UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 24, 2014

 

 

Advanced Drainage Systems, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-36557   51-0105665

(State or other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

4640 Trueman Boulevard,

Hilliard, Ohio 43026

  43026
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (614) 658-0050

(Former name or former address if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 1.01 Entry into a Material Definitive Agreement

On July 30, 2014, Advanced Drainage Systems, Inc., a Delaware corporation (the “Company”) closed its initial public offering (the “Offering”) of 14,500,000 shares of the Company’s common stock, par value $0.01 per share (“Common Stock”), pursuant to the Company’s Registration Statement on Form S-1 (File No. 333-194980), as amended (the “Registration Statement”). The material terms of the Offering are described in the prospectus, dated July 24, 2014 (the “Prospectus”), filed by the Company with the Securities and Exchange Commission (the “SEC”) on July 28, 2014.

Registration Rights Agreement

In connection with the Offering, on July 30, 2014, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with certain stockholders of the Company, including ASP ADS Investco, LLC. The Registration Rights Agreement grants to certain stockholders of the Company the right to cause the Company, generally at the Company’s expense, to use the Company’s reasonable best efforts to register certain securities of the Company held by such stockholders for public resale, subject to certain limitations. In the event the Company registers any of its Common Stock following the Offering, certain stockholders of the Company will also have the right to require the Company to use its reasonable best efforts to include in such registration statement shares of Common Stock held by such stockholders, subject to certain limitations, including as determined by the underwriters. The Registration Rights Agreement also provides for the Company to indemnify certain stockholders of the Company and their affiliates in connection with the registration of shares of Common Stock.

The foregoing description is qualified in its entirety by reference to the full text of the Registration Rights Agreement, which is attached as Exhibit 4.1 to this Current Report on Form 8-K and incorporated in this Item 1.01 by reference.


Item 3.03 Material Modification to Rights of Security Holders.

The information provided in Item 1.01 hereto under the heading “Registration Rights Agreement” and in Item 5.03 hereto is incorporated by reference into this Item 3.03.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On July 24, 2014, Scott M. Wolff provided notice of his resignation from his position as a director on the Company’s Board of Directors and any committees thereof, effective as of the date hereof. Mr. Wolff’s resignation did not result from a disagreement with the Company on any matter relating to the Company’s operation, policies or practices. The Company intends to reduce the size of the Board of Directors to eliminate the vacancy created by the departure of Mr. Wolff.

 

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Changes in Fiscal Year.

Amended and Restated Certificate of Incorporation

On July 30, 2014, immediately prior to the closing of the Offering, the Company amended and restated its Certificate of Incorporation (as amended and restated, the “Certificate of Incorporation”), which was filed with the Secretary of State of the State of Delaware on July 30, 2014. A description of the Certificate of Incorporation is contained in the section of the Prospectus entitled “Description of Capital Stock” and is incorporated herein by reference.

The foregoing description and the description contained in the Prospectus are qualified in their entirety by reference to the full text of the Certificate of Incorporation, which is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated in this Item 5.03 by reference.

Second Amended and Restated Bylaws

On July 30, 2014, immediately prior to the closing of the Offering, the Company amended and restated its Amended and Restated Bylaws (as amended and restated, the “Bylaws”). A description of the Bylaws is contained in the section of the Prospectus entitled “Description of Capital Stock” and is incorporated herein by reference.

The foregoing description and the description contained in the Prospectus are qualified in their entirety by reference to the full text of the Bylaws, which is filed as Exhibit 3.2 to this Current Report on Form 8-K and is incorporated in this Item 5.03 by reference.


Item 9.01 Financial Statements and Exhibits

 

(d) Exhibits

Exhibit No.

  

Description

3.1    Amended and Restated Certificate of Incorporation of Advanced Drainage Systems, Inc.
3.2    Second Amended and Restated Bylaws of Advanced Drainage Systems, Inc.
4.1    Registration Rights Agreement, dated as of July 30, 2014, by and among Advanced Drainage Systems, Inc. and the stockholders from time to time party thereto.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    ADVANCED DRAINAGE SYSTEMS, INC.
Date: July 30, 2014     By:   /s/ Mark B. Sturgeon
    Name: Mark B. Sturgeon
    Title: EVP, CFO, Secretary & Treasurer


EXHIBIT INDEX

 

Exhibit No.

  

Description

3.1    Amended and Restated Certificate of Incorporation of Advanced Drainage Systems, Inc.
3.2    Second Amended and Restated Bylaws of Advanced Drainage Systems, Inc.
4.1    Registration Rights Agreement, dated as of July 30, 2014, by and among Advanced Drainage Systems, Inc. and the stockholders from time to time party thereto.

Exhibit 3.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

ADVANCED DRAINAGE SYSTEMS, INC.

ADVANCED DRAINAGE SYSTEMS, INC., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:

1. The present name of the corporation is Advanced Drainage Systems, Inc. (the “ Corporation ”).

2. The Corporation was originally formed under the same name as Advanced Drainage Systems, Inc., a Delaware corporation, on October 31, 1966 by the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware (the “ Secretary of State ”). A Certificate of Amendment amending the original Certificate of Incorporation was filed with the Secretary of State on each of the following dates: August 3, 1970; July 8, 1985; July 1, 1986; December 23, 1986; July 1, 1988; September 30, 1993; July 18, 2003; and March 24, 2006. A Certificate of Merger amending the original Certificate of Incorporation was filed with the Secretary of State on March 30, 1984. A Certificate of Amendment changing the Corporation’s authorized capital and effecting a 4.707-for-1 stock split was filed with the Secretary of State on July 11, 2014.

3. The Corporation’s Certificate of Incorporation is hereby amended and restated pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware (as amended from time to time, the “ DGCL ”), so as to read in its entirety in the form attached hereto as Exhibit A and incorporated herein by this reference (Exhibit A and this Certificate collectively constituting the Corporation’s Amended and Restated Certificate of Incorporation).

4. The amendment and restatement of the Certificate of Incorporation of the Corporation has been duly adopted in accordance with the provisions of Sections 242 and 245 of the DGCL, the Board of Directors of the Corporation having duly adopted resolutions setting forth such amendment and restatement, declaring its advisability and directing that it be submitted to the stockholders of the Corporation for their approval at the 2014 annual meeting of the stockholders of the Corporation; and on June 2, 2014 at such annual meeting, a majority of the outstanding stock entitled to vote thereon, and the holders of a majority of the outstanding stock of each class of stock entitled to vote thereon as a class, was voted in favor of such amendment and restatement.

IN WITNESS WHEREOF, the undersigned officer of the Corporation has executed this Amended and Restated Certificate of Incorporation on the 30 th day of July, 2014.

 

ADVANCED DRAINAGE SYSTEMS, INC.
By:   /s/ Joseph A. Chlapaty
 

 

Name:   Joseph A. Chlapaty
Title:   Chairman, CEO & President


EXHIBIT A

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

ADVANCED DRAINAGE SYSTEMS, INC.

FIRST : Name . The name of the corporation is Advanced Drainage Systems, Inc. (the “ Corporation ”).

SECOND : Registered Office . The Corporation’s registered office in the State of Delaware is at Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, New Castle County. The name of its registered agent at such address is The Corporation Trust Company.

THIRD : Purpose . The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (as amended from time to time, the “ DGCL ”).

FOURTH : Capital Stock . The total number of shares of stock which the Corporation shall have authority to issue is 1,147,070,000, consisting of: (x) 1,000,000,000 shares of common stock, par value $0.01 per share (the “ Common Stock ”), (y) 100,000,000 shares of preferred stock, par value $0.01 per share (the “ General Preferred Stock ”), issuable in one or more series as hereinafter provided, and (z) 47,070,000 shares of 2.50% Cumulative Convertible Voting Preferred Stock, par value $0.01 per share (the “ ESOP Preferred Stock ” and together with General Preferred Stock, “ Preferred Stock ”).

(a)  Common Stock. Except as otherwise provided (i) by the DGCL, (ii) by Section (b) of this Article FOURTH, (iii) Section (c) of this Article FOURTH (and Exhibit 1 referenced therein), or (iv) by resolutions, if any, of the board of directors of the Corporation (the “ Board of Directors ”) fixing the powers, designations, preferences and the relative, participating, optional or other rights of General Preferred Stock, or the qualifications, limitations or restrictions of General Preferred Stock, the entire voting power of the shares of the Corporation for the election of directors and for all other purposes shall be vested exclusively in the Common Stock. Each share of Common Stock shall have one vote upon all matters to be voted on by the holders of the Common Stock, and shall be entitled to participate equally in all dividends payable with respect to the Common Stock and to share equally, subject to any rights and preferences of the General Preferred Stock (as fixed by resolutions, if any, of the Board of Directors) or the ESOP Preferred Stock, in all assets of the Corporation, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, or upon any distribution of the assets of the Corporation. Notwithstanding the foregoing, while any shares of ESOP Preferred Stock are outstanding, pursuant to Section (c) of this Article FOURTH (and Exhibit 1 referenced therein), (A) except as otherwise required by the laws of the State of Delaware, the holders of outstanding shares of Common Stock shall vote together with the holders of outstanding shares of ESOP Preferred Stock as a single class, (B) any dividends or other distributions with respect to any outstanding


shares of Common Stock shall not be declared or paid except in a manner that complies with Section (c) of this Article FOURTH (and Exhibit 1 referenced therein) and (C) the holders of outstanding shares of ESOP Preferred Stock shall be entitled to participate in dividends declared by the Board of Directors of the Corporation with respect to the outstanding shares of Common Stock to the extent and in the manner provided for in Section (c) of this Article FOURTH (and Exhibit 1 referenced therein).

(b)  General Preferred Stock. Subject to the provisions of this Amended and Restated Certificate of Incorporation, the Board of Directors is authorized to fix from time to time by resolution or resolutions the number of shares of any class or series of General Preferred Stock, and to determine the voting powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions, of any such class or series. Further, within the limits and restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any such class or series, the Board of Directors is authorized to increase or decrease (but not below the number of shares of such class or series then outstanding) the number of shares of any such class or series subsequent to the issue of shares of that class or series. In all events, the rights of any and all classes or series of General Preferred Stock shall be subject to and qualified by the rights of the holders of ESOP Preferred Stock specified in Section (c) of this Article FOURTH (and Exhibit 1 referenced therein).

(c)  ESOP Preferred Stock. The powers, designations, preferences and relative, participating, optional or other special rights of, and the qualifications, limitations and restrictions applicable to, the ESOP Preferred Stock shall be as set forth on Exhibit 1 attached to this Amended and Restated Certificate of Incorporation.

FIFTH : Management of Corporation . The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation and for the purpose of creating, defining, limiting and regulating the powers of the Corporation and its directors and stockholders:

(a) The number of directors constituting the Board of Directors shall be not fewer than three and not more than seventeen, each of whom shall be a natural person. Subject to any special rights of any holders of any class or series of Preferred Stock to elect directors, the precise number of directors of the Corporation shall be fixed, and may be altered from time to time, only by resolution of the Board of Directors.

(b) The directors of the Corporation, subject to any rights of the holders of shares of any class or series of Preferred Stock to elect directors, shall be classified with respect to the time for which they severally hold office into three classes, as nearly equal in number as possible. One class’s initial term will expire at the first annual meeting of stockholders of the Corporation following the effectiveness of this Amended and Restated Certificate of Incorporation, another class’s initial term will expire at the second annual meeting of stockholders following the effectiveness of this Amended and Restated Certificate of Incorporation and another class’s initial term will expire at the third annual meeting of stockholders following the effectiveness of this Amended and Restated


Certificate of Incorporation, with directors of each class to hold office until their successors are duly elected and qualified, provided that the term of each director shall continue until the election and qualification of his or her successor or until such director’s earlier death, resignation or removal. At each annual meeting of stockholders of the Corporation beginning with the first annual meeting of stockholders following the effectiveness of this Amended and Restated Certificate of Incorporation, subject to any rights of the holders of shares of any class or series of Preferred Stock, the successors of the directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. In the case of any increase or decrease, from time to time, in the number of directors of the Corporation, the number of directors in each class shall be apportioned as nearly equal as possible. No decrease in the number of directors shall shorten the term of any incumbent director.

(c) Subject to this Article FIFTH, the election of directors may be conducted in any manner approved by the person presiding at a meeting of the stockholders or the directors, as the case may be, at the time when the election is held and need not be by written ballot. The stockholders do not have the right to cumulate their votes for the election of directors.

(d) Subject to any rights of the holders of shares of any class or series of Preferred Stock, if any, to elect additional directors under specified circumstances, a director may be removed from office only for cause and only by the affirmative vote of holders of at least three-fourths (75%) of the votes to which all the stockholders of the Corporation would be entitled to cast in any election of directors or class of directors.

(e) Subject to any rights of the holders of shares of any class or series of Preferred Stock, if any, to elect additional directors under specified circumstances and, except as otherwise provided by law, any vacancy in the Board of Directors that results from an increase in the number of directors, from the death, disability, resignation, disqualification or removal of any director or from any other cause shall be filled solely by a majority of the total number of directors then in office, even if less than a quorum, or by a sole remaining director.

(f) All corporate powers and authority of the Corporation (except as at the time otherwise provided by law, by this Amended and Restated Certificate of Incorporation or by the bylaws of the Corporation) shall be vested in and exercised by the Board of Directors.

(g) To the fullest extent permitted by the DGCL, a director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. If the DGCL is amended after the date of the filing of this Amended and Restated Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended from time to time.


(h) To the fullest extent permitted by the DGCL, the Corporation shall indemnify and advance expenses to the directors of the Corporation, provided that, except as otherwise provided in the bylaws of the Corporation, the Corporation shall not be obligated to indemnify or advance expenses to a director of the Corporation in respect of an action, suit or proceeding (or part thereof) instituted by such director, unless such action, suit or proceeding (or part thereof) has been authorized by the Board of Directors. The rights provided by this Article FIFTH, Section (h) shall not limit or exclude any rights, indemnities or limitations of liability to which any director of the Corporation may be entitled, whether as a matter of law, under the bylaws of the Corporation, by agreement, vote of the stockholders, approval of the directors of the Corporation or otherwise.

SIXTH . Stockholder Action by Written Consent . Any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken only upon the vote of the stockholders at an annual or special meeting duly called and may not be taken by written consent of the stockholders.

