exv10w2



 





Exhibit 10.2




SECOND AMENDED AND RESTATED




OPERATING AGREEMENT




OF




COMPASS GROUP DIVERSIFIED HOLDINGS LLC




Dated as of January 9, 2006




 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	ARTICLE 1 THE COMPANY
	 	 	1	 
	 
	 	 	 	 
	Section 1.1 Formation
	 	 	1	 
	Section 1.2 Name
	 	 	1	 
	Section 1.3 Purpose; Powers; Company Not to Be an Investment Company; Prior Authorization of Actions Valid
	 	 	2	 
	Section 1.4 Principal Place of Business; Registered Office; Registered Agent
	 	 	3	 
	Section 1.5 Term
	 	 	3	 
	Section 1.6 Filings
	 	 	3	 
	Section 1.7 Title to Property
	 	 	3	 
	Section 1.8 Payments of Individual Obligations
	 	 	4	 
	Section 1.9 Definitions
	 	 	4	 
	 
	 	 	 	 
	ARTICLE 2 THE TRUST
	 	 	23	 
	 
	 	 	 	 
	Section 2.1 Trust to Be Sole Holder of Trust Interests
	 	 	23	 
	Section 2.2 Trust Shares to Represent Trust Interests
	 	 	23	 
	Section 2.3 Voluntary Exchange of Trust Shares for Trust Interests
	 	 	23	 
	Section 2.4 Acquisition Exchange of Trust Shares for Trust Interests
	 	 	23	 
	Section 2.5 Right of Holders of Trust Shares and Members to Enforce Provisions of this Agreement
and Bring Derivative Action
	 	 	24	 
	Section 2.6 Reimbursement of Regular Trustees
	 	 	24	 
	 
	 	 	 	 
	ARTICLE 3 CLASSES AND ISSUANCE OF LLC INTERESTS; TRANSFER
	 	 	24	 
	 
	 	 	 	 
	Section 3.1 LLC Interests
	 	 	24	 
	Section 3.2 Issuance of Additional Trust Interests
	 	 	26	 
	Section 3.3 Trust Interest Certificates; Admission of Additional Members
	 	 	26	 
	Section 3.4 Repurchase of Trust Interests by the Company
	 	 	26	 
	Section 3.5 Mutilated, Lost, Destroyed or Stolen Certificates
	 	 	27	 
	 
	 	 	 	 
	ARTICLE 4 ALLOCATIONS
	 	 	27	 
	 
	 	 	 	 
	Section 4.1 General Application
	 	 	27	 
	Section 4.2 Allocations of Profits and Losses
	 	 	27	 
	Section 4.3 Special Allocations
	 	 	28	 
	Section 4.4 Curative Allocations
	 	 	30	 
	Section 4.5 Loss Limitation
	 	 	30	 
	Section 4.6 Other Allocation Rules
	 	 	30	 






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	 	 	Page
	Section 4.7 Tax Allocations: Code Section 704(c)
	 	 	31	 
	 
	 	 	 	 
	ARTICLE 5 DISTRIBUTIONS
	 	 	31	 
	 
	 	 	 	 
	Section 5.1 Distributions to Members
	 	 	31	 
	Section 5.2 Distributions to the Allocation Member
	 	 	31	 
	Section 5.3 Amounts Withheld
	 	 	37	 
	Section 5.4 Limitations on Dividends and Distributions
	 	 	37	 
	 
