Document:

Exhibit

FOURTH AMENDMENT TO SIXTH AMENDED AND RESTATED CREDIT AGREEMENT
This Fourth Amendment to Sixth Amended and Restated Credit Agreement (this “Fourth Amendment”) is made as of June 27, 2018 by and among Credit Acceptance Corporation, a Michigan corporation (the “Company”), Comerica Bank and the other banks signatory hereto (individually, an “Extending Bank” and collectively, the “Extending Banks”) and Comerica Bank, as administrative agent for the Banks (in such capacity, “Agent”).
RECITALS
		
	A.
	The Company, Agent and the Banks entered into that certain Sixth Amended and Restated Credit Acceptance Corporation Credit Agreement dated as of June 23, 2014 (as amended by that certain First Amendment to Sixth Amended and Restated Credit Agreement, dated as of June 11, 2015, that certain Second Amendment to Sixth Amended and Restated Credit Agreement, dated as of June 15, 2016, and that certain Third Amendment to Sixth Amended and Restated Credit Agreement and Extension Agreement, dated as of June 28, 2017, and as further amended, amended and restated or otherwise modified from time to time, the “Credit Agreement”) under which the Banks renewed and extended (or committed to extend) credit to the Company, as set forth therein.

		
	B.
	In addition, the Company has requested that Agent and the Banks agree to the additional amendments to the Credit Agreement contained herein and Agent and the Extending Banks (which constitute Majority Banks) are willing to do so, but only on the terms and conditions set forth in this Fourth Amendment.

NOW, THEREFORE, Company, Agent and the Extending Banks agree:
1.Section 1 of the Credit Agreement is amended as follows:
		
	(a)
	By amending and restating the definitions of “Debt”, “Extended Maturity Date” and “Permitted Refinancing” in their entireties as follows:

“Debt” shall mean, with respect to any Person, without duplication, (a) its liabilities for borrowed money (whether or not evidenced by a security), (b) any liabilities secured by any Lien existing on property owned by such Person (whether or not such liabilities have been assumed), (c) its liabilities in respect of the principal component of Capitalized Leases, (d) the present value of all payments due under any arrangement for retention of title or any conditional sale agreement (other than a Capitalized Lease) discounted at the implicit rate, if known, with respect thereto or, if unknown, at eight and eighty-seven one-hundredths percent (8.87%) per annum, (e) reimbursement obligations (contingent or otherwise) in respect of letters of credit, and obligations in respect of bankers acceptances, and (f) its guaranties of any liabilities of another Person constituting liabilities of a type set forth in clauses (a) through (e), above; provided however that the obligation of the Company or any of its Subsidiaries (i) to remit monies to Dealers under Dealer Agreements (including, without limitation, with respect to Installment Contracts, claims or refunds under insurance policies or claims or refunds under service contracts) or (ii) to make 

deposits in trust or otherwise as required under re-insurance agreements and pursuant to state regulatory requirements shall not be considered Debt of the Company or its Subsidiaries; provided further that upon the defeasance or satisfaction and discharge of Debt in accordance with the terms of such Debt, such Debt will cease to be “Debt” hereunder (for the avoidance of doubt, including upon the giving or mailing of a notice of redemption and redemption funds being deposited with a trustee or paying agent or otherwise segregated or held in trust or under an escrow or other funding arrangement for the sole purpose of repurchasing, redeeming, defeasing, repaying, satisfying and discharging, or otherwise acquiring or retiring such Debt); and provided further that “Debt” shall include payment obligations, if any, under interest rate protection agreements (including without limitation interest rate swaps and similar agreements) and currency swaps and hedges and similar agreements.
“Extended Maturity Date” means June 22, 2021.
“Permitted Refinancing” shall mean with respect to the Debt of any Person, any modification, replacement, refinancing, refunding, defeasance, satisfaction and discharge, renewal or extension of such Debt (the “Refinanced Debt”) from time to time, in whole or in part; provided, in the case of any such modification, replacement, refinancing, refunding, defeasance, satisfaction and discharge, renewal or extension, that any Debt incurred in connection therewith (the “Permitted Refinancing Debt”) has an aggregate outstanding principal amount not greater than the amount of Refinanced Debt, plus any accreted amount, unpaid accrued interest and premium (including tender or prepayment premiums thereon), and underwriting discount, and any other fees, commissions and expenses; and, provided further that, all or a portion of Permitted Refinancing Debt may either be (i) applied to repurchase, redeem, defease, repay, satisfy and discharge, or otherwise acquire or retire the Refinanced Debt substantially concurrently with the incurrence of such Permitted Refinancing Debt, or (ii) deposited into a segregated account subject to a trust, escrow or other funding arrangement entered into in connection with the issuance or incurrence of such Permitted Refinancing Debt for the sole purpose of repurchasing, redeeming, defeasing, repaying, satisfying and discharging, or otherwise acquiring or retiring the Refinanced Debt. “Permitted Refinancing” shall be deemed to include, for all purposes, any successive Permitted Refinancing.
		
