Exhibit 10.2

EXECUTION VERSION

July 9, 2018

 

Advanced Drainage Systems, Inc.

4640 Trueman Blvd.

Hilliard, OH 43026

 

Re:

Amendment No. 1 to Second Amended and Restated Private Shelf Agreement

Ladies and Gentlemen:

Reference is made to that certain Second Amended and Restated Private Shelf    
Agreement, dated as of June 22, 2017, (the “Note Agreement”), between Advanced
Drainage Systems, Inc., a Delaware corporation (the “Company”), on one hand, and
PGIM, Inc. (“Prudential”), the Existing Holders and each other Prudential
Affiliate as therein defined which becomes bound by certain provisions thereof
as therein provided, on the other hand. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such    terms in
the Note Agreement.

The Company has requested that Prudential and the holders of Notes amend the
Note Agreement as set forth herein, and Prudential and the holders of the Notes
executing this letter agreement are willing to agree to such requests on the
terms and conditions set forth herein.

Accordingly, and in accordance with the provisions of paragraph 11C of the Note
Agreement, the parties hereto agree as follows:

SECTION 1.  Amendments.  From and after the Effective Date (as defined in
Section 3 hereof), the parties hereto agree that the paragraph 10B of the Note
Agreement is hereby      amended by amending and restating the definition of
“Consolidated EBITDAE” to read as    follows:

“Consolidated EBITDAE” for any period of determination shall mean, without
duplication, (i) net income, plus, to the extent reducing net income, the sum,
of amounts for (a) consolidated interest expense, (b) charges for federal,
state, local and foreign income taxes, (c) total depreciation expense, (d) total
amortization expense, (e) costs and expenses incurred in connection with the
Transactions in an aggregate amount not to exceed $2,500,000, (f) non-cash
charges reducing net income for such period, (g) ESOP Compensation, (h) non-cash
compensation related to stock options and restricted stock, (i) one time,
nonrecurring expenses related to the restatement of the Transaction Parties’
financial statements for the trailing four fiscal quarters, and (j)
non-recurring cash charges of up to $15,000,000 in the aggregate for the
trailing fiscal four quarters, minus (ii) the sum of (a) non‑recurring, one-time
cash gains increasing net  income, and (b) non-cash gains increasing net income,
in each case of the

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Company and its Subsidiaries for such period determined and consolidated in
accordance with GAAP.

For purposes of calculating Consolidated EBITDAE (x) with respect to a business
acquired by the Transaction Parties or Subsidiaries thereof pursuant to a
Permitted Acquisition, Consolidated EBITDAE shall be calculated on a pro forma
basis (determined on a basis consistent with Article 11 or Regulation S-X
promulgated under the Securities Act and as interpreted by the staff of the
United States of America Securities and Exchange Commission), using
historical    numbers of any business so acquired, in accordance with GAAP as if
the     Permitted Acquisition had been consummated at the beginning of such
period,      and (y) with respect to a business or assets liquidated, sold or
disposed of by the Transaction Parties or Subsidiaries pursuant to paragraph
611, Consolidated EBITDAE shall be calculated on a pro forma basis (determined
on the basis stated above), using historical numbers of any business or assets
so liquidated, sold or disposed of, in accordance with GAAP as if such
liquidation, sale or disposition   had been consummated at the beginning of such
period.