	 	 	 	 
	ARTICLE 6 BOARD OF DIRECTORS
	 	 	37	 
	 
	 	 	 	 
	Section 6.1 Initial Board
	 	 	37	 
	Section 6.2 General Powers
	 	 	37	 
	Section 6.3 Duties of Directors
	 	 	38	 
	Section 6.4 Number, Tenure and Qualifications
	 	 	38	 
	Section 6.5 Election of Directors
	 	 	39	 
	Section 6.6 Removal
	 	 	39	 
	Section 6.7 Resignations
	 	 	39	 
	Section 6.8 Vacancies and Newly Created Directorships
	 	 	39	 
	Section 6.9 Appointment of or Nomination and Election of Chairman
	 	 	40	 
	Section 6.10 Chairman of the Board
	 	 	40	 
	Section 6.11 Regular Meetings
	 	 	40	 
	Section 6.12 Special Meetings
	 	 	40	 
	Section 6.13 Notice for Special Meetings
	 	 	41	 
	Section 6.14 Waiver of Notice
	 	 	41	 
	Section 6.15 Action Without Meeting
	 	 	41	 
	Section 6.16 Conference Telephone Meetings
	 	 	41	 
	Section 6.17 Quorum
	 	 	42	 
	Section 6.18 Committees
	 	 	42	 
	Section 6.19 Committee Members
	 	 	43	 
	Section 6.20 Committee Secretary
	 	 	44	 
	Section 6.21 Compensation
	 	 	44	 
	Section 6.22 Indemnification, Advances and Insurance
	 	 	44	 
	Section 6.23 Reliance; Limitations in Liability
	 	 	46	 
	 
	 	 	 	 
	ARTICLE 7 OFFICERS
	 	 	47	 
	 
	 	 	 	 
	Section 7.1 General
	 	 	47	 
	Section 7.2 Duties of Officers
	 	 	48	 
	Section 7.3 Election and Term of Office
	 	 	48	 
	Section 7.4 Chief Executive Officer
	 	 	48	 
	Section 7.5 Chief Financial Officer
	 	 	49	 
	Section 7.6 Reserved
	 	 	49	 
	Section 7.7 Secretary
	 	 	49	 
	Section 7.8 Resignations
	 	 	49	 






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	 	 	Page
	Section 7.9 Vacancies
	 	 	49	 
	 
	 	 	 	 
	ARTICLE 8 MANAGEMENT
	 	 	49	 
	 
	 	 	 	 
	Section 8.1 Duties of the Manager
	 	 	49	 
	Section 8.2 Secondment of the Chief Executive Officer and Chief Financial Officer
	 	 	49	 
	Section 8.3 Secondment of Additional Officers
	 	 	50	 
	Section 8.4 Status of Seconded Officers and Employees
	 	 	50	 
	Section 8.5 Removal of Seconded Officers
	 	 	50	 
	Section 8.6 Replacement Manager
	 	 	50	 
	 
	 	 	 	 
	ARTICLE 9 THE MEMBERS
	 	 	50	 
	 
	 	 	 	 
	Section 9.1 Rights or Powers
	 	 	50	 
	Section 9.2 Annual Meetings of Members
	 	 	51	 
	Section 9.3 Special Meetings of Members
	 	 	51	 
	Section 9.4 Place of Meeting
	 	 	51	 
	Section 9.5 Notice of Meeting
	 	 	51	 
	Section 9.6 Quorum and Adjournment
	 	 	52	 
	Section 9.7 Proxies
	 	 	53	 
	Section 9.8 Notice of Member Business and Nominations
	 	 	53	 
	Section 9.9 Procedure for Election of Directors; Voting
	 	 	56	 
	Section 9.10 Inspectors of Elections; Opening and Closing the Polls
	 	 	56	 
	Section 9.11 Confidential Member Voting
	 	 	57	 
	Section 9.12 Waiver of Notice
	 	 	57	 
	Section 9.13 Remote Communication
	 	 	57	 
	Section 9.14 Member Action Without a Meeting
	 	 	58	 
	Section 9.15 Return on Capital Contribution
	 	 	58	 
	Section 9.16 Member Compensation
	 	 	58	 
	Section 9.17 Member Liability
	 	 	58	 
	 
	 	 	 	 
	ARTICLE 10 MEMBER VOTE REQUIRED IN CONNECTION WITH CERTAIN BUSINESS COMBINATIONS OR TRANSACTIONS
	 	 	58	 
	 
	 	 	 	 
	Section 10.1 Vote Generally Required
	 	 	58	 
	Section 10.2 Vote for Business Combinations
	 	 	59	 
	Section 10.3 Power of Continuing Directors
	 	 	59	 
	Section 10.4 No Effect on Fiduciary Obligations
	 	 	59	 
	 