	(b)
	By amending and restating clause (i) of the definition of “Permitted Liens” in its entirety as follows:

(i)    Liens on property or assets deposited with a trustee or paying agent or otherwise segregated or held in trust or under an escrow or other funding arrangement for the sole purpose of repurchasing, redeeming, defeasing, repaying, satisfying and discharging or otherwise acquiring or retiring Debt; provided that such repurchase, redemption, defeasance, repayment, satisfaction and discharge or other acquisition or retiring of Debt is not prohibited by this Agreement;
		
	(c)
	By adding the following new definitions in the appropriate alphabetical order:

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“Fourth Amendment Effective Date” means June 27, 2018.
		
	(d)
	By adding the following to the end of Section 1.2:  

As used herein or in any of the other Loan Documents, “continuing representations and warranties” shall refer to those representations and warranties which are not given solely as of a specific date; such continuing representations and warranties shall be deemed remade as of the date of each Request for Advance or Request for Swing Line Advance, as applicable (and as of the making of such Advance), as of the issuance of a Letter of Credit and as of the effective date of any other Loan Document (containing such continuing representations and warranties, to the extent set forth therein) delivered pursuant to or in connection with this Agreement.
2.    Section 6.16 of the Credit Agreement is amended and restated in its entirety as follows:
6.16    ERISA.  
		
	(a)
	Neither the Company nor any of its Subsidiaries maintains or contributes to any Pension Plan subject to Title IV of ERISA, except as set forth on Schedule 6.16 hereto or otherwise disclosed to the Agent in writing.  There is no accumulated funding deficiency with respect to any Pension Plans within the meaning of Section 412 of the Internal Revenue Code or Section 302 of ERISA, or any outstanding liability with respect to any Pension Plans owed to the PBGC other than future premiums due and owing pursuant to Section 4007 of ERISA, and no Reportable Event has occurred with respect to any Pension Plan.  Neither the Company or any of its Subsidiaries has engaged in a Prohibited Transaction with respect to any Pension Plan, which could subject such Person to a material tax or penalty imposed by Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA other than a Prohibited Transaction for which an exemption is available and has been obtained.  Each Pension Plan is being maintained and funded in accordance with its terms and is in material compliance with the requirements of the Internal Revenue Code and ERISA.  Neither the Company nor any of its Subsidiaries has had a complete or partial withdrawal from any Multiemployer Plan that has resulted or could reasonably be expected to have resulted in any Withdrawal Liability and, except as notified to Agent in writing following the Effective Date, no such Multiemployer Plan is in reorganization (within the meaning of Section 4241 of ERISA) or insolvent (within the meaning of Section 4245 of ERISA).

		
	(b)
	Neither the Company nor any of its Subsidiaries is an entity deemed to hold “plan assets” of any employee benefit plan subject to Title I of ERISA or any plan or account subject to Section 4975 of the Internal Revenue Code for purposes of ERISA or the Internal Revenue Code, and, assuming 

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that none of the Banks is or will be (i) an employee benefit plan subject to Title I of ERISA, (ii) a plan or account subject to Section 4975 of the Internal Revenue Code, (iii) an entity deemed to hold “plan assets” of any such plans or accounts for the purposes of ERISA or the Internal Revenue Code, or (iv) a “governmental plan” within the meaning of ERISA, then neither the execution and delivery nor performance of the transactions contemplated by this Agreement, including the making of any Advance and the issuance of any Letter of Credit, will give rise to a non-exempt Prohibited Transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue Code.
3.    Section 8.5(e) and 8.5(j), respectively, of the Credit Agreement are amended and restated in their entirety as follows:
(a)    unsecured Debt or Debt (including, without limitation, Capitalized Leases, capitalized portions of operating leases, purchase money obligations and mortgage financings) secured by Liens permitted under Section 8.6(b) (and any Permitted Refinancing thereof) not to exceed an aggregate amount at any time outstanding for all such Debt (determined, in each case, when such Debt is incurred) equal to the greater of (i) Eighty-Five Million Dollars ($85,000,000) and (ii) 10% of the Company’s Consolidated Tangible Net Worth (determined at the time such Debt becomes an obligation of the Company or any Subsidiary);
(j)    Debt incurred or to be incurred by Company or a wholly-owned Subsidiary of Company, in an aggregate principal amount not to exceed $13,000,000, in connection with the acquisition of real property and secured by such real property.