SEVENTH . Special Meetings . Subject to the special rights of any series of Preferred Stock and to the requirements of applicable law, special meetings of the stockholders of the Corporation for any purpose or purposes may be called only by or at the direction of the Board of Directors pursuant to a resolution of the Board of Directors adopted by a majority of the total number of directors then in office. The stockholders of the Corporation do not have the power to call a special meeting of the stockholders. Except as otherwise required by law, the business conducted at a special meeting of stockholders of the Corporation shall be limited exclusively to the business set forth in the Corporation’s notice of meeting, and the individual or group calling such meeting shall have exclusive authority to determine the business included in such notice. Any special meeting of the stockholders shall be held either within or without the State of Delaware, at such place, if any, and on such date and time as shall be specified in the notice of such special meeting. The bylaws of the Corporation may establish procedures regulating the submission by stockholders of nominations and proposals for consideration at meetings of stockholders of the Corporation.

EIGHTH : DGCL Section 203 . As permitted under and pursuant to Section 203(b)(3) of the DGCL, the Corporation shall not be governed by or subject to Section 203 of the DGCL.

NINTH : Approval of Specified Matters . Subject to the special rights of any series of Preferred Stock and to the requirements of applicable law, and in addition to any other vote required by this Amended and Restated Certificate of Incorporation, the bylaws of the Corporation or otherwise required by law, unless the following are approved by the affirmative vote of at least three-fourths (75%) of the total number of Directors then in office, the affirmative vote of the holders of at least three-fourths (75%) of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to approve:

(a) a reorganization, recapitalization, share exchange, share reclassification, consolidation, conversion or merger of the Corporation;


(b) the sale, lease, exchange, transfer or other disposition (in one transaction or a series of transactions) of all or substantially all of the Corporation’s assets; or

(c) a dissolution of the Corporation or a revocation of a dissolution.

TENTH : Amendment of Certificate of Incorporation . The Corporation reserves the right to amend, alter or repeal any provision contained in this Amended and Restated Certificate of Incorporation in the manner now or hereafter prescribed by the DGCL, and all rights herein conferred upon stockholders or directors are granted subject to this reservation, provided, however, that any amendment, alteration or repeal of Article FIFTH, Section (g) or Section (h) shall not adversely affect any right or protection existing under this Amended and Restated Certificate of Incorporation immediately prior to such amendment, alteration or repeal, including any right or protection of a director thereunder in respect of any act or omission occurring prior to the time of such amendment, alteration or repeal. Notwithstanding anything to the contrary contained in this Amended and Restated Certificate of Incorporation, and notwithstanding that a lesser percentage may be permitted from time to time by applicable law, no provision of any of Articles FIFTH, SIXTH, SEVENTH, EIGHTH, NINTH, this Article TENTH or Articles ELEVENTH or TWELFTH may be amended, altered or repealed in any respect, nor may any provision or bylaw inconsistent therewith be adopted, unless, in addition to any other vote required by this Amended and Restated Certificate of Incorporation or otherwise required by law, such amendment, alteration or repeal is approved at a meeting of the stockholders called for that purpose by, in addition to any other vote otherwise required by law, the affirmative vote of the holders of at least three-fourths (75%) of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.

ELEVENTH : Amendment of Bylaws . In furtherance and not in limitation of the powers conferred by law, the Board of Directors is expressly authorized to amend, alter or repeal the bylaws of the Corporation subject to the power of the stockholders of the Corporation entitled to vote with respect thereto to amend, alter or repeal the bylaws. Any amendment, alteration or repeal of the bylaws of the Corporation by the Board of Directors shall require the approval of three-fourths (75%) of the total number of Directors then in office. In addition to any other vote otherwise required by law, the stockholders of the Corporation may amend, alter or repeal the bylaws of the Corporation, provided that any such action will require the affirmative vote of the holders of at least three-fourths (75%) of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote with respect thereto, voting together as a single class.

TWELFTH : Exclusive Jurisdiction for Certain Actions . Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation arising pursuant to any provision of the DGCL, this Amended and Restated Certificate of Incorporation or the bylaws of the Corporation, or (iv) any action asserting a claim against the Corporation governed by the internal affairs doctrine, in each such case subject to said Court of Chancery


having personal jurisdiction over the indispensable parties named as defendants therein. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article TWELFTH.

[Remainder of page intentionally left blank; Exhibit 1 to Amended and Restated Certificate of Incorporation of

Advanced Drainage Systems, Inc. follows]


EXHIBIT 1 TO

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

ADVANCED DRAINAGE SYSTEMS, INC.

The powers, designations, preferences and relative, participating, optional or other special rights of, and the qualifications, limitations and restrictions applicable to, the ESOP Preferred Stock shall be as follows:

1. Restricted Ownership .

Shares of ESOP Preferred Stock shall be issued only to a trustee acting on behalf of any employee stock ownership plan or other employee benefit plan of the Corporation (a “ Plan Trustee ”). In the event of any transfer of shares of ESOP Preferred Stock to any person other than to a Plan Trustee, including a distribution to the participants of an employee stock ownership plan or other employee benefit plan, the shares of ESOP Preferred Stock so transferred, upon such transfer and without any further action by the Corporation or the holder, shall be automatically converted into shares of Common Stock, on the terms provided for the conversion of shares of ESOP Preferred Stock into shares of Common Stock pursuant to Section 5 of this Exhibit 1 and no such transferee shall have any of the voting powers, preferences and relative, participating, optional or special rights ascribed to shares of ESOP Preferred Stock hereunder but, rather, only the powers and rights pertaining to the Common Stock into which such shares of ESOP Preferred Stock shall be so converted (the “ Automatic Conversion Upon Transfer ”). Certificates representing shares of ESOP Preferred Stock shall contain legends to reflect such restrictions on transfer. Notwithstanding the foregoing provisions of this Section 1 of this Exhibit 1 , shares of ESOP Preferred Stock may be converted into shares of Common Stock as provided by Section 5 of this Exhibit 1 and the shares of Common Stock issued upon such conversion may be transferred by the holder thereof as permitted by law and by the Corporation’s Amended and Restated Certificate of Incorporation, as amended.

2. Dividends .

(a) From and after the date of issuance (the “ Date of Issuance ”) of shares of ESOP Preferred Stock and prior to the date of conversion thereof, the holders of such shares shall be entitled to receive, out of the assets of the Corporation at the time legally available therefor and before any dividend or other distribution is declared or paid with respect to the outstanding shares of Common Stock or General Preferred Stock, cumulative dividends payable in cash or, at the option of the Corporation, in additional shares of ESOP Preferred Stock having a Fair Market Value equal to the cash value of the dividends, as and when declared by the Board of Directors, on March 31 of such year or on such other date in March of such year as shall be designated by the Board of Directors (each date is referred to herein as a “ Dividend Payment Date ” and the annual period between the consecutive Dividend Payment Dates is referred to herein as a “ Dividend Period ”) at the Applicable Dividend Rate (as defined below). To the extent: (i) a cash dividend is not paid on a Dividend Payment Date in accordance with the next preceding sentence; (ii) shares of ESOP Preferred Stock are available to the Company to make such dividend payment; and (iii) the Company is not legally prohibited from making a dividend


payment in shares of ESOP Preferred Stock at such time, then the Company shall make the dividend payment in shares of ESOP Preferred Stock. Such dividends shall be payable in arrears, in an annual installment at the Applicable Dividend Rate on each Dividend Payment Date. Each such annual dividend shall be paid to the holders of record of outstanding shares of ESOP Preferred Stock as their names shall appear on the share register of the Corporation on the corresponding Record Date (as defined below). As used herein, the term “ Applicable Dividend Rate ” means a dividend rate of $0.0195 per share per annum, which dividend rate is subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization affecting shares of ESOP Preferred Stock. Also, as used in this Exhibit 1 , the term “ Record Date ” means, with respect to the annual dividends payable on March 31, the preceding March 15 or such other record date as may be designated by the Board of Directors in the event that the Board of Directors designates a Dividend Payment Date other than March 31.

(b) If, on any Dividend Payment Date which is prior to the date of conversion of shares of ESOP Preferred Stock, full cash dividends pursuant to subclause (a) above are not paid or made available to the holders of outstanding shares of ESOP Preferred Stock and the funds available to the Corporation for such purpose shall be insufficient to permit payment in full in cash to all such holders of outstanding shares of ESOP Preferred Stock of the preferential dividend amounts to which they are then entitled pursuant to subclause (a) above and such dividend is not paid in the form of additional shares of ESOP Preferred Stock, the entire amount available for payment of cash dividends with respect to the outstanding shares of ESOP Preferred Stock pursuant to subclause (a) above shall be distributed among the holders of outstanding shares of ESOP Preferred Stock ratably, in proportion to the full amounts to which they would otherwise be entitled, and any remainder not paid in cash to the holders of outstanding shares of ESOP Preferred Stock shall cumulate as provided in subclause (c) below.

(c) If, on any Dividend Payment Date which is prior to the date of conversion of shares of ESOP Preferred Stock, the holders of outstanding shares of ESOP Preferred Stock shall not have received the full dividends in cash or in shares of ESOP Preferred Stock to which they are entitled pursuant to subclause (a) above, then such unpaid dividends shall cumulate, whether or not declared, until so paid. If, on any Dividend Payment Date which is prior to the date of conversion of shares of ESOP Preferred Stock, full cumulative dividends on the ESOP Preferred Stock have not been declared and paid or set apart for payment when due, the Corporation shall not declare or pay or set apart for payment any dividends, or make any other distribution, repurchase, redemption, or retirements on any class of stock ranking junior to the ESOP Preferred Stock.

(d) In addition to the cumulative dividends payable with respect to the outstanding shares of ESOP Preferred Stock, pursuant to subclauses (a), (b) and (c) above if, on any Dividend Payment Date which is prior to the date of conversion of shares of ESOP Preferred Stock, after the payment of all dividends, if any, with respect to the outstanding shares of ESOP Preferred Stock pursuant to subclauses (a), (b) and (c) above any dividend shall be declared by the Board of Directors with respect to the outstanding shares of Common Stock, the holders of outstanding shares of ESOP Preferred Stock on the applicable Record Date shall be entitled to receive on the applicable Dividend Payment Date dividends in such amount as they would be entitled to receive if their shares of ESOP Preferred Stock had been converted into shares of Common Stock on the applicable Record Date.


3. Distributions Upon Liquidation. Dissolution or Winding Up .

(a) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, and before any distribution or payment shall be made to the holders of outstanding shares of Common Stock or General Preferred Stock, the holders of outstanding shares of ESOP Preferred Stock shall be entitled to receive, out of the assets of the Corporation at the time legally available therefor, an amount equal to the Applicable Value (as defined below), together with all dividends accrued (whether or not declared) during the Dividend Period in which such liquidation, dissolution or winding up occurs and all cumulated and unpaid dividends, if any, accrued during any prior Dividend Periods. As used herein, the term “ Applicable Value ” means $0.781 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization affecting such shares. If, upon any such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the assets of the Corporation legally available therefor before any distribution or payment shall be made to the holders of outstanding shares of Common Stock or General Preferred Stock shall be insufficient to permit the payment in full to the holders of outstanding shares of ESOP Preferred Stock of the preferential liquidation amounts to which they are then entitled, the entire assets of the Corporation thus distributable shall be distributed among the holders of the outstanding shares of ESOP Preferred Stock ratably, in proportion to the full amounts to which such holders would otherwise be entitled if such assets were sufficient to permit payment in full. In addition, after the payment in full of all preferential liquidation amounts to which the holders of outstanding shares of ESOP Preferred Stock shall be entitled, the holders of outstanding shares of ESOP Preferred Stock shall be entitled to participate in the distribution of assets of the Corporation available for distribution to holders of Common Stock, ratably with the holders of outstanding shares of Common Stock, in proportion to the ratio which the total number of shares of Common Stock into which the outstanding shares of ESOP Preferred Stock would be convertible on the effective date of such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation bears to the total number of shares of Common Stock deemed to be outstanding on such date (assuming for this purpose the conversion of all outstanding shares of ESOP Preferred Stock on such effective date). Each holder of outstanding shares of ESOP Preferred Stock shall be entitled to receive that portion of the assets of the Corporation available for such distribution which number of shares of Common Stock issuable upon conversion of such holder’s shares of ESOP Preferred Stock bears to the total number of shares of Common Stock deemed to be outstanding on the effective date of such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.

4. Redemption .

The shares of ESOP Preferred Stock shall not be redeemable at the option of the Corporation. Shares of ESOP Preferred Stock shall be redeemed by the Corporation, for cash at a redemption price equal to the greater of the Fair Market Value of the ESOP Preferred Stock or the Applicable Value, plus accumulated and unpaid dividends thereon to the date fixed for redemption, at the option of the holder, at any time and from time to time upon notice to the Corporation given not less than five (5) business days prior to the date fixed by the holder in such notice for such redemption, upon certification by such holder to the Corporation when and to the extent necessary for such holder to provide for distributions required to be made to participants under the Corporation’s Employee Stock Ownership Plan, as amended and restated effective as of April 1, 2010, as the same may be amended (the “ ESOP ”), or any successor plan.


5. Conversion .

(a) From and after the Date of Issuance of shares of ESOP Preferred Stock and prior to the expiration of thirty days following the date (the “ ESOP Payment Date ”) the trustee of the Corporation’s ESOP receives written notice of the final payment by the ESOP of all amounts due to the Corporation pursuant to the Secured Term Loan Agreement dated on or about September 30, 1993 between the Corporation and the ESOP, each share of ESOP Preferred Stock shall be convertible, at the option of the holder thereof, into 0.7692 of a fully paid and nonassessable share of Common Stock of the Corporation, subject to adjustment as hereinafter set forth in subclause (e) below. Notwithstanding the foregoing provisions of this paragraph 5(a), in the case of an Automatic Conversion Upon Transfer resulting from the distribution to a participant of an employee stock ownership plan or other employee benefit plan, each share of ESOP Preferred Stock shall be converted into a number of Shares of Common Stock having Fair Market Value equal to the greater of (i) the Fair Market Value of the ESOP Preferred Stock, or (ii) the Applicable Value, plus accumulated and unpaid dividends thereon to the date of such Automatic Conversion Upon Transfer, but not less than the number of shares of Common Stock determined pursuant to the next preceding sentence.