	 	 	 	 
	ARTICLE 11 BOOKS AND RECORDS
	 	 	59	 
	 
	 	 	 	 
	Section 11.1 Books and Records; Inspection by Members
	 	 	59	 
	Section 11.2 Reports
	 	 	60	 
	Section 11.3 Preparation of Tax Returns
	 	 	61	 
	Section 11.4 Tax Elections
	 	 	61	 






iii









 






	 	 	 	 	 
	 	 	Page
	Section 11.5 Tax Information
	 	 	62	 
	 
	 	 	 	 
	ARTICLE 12 AMENDMENTS
	 	 	62	 
	 
	 	 	 	 
	ARTICLE 13 TRANSFERS; MONTHLY ALLOCATIONS
	 	 	62	 
	 
	 	 	 	 
	ARTICLE 14 DISSOLUTION AND WINDING UP
	 	 	63	 
	 
	 	 	 	 
	Section 14.1 Dissolution Events
	 	 	63	 
	Section 14.2 Winding Up
	 	 	63	 
	Section 14.3 Compliance with Certain Requirements of Regulations;
Deficit Capital Accounts
	 	 	64	 
	Section 14.4 Deemed Distribution and Recontribution
	 	 	65	 
	Section 14.5 Rights of Members
	 	 	65	 
	Section 14.6 Notice of Dissolution/Termination
	 	 	65	 
	Section 14.7 Allocations During Period of Liquidation
	 	 	65	 
	Section 14.8 Character of Liquidating Distributions
	 	 	65	 
	Section 14.9 The Liquidator
	 	 	65	 
	Section 14.10 Form of Liquidating Distributions
	 	 	66	 
	 
	 	 	 	 
	ARTICLE 15 MISCELLANEOUS
	 	 	66	 
	 
	 	 	 	 
	Section 15.1 Notices
	 	 	66	 
	Section 15.2 Binding Effect
	 	 	67	 
	Section 15.3 Construction
	 	 	67	 
	Section 15.4 Time
	 	 	67	 
	Section 15.5 Headings
	 	 	67	 
	Section 15.6 Severability
	 	 	67	 
	Section 15.7 Incorporation by Reference
	 	 	67	 
	Section 15.8 Variation of Terms
	 	 	67	 
	Section 15.9 Governing Law and Consent to Jurisdiction/Service of Process
	 	 	67	 
	Section 15.10 Waiver of Jury Trial
	 	 	68	 
	Section 15.11 Counterpart Execution
	 	 	68	 
	Section 15.12 Specific Performance
	 	 	68	 
	 
	 	 	 	 
	Exhibit A — Specimen Trust Interest Certificate
	 	 	A-1	 







iv









 





          This SECOND AMENDED AND RESTATED OPERATING AGREEMENT (the “Agreement”) shall be effective as
of the 4th day of January, 2007 and is entered into by Compass Diversified Trust and
Compass Group Management LLC, as Members hereunder and pursuant to the provisions of the Act as in
effect on the date hereof. Such Members hereby agree to the amendment and restatement of the
Amended and Restated Operating Agreement, dated as of April 25, 2006, which amended and restated
the Operating Agreement, dated as of November 18, 2005 (the “Original Agreement”), as set forth
herein. Capitalized terms used in this Agreement without definition shall have the respective
meanings specified in Section 1.9 and, unless otherwise specified, article and section references
used herein refer to Articles and Sections of this Agreement.