4.    Section 8.6(b) and 8.6(e), respectively, of the Credit Agreement are amended and restated in their entirety as follows:
(b)    Capitalized Leases and mortgages or security interests encumbering any property or assets of the Company or its Subsidiaries, other than Dealer Loans, Dealer Loan Pools, Installment Contracts or other related assets which constitute Collateral, to secure Debt which may be outstanding from time to time under Section 8.5(e);

(e)    Liens on the property of Company or any of its Subsidiaries, other than Dealer Loans, Dealer Loan Pools, Installment Contracts or other related assets which constitute Collateral, not otherwise permitted under subparagraphs (a) through (d) of this Section 8.6 if the obligations secured by such Liens are disclosed on Schedule 8.6 hereto; 

5.    Section 8.6 of the Credit Agreement is amended by adding the following new clause (i) at the end thereof:

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(i)    Lien on certain real property securing Debt permitted under Section 8.5(j).
6.    Section 11.3 of the Credit Agreement is amended and restated in its entirety as follows:
11.3    Circumstances Affecting LIBOR Rate Availability.  
		
	(a)
	If Agent or the Majority Banks (after consultation with Agent) shall determine that, by reason of circumstances affecting the foreign exchange and interbank markets generally, deposits in eurodollars in the applicable amounts are not being offered to the Agent or such Banks at the applicable LIBOR Rate, then Agent shall forthwith give notice thereof to Company. Thereafter, until Agent notifies Company that such circumstances no longer exist, (i) the obligation of Banks to make Advances which bears interest at or by reference to the LIBOR Rate, and the right of Company to convert an Advance to or refund an Advance as an Advance which bears interest at or by reference to the LIBOR Rate shall be suspended and (ii) effective upon the last day of each Eurodollar-Interest Period related to any existing Eurodollar-based Advance, each such Eurodollar-based Advance shall automatically be converted into an Advance which bears interest at or by reference to the Base Rate  (without regard to satisfaction of any conditions to conversion contained elsewhere herein) and (iii) effective immediately following such notice, each Advance which bears interest at or by reference to the Daily Adjusting LIBOR Rate shall automatically be converted into an Advance which bears interest at or by reference to the Base Rate (without regard to the satisfaction of any conditions to conversion contained elsewhere herein).

		
	(b)
	If at any time the Agent or the Majority Banks (after consultation with Agent) shall determine (which determination shall be conclusive absent manifest error) that (i) the circumstances set forth in the first sentence of Section 11.3(a) have arisen and such circumstances are unlikely to be temporary or (ii) the circumstances set forth in the first sentence of Section 11.3(a) have not arisen but the supervisor for the administrator of the LIBOR Rate or a Governmental Authority having jurisdiction over the Agent has made a public statement identifying a specific date after which the LIBOR Rate shall no longer be used for determining interest rates for loans, then the Agent and the Company shall endeavor to establish an alternate rate of interest to the LIBOR Rate that gives due consideration to the then prevailing market convention for determining a rate of interest for syndicated loans in the United States at such time, and shall enter into an amendment to this Agreement to reflect such alternate rate of interest and such other related changes to this Agreement as may be applicable; provided however that, if such alternate rate of interest shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.  Notwithstanding anything to the contrary in Section 13.11, such amendment shall become effective without any further action or consent of any other party to this 