SECTION 2.  Representations and Warranties.  The Company represents and warrants
to Prudential and each holder of a Note that (i) the execution and delivery of
this letter agreement has been duly authorized by all necessary corporate action
on behalf of the Company and each Guarantor, (ii) this letter agreement has been
executed and delivered by a duly authorized officer of the Company and each
Guarantor, (iii) the Company and each Guarantor has obtained all authorizations,
consents, and approval necessary for the execution, delivery and performance of
this letter agreement and such authorizations, consents and approval are in full
force and effect, (iv) since March 31, 2018, no Material Adverse Effect shall
have occurred with respect to the Company or any of the Guarantors and (v) after
giving effect hereto (a) each representation and warranty set forth in paragraph
8 of the Note Agreement is true and correct in all material respects (or in all
respects, in the case of any representation and warranty that is already
qualified by materiality or “Material Adverse Effect”) as of the date of the
execution and delivery of this letter agreement by the Company with the same
effect as if made on such date, except to the extent that any such statement
expressly relates to an earlier date (in which case such statement was true and
correct in all material respects (or in all respects, in the case of any
representation and warranty that is already qualified by materiality or
“Material Adverse Effect”) on and as of such earlier date), (b) no Event of
Default or Default exists and (c) neither the Company nor any Subsidiary has
paid or agreed to pay, and the Company and its Subsidiaries will not pay or
agree to pay, any fees or other consideration to the Bank Agent or any Bank for
or with respect to the amendment to the Credit Agreement referred to in Section
3.2 below other than the legal fees paid to counsel for the Banks and Bank Agent
referred to in Section 6.3 of the amendment to the Credit Agreement referenced
in Section 3.2 below.

SECTION 3.  Conditions Precedent.  The amendments in Section 1 of this letter
agreement shall become effective as of March 31, 2018 (the “Effective Date”)
once each of the following conditions has been satisfied:

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3.1.

Documents.  Prudential and each holder of a Note shall have received
counterparts of this letter agreement executed by Prudential, the Required
Holder(s), the Company and each Guarantor.

 

3.2.

Credit Agreement.  Prudential and each holder of a Note shall have received an
executed copy of the amendment to the Credit Agreement in form and substance
consistent with the terms set forth herein and satisfactory to Prudential and
the Required Holder(s).

 

3.3.

Compliance Certificate. The Company shall have furnished its Compliance
Certificate to each Significant Holder pursuant to paragraph 5A of the Note
Agreement applicable to the financial statements delivered for the quarter
ending March 31, 2018 (the “3/31/18 Compliance Certificate”), including
Consolidated EBITDAE calculated, in the manner consistent with the definition of
Consolidated EBITDAE, as amended by this letter agreement.

 

3.4.

Representations.  All statements set forth in Section 2 shall be true and
correct as of the Effective Date, except to the extent that any such statement
expressly relates to an earlier date (in which case such statement was true and
correct on and as of such earlier date).

 

3.5.

Proceedings. All corporate and other proceedings taken or to be taken in
connection with the transactions contemplated by this letter agreement shall be
satisfactory to Prudential and each holder of a Note and its counsel, and
Prudential and each holder of a Note shall have received all such counterpart
originals or certified or other copies of such documents as they may reasonably
request.

 

SECTION 4.  Reference to and Effect on Note Agreement; Ratification of Note
Agreement. Upon the effectiveness of the amendments to the Note Agreement made
in this letter agreement, each reference to the Note Agreement in any other
document, instrument or agreement shall mean and be a reference to the Note
Agreement as modified by this letter agreement. Except as specifically set forth
in Section 1 hereof, the Note Agreement shall remain in full force and effect
and is hereby ratified and confirmed in all respects. Except as specifically
stated in this letter agreement, the execution, delivery and effectiveness of
this letter agreement shall not (a) amend the Note Agreement or any Note, (b)
operate as a waiver of any right, power or remedy of any holder of a Note, or
(c) constitute a waiver of, or consent to any departure  from, any provision of
the Note Agreement or Note at any time. Nothing contained in this letter
agreement shall be construed as a course of dealing or other implication that
Prudential and any holder of a Note has agreed to or is prepared to grant any
consents or agree to any amendments to the Note Agreement or any Note in the
future, whether or not under similar circumstances.

