each hereby waives any objection to such exclusive jurisdiction and that
such courts represent an inconvenient forum. Any such process or summons to be
served upon the Company or the Warrant Agent may be served by transmitting a
copy thereof by registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in Section 9.2 hereof. Such
mailing shall be deemed personal service and shall be legal and binding upon the
Company or the Warrant Agent in any action, proceeding or claim.

    

    9.4 Persons Having Rights under
this Warrant Agreement. Nothing in this Agreement expressed and nothing
that may be implied from any of the provisions hereof is intended, or shall be
construed, to confer upon, or give to, any person or corporation, other than the
parties hereto and the registered holders of the Warrants and, for the purposes
of Sections 6.1, 6.4, 7.4, 9.2 and 9.8 hereof, the Representatives, any right,
remedy or claim under or by reason of this Agreement or of any covenant,
condition, stipulation, promise or agreement hereof. the Representative shall be
deemed to be a third-party beneficiary of this Agreement with respect to
Sections 6.1, 6.4, 7.4, 9.2 and 9.8 hereof. All covenants, conditions,
stipulations, promises and agreements contained in this Warrant Agreement shall
be for the sole and exclusive benefit of the parties hereto (and the
Representative, with respect to the Sections 6.1, 6.4, 7.4, 9.2 and 9.8 hereof)
and their successors and assigns and of the registered holders of the
Warrants.

    

    9.5 Examination of the
Agreement. A copy of this Agreement shall be available at all reasonable
times at the office of the Warrant Agent in the Borough of Manhattan, City and
State of New York, for inspection by the registered holder of any Warrant. The
Warrant Agent may require any such holder to submit his, her or its Warrant for
inspection.

    

    9.6 Counterparts; Facsimile
Signatures. This Agreement may be executed in any number of counterparts,
and each of such counterparts shall, for all purposes, be deemed to be an
original, and all such counterparts shall together constitute one and the same
instrument. Facsimile signatures shall constitute original signatures for all
purposes of this Warrant Agreement. Facsimile signatures shall constitute
original signatures for all purposes of this Agreement.

    

    9.7 Effect of Headings.
The section headings herein are for convenience only and are not part of this
Warrant Agreement and shall not affect the interpretation thereof.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    

    9.8 Amendments. This
Agreement may be amended by the parties hereto without the consent of any
registered holder for the purpose of curing any ambiguity, or of curing,
correcting or supplementing any defective provision contained herein or adding
or changing any other provisions with respect to matters or questions arising
under this Warrant Agreement as the parties may deem necessary or desirable and
that the parties deem shall not adversely affect the interest of the registered
holders. All other modifications or amendments, including any amendment to
increase the Warrant Price or shorten the Exercise Period, shall require the
written consent of each of the Representative and the registered holders of a
majority of the then outstanding Warrants. Notwithstanding the foregoing, the
Company may lower the Warrant Price or extend the duration of the Exercise
Period in accordance with Sections 3.1 and 3.2, respectively, without such
consent.

    

    9.9 Severability. This
Agreement shall be deemed severable, and the invalidity or unenforceability of
any term or provision hereof shall not affect the validity or enforceability of
this Agreement or of any other term or provision hereof. Furthermore, in lieu of
any such invalid or unenforceable term or provision, the parties hereto intend
that there shall be added as a part of this Agreement a provision as similar in
terms to such invalid or unenforceable provision as may be possible and be valid
and enforceable.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as
of the day and year first above written.

    

    
      	
              Attest

               

               

              ___________________________

            	
              SMG
      INDIUM RESOURCES LTD.

               

               

              By:
      _____________________________

              Name:
      Ailon Z. Grushkin

              Title:
      President

            
	 
      	 
      
	
              Attest

               

               

              ___________________________

            	
              CONTINENTAL
      STOCK TRANSFER & TRUST COMPANY

               

               

              By:
      _____________________________

              Name:

              Title:

            

    

    

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    EXHIBIT
A

    

    Form of Public
Warrant

     

     

     

     

    
 

    

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    EXHIBIT
B

    

    Warrant Agent
Fees

    

    

    

    

    
      
         

      

      
        17

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