ARTICLE 1




THE COMPANY




     Formation. Pursuant to the terms of the Original Agreement, the Manager formed the
Company as a limited liability company under and pursuant to the provisions of the Act and upon the
terms and conditions set forth in the Original Agreement. The fact that the Certificate is on file
in the office of the Secretary of State of the State of Delaware shall constitute notice that the
Company is a limited liability company. Simultaneously with the execution of Original Agreement and
the formation of the Company, the Manager was admitted as a Member of the Company. Each member of
the Board of Directors was designated as an “authorized person” within the meaning of the Act under
the Original Agreement, and I. Joseph Massoud has executed, delivered and filed the Certificate
with the Secretary of State of the State of Delaware, such execution, delivery and filing being
hereby ratified in all respects. Upon the effectiveness of this Agreement, the powers of each
member of the Board of Directors as an authorized person shall cease, and the Manager shall become
the designated “authorized person” within the meaning of the Act and shall continue as the
designated “authorized person” within the meaning of the Act. The Manager shall execute, deliver
and file any other certificates (and any amendments and/or restatements thereof) necessary for the
Company to qualify to do business in Connecticut and in any other jurisdiction in which the Company
may wish to conduct business. The rights and liabilities of the Members shall be as provided under
the Act, the Certificate and this Agreement.



     Section 1.2 Name.



          (a) Subject to Section 1.2(b), the name of the Company shall continue to be Compass Group
Diversified Holdings LLC and all business of the Company shall be conducted in such name. The Board
of Directors may change the name of the Company upon ten (10) Business Days’ written notice to the
Members, which name change shall be effective upon the

1









 








filing of a certificate of amendment of the
Certificate with the Secretary of State of the State of Delaware, and an amendment of this
Agreement (which amendment shall not require the consent of any Member or other Person
notwithstanding any other provision of this Agreement).




          (b) The Board of Directors shall take all action and do all things necessary to give effect to
Section 9.5 of the Management Services Agreement.




     Section 1.3 Purpose; Powers; Company Not to Be an Investment Company; Prior Authorization
of Actions Valid.



          (a) The purposes of the Company are (i) to conduct or promote any lawful business, purpose or
activity permitted for a limited liability company of the State of Delaware under the Act, (ii) to
make such additional investments and engage in such additional activities as the Board of Directors
may approve, and (iii) to engage in any and all activities related or incidental to the purposes
set forth in clauses (i) and (ii); provided, however, that the Company is not permitted to engage
in any activities that would cause it to become an “investment company” as defined in Section
3(a)(1) of the Investment Company Act of 1940, as amended and as may be amended from time to time,
or any successor provision thereto.




          (b) The Company has the power to do any and all acts necessary, appropriate, proper,
advisable, incidental or convenient to or in furtherance of the purposes of the Company set forth
in this Section 1.3 and has, without limitation, any and all powers that may be exercised on behalf
of the Company by the Board of Directors pursuant to Article 6 hereof.




          (c) Notwithstanding anything in this Agreement to the contrary, any actions and things
(including the entering into and performance of any agreements or other documents) properly
authorized, in the name and on behalf of the Company, by the Board of Directors as constituted at
the time of any such authorization, whether prior to the date of this Agreement (including under
the Original Agreement) or under and in accordance with this Agreement (or the Original Agreement),
were, are and shall continue to be valid and duly authorized, and the Company shall continue to
have the power and authority to take and do all such actions and things (including to enter into
and perform all such agreements or other documents), whether or not such actions or things have
already been taken or done (or such agreements or other documents entered into and/or performed),
and regardless of whether the composition of the Board of Directors has changed, whether the
Original Agreement or this Agreement has been amended, whether the Initial Public Offering has
closed or otherwise prior to the actual taking or doing of any such actions or things (including
the entering into or performance of any such documents) by the Company.




          (d) The Company, and the Company on behalf of the Trust, is hereby authorized to execute,
deliver and perform, and the Manager or any member of the Board of Directors or the Chief Executive
Officer or the Chief Financial Officer, or any Person authorized by the Board of Directors on
behalf of the Company, are hereby authorized to execute and deliver, the Transaction Documents and
all documents, agreements, certificates, or financing statements contemplated thereby or related
thereto, all without any further act, vote or approval of any other Person notwithstanding any
other provision of this Agreement. The foregoing authorizations shall not be deemed a restriction
on the powers of the Manager or the Board of




2









 







Directors to enter into (or for the Board of Directors
to delegate to other Persons the power to enter into) other agreements on behalf of the Company.