SECTION 5.  Expenses.  The Company hereby confirms its obligations under the
Note Agreement, whether or not the transactions hereby contemplated are
consummated, to pay, promptly after request by Prudential or any holder of a
Note, all reasonable out-of-pocket costs and expenses, including attorneys’ fees
and expenses, incurred by Prudential or such holder of a Note in connection with
this letter agreement or the transactions contemplated hereby, in enforcing any
rights under this letter agreement, or in responding to any subpoena or other
legal process or informal investigative demand issued in connection with this
letter agreement or the

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transactions contemplated hereby. The obligations of Company under this Section
5 shall  survive transfer by any holder of a Note of any Note and payment of any
Note.

SECTION 6.  Governing Law.  THIS LETTER AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF        THE PARTIES SHALL BE
GOVERNED BY, THE LAW OF THE STATE OF NEW        YORK (EXCLUDING ANY CONFLICTS OF
LAW RULES WHICH WOULD   OTHERWISE CAUSE THIS AGREEMENT TO BE CONSTRUED OR
ENFORCED IN ACCORDANCE WITH, OR THE RIGHTS OF THE PARTIES TO BE GOVERNED BY,  
THE LAWS OF ANY OTHER JURISDICTION).

SECTION 7.  Reaffirmation.  Each Guarantor hereby consents to the foregoing
amendments and consents to the Note Agreement and hereby ratifies and reaffirms
all of their payment and performance obligations, contingent or otherwise, under
the Guaranty Agreement after giving effect to such amendments and consents. Each
Guarantor hereby acknowledges that, notwithstanding the foregoing amendments and
consents, that the Guaranty Agreement remains in full force and effect and is
hereby ratified and confirmed. Without limiting the generality of the foregoing,
each Guarantor agrees and confirms that the Guaranty Agreement continues to
guaranty the Guarantied Obligations (as defined in the Guaranty Agreement)
arising under or in connection with the Note Agreement or any of the Shelf
Notes, as the same are amended by this letter agreement.

SECTION 8.  Counterparts; Section Titles.  This letter agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which when taken together shall constitute but one and
the same instrument. Delivery of an executed counterpart of a signature page to
this letter agreement by facsimile shall be effective as delivery of a manually
executed counterpart of this letter agreement. The section titles contained in
this letter agreement are and shall be without substance, meaning or content of
any kind whatsoever and are not a part of the agreement between the parties
hereto.

[Signature Pages Follow]

 

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Very Truly Yours,

 

PGIM, INC.

 

 

 

By:/s/ David Quankenbush

Vice President

 

 

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

 

 

 

By:/s/ David Quankenbush

Vice President

 

 

PRUDENTIAL RETIREMENT INSURANCE AND ANNUITY COMPANY

 

By:PGIM, Inc.,

as investment manager

 

 

 

By:/s/ David Quankenbush

Vice President

 

 

PRUCO LIFE INSURANCE COMPANY

 

 

 

By:/s/ David Quankenbush

Assistant Vice President

AMENDMENT NO. 1 TO
SECOND AMENDED AND RESTATED PRIVATE SHELF AGREEMENT

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THE GIBRALTAR LIFE INSURANCE CO.,
  LTD.

 

 

By:

Prudential Investment Management Japan Co., Ltd., as Investment Manager

 

 

By:

PGIM, Inc., as Sub-Adviser

 

 

 

By:

/s/ Anthony Coletta

Vice President

AMENDMENT NO. 1 TO
SECOND AMENDED AND RESTATED PRIVATE SHELF AGREEMENT

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Accepted and Agreed:

 

 

COMPANY:

 

ADVANCED DRAINAGE SYSTEMS, INC.

 

 

By:/s/ D. Scott Barbour

Name: D. Scott Barbour

Title: President and Chief Executive Officer

 

GUARANTORS:

 

 

STORMTECH LLC

HANCOR, INC.

HANCOR HOLDING CORPORATION

 

 

By:/s/ Dean G. Bruno

Name: Dean G. Bruno

Title: Treasurer

 

AMENDMENT NO. 1 TO
SECOND AMENDED AND RESTATED PRIVATE SHELF AGREEMENT