(b) From and after the thirty-first day following the ESOP Payment Date, each share of ESOP Preferred Stock shall be convertible, at the option of the holder thereof, into .07692 of a fully paid and nonassessable share of Common Stock of the Corporation, subject to adjustment as hereinafter set forth in subclause (e) below.

(c) To exercise such conversion option, the holder of shares of ESOP Preferred Stock shall surrender the certificate or certificates representing the shares of ESOP Preferred Stock to be converted, duly endorsed for transfer to the Corporation, at the principal executive office of the Corporation, and shall give written notice, postage prepaid, by certified or registered mail, return receipt requested, or by hand delivery to the Corporation at its principal executive office, of the election of such holder to convert all or a portion of the shares of ESOP Preferred Stock represented by the certificate or certificates surrendered into shares of Common Stock which notice shall set forth the name or names in which the certificate or certificates representing the shares of Common Stock to be issued upon conversion are to be issued. Conversion shall be deemed to have been effected on the date of receipt by the Corporation of such notice and the certificate or certificates to be surrendered for conversion is made (the “ Conversion Date ”). As promptly as practicable thereafter, the Corporation shall issue to or upon the written order of such holder, a certificate or certificates for the number of full shares of Common Stock to which such holder is entitled. The conversion of shares of ESOP Preferred Stock into shares of Common Stock shall be deemed to be effective and such holder, or the person or person designated by such holder, shall be deemed to have become a holder of record of the shares of Common Stock issuable upon conversion of such shares of ESOP Preferred Stock on the applicable Conversion Date unless the transfer books of the Corporation are closed on such date, in which event such holder shall be deemed to have become a holder of record of the shares of Common Stock issued upon conversion of the shares of ESOP Preferred Stock on the next succeeding date on which the transfer of books of the Corporation are open. Upon conversion of


only a portion of the number of shares of ESOP Preferred Stock represented by a certificate or certificates surrendered for conversion, the Corporation shall issue and deliver to or upon the written order of the holder of the certificate or certificates so surrendered a new certificate or certificates representing the number of shares of ESOP Preferred Stock not so converted.

(d) No fractional shares of Common Stock shall be issued upon conversion of shares of ESOP Preferred Stock. In lieu of issuing fractional shares of Common Stock upon conversion of shares of ESOP Preferred Stock, the Corporation shall pay a cash adjustment in respect of such fractional shares of Common Stock equal to the fair-market value thereof as determined by the Board of Directors. The Corporation shall at all times reserve and keep available out of its authorized, but unissued shares of Common Stock, solely for the purpose of effecting the conversion of outstanding shares of ESOP Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all shares of ESOP Preferred Stock from time-to-time outstanding.

(e) The number of shares of Common Stock into which a share of ESOP Preferred Stock shall be convertible as set forth in subclauses (a) and (b) above, shall be subject to adjustment from time-to-time as follows:

(1) In case the Corporation shall at any time subdivide its outstanding shares of Common Stock or shall issue a dividend or other distribution payable in shares of Common Stock, the number of shares of Common Stock into which a share of ESOP Preferred Stock shall be convertible shall be proportionately increased, effective immediately after the effective date of such subdivision or at the close of business on the record date fixed by the Board of Directors for such dividend or other distribution, as the case may be;

(2) In case the Corporation shall at any time combine its outstanding shares of Common Stock, the number of shares of Common Stock into which a share of ESOP Preferred Stock shall be convertible shall be proportionately decreased, effective immediately after the effective date of such combination; and

(3) In case the Corporation shall at any time recapitalize or reclassify its capital stock, or in case of any consolidation or merger of the Corporation with or into any other person in which the Corporation’s stock is exchanged solely for stock (other than a consolidation or merger in which the Corporation is the continuing entity and which does not result in any change in the capital stock of the Corporation) or in the case of the sale or other disposition of all or substantially all the assets of the Corporation as an entity to any other person solely for stock, then in each such case each outstanding share of ESOP Preferred Stock shall after such recapitalization, reclassification, consolidation, merger, sale or other disposition be convertible into preferred stock of the successor or resulting Corporation and shall have the same powers, preferences, rights and other attributes as the ESOP Preferred Stock, except that the common stock of the successor or resulting Corporation shall be the stock into which the preferred stock is convertible. The provisions set forth above shall apply to successive recapitalizations, reclassifications, consolidations, mergers, sales or other dispositions.


(4) In case of any consolidation or merger of the Corporation with or into any other person in which the Corporation’s stock is exchanged for stock and cash (other than a consolidation or merger in which the Corporation is the continuing entity and which does not result in any change in the capital stock of the Corporation), the ESOP Preferred Stock shall be deemed converted into the Corporation’s Common Stock immediately prior to consummation of such transaction unless notified by the record holder of the ESOP Preferred Stock that such record holder elects to redeem the ESOP Preferred Stock at the price of par plus accumulated and unpaid dividends.

(f) All shares of Common Stock issued upon conversion of shares of ESOP Preferred Stock shall, upon issuance by the Corporation, be duly and validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issuance thereof.

6. Voting Rights . The holders of shares of ESOP Preferred Stock shall be entitled to vote on or otherwise consent to any matter requiring the vote or consent of the stockholders of the Corporation under the laws of the State of Delaware. Each holder of outstanding shares of ESOP Preferred Stock shall be entitled to one vote for each share of ESOP Preferred Stock immediately held of record by such holder on the record date fixed by the Board of Directors for determining the stockholders of the Corporation entitled to vote or otherwise consent to such matters. Except as otherwise required by the laws of the State of Delaware, the holders of outstanding shares of ESOP Preferred Stock shall vote together with the holders of outstanding shares of Common Stock as a single class.

7. Definitions . For the purpose of this Exhibit 1 , the following definitions shall apply:

Fair Market Value ” of any security which is not publicly traded or of any other property shall mean the fair value thereof as determined by an independent investment banking or appraisal firm experienced in the valuation of such securities or property selected in good faith by the Board of Directors or a committee thereof, or, if no such investment banking or appraisal firm is in the good faith judgment of the Board of Directors or such committee available to make such determination, as determined in good faith by the Board of Directors or such committee; provided, however, and solely for the purposes of this Exhibit 1 , the Fair Market Value of the ESOP Preferred Stock, the General Preferred Stock and the Common Stock (except, with respect to any such class of stock, at such time as it is publicly traded) shall be determined by reference to the most recent appraisal thereof rendered to the Plan Trustee of the Plan by its financial advisor or, at the election of the Corporation, a financial advisor mutually acceptable to the Plan Trustee and the Board of Directors or a committee thereof (except that in lieu of said most recent appraisal, in the event that the Fair Market Value could reasonably be expected to have changed since such appraisal, either the Plan Trustee or the Corporation may require said financial advisor to prepare a current appraisal thereof, in which event such current appraisal shall be determinative). As to shares of Common Stock, General Preferred Stock or any other class of capital stock or securities of the Corporation or any other issuer which are publicly traded, the “ Fair Market Value ” thereof shall mean the average of the Current Market Prices (as hereinafter defined) of such shares or securities for each day of the Adjustment Period (as hereinafter defined). “ Current Market Price ” of publicly traded shares of Common Stock, General Preferred Stock or any other class of capital stock or other security of the Corporation or any other issuer for a day shall mean the last reported sales price, regular way, or, in case no sale takes place on such day, the average of the reported-closing bid and asked prices, regular way, in either case as


reported on the New York Stock Exchange Composite Tape or, if such security is not listed or admitted to trading on the New York Stock Exchange, on the principal national securities exchange on which such security is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, the average of the closing bid and asked prices on each such day in the over-the-counter market as reported through the OTC Bulletin Board (OTCBB) or, if bid and asked prices for such security on each such day shall not have been reported through the OTC Bulletin Board (OTCBB), the average of the bid and asked prices for such day as furnished by any New York Stock Exchange member firm regularly making a market in such security selected for such purpose by the Board of Directors or a committee thereof on each trading day during the Adjustment Period. “ Adjustment Period ” shall mean the period of five (5) consecutive trading days, selected by the Board of Directors or a committee thereof, during the twenty (20) trading days preceding, and including the date as of which the Fair Market Value of a security is to be determined.

* * * * * *

Exhibit 3.2

ADVANCED DRAINAGE SYSTEMS, INC.

SECOND AMENDED AND RESTATED BYLAWS

As amended and restated effective as of July 30, 2014

ARTICLE I

STOCKHOLDERS

Section 1.01.   Annual Meetings . The annual meeting of the stockholders of Advanced Drainage Systems, Inc. (the “ Corporation ”) for the election of directors (each, a “ Director ”) to succeed directors whose terms expire and for the transaction of such other business as properly may come before such meeting shall be held each year, either within or without the State of Delaware, at such place, if any, and on such date and at such time, as may be fixed from time to time by resolution of the Corporation’s Board of Directors (the “ Board of Directors ”) and set forth in the notice or waiver of notice of the meeting. The Board of Directors may postpone, reschedule or cancel any annual meeting of stockholders previously scheduled by the Board of Directors.

Section 1.02.   Special Meetings . Special meetings of the stockholders of the Corporation may be called only in the manner set forth in certificate of incorporation of the Corporation (the “ Certificate of Incorporation ”). Notice of every special meeting of the stockholders of the Corporation shall state the purpose or purposes of such meeting. Except as otherwise required by law, the business conducted at a special meeting of stockholders of the Corporation shall be limited exclusively to the business set forth in the Corporation’s notice of meeting, and the individual or group calling such meeting shall have exclusive authority to determine the business included in such notice. Any special meeting of the stockholders shall be held either within or without the State of Delaware, at such place, if any, and on such date and time, as shall be specified in the notice of such special meeting.

Section 1.03.   Participation in Meetings by Remote Communication . The Board of Directors, acting in its sole discretion, may establish guidelines and procedures in accordance with applicable provisions of the General Corporation Law of the State of Delaware, as amended from time to time (the “ DGCL ”) and any other applicable law for the participation by stockholders and proxyholders in a meeting of stockholders by means of remote communications, and may determine that any meeting of stockholders will not be held at any place but will be held solely by means of remote communication. Stockholders and proxyholders complying with such procedures and guidelines and otherwise entitled to vote at a meeting of stockholders shall be deemed present in person and entitled to vote at a meeting of stockholders, whether such meeting is to be held at a designated place or solely by means of remote communication.

Section 1.04.   Notice of Meetings; Waiver .

(a) The Secretary or any Assistant Secretary shall cause notice of each meeting of stockholders to be given in a manner permitted by the DGCL not less than ten nor more than 60 days prior to the meeting, to each stockholder of record entitled to vote at such meeting, subject to such exclusions as are then permitted by the DGCL. The notice shall


specify (i) the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date of stockholders entitled to notice of the meeting), (ii) the place, if any, date and time of such meeting of the stockholders, (iii) the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, (iv) in the case of a special meeting, the purpose or purposes for which such meeting is called and (v) such other information as may be required by law or as may be deemed appropriate by the Board of Directors, the Chief Executive Officer or the Secretary of the Corporation. If the stockholder list referred to in Section 1.07 of these Bylaws is made accessible on an electronic network, the notice of meeting shall indicate how the stockholder list can be accessed. If a stockholder meeting is to be held solely by means of electronic communications, the notice of such meeting must provide the information required to access such stockholder list.

(b) A written waiver of notice of meeting signed by a stockholder, or a waiver by electronic transmission by a stockholder, whether given before or after the meeting, is deemed equivalent to notice. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in a waiver of notice. The attendance of any stockholder at a meeting of stockholders is a waiver of notice of such meeting, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business at the meeting on the ground that the meeting is not lawfully called or convened.

Section 1.05.   Quorum . Except as otherwise required by law or by the Certificate of Incorporation, the presence in person or by proxy of the holders of record of a majority in voting power of the shares entitled to vote at a meeting of stockholders shall constitute a quorum for the transaction of business at such meeting, provided, however, that where a separate vote by a class or series is required, the holders of a majority in voting power of all issued and outstanding stock of such class or series entitled to vote on such matter, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to such matter. In the absence of a quorum, the stockholders so present may, by a majority in voting power thereof, adjourn the meeting from time to time in the manner provided in Section 1.08 of these Bylaws until a quorum shall attend.

Section 1.06 Voting . Except as otherwise provided in the Certificate of Incorporation or by law, every holder of record of shares entitled to vote at a meeting of stockholders shall be entitled to one vote for each such share outstanding in his or her name on the books of the Corporation at the close of business on the record date for such vote. If no record date has been fixed for a meeting of stockholders, then every holder of record of shares entitled to vote at a meeting of stockholders shall be entitled to one vote (unless otherwise provided by the Certificate of Incorporation or by applicable law) for each such share of stock outstanding in his or her name on the books of the Corporation at the close of business on the day next preceding the day on which notice of the meeting is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. Except as otherwise required by law, the Certificate of Incorporation, these Bylaws, the rules and regulations of any stock exchange applicable to the Corporation, or pursuant to any other rule or regulation applicable to the Corporation or its stockholders, the vote of a majority in voting power of the shares entitled

 

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to vote at a meeting of stockholders on the subject matter in question represented in person or by proxy at any meeting at which a quorum is present shall be sufficient for the transaction of any business at such meeting. The stockholders do not have the right to cumulate their votes for the election of Directors. As of the effective date of these Bylaws, in accordance with the Certificate of Incorporation, the voting power of the Corporation consists of (except to the extent otherwise required by the laws of the State of Delaware) the holders of outstanding shares of common stock of the Corporation and the holders of outstanding shares of 2.50% Cumulative Convertible Voting Preferred Stock of the Corporation voting together as a single class.

Section 1.07.   Voting Lists . The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare, at least 10 days before every meeting of the stockholders (and before any adjournment thereof for which a new record date has been set), a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder. This list, which may be in any format including electronic format, shall be open to the examination of any stockholder prior to and during the meeting for any purpose germane to the meeting in the manner required by the DGCL and other applicable law. The stock ledger shall be the only evidence as to who are the stockholders entitled by this Section 1.07 to examine the list required by this Section 1.07 or to vote in person or by proxy at any meeting of stockholders.