     Section 1.4 Principal Place of Business; Registered Office; Registered Agent. The principal
executive offices of the Company are at 61 Wilton Road, Westport, CT 06880. The Board of Directors
may change the principal executive offices of the Company to any other place within or without the
State of Delaware upon written notice to the Members. The address of the Company’s registered
office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent for service of process in the
State of Delaware at such address is The Corporation Trust Company or any successor registered
agent for service of process as shall be appointed by the Board of Directors in accordance with the
Act. The Company may have such offices, either within or without the State of Delaware, as the
Board of Directors may designate or as the business of the Company may from time to time require.



     Section 1.5 Term. The term of the Company commenced on the date the Certificate was first filed in
the Office of the Secretary of State of the State of Delaware in accordance with the Act and shall
continue until the winding up of the Company is completed following a Dissolution Event, as
provided in Article 14 and the Certificate is cancelled as provided in the Act.



     Section 1.6 Filings.



          (a) The Board of Directors shall take any and all other actions, as may be reasonably
necessary, to perfect and maintain the status of the Company as a limited liability company or
similar type of limited liability entity under the laws of the State of Delaware and under the laws
of any other jurisdictions in which the Company engages in business, including causing the Company
to prepare, execute and file such amendments to the Certificate and such other assumed name
certificates, documents, instruments and publications as may be required by law, including, without
limitation, action to reflect:





     (i) a change in the Company name; or




     (ii) a correction of false or erroneous statements in the Certificate to accurately
represent the information contained therein.



          (b) Upon the dissolution and completion of the winding up of the Company in accordance with
Article 14, the Board of Directors shall cause the Company to promptly execute and file a
Certificate of Cancellation in accordance with the Act and the laws of any other jurisdiction in
which the Board of Directors deems such filing necessary or advisable.




     Section 1.7 Title to Property. All Property owned by the Company shall be owned by the Company as
an entity and no Member shall have any ownership interest in such Property in its individual name,
and each Member’s interest in the Company shall be personal property for all purposes. At all times
after the Effective Date, the Company shall hold title to all of its Property in the name of the
Company and not in the name of any Member.



3









 





     Section 1.8 Payments of Individual Obligations. The Company’s credit and assets shall be used solely for the benefit of the Company, and no
asset of the Company shall be Transferred or encumbered for, or in payment of, any individual
obligation of any Member.



     Section 1.9 Definitions. For all purposes of this Agreement (as defined herein), except as
otherwise expressly provided or unless the context otherwise requires:



          (i) the terms defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular;




          (ii) unless the context otherwise requires, any reference to an “Article,” “Section” or an
“Exhibit” refers to an Article, Section or an Exhibit, as the case may be, of this Agreement; and




          (iii) the words “herein,” “hereinafter,” “hereof,” “hereto” and “hereunder” and other words of
similar import refer to this Agreement as a whole and not to any particular Article, Section or
other subdivision:




          “Acquirer” has the meaning set forth in the Trust Agreement.




          “Acquisition Exchange” has the meaning set forth in the Trust Agreement.




          “Act” means the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101 et seq., as
amended from time to time (or any corresponding provisions of succeeding law) and, for the
avoidance of doubt, includes all applicable jurisprudence.




          “Adjusted Capital Account Deficit” means, with respect to any Member, the deficit balance, if
any, in such Member’s Capital Account as of the end of the relevant Allocation Year, after giving
effect to the following adjustments:




          (i) credit to such Capital Account any amounts which such Member is deemed to be obligated to
restore pursuant to the penultimate sentence in each of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of
the Regulations; and




          (ii) debit to such Capital Account the items described in Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of the Regulations.




          The foregoing definition of “Adjusted Capital Account Deficit” is intended to comply with the
provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently
therewith.




          “Adjusted Net Assets” shall be equal to, with respect to any Person as of any date, the sum of
(i) such Person’s consolidated total assets (as determined in accordance with GAAP) as of such
date, plus (ii) the absolute amount of consolidated accumulated amortization of intangibles of such
Person (as determined in accordance with GAAP) as of such date, minus (iii) the absolute amount of
Adjusted Total Liabilities of such Person as of such date.