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Agreement so long as the Agent shall not have received, within five (5) Business Days of the date notice of such alternate rate of interest is provided to the Banks, a written notice from the Majority Banks stating that such Majority Banks object to such amendment. Until an alternate rate of interest shall be determined in accordance with this clause (b) (but, in the case of the circumstances described in clause (ii) of the first sentence of this Section 11.3(b), only to the extent the LIBOR Rate and such Interest Period is not available or published at such time on a current basis), (x) any Request for Advance that requests the conversion of any related Advance to, or continuation of any related Advance as, a Eurodollar-based Advance shall be ineffective and (y) if any Request for Advance requests a Eurodollar-based Advance or the use of the Eurodollar-based Rate, such Advance shall be made or carried as a Base Rate Advance.
7.    Section 12 of the Credit Agreement is amended by inserting the following new Section 12.19 in the appropriate numerical order:
12.19    Banks’ ERISA Representations.  Each Bank hereby represents, warrants and covenants to the Agent and its Affiliates (and not, for the avoidance of doubt, to or for the benefit of the Company or any of its Subsidiaries), that, from and after the date hereof, such Bank is not and will not be (i) an employee benefit plan subject to Title I of ERISA, (ii) a plan or account subject to Section 4975 of the Internal Revenue Code, (iii) an entity deemed to hold “plan assets” of any such plans or accounts for the purposes of ERISA or the Internal Revenue Code, or (iv) a “governmental plan” within the meaning of ERISA.  For the avoidance of doubt, a Bank may act as a service provider to or with respect to an ERISA plan and/or a plan or account subject to Section 4975 of the Internal Revenue Code; provided, however, that such Bank shall not exercise any discretion or authority to utilize the assets of such plans or accounts to fund any loans or other credit extended hereunder.
8.    Section 13.1 of the Credit Agreement is amended to delete the last sentence thereof.
9.    Section 13.13 of the Credit Agreement is amended and restated in its entirety as follows:
13.13    Confidentiality.  Agent and each Bank agrees that without the prior consent of Company, it will not disclose (other than to its Affiliates and to its and its Affiliates’ employees, partners, directors, officers, agents, trustees, administrators, managers, representatives, auditors, counsel or other advisors, or to another Bank or to any other party to this Agreement (provided that such Persons are informed of the confidential nature of such information and agree or are otherwise bound to keep such information confidential)) any information furnished by or on behalf of the Company or any of its Subsidiaries with respect to the Company, any of its Subsidiaries or any of their respective businesses, other than information which was publicly available to Agent or such Bank prior to disclosure by the Company or any of its Subsidiaries; provided that Agent or any Bank may disclose any such information (a) as has become generally available to the public (other than as a 

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result of a disclosure by or through Agent or its officers, directors, employees, agents, counsel, accountants, auditors, affiliates, advisors or representatives) or has been lawfully obtained by Agent or such Bank from any third party under no duty of confidentiality to the Company known to Agent or such Bank after reasonable inquiry, (b) as may be required by any regulatory body or in connection with any regulatory proceeding, in each case purporting to have jurisdiction over Agent or the applicable Bank or their respective Affiliates (c) as may be required or appropriate in respect of any summons or subpoena or in connection with any litigation, (d) in order to comply with any law, order, regulation or ruling applicable to Agent or such Bank or their respective Affiliates, and (e) to any permitted transferee or assignee or to any approved participant of, or with respect to, the Indebtedness, as aforesaid, which has signed a confidentiality agreement consistent with the terms of this Section 13.13 hereof.  Agent shall exercise good faith and make diligent efforts to provide the Company with prompt written notice of any disclosure pursuant to this Section 13.13 except where prohibited by law. For purposes of this Section 13.13, Affiliate shall include only those Persons who satisfy clause (a) of the definition thereof.  In addition, Agent and the Banks may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry and service providers to the Agent or any Bank in connection with the administration of this Agreement, and the other Loan Documents, to the extent such information is routinely provided to such market data collectors and similar service providers and would otherwise be permissible to disclose under clause (a) of this Section 13.13.

10.    Section 13.23 of the Credit Agreement is amended to add, to the caption thereof, the words “; Beneficial Ownership Certification” and to add the following sentence to the end of such section:
The Company shall also deliver, from time to time at the reasonable request of the Agent or any Bank, a completed certification regarding beneficial ownership to the extent required by 31 C.F.R. §1010.230, together with any other information required under such regulation.
11.    This Fourth Amendment shall become effective (the “Effective Date”) according to the terms and as of the date hereof, upon satisfaction of the following conditions:
		
	(a)
	receipt by the Agent of .pdf copies (followed by prompt delivery of original signatures) of counterpart originals of:

		
	(i)
	this Fourth Amendment, duly executed and delivered by the Company and the requisite Banks;

		
	(ii)
	a Reaffirmation of Loan Documents duly executed and delivered by the Company and each of the Guarantors;

		
	(iii)
	a certificate from the secretary (or other authorized officer) of Company and each Guarantor certifying: (A) as to the adoption of  

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authorizing resolutions in connection with this Fourth Amendment and the Reaffirmation of Loan Documents and attaching true and correct copies thereof, (B) that no consents or authorizations of any third parties are required in connection therewith, and (C) that either there have been no changes to the organizational documents of such party previously delivered to Agent or that true and accurate copies of organizational documents are being provided to Agent with such certificate, and
		
	(b)
	Company shall have paid to Agent and the applicable Banks all interest, fees and other amounts, if any, due and owing to the Agent and such Banks as of the Effective Date, including, without limitation, payment of the fees required to be paid in accordance with the terms of that certain Fee Letter dated May 16, 2018.