Section 1.08.   Adjournment . Any meeting of stockholders may be adjourned from time to time, by the chairperson of the meeting or by the vote of a majority in voting power of the shares of stock present in person or represented by proxy at the meeting, to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the place, if any, and date and time thereof (and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting) are announced at the meeting at which the adjournment is taken unless the adjournment is for more than 30 days or a new record date is fixed for the adjourned meeting after the adjournment, in which case notice of the adjourned meeting in accordance with Section 1.04 of these Bylaws shall be given to each stockholder of record entitled to vote at the meeting. At the adjourned meeting, the Corporation may transact any business that might have been transacted at the original meeting.

Section 1.09.   Proxies . Any stockholder entitled to vote at any meeting of the stockholders or to express consent to or dissent from corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy. A stockholder may authorize a valid proxy by executing a written instrument signed by such stockholder, or by causing his or her signature to be affixed to such writing by any reasonable means including, but not limited to, by facsimile signature, or by transmitting or authorizing an electronic transmission setting forth an authorization to act as proxy to the person designated as the holder of the proxy, a proxy solicitation firm or a like authorized agent. No proxy may be voted or acted upon after the expiration of three years from the date of such proxy, unless such proxy provides for a longer period. Every proxy is revocable at the pleasure of the stockholder executing it unless the proxy states that it is irrevocable and applicable law makes it irrevocable. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by filing another duly executed proxy bearing a later date with the Secretary. Proxies by electronic transmission must either set forth or be submitted

 

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with information from which it can be determined that the electronic transmission was authorized by the stockholder. Any copy, facsimile telecommunication or other reliable reproduction of a writing or transmission created pursuant to this Section 1.09 may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

Section 1.10 Organization; Procedure; Inspection of Elections .

(a) At every meeting of stockholders the presiding person shall be the Chairman of the Board or, in the event of his or her absence or disability, the Chief Executive Officer or, in the event of his or her absence or disability, a presiding person chosen by resolution of the Board of Directors. The Secretary, or in the event of his or her absence or disability, the Assistant Secretary, if any, or if there be no Assistant Secretary, in the absence of the Secretary, an appointee of the presiding person, shall act as secretary of the meeting. The Board of Directors may make such rules or regulations for the conduct of meetings of stockholders as it shall deem necessary, appropriate or convenient. Subject to any such rules and regulations, the presiding person of any meeting shall have the right and authority to prescribe rules, regulations and procedures for such meeting and to take all such actions as in the judgment of the presiding person are appropriate for the proper conduct of such meetings. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the presiding person of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the presiding person of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter of business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board of Directors or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

(b) Preceding any meeting of the stockholders, the Board of Directors may, and when required by law shall, appoint one or more persons to act as inspectors of elections, and may designate one or more alternate inspectors. If no inspector or alternate so appointed by the Board of Directors is able to act, or if no inspector or alternate has been appointed and the appointment of an inspector is required by law, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. No Director or nominee for the office of Director shall be appointed as an inspector of elections. Each

 

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inspector, before entering upon the discharge of the duties of an inspector, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall discharge their duties in accordance with the requirements of applicable law.

Section 1.11.   Stockholder Action by Written Consent . Except as otherwise provided in the Certificate of Incorporation, stockholders may not take any action by written consent in lieu of action at an annual or special meeting of stockholders.

Section 1.12.   Notice of Stockholder Proposals and Nominations .

(a)  Annual Meetings of Stockholders .

(i) Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders only (A) pursuant to the Corporation’s notice of the meeting (or any supplement thereto), (B) by or at the direction of the Board of Directors or a Committee appointed by the Board for such purpose, or (C) by any stockholder of the Corporation who is entitled to vote at the meeting, who complies with the notice procedures set forth in clauses (ii) and (iii) of this Section 1.12(a) and who is a stockholder of record at the time such notice is delivered and at the date of the meeting.

(ii) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to subclause (C) of Section 1.12(a)(i) of these Bylaws, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and any such proposed business other than nominations must constitute a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not fewer than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting (which anniversary date, in the case of the first annual meeting of stockholders following the closing of the Corporation’s initial underwritten public offering of common stock, shall be deemed to be June 2, 2015); provided that if the date of the annual meeting is advanced by more than 30 days or delayed by more than 70 days from such anniversary date of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than 120 days prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made. Such stockholder’s notice shall set forth (A) as to each person whom the stockholder proposes to nominate for election or re-election as a Director all information relating to such person that is required to be disclosed in solicitations of proxies for election of Directors, or is otherwise required, in each case pursuant to and in accordance with Section 14(a) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) and the rules and regulations promulgated thereunder, including such person’s written consent to being named in the proxy

 

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statement as a nominee and to serving as a Director if elected; (B) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting (including the text of any resolution proposed for consideration and if such business includes proposed amendments to the Certificate of Incorporation or Bylaws, the text of the proposed amendments), the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and of any beneficial owner on whose behalf the proposal is made; and (C) as to the stockholder giving the notice and any beneficial owner on whose behalf the nomination or proposal is made (1) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner, (2) the class or series and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner, (3) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination, and (4) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (x) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal or elect the nominee and/or (y) otherwise to solicit proxies from stockholders in support of such proposal or nomination. Notice of a stockholder nomination or proposal shall also set forth, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (A) a description of any agreement, arrangement or understanding between or among such stockholder and any such beneficial owner, any of their respective affiliates or associates, and any other person or persons (including their names) in connection with the proposal of such nomination or other business; (B) a description of any agreement, arrangement or understanding (including, regardless of the form of settlement, any derivative, long or short positions, profit interests, forwards, futures, swaps, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions and borrowed or loaned shares) that has been entered into by or on behalf of, or any other agreement, arrangement or understanding that has been made, the effect or intent of which is to create or mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder or any such beneficial owner or any such nominee with respect to the Corporation’s securities (a “ Derivative Instrument ”); (C) to the extent not disclosed pursuant to the immediately preceding clause (B), the principal amount of any indebtedness of the Corporation or any of its subsidiaries beneficially owned by such stockholder or by any such beneficial owner, together with the title of the instrument under which such indebtedness was issued and a description of any Derivative Instrument entered into by or on behalf of such stockholder or such beneficial owner relating to the value or payment of any indebtedness of the Corporation or any such subsidiary; and (D) any other information relating to such stockholder and any such beneficial owner required to be disclosed in a proxy statement or other filings required to be made in connection with

 

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solicitations of proxies for, as applicable, the proposal and/or for the election of directors in an election contest pursuant to and in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder. The foregoing notice requirements shall be deemed satisfied by a stockholder if the stockholder has notified the Corporation of his or her intention to present a proposal at an annual meeting in compliance with Rule 14a-8 (or any successor thereof) promulgated under the Exchange Act, and such stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting. The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a Director of the Corporation. In addition, a stockholder seeking to bring an item of business before the annual meeting shall promptly provide any other information reasonably requested by the Corporation.

(iii) Notwithstanding anything in the second sentence of Section 1.12(a)(ii) of these Bylaws to the contrary, in the event that the number of Directors to be elected to the Board of Directors is increased and there is no public announcement naming all of the nominees for Director or specifying the size of the increased Board of Directors made by the Corporation at least 70 days prior to the first anniversary of the preceding year’s annual meeting (which anniversary date, in the case of the first annual meeting of stockholders following the closing of the Corporation’s initial underwritten public offering of common stock, shall be deemed to be June 2, 2015), a stockholder’s notice under this Section 1.12(a) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the tenth day following the day on which such public announcement is first made by the Corporation.

(b)  Special Meetings of Stockholders . Only such business as shall have been brought before the special meeting of the stockholders pursuant to the Corporation’s notice of meeting shall be conducted at such meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which Directors are to be elected pursuant to the Corporation’s notice of meeting (i) by or at the direction of the Board of Directors or a Committee appointed by the Board for such purpose or (ii) provided that the Board of Directors has determined that the Directors shall be elected at such meeting, by any stockholder of the Corporation who is entitled to vote at the meeting, who complies with the notice procedures set forth in this Section 1.12(b) and who is a stockholder of record at the time such notice is delivered to the Secretary of the Corporation. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more Directors of the Corporation, any stockholder entitled to vote at such meeting may nominate a person or persons, as the case may be, for election to such position(s) as specified by the Corporation, if the stockholder’s notice as required by Section 1.12(a)(ii) of these Bylaws shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not earlier than the 120 days prior to such special meeting and not later than the close of

 

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business on the later of the 90 day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.

(c)  General .

(i) Except as otherwise provided by applicable law, the Certificate of Incorporation or these Bylaws, the presiding person of a meeting of stockholders shall have the power and duty (x) to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this Section 1.12 (including whether the stockholder or beneficial owner, if any, on whose behalf the nomination or proposal is made, solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies in support of such stockholder’s nominee or proposal in compliance with such stockholder’s representation as required by clause (a)(ii)(C)(4) of this Section 1.12), and (y) if any proposed nomination or business is not in compliance with this Section 1.12, to declare that such defective nomination shall be disregarded or that such proposed business shall not be transacted.

(ii) If the stockholder (or a qualified representative of the stockholder) making a nomination or proposal under this Section 1.12 does not appear at a meeting of stockholders to present such nomination or proposal, the nomination shall be disregarded and/or the proposed business shall not be transacted, as the case may be, notwithstanding that proxies in favor thereof may have been received by the Corporation. For purposes of this Section 1.12, to be considered a qualified representative of the stockholder, a person must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.

(iii) For purposes of this Section 1.12, “ public announcement ” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(iv) Notwithstanding the foregoing provisions of this Section 1.12, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 1.12. Nothing in this Section 1.12 shall be deemed to affect any rights of (x) stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (y) the holders of any series of preferred stock to elect Directors pursuant to any applicable provisions of the Certificate of Incorporation or of the relevant preferred stock certificate of designation.

 

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(v) The announcement of an adjournment or postponement of an annual or special meeting does not commence a new time period (and does not extend any time period) for the giving of notice of a stockholder nomination or a stockholder proposal as described above.

ARTICLE II

BOARD OF DIRECTORS

Section 2.01.   General Powers . Except as may otherwise be provided by law, by the Certificate of Incorporation or by these Bylaws, the property, affairs and business of the Corporation shall be managed by or under the direction of the Board of Directors and the Board of Directors may exercise all the powers and authority of the Corporation.

Section 2.02.   Classification; Election of Directors . The Board of Directors shall be classified into three classes as provided by the Certificate of Incorporation. Except as provided in Section 2.14 of these Bylaws, at each annual meeting of the stockholders the successors of the Directors whose term expires at that meeting shall be elected. At each meeting of the stockholders for the election of Directors, provided a quorum is present, the Directors who are standing for election shall be elected by a plurality of the votes validly cast in such election.

Section 2.03.   Annual and Regular Meetings ; Notice. The annual meeting of the Board of Directors for the purpose of electing officers and for the transaction of such other business as may come before the meeting shall be held as soon as possible following adjournment of the annual meeting of the stockholders either (a) at the place of such annual meeting of the stockholders, in which event notice of such annual meeting of the Board of Directors need not be given, or (b) at such other time and place as shall have been specified in advance notice given to members of the Board of Directors of the date, place and time of such meeting. Any such notice shall be given at least 48 hours in advance if sent to each Director by facsimile or any form of electronic transmission previously approved by a Director, which approval has not been revoked (“ Approved Electronic Transmission ”), or delivered to him or her personally, or at least five days in advance, if notice is mailed to each Director, addressed to him or her at his or her usual place of business or other designated address. Any such notice need not be given to any Director who attends such meeting without protesting the lack of notice to him or her, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice (including by Approved Electronic Transmission), whether before or after such meeting. The Board of Directors from time to time may by resolution provide for the holding of regular meetings. Regular meetings of the Board of Directors shall be held at the place (if any), on the date and at the time as shall have been established by the Board of Directors and publicized among all directors. A notice of a regular meeting, the date of which has been so publicized, shall not be required.

 

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Section 2.04 Special Meetings; Notice . Special meetings of the Board of Directors may be called only by or at the direction of the Chairman of the Board, the Chief Executive Officer, the Secretary or a majority of the total number of Directors then in office. Special meetings of the Board of Directors shall be held at such place (within or without the State of Delaware), date and time as may be specified in the respective notices or waivers of notice of such meetings. Special meetings of the Board of Directors may be called on (a) 48 hours’ notice, if such notice is sent by facsimile or Approved Electronic Transmission to each Director or delivered to him or her personally or (b) five days’ notice, if such notice is mailed to each Director, addressed to him or her at his or her usual place of business or other designated address. Notice of any special meeting need not be given to any Director who attends such meeting without protesting the lack of notice to him or her, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice (including by electronic transmission), whether before or after such meeting. Except as provided in Section 9.01(a), any business may be conducted at a special meeting of the Board of Directors.

Section 2.05.   Quorum . A quorum for meetings of the Board of Directors shall consist of a majority of the total number of Directors then in office.

Section 2.06.   Voting . Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, the vote of a majority of the Directors present at any meeting at which a quorum is present shall be the act of the Board of Directors.

Section 2.07.   Adjournment . A majority of the Directors present, whether or not a quorum is present, may adjourn any meeting of the Board of Directors to another time or place, provided such adjourned meeting is no earlier than 48 hours after written notice (in accordance with these Bylaws) of such adjournment has been given to the Directors (or such notice is waived in accordance with these Bylaws), and, at any such adjourned meeting, a quorum shall consist of a majority of the total number of Directors then in office.

Section 2.08.   Action Without a Meeting . Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing or by Approved Electronic Transmission, and such writing or writings or Approved Electronic Transmissions are filed with the minutes of proceedings of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

Section 2.09.   Regulations; Manner of Acting . To the extent consistent with applicable law, the Certificate of Incorporation and these Bylaws, the Board of Directors may adopt such rules and regulations for the conduct of meetings of the Board of Directors and for the management of the property, affairs and business of the Corporation as the Board of Directors may deem appropriate. In addition to the election of the Chairman of the Board, the Board may elect one or more vice-chairpersons or lead Directors to perform such other duties as may be designated by the Board.

Section 2.10.   Action by Telephonic Communications . Members of the Board of Directors may participate in a meeting of the Board of Directors by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting.

 

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Section 2.11.   Removal; Resignation . Directors may only be removed as set forth in the Certificate of Incorporation. Any Director may resign at any time by submitting an electronic transmission or by delivering a written notice of resignation to the Chairman of the Board, the Chief Executive Officer or the Secretary. Such resignation shall take effect upon delivery unless the resignation specifies a later effective date or an effective date determined upon the happening of a specified event.