4









 





          “Adjusted Profit Distribution Amount” has the meaning set forth in Section 5.2(b).




          “Adjusted Total Liabilities” shall be equal to, with respect to any Person as of any date,
such Person’s consolidated total liabilities (as determined in accordance with GAAP) as of such
date, after excluding the effect of any outstanding indebtedness of such Person.




          “Administrator” means, as of any Calculation Date, (i) the Manager as of such Calculation
Date, and (ii) if there is no Manager, the Chief Financial Officer in all other cases.




          “Affiliate” means, with respect to any Person, (i) any Person directly or indirectly
controlling, controlled by or under common control with such Person or (ii) any officer, director,
general member, member or trustee of such Person. For purposes of this definition, the terms
“controlling,” “controlled by” or “under common control with” shall mean, with respect to any
Persons, the possession, direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, or the power to elect at least fifty percent (50%) of the directors,
managers, general members or Persons exercising similar authority with respect to such Person.




          “Agreement” has the meaning set forth in the introductory paragraph hereof.




          “Allocated Share of Company Overhead” means, with respect to any Profit Distribution
Subsidiary during any Measurement Period as of any Calculation Date, the aggregate amount of such
Profit Distribution Subsidiary’s Quarterly Share of the Company’s Overhead for each Fiscal Quarter
ending during such Measurement Period.




          “Allocation Interests” means the limited liability company interests in the Company designated
under the Original Agreement as the “Class B Interests” and redesignated herein as “Allocation
Interests”, as authorized pursuant to Section 3.1(b), and having the rights provided herein.




          “Allocation Interest Certificate” means a certificate representing Allocation Interests
substantially in the form attached hereto as Exhibit A.




          “Allocation Member” means the Manager, in its capacity as a Member.




          “Allocation Year” means (i) the period commencing on the Effective Date and ending on December
31, 2005, (ii) any subsequent twelve (12)-month period commencing on January 1 and ending on
December 31, or (iii) any portion of the period described in clause (i) or (ii) above for which the
Company is required to allocate Profits, Losses and other items of Company income, gain, loss or
deduction pursuant to Article 4.




          “Applicable Listing Rules” means the applicable rules, if any, of the principal U.S.
securities exchange or the Nasdaq National Market, as the case may be, on which the Trust Shares or
Trust Interests, as applicable, are listed or quoted, as the case may be.




          “Appointed Director” has the meaning set forth in Section 6.4.




5









 





          “Approved Profit Distribution” has the meaning set forth in Section 5.2(c).




          “Approved Profit Distribution Payment Date” means, with respect to any Calculation Date, ten
(10) Business Days after the date upon which the Approved Profit Distribution as of such
Calculation Date is deemed approved in accordance with Sections 5.2(c) or 5.2(d).




          “Associate” has the meaning ascribed to such term in Rule 12b-2 of the rules promulgated under
the Exchange Act.




          “Audit Committee” means the Audit Committee of the Board of Directors established pursuant to
Section 6.18(a)(ii).




          “Average Allocated Share of Consolidated Equity” shall be equal to, with respect to any Profit
Distribution Subsidiary during any Measurement Period as of any Calculation Date, the average (i.e.
the arithmetic mean) of the Profit Distribution Subsidiary’s Quarterly Allocated Share of
Consolidated Equity for each Fiscal Quarter ending during such Measurement Period.




          “Beneficial Owner” has the meaning ascribed to such term in Rule 13d-3 of the Rules and
Regulations promulgated under the Exchange Act.




          “Board” or “Board of Directors” means the Board of Directors referred to in Article 6.