12.    Company hereby certifies that (a) all necessary actions have been taken by the Company to authorize execution and delivery of this Fourth Amendment and (b) after giving effect to this Fourth Amendment, no Default or Event of Default has occurred and is continuing on the Effective Date.
13.    The Company ratifies and confirms, as of the date hereof and after giving effect to the amendments contained herein, each of the representations and warranties set forth in Sections 6.1 through 6.19, inclusive, of the Credit Agreement and acknowledges that such representations and warranties are and shall remain continuing representations and warranties during the entire life of the Credit Agreement, except to the extent such representations and warranties speak only as of a specific date.
14.    Except as specifically set forth above, this Fourth Amendment shall not be deemed to amend or alter in any respect the terms and conditions of the Credit Agreement, any of the Notes issued thereunder or any of the other Loan Documents, or to constitute a waiver by the Banks or Agent of any right or remedy under or a consent to any transaction not meeting the terms and conditions of the Credit Agreement, any of the Notes issued thereunder or any of the other Loan Documents.
15.    Unless otherwise defined to the contrary herein, all capitalized terms used in this Fourth Amendment shall have the meaning set forth in the Credit Agreement.
16.    This Fourth Amendment may be executed in counterparts in accordance with Section 13.10 of the Credit Agreement.
17.    This Fourth Amendment shall be construed in accordance with and governed by the laws of the State of Michigan.
[Signatures Follow on Succeeding Pages]

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WITNESS the due execution hereof as of the day and year first above written.
CREDIT ACCEPTANCE CORPORATION

By: /s/ Douglas W. Busk                
Name:  Douglas W. Busk
Title:  Treasurer

Signature Page to CAC Fourth Amendment

COMERICA BANK, as Administrative Agent, Joint Bookrunner, Co-Lead Arranger, and Collateral Agent and an Extending Bank

By:  /s/ Paul G. Russo                
Name:  Paul G. Russo
Title:  Vice President

Signature Page to CAC Fourth Amendment

BANKS:

BANK OF AMERICA, N.A., as Documentation Agent, and an Extending Bank

By:  /s/ Gregory J. Bosio                
Name:  Gregory J. Bosio                
Title:  Senior Vice President                        

Signature Page to CAC Fourth Amendment

BANK OF MONTREAL, as Joint Bookrunner, Co-Lead Arranger and an Extending Bank

By:  /s/ Daniel Ryan                            
Name:  Daniel Ryan                            
Title:  Vice President                    

Signature Page to CAC Fourth Amendment

FIFTH THIRD BANK, an Ohio banking corporation, successor by merger with FIFTH THIRD BANK, a Michigan banking corporation, as Joint Bookrunner and Co-Lead Arranger, and an Extending Bank

By:  /s/ Marshall Kleven                
Name:  Marshall Kleven                        
Title:      Vice President                            

Signature Page to CAC Fourth Amendment

CITIZENS BANK, N.A., as Joint Bookrunner and Co-Lead Arranger and an Extending Bank

By:  /s/ Michael S. Farley                
Name:  Michael S. Farley                        
Title:  Senior Vice President                

Signature Page to CAC Fourth Amendment

THE HUNTINGTON NATIONAL BANK, as an Extending Bank

By:  /s/ Tara Donovan                
Name:  Tara Donovan                
Title:  Vice President                

Signature Page to CAC Fourth Amendment

FLAGSTAR BANK, FSB, as Syndication Agent, and an Extending Bank

By:  /s/ Kelly M. Hamrick                
Name:  Kelly M. Hamrick                
Title: First Vice President                

Signature Page to CAC Fourth Amendment

KEYBANK, NATIONAL ASSOCIATION, as Documentation Agent and an Extending Bank

By: /s/ James Clay Harris                
Name:  James Clay Harris                
Title: Commercial Analyst                

Signature Page to CAC Fourth Amendment

CHEMICAL BANK, as an Extending Bank

By: /s/ John R. Hruska                
Name:  John R. Hruska                        
Title:  Senior Vice President                

Signature Page to CAC Fourth AmendmentExhibit 4.1

 

SUBSCRIPTION AGENT AGREEMENT

 

This SUBSCRIPTION AGENT AGREEMENT (this “Agreement”) is entered into as of June 28, 2018, by and between American Stock Transfer & Trust Company, LLC (the “Subscription Agent”) and CDTi Advanced Materials, Inc. (the “Company”).