Section 2.12.   Director Fees and Expenses . The amount, if any, which each Director shall be entitled to receive as compensation for his or her services shall be fixed from time to time by the Board of Directors. The non-employee directors of the Corporation shall be paid their reasonable expenses, if any, of attendance at each meeting of the Board of Directors and may be reimbursed a fixed sum for attendance at each meeting of the Board of Directors, paid an annual retainer or paid other compensation, including equity compensation, as the Board determines.

Section 2.13.   Reliance on Accounts and Reports, etc . A Director, or a member of any Committee designated by the Board of Directors shall, in the performance of his or her duties, be fully protected in relying in good faith upon the records of the Corporation and upon information, opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees, or Committees designated by the Board of Directors, or by any other person as to the matters the member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

Section 2.14. Vacancies and Newly Created Directorships . Except as otherwise provided by law, any vacancy in the Board of Directors that results from the death, disability, resignation, disqualification, removal of any Director or from any other cause may only be filled by the affirmative vote of a majority of the Directors then in office, even if less than a quorum, or by a sole remaining Director. A Director elected to fill a vacancy or newly created directorship shall hold office until his or her successor has been elected and qualified or until his or her earlier death, resignation or removal.

ARTICLE III

COMMITTEES

Section 3.01.   How Constituted . The Board of Directors shall have an Executive Committee, a Compensation Committee, an Audit Committee, a Nominating and Corporate Governance Committee and such other committees as the Board of Directors may determine (collectively, the “ Committees ”). Each Committee shall consist of such number of Directors as from time to time may be fixed by a majority of the total number of Directors then in office. Any Committee may be abolished or re-designated from time to time by the Board of Directors. Each member of any such Committee (whether designated at an annual meeting of the Board of Directors or to fill a vacancy or otherwise) shall hold office until his or her successor shall have been designated or until he or she shall cease to be a Director, or until his or her earlier death, resignation or removal.

 

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Section 3.02 Powers . Each Committee shall have such powers and responsibilities as the Board of Directors may from time to time authorize, and each Committee, except as otherwise provided in this Section 3.02, shall have and may exercise such powers of the Board of Directors as may be provided by resolution or resolutions of the Board of Directors. No Committee shall have the power or authority to:

(a) amend the Certificate of Incorporation (except that a Committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors as provided in Section 151(a) of the DGCL, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series);

(b) adopt an agreement to effect a reorganization, recapitalization, share exchange, share reclassification, consolidation, conversion or merger of the Corporation of the Corporation;

(c) recommend to the stockholders the sale, lease, exchange, transfer or other disposition (in one transaction or a series of transactions) of all or substantially all of the Corporation’s property and assets;

(d) recommend to the stockholders a dissolution of the Corporation or a revocation of a dissolution; or

(e) amend these Bylaws of the Corporation.

Any Committee may be granted by the Board of Directors, power to authorize the seal of the Corporation to be affixed to any or all papers which may require it.

Section 3.03 Proceedings . Each Committee may fix its own rules of procedure and may meet at such place (within or without the State of Delaware), at such time and upon such notice, if any, as it shall determine from time to time, provided that the Board of Directors may adopt other rules and regulations for the governance of any Committee not inconsistent with the provisions of these Bylaws. Each such Committee shall keep minutes of its proceedings and shall report such proceedings to the Board of Directors at the meeting of the Board of Directors following any such proceedings.

Section 3.04 Quorum and Manner of Acting . Except as may be otherwise provided in the resolution creating a Committee, at all meetings of any Committee the presence of members constituting a majority of the total authorized membership of such Committee shall constitute a quorum for the transaction of business. The act of the majority of the members of a Committee present at any meeting at which a quorum is present shall be the act of such Committee. Any action required or permitted to be taken at any meeting of any Committee may be taken without a meeting, if all members of such Committee shall consent to such action in writing or by electronic transmission, and such writing or writings or electronic transmission or transmissions are filed with the minutes of the proceedings of the Committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. The members of any Committee shall act only as a Committee, and the individual members of such Committee shall have no power as such.

 

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Section 3.05 Action by Telephonic Communications . Members of any Committee designated by the Board of Directors may participate in a meeting of such Committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting.

Section 3.06 Resignations . Any member of any Committee may resign from such Committee at any time by submitting an electronic transmission or by delivering a written notice of resignation to the Chairman of the Board, the Chief Executive Officer or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon delivery.

Section 3.07 Removal . Any member of any Committee may be removed from his or her position as a member of such Committee at any time, either for or without cause, by resolution adopted by a majority of the number of Directors then in office.

Section 3.08 Vacancies . If any vacancy shall occur in any Committee, by reason of disqualification, death, resignation, removal or otherwise, the remaining members shall continue to act, and any such vacancy may be filled by the Board of Directors subject to Section 3.01 of these Bylaws.

ARTICLE IV

OFFICERS

Section 4.01 Number . The officers of the Corporation shall be chosen by the Board of Directors and, subject to the last sentence of this Section 4.01, shall be a Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, one or more Executive Vice Presidents and a Secretary. The Board of Directors may also designate as officers a President, one or more Chief Operating Officers, one or more Vice Presidents, one or more Assistant Secretaries, a Treasurer, one or more Assistant Treasurers, and such other officers and agents as the Board of Directors shall deem necessary or appropriate. Each officer shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any number of offices may be held by the same person. The Board may determine that the Chairman of the Board will not be an officer of the Corporation. The Chairman of the Board (whether or not an officer) shall be a Director, but no other officer need be a Director.

Section 4.02 Election . Unless otherwise determined by the Board of Directors and except as otherwise provided in these Bylaws, the officers of the Corporation shall be elected by the Board of Directors at the annual meeting of the Board of Directors, and shall be elected to hold office until the next succeeding annual meeting of the Board of Directors at which his or her successor has been elected and qualified. In the event of the failure to elect officers at such annual meeting, officers may be elected at any regular or special meeting of the Board of Directors. Each officer shall hold office until his or her successor has been elected and qualified, or until his or her earlier death, resignation or removal.

 

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Section 4.03 Salaries . The salaries and other compensation of all officers and agents of the Corporation shall be fixed by the Board or in the manner established by the Board.

Section 4.04 Removal and Resignation; Vacancies . Any officer may be removed for or without cause at any time by the Board of Directors. Any officer may resign at any time by delivering notice of resignation, either in writing signed by such officer or by electronic transmission, to the Chairman of the Board, the Chief Executive Officer or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon delivery. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise, shall be filled by the Board of Directors.

Section 4.05 Authority and Duties of Officers . The officers of the Corporation shall have such authority and shall exercise such powers and perform such duties as may be prescribed by the Board of Directors, except that in any event each officer shall exercise such powers and perform such duties as may be required by law. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officer or agent, notwithstanding any provision hereof.

Section 4.06 Security . The Board of Directors may require any officer, agent or employee of the Corporation to provide security for the faithful performance of his or her duties, in such amount and of such character as may be determined from time to time by the Board of Directors.

ARTICLE V

CAPITAL STOCK

Section 5.01 Certificates of Stock, Uncertificated Shares . The shares of the Corporation shall be represented by certificates, except to the extent that the Board of Directors has provided by resolution or resolutions that some or all of any or all classes or series of the stock of the Corporation shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Every holder of stock in the Corporation represented by certificates shall be entitled to have, and the Board of Directors may in its sole discretion permit a holder of uncertificated shares to receive upon request, a certificate signed by the appropriate officers of the Corporation representing the number of shares registered in certificate form. Such certificate shall be in such form as the Board of Directors may determine, to the extent consistent with applicable law, the Certificate of Incorporation and these Bylaws.

Section 5.02 Signatures; Facsimile . All signatures on the certificates referred to in Section 5.01 of these Bylaws may be in facsimile, engraved or printed form, to the extent permitted by law. In case any officer, transfer agent or registrar who has signed, or whose facsimile, engraved or printed signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

 

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Section 5.03 .  Lost, Stolen or Destroyed Certificates . A new certificate may be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, only upon delivery to the Corporation of an affidavit of the owner or owners (or their legal representatives) of such certificate, setting forth such allegation and a bond or undertaking as may be satisfactory to a financial officer of the Corporation to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of any such new certificate.

Section 5.04 Transfer of Stock . Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate representing shares, duly endorsed or accompanied by appropriate evidence of succession, assignment or authority to transfer, the Corporation shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Within a reasonable time after the transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the DGCL. Subject to the provisions of the Certificate of Incorporation and these Bylaws, the Board of Directors may prescribe such additional rules and regulations as it may deem appropriate relating to the issue, transfer and registration of shares of the Corporation.

Section 5.05 Registered Stockholders . Prior to due surrender of a certificate for registration of transfer and to the fullest extent permitted by law, the Corporation may treat the registered owner as the person exclusively entitled to receive dividends and other distributions, to vote, to receive notice and otherwise to exercise all the rights and powers of the owner of the shares represented by such certificate, and the Corporation shall not be bound to recognize any equitable or legal claim to or interest in such shares on the part of any other person, whether or not the Corporation shall have notice of such claim or interests, provided that if a transfer of shares shall be made for collateral security, and not absolutely, this fact shall be so expressed in the entry of the transfer if, when the certificates are presented to the Corporation for transfer or uncertificated shares are requested to be transferred, both the transferor and transferee request the Corporation to do so.

Section 5.06 Transfer Agent and Registrar . The Board of Directors may appoint one or more transfer agents and one or more registrars, and may require all certificates representing shares to bear the signature of any such transfer agents or registrars.

ARTICLE VI

INDEMNIFICATION

Section 6.01 Nature of Indemnity . The Corporation shall indemnify, to the fullest extent permitted by the DGCL and other applicable law, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (each, a “ proceeding ”), by reason of the fact that he or she is or was or has agreed to become a Director or officer of the Corporation, or while serving as a Director or officer of the Corporation, is or was serving or has agreed to serve at the request of the Corporation as a Director, officer, employee, manager or agent of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against expenses (including attorneys’

 

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fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her or on his or her behalf in connection with such proceeding and any appeal therefrom, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal proceeding had no reasonable cause to believe his or her conduct was unlawful; provided that in the case of an action or suit by or in the right of the Corporation to procure a judgment in its favor (i) such indemnification shall be limited to expenses (including attorneys’ fees) actually and reasonably incurred by such person in the defense or settlement of such action or suit, and (ii) no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper. Notwithstanding the foregoing, but subject to Section 6.05 of these Bylaws, the Corporation shall not be obligated to indemnify a Director or officer of the Corporation in respect of a proceeding (or part thereof) instituted by such Director or officer, unless such proceeding (or part thereof) has been authorized in the specific case by the Board of Directors. The termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal proceeding, had reasonable cause to believe that his or her conduct was unlawful.

Section 6.02 Successful Defense . To the extent that a present or former Director or officer of the Corporation has been successful on the merits or otherwise in defense of any proceeding referred to in Section 6.01 of these Bylaws or in defense of any claim, issue or matter therein, he or she shall be indemnified by the Corporation against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith.

Section 6.03 Determination That Indemnification Is Proper . Any indemnification of a present or former Director or officer of the Corporation under Section 6.01 of these Bylaws (unless ordered by a court) shall be made by the Corporation only upon a determination that indemnification of such person is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 6.01 of these Bylaws. Any such determination shall be made, with respect to a person who is a Director or officer at the time of such determination (i) by a majority vote of the Directors who are not parties to such proceeding, even though less than a quorum, or (ii) by a committee of such Directors designated by majority vote of such Directors, even though less than a quorum, or (iii) if there are no such Directors, or if such Directors so direct, by independent legal counsel in a written opinion or (iv) by the stockholders.

Section 6.04 Advance of Expenses . Expenses (including attorneys’ fees) incurred by a present or former Director or officer in defending any civil, criminal, administrative or investigative proceeding shall be paid by the Corporation prior to the final disposition of such proceeding upon written request by such person and delivery of an undertaking by such person to repay such amount if it shall ultimately be determined that he or she is not entitled to be

 

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indemnified by the Corporation under this ARTICLE VI or applicable law; provided that the Board of Directors may not require such Director or officer to post any bond or otherwise provide any security for such undertaking. The Corporation or, in respect of a present Director or officer, the Board of Directors may authorize the Corporation’s counsel to represent (subject to applicable conflict of interest considerations) such present or former Director or officer in any proceeding, whether or not the Corporation is a party to such proceeding.

Section 6.05 Procedure for Indemnification of Directors and Officers . Any indemnification of a Director or officer of the Corporation under Section 6.01 and Section 6.02 of these Bylaws, or advance of expenses to such persons under Section 6.04 of these Bylaws, shall be made promptly, and in any event within 30 days, upon the written request by or on behalf of such person (together with supporting documentation). If a determination by the Corporation that such person is entitled to indemnification pursuant to this ARTICLE VI is required, and the Corporation fails to respond within 60 days to a written request for indemnity, the Corporation shall be deemed to have approved such request. If the Corporation denies a written request for indemnity or advancement of expenses, in whole or in part, or if payment in full pursuant to such request is not made within 30 days, the right to indemnification or advances as granted by this ARTICLE VI shall be enforceable by such person in any court of competent jurisdiction. Such person’s costs and expenses incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified, to the fullest extent permitted by law, by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of costs, charges and expenses under Section 6.04 of these Bylaws where the required undertaking, if any, has been received by or tendered to the Corporation) that the claimant has not met the standard of conduct set forth in Section 6.01 of these Bylaws, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors or any Committee thereof, its independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Section 6.01 of these Bylaws, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors or any Committee thereof, its independent legal counsel, and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

Section 6.06 Contract Right; Non-Exclusivity; Indemnification Priority Survival .

(a) The rights to indemnification and advancement of expenses provided by this ARTICLE VI shall be deemed to be separate contract rights between the Corporation and each Director and officer who serves in any such capacity at any time while these provisions as well as the relevant provisions of the DGCL are in effect and any repeal or modification thereof shall not adversely affect any right or obligation then existing with respect to any state of facts then or previously existing or any proceeding previously or thereafter brought or threatened based in whole or in part upon any such state of facts. Such “ contract rights ” may not be modified retroactively as to any present or former Director or officer without the consent of such present or former Director or officer.