          “Business Combination” means:




          (i) any merger or consolidation of the Company or any Subsidiary thereof with (A) an
Interested Shareholder, or (B) any other Person (whether or not itself an Interested Shareholder)
that is, or after such merger or consolidation would be, an Affiliate or Associate of an Interested
Shareholder; or




          (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one
transaction or a series of transactions) to or with, or proposed by or on behalf of, an Interested
Shareholder or an Affiliate or Associate of an Interested Shareholder of any property or assets of
the Company or any Subsidiary thereof having an aggregate Fair Market Value as of the date of the
consummation of the transaction giving rise to the Business Combination of not less than ten
percent (10%) of the Net Investment Value as of such date; or




          (iii) the issuance or transfer by the Trust, the Company or any Subsidiary thereof (in one
transaction or a series of transactions) of any securities of the Trust, the Company or any
Subsidiary thereof to, or proposed by or on behalf of, an Interested Shareholder or an Affiliate or
Associate of an Interested Shareholder in exchange for cash, securities or other property (or a
combination thereof) having an aggregate Fair Market Value as of the date of the consummation of
the transaction giving rise to the Business Combination of not less than ten percent (10%) of the
Net Investment Value as of such date; or




6









 








          (iv) any spin-off or split-up of any kind of the Company or any Subsidiary thereof, proposed
by or on behalf of an Interested Shareholder or an Affiliate or Associate of an Interested
Shareholder; or




          (v) any reclassification of the Trust Interests or securities of a Subsidiary of the Company
(including any reverse split of Trust Interests or such securities) or recapitalization of the
Company or such Subsidiary, or any merger or consolidation of the Company or such Subsidiary with
any other Subsidiary thereof, or any other transaction (whether or not with or into or otherwise
involving an Interested Shareholder), that has the effect, directly or indirectly, of increasing
the proportionate share of (A) Outstanding LLC Interests or such securities or securities of such
Subsidiary which are beneficially owned by an Interested Shareholder or an Affiliate or Associate
of an Interested Shareholder or (B) any securities of the Company or such Subsidiary that are
convertible into or exchangeable for Trust Interests or such securities of such Subsidiary, that
are directly or indirectly owned by an Interested Shareholder or any of its Affiliates or
Associates; or




          (vi) any agreement, contract or other arrangement providing for any one or more of the actions
specified in clauses (i) through (v) above.




          “Business Day” means any day other than a Saturday, a Sunday or a day on which banks in The
City of New York are required, permitted or authorized, by applicable law or executive order, to be
closed for regular banking business.




          “Calculation Date” means, with respect to any Trigger Event, the last day of the Fiscal
Quarter in which such Trigger Event occurs.




          “Capital Account” means, with respect to any Member, the Capital Account established and
maintained for such Member by the Company in accordance with the following provisions:




          (i) to each Member’s Capital Account there shall be credited (A) such Member’s Capital
Contributions (net of any liabilities relating to such Property), and (B) such Member’s
distributive share of Profits and any items in the nature of income or gain which are specially
allocated pursuant to Sections 4.3 or 4.4;




          (ii) to each Member’s Capital Account there shall be debited (A) the amount of money and the
Gross Asset Value of any Property distributed to such Member pursuant to any provision of this
Agreement (net of any liabilities relating to such Property), and (B) such Member’s distributive
share of Losses and any items in the nature of expenses or losses which are specially allocated
pursuant to Sections 4.3 or 4.4;




          (iii) in the event LLC Interests are Transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it
relates to the Transferred LLC Interests; and




          (iv) in determining the amount of any liability for purposes of subparagraphs (i) and (ii)
above, there shall be taken into account Code Section 752(c) and any other applicable provisions of
the Code and the Regulations.




7









 




The foregoing provisions and the other provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with Regulations Section 1.704-1(b) and shall be
interpreted and applied in a manner consistent with such Regulations. In the event the Board of
Directors shall determine that it is prudent to modify the manner in which the Capital Accounts or
any debits or credits thereto (including, without limitation, debits or credits relating to
liabilities which are secured by contributed or distributed property or which are assumed by the
Company or any Members) are computed in order to comply with such Regulations, the Board of
Directors may make such modification; provided, that it is not likely to have a material effect on
the amounts distributed to any Person pursuant to Article 14 upon the dissolution of the Company.
The Board of Directors also shall (i) make any adjustments that are necessary or appropriate to
maintain equality among the Capital Accounts of the Members and the amount of capital reflected on
the Company’s balance sheet, as computed for book purposes, in accordance with Regulations Section
1.704-1(b)(2)(iv)(q), and (ii) make any appropriate modifications in the event unanticipated events
might otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b).