 

1.                                      The Company is offering (the “Rights Offering”) to the holders of shares of its common stock, par value $0.01 per share (“Common Stock”), on June 28, 2018 (the “Record Date”), the right (“Rights”) to subscribe for shares of Common Stock (“Shares”).  Except as set forth in Sections 9 and 10 below, Rights shall cease to be exercisable at 5:00 P.M., New York City time, on July 13, 2018 or such later date of which the Company notifies the Subscription Agent orally and confirms in writing (the “Expiration Date”). Fifteen Million Eight Hundred Three Thousand Seven Hundred Thirty-Six (15,807,736) Right(s) are being issued for Fifteen Million Eight Hundred Three Thousand Seven Hundred Thirty-Six (15,807,736) shares of Common Stock held on the Record Date, however the Company will only accept subscriptions for Six Million Eight Hundred Forty-Nine Thousand (6,849,000) Shares. One (1) Right and payment in full of the subscription price of $0.50 (the “Subscription Price”) are required to subscribe for one Share.  Rights are evidenced by non-transferable subscription certificates in registered form (“Subscription Certificates”). Each holder of Subscription Certificate(s) who exercises the holder’s right to subscribe for all Shares that can be subscribed for with the Rights evidenced by such Subscription Certificate(s) (the “Basic Subscription Right”) will have the right to subscribe for additional Shares, if any, available as a result of any unexercised Rights (such additional subscription right being referred to hereafter as the “Additional Subscription Privileged”).  The Rights Offering will be conducted in the manner and upon the terms set forth in the Company’s Prospectus Supplement dated June 28, 2018 and the accompanying base Prospectus dated May 19, 2015 (collectively, the “Prospectus”).

 

2.                                      The Subscription Agent is hereby appointed to affect the Rights Offering as set forth herein. The Subscription Agent may rely on, and shall be protected in acting upon, any certificate, instrument, opinion, representation, notice letter or other document delivered to it and believed by it to be genuine and to have been signed by the proper party or parties.

 

3.                                      Enclosed herewith are the following, the receipt of which the Subscription Agent acknowledges by its execution hereof:

 

(a)                     a copy of the Prospectus;

 

(b)                     the form of Subscription Certificate (with instructions); and

 

(c)                      resolutions adopted by the board of directors of the Company in connection with the Rights Offering, certified by the secretary of the Company.

 

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4.                                      As soon as is reasonably practical, the Subscription Agent shall mail or cause to be mailed to each holder of Common Stock at the close of business on the Record Date a Subscription Certificate evidencing the Rights to which such holder is entitled, a Prospectus and an envelope addressed to the Subscription Agent. Prior to mailing, the Company shall provide the Subscription Agent with blank Subscription Certificates which the Subscription Agent shall prepare and issue in the names of holders of Common Stock of record at the close of business on the Record Date and for the number of Rights to which they are entitled.  The Company shall also provide the Subscription Agent with a sufficient number of copies of each of the documents to be mailed with the Subscription Certificates.

 

5.                                      Subscription Procedure.

 

(a)                     Upon the Subscription Agent’s receipt prior to 5:00 P.M., New York City time, on the Expiration Date (by mail or delivery) of (ii) any Subscription Certificate completed and endorsed for exercise, as provided on the reverse side of the Subscription Certificate (except as provided in Section 9 hereof), and (ii) payment in full of the Subscription Price in U.S. funds by check or bank draft payable at par (without deduction for bank service charges or otherwise) to the order of “American Stock Transfer & Trust Company, LLC” the Subscription Agent shall as soon as practicable after the Expiration Date, but after performing the procedures described in subsections (b) and (c) below, mail to the subscriber’s registered address on the books of the Company certificates representing the securities underlying each Share duly subscribed for (pursuant to the Basic Subscription Right and the Additional Subscription Privilege) and furnish a list of all such information to the Company.

 

(b)                     As soon as practicable after the Expiration Date the Subscription Agent shall calculate the number of Shares to which each subscriber is entitled pursuant to the Additional Subscription Privilege. The Additional Subscription Privilege may only be exercised by holders who subscribe to all the Shares that can be subscribed for under the Basic Subscription Right.  The Shares available for additional subscriptions will be those that have not been subscribed and paid for pursuant to the Basic Subscription Right (the “Remaining Shares”).  Where there are sufficient Remaining Shares to satisfy all additional subscriptions by holders exercising their rights under the Additional Subscription Privilege, each holder shall be allotted the number of additional Shares subscribed for. If the aggregate number of Shares subscribed for under the Additional Subscription Privilege exceeds the number of Remaining Shares, the number of Remaining Shares allotted to each participant in the Additional Subscription Privilege shall be the product (disregarding fractions) obtained by multiplying the number of Remaining Shares by a fraction of which the numerator is the number of shares of Common Stock owned by that participant on the Record Date and the denominator is the aggregate number of shares of Common Stock owned by all participants duly exercising their Additional Subscription Privilege.  If this pro-rata allocation results in any participants receiving a greater number of Shares than the participant subscribed for pursuant to the exercise of the Additional Subscription Privilege, then such participant will be allocated only that number of Shares for which