 

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(b) The rights to indemnification and advancement of expenses provided by this ARTICLE VI shall continue as to a person who has ceased to be a Director or officer and shall not be deemed exclusive of any other rights to which a present or former Director or officer of the Corporation seeking indemnification or advancement of expenses may be entitled under any by-law, agreement, vote of stockholders or disinterested Directors, or otherwise; provided, however, that to the extent that that an indemnitee is entitled to be indemnified by the Corporation pursuant to this ARTICLE VI and by any stockholder of the Corporation or any affiliate of any such stockholder (other than the Corporation) under any other agreement or instrument, or by any insurer under a policy maintained by such stockholder or affiliate, the obligations of the Corporation pursuant to this ARTICLE VI shall be primary, and the obligations of such stockholder, affiliate or insurer secondary and the Corporation shall not be entitled to contribution or indemnification from or subrogation against such stockholder or affiliate.

(c) The rights to indemnification and advancement of expenses provided by this ARTICLE VI to any present or former Director or officer shall inure to the benefit of the heirs, executors and administrators of such a person.

Section 6.07 Insurance . The Corporation shall purchase and maintain insurance on behalf of any person who is or was or has agreed to become a Director or officer of the Corporation, or is or was serving at the request of the Corporation as a Director or officer of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her or on his or her behalf in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of this ARTICLE VI, provided that such insurance is available on commercially reasonable terms consistent with then prevailing rates in the insurance market.

Section 6.08 Subrogation . In the event of payment under this ARTICLE VI, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of the indemnitee, who shall execute all documents, and do all acts, that as the Corporation may reasonably request to secure such rights, including the execution of such documents as the Corporation may reasonably request to enable the Corporation effectively to bring suit to enforce such rights.

Section 6.09 Employees and Agents . The Board of Directors, or any officer authorized by the Board of Directors generally or in the specific case to make indemnification decisions, may cause the Corporation to indemnify any present or former employee or agent of the Corporation in such manner and for such liabilities as the Board of Directors may determine, up to the fullest extent permitted by the DGCL and other applicable law.

Section 6.10 Interpretation; Severability . Terms defined in Sections 145(h) or (i) of the DGCL have the meanings set forth in such sections when used in this ARTICLE VI. If this ARTICLE VI or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Director or officer as to costs, charges and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any proceeding, whether, civil, criminal, administrative, investigative or otherwise, including an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this ARTICLE VI that shall not have been invalidated and to the fullest extent permitted by applicable law.

 

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ARTICLE VII

OFFICES

Section 7.01 .  Registered Office . The registered office of the Corporation in the State of Delaware shall be located at the location provided in the Certificate of Incorporation.

Section 7.02 Other Offices . The Corporation may maintain offices or places of business at such other locations within or without the State of Delaware as the Board of Directors may from time to time determine or as the business of the Corporation may require.

ARTICLE VIII

GENERAL PROVISIONS

Section 8.01 Dividends . Subject to any applicable provisions of law and the Certificate of Incorporation, dividends upon the shares of the Corporation may be declared by the Board of Directors at any regular or special meeting of the Board of Directors and any such dividend may be paid in cash, property, or shares of the Corporation’s capital stock. A member of the Board of Directors, or a member of any Committee designated by the Board of Directors shall be fully protected in relying in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or Committees of the Board of Directors, or by any other person as to matters the Director reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation, as to the value and amount of the assets, liabilities and/or net profits of the Corporation, or any other facts pertinent to the existence and amount of surplus or other funds from which dividends might properly be declared and paid.

Section 8.02 Reserves . There may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, thinks proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall think conducive to the interest of the Corporation and the Corporation’s stockholders, and the Board of Directors may similarly modify or abolish any such reserve.

Section 8.03 Execution of Instruments . Except as otherwise provided by law or the Certificate of Incorporation, the Board of Directors may authorize any officer or agent to enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. Any such authorization may be general or limited to specific contracts or instruments.

Section 8.04 Action with Respect to Securities of Other Companies . Unless otherwise directed by the Board of Directors, the Chief Executive Officer, or any officer of the Corporation authorized thereby, shall have power to vote and otherwise act on behalf of the Corporation, in

 

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person or by proxy, at any meeting of stockholders or equityholders of, or with respect to any action of, stockholders or equityholders of any other entity in which the Corporation may hold securities and otherwise to exercise any and all rights and powers which the Corporation may possess by reason of its ownership of securities in such other entity.

Section 8.05 Fiscal Year . The fiscal year of the Corporation shall be fixed from time to time by resolution of the Board of Directors.

Section 8.06 Seal . In the discretion of the Board of Directors, the Corporation may have a seal which shall contain the name of the Corporation, the year of its incorporation and the words “Corporate Seal” and “Delaware”. The form of such seal shall be subject to alteration by the Board of Directors. The seal may be used by causing it or a facsimile thereof to be impressed, affixed or reproduced, or may be used in any other lawful manner.

Section 8.07 Books and Records; Inspection . Except to the extent otherwise required by law, the books and records of the Corporation shall be kept at such place or places within or without the State of Delaware as may be determined from time to time by the Board of Directors.

Section 8.08 Electronic Transmission . “ Electronic transmission ”, as used in these Bylaws, means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

ARTICLE IX

AMENDMENT OF BYLAWS

Section 9.01 Amendment . Subject to the provisions of the Certificate of Incorporation, these Bylaws may be amended, altered or repealed:

(a) by resolution adopted by three-fourths (75%) of the total number of Directors then in office at any special or regular meeting of the Board of Directors if, in the case of such special meeting only, notice of such amendment, alteration or repeal is contained in the notice or waiver of notice of such meeting;

(b) By resolution adopted by all of the members of the Board of Directors then in office without a meeting in accordance with Section 2.08; or

(c) at any regular or special meeting of the stockholders upon the affirmative vote of the holders of at least three-fourths (75%) of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote with respect thereto, voting together as a single class, if, in the case of such special meeting only, notice of such amendment, alteration or repeal is contained in the notice or waiver of notice of such meeting.

Notwithstanding the foregoing, no amendment, alteration or repeal of ARTICLE VI shall adversely affect any right or protection existing under these Bylaws immediately prior to such amendment, alteration or repeal, including any right or protection of a present or former Director or officer thereunder in respect of any act or omission occurring prior to the time of such amendment.

 

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ARTICLE X

CONSTRUCTION

Section 10.01 Construction . In the event of any conflict between the provisions of these Bylaws as in effect from time to time and the provisions of the Certificate of Incorporation as in effect from time to time, the provisions of such Certificate of Incorporation shall be controlling.

* * * * * *

 

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Exhibit 4.1

EXECUTION VERSION

ADVANCED DRAINAGE SYSTEMS, INC.

REGISTRATION RIGHTS AGREEMENT

Dated as of July 30, 2014


REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT is dated as of July 30, 2014 (this “Agreement”), between Advanced Drainage Systems, Inc., a Delaware corporation (“ADS”), those Persons set forth on Schedule I hereto, and any Person who becomes a party hereto pursuant to the terms of this Agreement.

RECITAL

WHEREAS , the parties hereto wish to set forth certain rights and obligations with respect to the registration of the shares of ADS Common Stock under the Securities Act.

AGREEMENT

In consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties agree as follows:

ARTICLE I

Definitions

In addition to the terms defined in the preamble set forth above or elsewhere in this Agreement, as used herein, the following terms shall have the following meanings:

ADS Common Stock ” means the outstanding common stock, par value $.01 per share, of ADS.

Affiliate ” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such person, including any direct or indirect general partner, managing member, officer or director of such Person or any investment fund now or hereafter existing that is directly or indirectly controlled by one or more direct or indirect general partners or managing members of, or directly or indirectly shares that same management company with, such Person.

American Securities Group ” means those Persons identified on Exhibit A attached hereto and the transferees from them of the rights granted hereunder in accordance with Section 2.12 hereof.

AS Group Representative” means American Securities LLC, a New York limited liability company, or any successor chosen pursuant to Section 3.1(a) hereof.

Capital Securities ” means, as to any Person that is a corporation, the authorized shares of such Person’s capital stock, including all classes of common, preferred, voting and nonvoting capital stock, and, as to any Person that is not a corporation or an individual, the ownership interests in such Person, including the right to share in profits and losses, the right to receive distributions of cash and property, and the right to receive allocations of items of income, gain, loss, deduction and credit and similar items from such Person, whether or not such interests include voting or similar rights entitling the holder thereof to exercise control over such Person.


Certificate of Incorporation ” means the certificate of incorporation of ADS, as amended from time to time.

Chlapaty Group ” means those Persons identified on Exhibit B attached hereto, and the transferees from them of the rights granted hereunder in accordance with Section 2.12 hereof.

Chlapaty Group Representative ” means Joseph A. Chlapaty, an individual, or any successor chosen pursuant to Section 3.1(b) hereof.

Chlapaty Trustee ” means the trustee(s) of the Joseph A. Chlapaty Trust dated July 9, 1987, as amended from time to time.

Exchange Act ” means the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations thereunder, which shall be in effect from time to time.

IPO ” means an initial underwritten public offering of the ADS Common Stock pursuant to an effective Registration Statement filed under the Securities Act, other than pursuant to a Registration Statement on Form S-4, Form S-8 or any similar or successor form.

Major Stockholder ” means (a) the American Securities Group so long as the members of such group together hold at least ten percent (10%) of the aggregate outstanding ADS Common Stock held by Stockholders and (b) the Chlapaty Group so long as the members of such group together hold at least ten percent (10%) of the aggregate outstanding ADS Common Stock held by Stockholders.

Material Adverse Change ” or “ Material Adverse Effect ” means an event or condition having a materially adverse effect on the business, assets, condition (financial or otherwise) or results of operations of ADS or the financial, banking or securities markets generally.

Person ” means any individual, estate, trust, corporation, partnership, limited liability company, foundation, joint venture, unincorporated organization, association or other entity, and any government, governmental department or agency or political subdivision thereof.

Prospectus ” means the prospectus or prospectuses included in any Registration Statement, as amended or supplemented by any prospectus supplement or “free writing prospectus” (as defined in Rule 405 of the Securities Act) with respect to the terms of the offering of any ADS Common Stock covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus or prospectuses.

The terms “ register ”, “ registered ” and “ registration ” refer to a registration effected by preparing and filing a Registration Statement in compliance with the Securities Act and the declaration or ordering of effectiveness of such Registration Statement.

Registrable Securities ” means any outstanding shares of ADS Common Stock held by Major Stockholders. As to any particular shares of ADS Common Stock, such shares of ADS Common Stock shall cease to be Registrable Securities when (a) a Registration Statement

 

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covering such securities has been declared effective by the SEC and such securities have been disposed of pursuant to such effective Registration Statement, (b) such securities are sold under circumstances in which all of the applicable conditions of Rule 144 (or any similar provisions then in force) under the Exchange Act are met, (c) such securities are otherwise transferred and such securities may be resold without subsequent registration under the Securities Act, (d) such securities shall have ceased to be outstanding; or (e) the holder thereof is not or no longer qualifies as a Major Stockholder.

Registration Statement ” means any registration statement of ADS which covers any of the ADS Common Stock pursuant to the provisions of this Agreement, including any Prospectus related thereto, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all materials incorporated by reference in such registration statement.

SEC ” means the United States Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

SEC Rule 144 ” means Rule 144 promulgated by the SEC under the Securities Act.

Securities Act ” means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations thereunder, which shall be in effect from time to time.

Stockholder ” or “ Stockholders ” means all holders of ADS Common Stock.

ARTICLE II

Registration Rights

Section 2.1 Demand Registration . If ADS shall receive from any Major Stockholder or Major Stockholders a written request or requests that ADS effect a registration on Form S-3 with respect to all or part of the Registrable Securities owned by such Major Stockholder or Major Stockholders (or if Form S-3 is not permitted for such registration, then pursuant to a Form S-1 or any successor or similar registration statement (“Form S-1”)), including by means of a shelf registration pursuant to rule 415 under the Securities Act, and ADS is then eligible to register the ADS Common Stock on Form S-3 or Form S-1, as applicable, then ADS shall:

a) Promptly (and in any event within 5 business days after receipt of such request) give written notice of the proposed registration, and any related qualification or compliance, to all other Major Stockholders; and

b) as soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Major Stockholder’s or Major Stockholders’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Major Stockholder or Major Stockholders joining in such request as are specified in a written request given within 15 days after receipt of such written notice from ADS; provided, however, that no such registration pursuant to this Section 2.1 shall be required: (1) to become effective prior to one hundred eighty (180) days following the effective date of an ADS-initiated registration statement which covers any ADS Common Stock

 

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(other than a registration statement filed solely to qualify an ADS employee benefit plan or business combination pursuant to Rule 145); provided that ADS is actively employing reasonable efforts in good faith to cause such registration statement to become effective; (2) unless the Major Stockholders propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public (before deduction of any underwriters’ discounts or commissions) of at least $10,000,000 with respect to a Registration Statement on Form S-3 or at least $50,000,000 with respect to a Registration Statement on Form S-1; and (3) if, within the twelve (12) month period preceding the date of such request, ADS has already effected two registrations for the Major Stockholders pursuant to this Section 2.1.

c) Subject to the foregoing, ADS shall file a registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable (and in any event within 45 days) after receipt of the request or requests of the Major Stockholders.

d) Notwithstanding the provisions of Section 2.1 (a)-(c) above, if any registration requested pursuant to this Section 2.1 is proposed to be effected on Form S-3 and is in connection with an underwritten offering, and if the managing underwriter shall advise ADS in writing that, in its opinion, it is of material importance to the success of such proposed offering to file a Registration Statement on Form S-1 or to include in such Registration Statement information not requested to be included pursuant to Form S-3, then ADS will file a Registration Statement on Form S-1 or supplement Form S-3 as reasonably requested by such managing underwriter.

e) Notwithstanding the provisions of Section 2.1(a)-(d) above, if ADS furnishes to the Major Stockholders requesting a registration pursuant to this Section 2 a certificate signed by ADS’ chief executive officer stating that in the good faith judgment of ADS’s Board of Directors (after consultation with legal counsel) it would be materially detrimental to ADS and its Stockholders for such Registration Statement to be filed, become effective or continue to be used, including a shelf registration pursuant to Rule 415 under the Securities Act, because such action would (i) materially interfere with ADS’s ability to effect a material proposed acquisition, disposition, financing, reorganization, recapitalization or similar transaction involving ADS; (ii) require premature disclosure of material, non-public information that ADS has a bona fide business purpose for preserving as confidential (which disclosure would be required to be made in any Registration Statement so that such Registration Statement would not be materially misleading and would not be required to be made at such time but for the filing, effectiveness or continued use of such Registration Statement); or (iii) render ADS unable to comply with requirements under the Securities Act or Exchange Act, then ADS may, upon giving prompt written notice of such action to the Major Stockholders participating in such registration, delay the filing or initial effectiveness of, or suspend use of, such Registration Statement; provided that if ADS exercises its rights under this Section 2.1(e), the applicable time period during which the Registration Statement is to remain effective shall be extended by a period of time equal to the duration of the period during which such Registration Statement is suspended hereunder; provided, further that ADS shall not be permitted to do so (a) more than once during any consecutive twelve (12) month period, or (b) for a period exceeding forty-five (45) days on any one occasion. In the event ADS exercises its rights under the preceding sentence, such Major Stockholders agree to suspend, promptly upon their receipt of the notice

 

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referred to above, their use of any prospectus relating to such registration in connection with any sale or offer to sell Registrable Securities for the period during which suspension by ADS is permitted hereby. ADS shall promptly notify such Major Stockholders of the expiration of any period during which it exercised its rights under this Section 2.1. ADS agrees that, in the event it exercises its right sunder this Section 2.1, it shall, within 30 days following such Major Stockholders’ receipt of the notice of suspension, update the suspended statement as may be necessary to permit the Major Stockholders to resume use thereof in connection with the offer and sale of their Registrable Securities in accordance with applicable law.

Section 2.2 ADS Registration .

a) If at any time ADS, directly or indirectly through an Affiliate, determines to register any ADS Common Stock under the Securities Act in connection with the public offering of such securities solely for cash on a form that would also permit the registration of any ADS Common Stock held by a member of the American Securities Group or the Chlapaty Group, ADS shall, at each such time, promptly give each party hereto written notice of such determination setting forth the date on which ADS proposes to file such registration statement. Upon the written request of any party hereto received by ADS within thirty (30) days from the date of such notice by ADS, ADS shall use its best efforts to cause to be registered under the Securities Act all of the ADS Common Stock that each such party has requested be registered. ADS shall have the right to terminate or withdraw any registration initiated by it under this Section 2.2 before the effective date of such registration, whether or not a member of the American Securities Group or the Chlapaty Group has elected to include Registrable Securities in such registration. The expenses of such withdrawn registration shall be borne by ADS in accordance with Section 2.6.

b) The provisions of Section 2.2 (a) shall not apply to any registration (i) on Form S-4 or Form S-8 or any successor forms thereto or (ii) in which the only stock being registered is ADS Common Stock issuable upon conversion of debt securities that are also being registered.

Section 2.3 Underwriting Requirements .

a) If, pursuant to Section 2.1, the initiating Major Stockholders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise ADS as a part of their request made pursuant to Section 2.1. The underwriter(s) will be selected by ADS and shall be reasonably acceptable to the initiating Major Stockholders. In such event, the right of any Major Stockholder to include such Major Stockholder’s Registrable Securities in such registration shall be conditioned upon such Major Stockholder’s participation in such underwriting and the inclusion of such Major Stockholder’s Registrable Securities in the underwriting to the extent provided herein. All Major Stockholders proposing to distribute their securities through such underwriting shall (together with ADS) enter into an underwriting agreement in customary form with the underwriter(s) selected for such underwriting. Notwithstanding any other provision of this Subsection 2.3, if the managing underwriter(s) advise(s) ADS in writing that marketing factors require a limitation on the number of shares to be underwritten, then ADS shall so advise all Major Stockholders of Registrable Securities that otherwise would be underwritten pursuant hereto, and the number of Registrable

 

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Securities that may be included in the underwriting shall be allocated among such Major Stockholders of Registrable Securities, including the initiating Major Stockholders, in proportion (as nearly as practicable) to the number of Registrable Securities owned by each Major Stockholder or in such other proportion as shall mutually be agreed to by all such selling Major Stockholders. To facilitate the allocation of shares in accordance with the above provisions, ADS or the underwriters may round the number of shares allocated to any Major Stockholder to the nearest 100 shares.

b) In connection with any offering involving an underwriting of shares of ADS’s Capital Securities pursuant to Section 2.2, ADS shall not be required to include any of the Major Stockholders’ Registrable Securities in such underwriting unless the Major Stockholders accept the terms of the underwriting as agreed upon between ADS and its underwriters, and then only in such quantity as the underwriters in their sole discretion determine will not jeopardize the success of the offering by ADS. If the total number of securities, including Registrable Securities, requested by Major Stockholders to be included in such offering exceeds the number of securities to be sold (other than by ADS) that the underwriters in their reasonable discretion determine is compatible with the success of the offering, then ADS shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters and ADS in their sole discretion determine will not jeopardize the success of the offering. If the underwriters determine that less than all of the Registrable Securities requested to be registered can be included in such offering, then the Registrable Securities that are included in such offering shall be allocated among the selling Major Stockholders in proportion (as nearly as practicable to) the number of Registrable Securities owned by each selling Major Stockholder or in such other proportions as shall mutually be agreed to by all such selling Major Stockholders. To facilitate the allocation of shares in accordance with the above provisions, ADS or the underwriters may round the number of shares allocated to any Major Stockholder to the nearest 100 shares. Notwithstanding the foregoing, in no event shall (i) the number of Registrable Securities included in the offering be reduced unless all other securities (other than securities to be sold by ADS) are first entirely excluded from the offering, or (ii) the number of Registrable Securities included in the offering be reduced below twenty percent (20%) of the total number of securities included in such offering.

c) For purposes of Section 2.1, a registration shall not be counted as “effected” if, as a result of an exercise of the underwriter’s cutback provision in Section 2.3(a), fewer than fifty percent (50%) of the total number of Registrable Securities that Major Stockholders have requested to be included in such registration statement are actually included.

Section 2.4 Obligations of ADS . Whenever required under this Section 2 to use its best efforts to effect the registration of any ADS Common Stock (including Registrable Securities), as applicable, ADS shall:

a) Prepare and file with the SEC a Registration Statement with respect to such ADS Common Stock and use its best efforts to cause such Registration Statement to become and remain effective for a period of not less than 120 days or until the distribution contemplated in the Registration Statement has been completed (if sooner) (or in the case of a shelf registration pursuant to rule 415 under the Securities Act, for a period ending on the earlier of the date on which all Registrable Securities have been sold pursuant to such shelf registration

 

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(but in no event prior to the applicable period referred to in Section 4(a)(3) of the Securities Act and Rule 174 thereunder) or have otherwise ceased to be Registrable Securities); provided, however , that ADS shall in no event be obligated to cause any such registration to remain effective for more than nine (9) months and provided further that in the case of any registration of Registrable Securities on Form S-3 that is intended to be offered on a continuous or delayed basis, such nine (9) month period shall be extended for up to ninety (90) days, if necessary, to keep the Registration Statement effective until all such ADS Common Stock has been sold, provided that Rule 415 under the Securities Act, or any successor rule under the Securities Act, permits an offering on a continuous or delayed basis;

b) As expeditiously as reasonably possible, prepare and file with the SEC such amendments and supplements to such Registration Statement and the Prospectus used in connection with such Registration Statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement;

c) As expeditiously as reasonably possible, furnish to the Major Stockholders such numbers of copies of a Prospectus, including a preliminary Prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of ADS Common Stock owned by them;

d) As expeditiously as reasonably possible, use its best efforts to register and qualify the securities covered by such Registration Statement under such securities or Blue Sky laws of such jurisdictions as the selling Major Stockholders shall reasonably request for the distribution of the securities covered the Registration Statement; provided that ADS shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such jurisdiction; and provided, further, that (anything in this Agreement to the contrary notwithstanding with respect to the bearing of expenses) if any jurisdiction in which the securities shall be qualified shall require that expenses incurred in connection with the qualification of the securities in that jurisdiction be borne by selling stockholders, then such expenses shall be payable by the Major Stockholders who are selling stockholders pro rata, to the extent required by such jurisdiction;

e) In the event of any underwritten public offering, use best efforts to enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering and, in connection therewith, ADS shall cooperate with the underwriter and shall attend such meetings and travel to such places to aid in the marketing of such underwritten public offering as the underwriters may reasonably request;

f) Notify each holder of Registrable Securities covered by such Registration Statement at any time when the Company is notified or becomes aware that a Prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing;

 

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g) Use best efforts to cause all such Registrable Securities registered pursuant hereto be listed on each securities exchange on which similar securities issued by ADS are then listed;

h) Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereto and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration statement; and

i) In the event of an underwritten public offering, use best efforts to obtain, at the request of any holder requesting registration of Registrable Securities pursuant to this Agreement, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration effected pursuant to this Agreement, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the Registration Statement with respect to such securities becomes effective, (i) an opinion, dated such date, of the counsel representing ADS for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the holders requesting registration of Registrable Securities, and (ii) a letter, dated such date, from the independent certified public accountants of ADS, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the holders requesting registration of the Registrable Securities (unless such independent certified public accountants shall be prohibited from so addressing such letters to the holders requesting registration by applicable standards of the accounting profession).

Section 2.5 Obligations of the Major Stockholders . It shall be a condition precedent to the obligations of ADS to take any action pursuant to this Agreement that the selling Major Stockholders shall furnish to ADS such information regarding themselves, the ADS Common Stock held by them, and the intended method of disposition of such securities as ADS shall reasonably request and as shall be required in connection with the action to be taken by ADS; provided , however , that under no circumstances will any Major Stockholder be obligated to make representations or provide indemnities except with respect to information reasonably required with respect to itself, the securities proposed to be sold by it and the intended method of disposition of such securities by such holder, or such other representations as required by law.

Section 2.6 Expenses of Registration . All expenses incurred in connection with a registration pursuant to this Section 2 (excluding stock transfer taxes and underwriters’ discounts and commissions, which shall be borne by the holders of the applicable Registrable Securities), including without limitation all registration, filing and qualification fees, printers’ and accounting fees (including the cost of “cold comfort” letters, if required), fees and disbursements of counsel for ADS, in addition to reasonable fees and disbursements, not to exceed $100,000, of one (1) special counsel for the requesting Major Stockholders (which counsel shall be selected by such requesting Major Stockholders) shall be borne by ADS; provided, however , that ADS shall not be required to pay for any expenses of any proposed registration begun pursuant to Section 2.1 if the registration request is subsequently withdrawn at the request of the requesting Major Stockholders. In such instance, the requesting Major Stockholders shall be severally liable for such expenses unless such Major Stockholders agree to forfeit the collective right of such Major Stockholders to any demand registration or demand

 

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registrations then available pursuant to Section 2.1. Notwithstanding the foregoing, the requesting Major Stockholders may withdraw a request made within forty-five (45) days following the end of a fiscal year if a Material Adverse Change has occurred and the requesting Major Stockholders had no knowledge of or information related to a Material Adverse Change at the time of the registration request, in which event the Major Stockholders shall not be required to pay any of the expenses and shall not forfeit their right to demand registrations pursuant to Section 2.1.

Section 2.7 No Delay of Registration . No Stockholder shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration pursuant to this Agreement as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.

Section 2.8 Indemnification . In the event any shares of ADS Common Stock (including Registrable Securities) are included in a Registration Statement under Section 2, the provisions of this Section 2.8 shall apply.

a) To the extent permitted by law, ADS will indemnify and hold harmless each Major Stockholder requesting or joining in a registration, any underwriter (as defined in the Securities Act) for it, and each Person, if any, who controls such Major Stockholder or such underwriter within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based on any untrue or alleged untrue statement of any material fact contained in such Registration Statement, including any preliminary or final prospectus contained therein or any amendments or supplements thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, and will reimburse each such Major Stockholder, underwriter or controlling Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however , that the indemnity agreement contained in this Section 2.8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of ADS (which consent shall not be unreasonably withheld) nor shall ADS be liable to any Major Stockholder, underwriter or controlling Person of either for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon an untrue statement or omission made in connection with such Registration Statement, preliminary or final prospectus or amendments or supplements thereto in reliance upon and in conformity with written information furnished for use in connection with such registration by such Major Stockholder, underwriter or controlling Person.

b) To the extent permitted by law, each Major Stockholder requesting or joining in a registration will indemnify and hold harmless ADS, each of its directors, each of its officers who has signed the Registration Statement, each Person, if any, who controls ADS within the meaning of the Securities Act, and each agent and any underwriter for ADS (within the meaning of the Securities Act) against any losses, claims, damages or liabilities to which ADS or any such director, officer, controlling person, agent or underwriter may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or

 

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actions in respect thereto) arise out of or are based upon any untrue statement of any material fact contained in such Registration Statement, including any preliminary or final prospectus contained therein or any amendments or supplements thereto, or arise out of or are based upon the omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or omission was made in such Registration Statement, preliminary or final prospectus, or amendments or supplements thereto, in reliance upon and in conformity with written information furnished by such Major Stockholder expressly for use in connection with such registration; and such Major Stockholder will reimburse any legal or other expenses reasonably incurred by ADS or any such director, officer, controlling Person, agent, or underwriter in connection with investigating or defending any such loss, claim, damage, liability or action; provided , however , that the indemnity agreement described in this Section 2.8(b) shall not apply to amounts paid in settlements effected without the consent of such Major Stockholder (which consent shall not be unreasonably withheld).

c) Promptly after receipt by an indemnified party under this Section 2.8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.8, notify the indemnifying party in writing of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties. In the event that the indemnifying parties cannot mutually agree as to the selection of counsel, each indemnifying party may retain separate counsel to act on its behalf. The indemnified party shall in all events be entitled to participate in such defense at its expense through its own counsel. In the further event that an indemnified party shall have been advised by its counsel that there may be one or more legal defenses available to it which are different from or additional to those available to one or more of the indemnifying parties, then such indemnified party shall have the right to act on its own behalf through counsel of its own selection and the indemnifying party shall pay such counsel fees. The failure to notify an indemnifying party promptly of the commencement of any such action, if prejudicial in any material respect to its ability to defend such action, shall relieve such indemnifying party of its liability to the indemnified party under this Section 2.8 to the extent, but only to the extent, that the indemnified party was prejudiced by the delay, but the omission so to notify the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section.

d) To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Section 2.8 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Section 2.8 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Section 2.8, then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified

 

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party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided , however , that, in any such case, (x) no Major Stockholder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Major Stockholder pursuant to such registration statement, and (y) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation; and provided further that in no event shall a Major Stockholder’s liability pursuant to this Section 2.8(d), when combined with the amounts paid or payable by such Major Stockholder pursuant to Section 2.8(b), exceed the proceeds from the offering received by such Major Stockholder (net of any selling expenses paid by such Major Stockholder), except in the case of willful misconduct or fraud by such Major Stockholder.

e) Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering, the obligations of ADS and the Major Stockholders under this Section 2.8 shall survive the completion of any offering of Registrable Securities in a registration under this Section 2, and otherwise shall survive the termination of this Agreement.