 

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such participant oversubscribed, and any then-Remaining Shares will be allocated among all other participants duly exercising their Additional Subscription Privilege on the same pro rata basis described above.  The proration process will be repeated until all Remaining Shares have been allocated. Any fractional Share to which persons exercising their Rights would otherwise be entitled pursuant to such allocation shall be rounded down to the next whole Share.

 

(c)                      Upon calculating the number of Shares to which each subscriber is entitled pursuant to the Additional Subscription Privilege and the amount overpaid, if any, by each subscriber, the Subscription Agent shall, as soon as practicable, furnish a list of all such information to the Company.

 

(d)                     Upon calculating the number of Shares to which each subscriber is entitled pursuant to the Additional Subscription Privilege and assuming payment for the additional Shares subscribed for has been delivered, the Subscription Agent shall mail, as contemplated in subsection (a) above, the certificates representing the additional securities which the subscriber has been allotted. If a lesser number of Shares is allotted to a subscriber under the Additional Subscription Privilege than the subscriber has tendered payment for, the Subscription Agent shall remit the difference to the subscriber without interest or deduction at the same time as certificates representing the securities allotted pursuant to the Additional Subscription Privilege are mailed.

 

(e)                      Funds received by the Subscription Agent pursuant to the Basic Subscription Right and the Additional Subscription Privilege shall be held by it in a segregated account. Upon mailing certificates representing the securities and refunding subscribers for additional Shares subscribed for but not allocated, if any, the Subscription Agent shall promptly remit to the Company all funds received in payment of the Subscription Price for Shares issued in the Rights Offering. The Subscription Agent will not be obligated to calculate or pay interest to any holder or party.

 

6.                                      As used in herein, “Business Day” shall mean any day other than a Saturday, a Sunday, or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.

 

7.                                      The Company shall have the absolute right to reject any defective exercise of Rights or to waive any defect in exercise. Unless requested to do so by the Company, the Subscription Agent shall not be under any duty to give notification to holders of Subscription Certificates of any defects or irregularities in subscriptions. Subscriptions will not be deemed to have been made until any such defects or irregularities have been cured or waived within such time as the Company shall determine. The Subscription Agent shall as soon as practicable return Subscription Certificates with the defects or irregularities which have not been cured or waived to the holder of the Rights. If any Subscription Certificate is alleged to have been lost, stolen or destroyed, the Subscription Agent should follow the same procedures followed for lost stock certificates representing Common Stock it uses in its capacity as transfer agent for the Company’s Common Stock.

 

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8.                                      Intentionally Omitted.

 

9.                                      If requested, the Subscription Agent shall deliver to the Company copies of the exercised Subscription Certificates in accordance with written directions received from the Company. The Subscription Agent shall deliver to the subscribers who have duly exercised Rights, at their registered addresses certificates representing the securities subscribed for as instructed on the reverse side of the Subscription Certificates.

 

10.                               The Subscription Agent shall notify the Company by telephone on and before the close of business on each Business Day during the period commencing three (3) Business Days after the mailing of the Rights and ending at the Expiration Date (a “daily notice”), which notice shall thereafter be confirmed in writing, of (i) the number of Rights exercised and the day covered by such daily notice, (ii) the number of Rights for which defective exercises have been received on the day covered by such daily notice, and (iii) the cumulative total of the information set forth in clauses (i) through (ii) above.  At or before 5:00 P.M., New York City time, on the first trading day following the Expiration Date the Subscription Agent shall certify in writing to the Company the cumulative total through the Expiration Date of all the information set forth in clauses (i) through (ii) above.. The Subscription Agent shall also maintain and update a listing of holders who have fully or partially exercised their Rights and holders who have not exercised their Rights.  The Subscription Agent shall provide the Company or its designees with such information compiled by the Subscription Agent pursuant to this Section 10 as any of them shall request.