Section 2.9 Termination of Registration Rights . No Major Stockholder shall be entitled to exercise any right provided for in this Section 2 after the date on which such Major Stockholder no longer holds any Registrable Securities.

Section 2.10 Reports Under Exchange Act . With a view to making available to the Major Stockholders the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a Major Stockholder to sell securities of ADS to the public without registration or pursuant to a registration on Form S-3, ADS shall:

a) Make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144, at all times after the effective date of the registration statement filed by ADS for the IPO;

b) Use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of ADS under the Securities Act and the Exchange Act (at any time after ADS has become subject to such reporting requirements); and

c) Furnish to any Major Stockholder, so long as the Major Stockholder owns any Registrable Securities, forthwith upon request (i) to the extent accurate, a written statement by ADS that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the effective date of the registration statement filed by ADS for the IPO), the Securities Act, and the Exchange Act (at any time after ADS has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold

 

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pursuant to Form S-3 (at any time after ADS so qualifies) and (ii) such other information as may be reasonably requested in availing any Major Stockholder of any rule or regulation of the SEC that permits the selling of any such securities without registration (at any time after ADS has become subject to the reporting requirements under the Exchange Act) or pursuant to Form S-3 (at any time after ADS so qualifies to use such form).

Section 2.11 Limitations in Connection with Future Grants or Registration Rights . Except as set forth in Section 2.12, from and after the date of this Agreement, ADS shall not, without the prior written consent of both Major Stockholders, enter into any agreement with any holder or prospective holder of any securities of ADS that would provide to such holder the right to include securities in any registration on other than either a pro rata basis with respect to the Registrable Securities or on a subordinate basis after all Major Stockholders have had the opportunity to include in the registration and offering all shares of Registrable Securities that they wish to so include.

Section 2.12 Assignment of Registration Rights . The rights granted under this Agreement may be assigned (but only with all related obligations) by: (i) a Stockholder (a) to his spouse, his descendants, any religious, charitable or educational organization, a trust of which such Stockholder, or any of these other Persons or entities, or any combination thereof, are primary beneficiaries (such Stockholder, any such other person or entity, and each settlor of the trust, each a “Permitted Beneficiary”), (b) to any Permitted Beneficiary of such Stockholder that is a trust (determined, for this purpose, as if any settlor of the trust was the Stockholder), or (c) to any other Stockholder who is defined herein as being a member of either the American Securities Group or Chlapaty Group, if such transferring Stockholder is also a member of that same group; (ii) a Major Stockholder to its employees or employees of the Major Stockholder’s Affiliates; (iii) a Major Stockholder to its Affiliates; or (iv) a Stockholder who is a member of the American Securities Group to the limited partners, co-investors, officers or consultants of a member of the American Securities Group; conditioned, in each of subsections (i)-(iv), upon the execution and delivery of a joinder agreement, in a form and substance reasonably acceptable to ADS.

ARTICLE III

Miscellaneous

Section 3.1 Action of Major Stockholders .

a) Each member of the American Securities Group hereby irrevocably appoints the AS Group Representative as its true and lawful attorney-in-fact and agent, with full powers of substitution and resubstitution, in its name, place and stead, in all capacities regarding any matter under this Agreement or otherwise relating to this Agreement, including (i) granting any consent or approval or exercising any right on behalf of the American Securities Group, and each member thereof, (ii) accepting notices on behalf of the American Securities Group, and each member thereof and (iii) executing and delivering, on behalf of the American Securities Group, and each member thereof, any and all notices, documents or certificates to be executed by the American Securities Group, and each member thereof, in connection with the transactions contemplated by the Agreement. As the representative of the American Securities Group, the AS Group Representative shall act as the agent for the American Securities Group, and each member thereof, and shall have authority to bind each such member, and the parties to this Agreement

 

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may rely on such appointment and authority until the receipt of notice of the appointment of a successor upon five (5) business days’ prior written notice by each member of the American Securities Group to ADS and the Chlapaty Group. Each member of the American Securities Group agrees that any decision, act, consent or instruction of the AS Group Representative (acting in its capacity as the AS Group Representative and pursuant to the authority expressly granted to it under this Agreement) shall constitute a decision of the American Securities Group and, except to the extent the terms of any such decision, act, consent or instruction otherwise expressly provide, shall be final, binding and conclusive upon each member of the American Securities Group, and the parties to this Agreement may rely upon any such decision, act, consent or instruction of the AS Group Representative as being the decision, act, consent or instruction of the American Securities Group. Each of the parties hereto shall be entitled to conclusively rely on actions taken by the AS Group Representative for purposes of actions to be taken by or on behalf of the American Securities Group, and each member of the American Securities Group, pursuant to this Agreement. For the avoidance of doubt, valid action of the American Securities Group under this Agreement shall only require the consent of the AS Group Representative.

b) Each member of the Chlapaty Group hereby irrevocably appoints the Chlapaty Group Representative as its true and lawful attorney-in-fact and agent, with full powers of substitution and resubstitution, in its name, place and stead, in all capacities regarding any matter under this Agreement or otherwise relating to this Agreement, including (i) granting any consent or approval or exercising any right on behalf of the Chlapaty Group, and each member thereof, (ii) accepting notices on behalf of the Chlapaty Group, and each member thereof and (iii) executing and delivering, on behalf of the Chlapaty Group, and each member thereof, any and all notices, documents or certificates to be executed by the Chlapaty Group, and each member thereof, in connection with the transactions contemplated by the Agreement. As the representative of the Chlapaty Group, the Chlapaty Group Representative shall act as the agent for the Chlapaty Group, and each member thereof, and shall have authority to bind each such member, and the parties to this Agreement may rely on such appointment and authority until the receipt of notice of the appointment of a successor upon five (5) business days’ prior written notice by each member of the Chlapaty Group to ADS and the American Securities Group. Each member of the Chlapaty Group agrees that any decision, act, consent or instruction of the Chlapaty Group Representative (acting in its capacity as the Chlapaty Group Representative and pursuant to the authority expressly granted to it under this Agreement) shall constitute a decision of the Chlapaty Group and, except to the extent the terms of any such decision, act, consent or instruction otherwise expressly provide, shall be final, binding and conclusive upon each member of the Chlapaty Group, and the parties to this Agreement may rely upon any such decision, act, consent or instruction of the Chlapaty Group Representative as being the decision, act, consent or instruction of the Chlapaty Group. Each of the parties hereto shall be entitled to conclusively rely on actions taken by the Chlapaty Group Representative for purposes of actions to be taken by or on behalf of the Chlapaty Group, and each member of the Chlapaty Group, pursuant to this Agreement. For the avoidance of doubt, valid action of the Chlapaty Group under this Agreement shall only require the consent of the Chlapaty Group Representative.

 

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Section 3.2 After-Acquired Shares . For the avoidance of doubt, the parties hereto acknowledge and agree that the provisions of this Agreement shall apply to all shares of ADS Common Stock or, as applicable, other ADS Capital Securities, held by a Stockholder who is a party to this Agreement, whether held as of the date hereof or acquired on any date thereafter.

Section 3.3 Remedies . The parties to this Agreement acknowledge and agree that breach of any of the covenants of ADS or the Stockholders who are party to this Agreement set forth in this Agreement are not compensable by payment of money damages and, therefore, that such covenants set forth in this Agreement may be enforced in equity by a decree requiring specific performance. Without limiting the foregoing, if any dispute arises concerning the transfer of any ADS Capital Securities subject to this Agreement, the parties to this Agreement agree that an injunction may be issued restraining the sale or other transfer of such Capital Securities or rescinding any such sale or other transfer, pending resolution of such controversy. Such remedies shall be cumulative and non-exclusive and shall be in addition to any other rights and remedies the parties may have under this Agreement.

Section 3.4 Entire Agreement; Amendment . This Agreement, together with the Schedules and Exhibits hereto, sets forth the entire understanding of the parties, and supersedes all prior agreements, arrangements and communications, whether oral or written, with respect to the subject matter hereof, including Section 5 of that certain Amended and Restated Stockholders’ Agreement, dated as of September 27, 2010, by and among ADS and the Persons set forth on Schedule I thereto. This Agreement shall not be modified or amended except by written agreement of ADS and each of (a) the American Securities Group (as long as the American Securities Group is a Major Stockholder) and (b) the Chlapaty Trustee (as long as the Chlapaty Group is a Major Stockholder). Captions appearing in this Agreement are for convenience only and shall not be deemed to explain, limit or amplify the provisions hereof.

Section 3.5 Severability . The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if the invalid or unenforceable provision were omitted.

Section 3.6 Notices . Any notice or other instrument or thing required or permitted to be given, served or delivered to any of the parties hereto shall be in writing and shall be deemed to have been given, served or delivered when personally delivered to, or seventy two (72) hours after being deposited in the United States mails, registered and with proper postage prepaid, addressed to ADS at 4640 Trueman Boulevard, Hilliard, Ohio 43026, Attention: Joseph A. Chlapaty, Chairman and CEO, and to a Stockholder at its address on Schedule I or at such other address as such Stockholder may designate by ten (10) days advance written notice to ADS.

Section 3.7 Assignment . This Agreement is not assignable in whole or in part except (a) in accordance with the terms of this Agreement, (b) in the event of the death of any of the individual Stockholders, his rights and obligations hereunder shall be transferred to his respective estate or personal representative so long as such estate or personal representative holds shares of ADS Common Stock or (c) the rights and obligations hereunder of any trustee who is a Stockholder shall be transferred to the successor trustee of such trustee.

Section 3.8 Governing Law . This Agreement shall be governed by and construed under the internal laws of the State of Delaware.

 

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Section 3.9 No Third Party Beneficiaries . Except as set forth in Section 2.8, nothing contained in this Agreement is intended to be for the benefit of or enforceable by any Person, other than the parties hereto, and their respective heirs, personal representatives, successors and assigns.

Section 3.10 Counterparts; Facsimile Signatures . This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which shall constitute one instrument. This Agreement may be executed by facsimile signature(s).

Section 3.11 Construction . The definitions of the terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. The word “any” shall mean “any and all” unless otherwise clearly indicated by context. Where any party’s consent is required hereunder, except as otherwise specified herein, such party’s consent may be granted or withheld in such party’s sole discretion. Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or therein), (b) any reference to any laws herein shall be construed as referring to such laws as from time to time enacted, repealed or amended, (c) any reference herein to any person shall be construed to include the person’s successors and assigns, (d) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, and (e) all references herein to Sections or Exhibits, unless otherwise specifically provided, shall be construed to refer to Sections and Exhibits of this Agreement.

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the undersigned parties have executed this Agreement as of the date first above written.

 

ADVANCED DRAINAGE SYSTEMS, INC.
By:  

/s/ J. A. Chlapaty

  Joseph A. Chlapaty,
  Chairman and Chief Executive Officer


JOSEPH A. CHLAPATY TRUST
By:  

/s/ J. A. Chlapaty

  Joseph A. Chlapaty, Trustee
By: Fifth Third Bank, Trustee
By:  

/s/ Kimberly H. Mayhew

  Kimberly H. Mayhew, Vice President and Senior Trust Officer II

/s/ J. A. Chlapaty

Joseph A. Chlapaty
KEVIN CHLAPATY IRREVOCABLE TRUST ONE
By:   /s/ Kevin Chlapaty
  Kevin Chlapaty, Trustee

/s/ Kevin Chlapaty

Kevin Chlapaty

 

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KEITH CHLAPATY IRREVOCABLE TRUST ONE
By:  

/s/ Keith Chlapaty

  Keith Chlapaty, Trustee

/s/ Keith Chlapaty

Keith Chlapaty
ASP ADS INVESTCO, LLC
By:   ASP MANAGER CORP., its Manager
By:  

/s/ Eric Schondorf

Name: Eric Schondorf
Title: Vice President & Secretary

 

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EXHIBIT A

Initial Members of the American Securities Group:

ASP ADS Investco, LLC, a Delaware limited liability company

 

A-1


EXHIBIT B

Initial Members of the Chlapaty Group:

Joseph A. Chlapaty

Trustee(s) of Joseph A. Chlapaty Trust dated July 9, 1987, as amended from time to time

Trustee(s) of Kevin Chlapaty Irrevocable Trust One dated September 20, 1994

Trustee(s) of Keith Chlapaty Irrevocable Trust One dated September 20, 1994

Kevin Chlapaty

Keith Chlapaty

 

B-1


SCHEDULE I

 

Name

  

Address

Joseph A. Chlapaty and Fifth Third Bank, as Trustees of the Joseph A. Chlapaty Trust dated July 9, 1987, as amended from time to time    Use address on file with Advanced Drainage Systems, Inc.
Joseph A. Chlapaty    Use address on file with Advanced Drainage Systems, Inc.
Kevin Chlapaty, Trustee of the Kevin Chlapaty Irrevocable Trust One dated September 20, 1994    Use address on file with Advanced Drainage Systems, Inc.
Keith Chlapaty, Trustee of the Keith Chlapaty Irrevocable Trust One dated September 20, 1994    Use address on file with Advanced Drainage Systems, Inc.
Kevin Chlapaty    Use address on file with Advanced Drainage Systems, Inc.
Keith Chlapaty    Use address on file with Advanced Drainage Systems, Inc.
American Securities LLC, as AS Group Representative, on behalf of each member of the American Securities Group   

American Securities LLC

299 Park Avenue, 34th Floor

New York, NY 10171

Attn: David Horing, Managing Director

Eric Schondorf, General Counsel

Fax: 212.697.5524

   With a copy to:

 

Kaye Scholer LLP

425 Park Avenue

New York, NY 10122

Attn: Emanuel Cherney, Esq.

Fax: 212.836.8689

echerney@kayescholer.com

Schedule I-1