 

11.                               With respect to notices or instructions to be provided by the Company hereunder, the Subscription Agent may rely and act on any written instruction signed by any one or more of the following authorized officers or employees of the Company:

 

	
Name
    	
 
    	
Title
    
	
Matthew Beale
    	
 
    	
Chief Executive Officer
    
	
Tracy Kern
    	
 
    	
Chief Financial Officer
    

 

12.                               Whether or not the Rights Offering is consummated, the Company agrees to pay the Subscription Agent for services rendered hereunder, as set forth in the schedule attached to this Agreement.

 

13.                               The Subscription Agent may employ or retain such agents (including but not limited to, vendors, advisors and subcontractors) as it reasonably requires to perform its duties and obligations hereunder; may pay reasonable remuneration for all services so performed by such agents; shall be responsible for any misconduct on the part of such agents; and in the case of counsel, may rely on the written advice or opinion of such counsel, which shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by the Subscription Agent hereunder in good faith and in accordance with such advice or opinion.  Additionally, the Subscription Agent shall identify, report and deliver any unclaimed property and/or payments to all states and jurisdictions for the Company in accordance with applicable abandoned property law.

 

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14.                               The Company hereby covenants and agrees to indemnify, reimburse and hold the Subscription Agent and its officers, directors, employees and agents harmless against any loss, liability or reasonable expense (including legal and other fees and expenses) incurred by the Subscription Agent arising out of or in connection with entering into this Agreement or the performance of its duties hereunder, except for such losses, liabilities or expenses incurred as a result of its gross negligence, bad faith or willful misconduct.  The Company shall not be liable under this indemnity with respect to any claim against the Subscription Agent unless the Company is notified of the written assertion of a claim against it, or of any action commenced against it, promptly after it shall have received any such written information as to the nature and basis of the claim; provided, however, that failure by the Subscription Agent to provide such notice shall not relieve the Company of any liability hereunder if no prejudice occurs.

 

In no event shall either party have any liability for any incidental, special, statutory, indirect or consequential damages, or for any loss of profits, revenue, data or cost of cover, other than pursuant to its indemnification obligations under this Agreement.

 

All provisions regarding indemnification, liability and limits thereon shall survive the resignation or removal of the Subscription Agent or the termination of this Agreement.

 

15.                               Any notice or communication by the Subscription Agent or the Company to the other is duly given if in writing and delivered in person or via first class mail (postage prepaid), or overnight air courier to the other’s address.

 

If to the Company:

 

CDTi Advanced Materials, Inc.

1700 Fiske Place

Oxnard, CA 93033

 

If to the Subscription Agent:

 

American Stock Transfer & Trust Company, LLC

6201 15th Avenue

Brooklyn, New York 11219

Attn: Corporate Actions

Tel: (718) 921.8200

 

with copy to:

 

American Stock Transfer & Trust Company, LLC

6201 15th Avenue

Brooklyn, New York 11219

Attn: General Counsel

Tel: (718) 921.8200

 

5

 

The Subscription Agent and the Company may, by notice to the other, designate additional or different addresses for subsequent notices or communications.

 

16.                               If any provision of this Agreement shall be held illegal, invalid, or unenforceable by any court, this Agreement shall be construed and enforced as if such provision had not been contained herein and shall be deemed an Agreement between the parties to the full extent permitted by applicable law.

 

17.                               This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to principles of conflicts of law, and shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto.

 

18.                               Neither this Agreement, nor any rights or obligations hereunder, may be assigned by either party without the written consent of the other party. However, the Subscription Agent may assign this Agreement or any rights granted hereunder, in whole or in part, either to affiliates, another division, subsidiaries or in connection with its reorganization or to successors of all or a majority of the Subscription Agent’s assets or business without the prior written consent of the Company.

 

19.                               No provision of this Agreement may be amended, modified or waived, except in writing signed by all of the parties hereto.  This Agreement may be executed in counterparts, each of which shall be for all purposes deemed an original, but all of which together shall constitute one and the same instrument.

 

20.                               Nothing herein contained shall amend, replace or supersede any agreement between the Company and the Subscription Agent to act as the Company’s transfer agent, which agreement shall remain of full force and effect.

 

[signature page follows]

 

6

 

This Subscription Agent Agreement has been executed by the parties hereto as of the date first written above.

 

	
 
    	
CDTi   Advanced Materials, Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Tracy Kern
    
	
 
    	
 
    	
Name:   Tracy Kern
    
	
 
    	
 
    	
Title:   Chief Financial Officer
    

 

Agreed & Accepted:

 

AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC

 

 

	
By:
    	
/s/ Michael Legregin
    	
 
    
	
 
    	
Name:   Michael Legregin
    	
 
    
	
 
    	
Title:   SVP
    	
 
    

 

7

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