          “Capital Contributions” means, with respect to any Member, the amount of money and the initial
Gross Asset Value of any Property (other than money) net of any liabilities relating to such
Property contributed to the Company with respect to the LLC Interests of the Company held or
subscribed for by such Member.




          “Capital Gains” (i) shall mean, with respect to any Person, capital gains (as determined in
accordance with GAAP) that are calculated in connection with the sale of capital stock or assets of
such Person and which gave rise to a Sale Event and the calculation of the Profit Distribution
Amount, and (ii) shall be equal to the amount, adjusted for minority interests, by which (x) the
net sales price of such capital stock or assets, as the case may be, exceeded (y) the net book
value (as determined in accordance with GAAP) of such capital stock or assets, as the case may be,
at the time of such sale thereof, as reflected on the Company’s consolidated balance sheet prepared
in accordance with GAAP; provided, that such amount shall not be less than zero.




          “Capital Losses” (i) shall mean, with respect to any Person, capital losses (as determined in
accordance with GAAP) that are calculated in connection with the sale of capital stock or assets of
such person and which gave rise to a Sale Event and the calculation of the Profit Distribution
Amount, and (ii) shall be equal to the amount, adjusted for minority interests, by which (x) the
net book value (as determined in accordance with GAAP) of such capital stock or assets, as the case
may be, at the time of such sale thereof, as reflected on the Company’s consolidated balance sheet
prepared in accordance with GAAP, exceeded (y) the net sales price of such capital stock or assets,
as the case may be; provided, that the absolute amount shall not be less than zero.




          “Cash Available for Distribution” means, for any period, the sum of (i) gross cash proceeds of
the Company for such period (which includes the proceeds of borrowings by the Company) minus (ii)
the portion thereof used to pay or establish reserves for Company expenses, debt payments, capital
improvements, replacements and contingencies, in each case, as determined by the Board of
Directors. “Cash Available for Distribution” shall not be reduced by




8









 





depreciation, amortization, cost recovery deductions or similar allowances, but shall be
increased by any reductions of reserves described in clause (ii) of the prior sentence.




          “Certificate” means the certificate of formation of the Company filed with the Secretary of
State of the State of Delaware pursuant to the Act on November 18, 2005, as originally executed and
amended, modified, supplemented or restated from time to time as the context requires.




          “Certificate of Cancellation” means a certificate of cancellation of the Certificate filed in
accordance with 6 Del. C. § 18-203.




          “Chairman” means the director designated or nominated and elected, as the case may be, as
Chairman of the Board of Directors, in accordance with Section 6.9, with such powers and duties as
are set forth in Section 6.10.




          “Chief Executive Officer” means the Chief Executive Officer of the Company, including any
interim Chief Executive Officer of the Company, with such powers and duties as are set forth in
Section 7.4.




          “Chief Financial Officer” means the Chief Financial Officer of the Company, including any
interim Chief Financial Officer of the Company, with such powers and duties as are set forth in
Section 7.5.




          “Closing Price” means, as of any date:




          (i) the closing sale price (or, if no closing price is reported, the last reported sale price)
of one Trust Share on the Nasdaq National Market on such date;




          (ii) if the Trust Shares are not so quoted on the Nasdaq National Market on any such date, the
last reported sale price as reported in the composite transactions for the principal U.S.
securities exchange on which the Trust Shares are so listed on such date;




          (iii) if the Trust Shares are not so reported, the last quoted bid price for the Trust Shares
in the over-the-counter market as reported by the National Quotation Bureau or a similar
organization on such date; or




          (iv) if the Trust Shares are not so quoted, the average of the midpoint of the last bid and
ask prices for the Trust Shares from at least three nationally recognized investment banking firms
that the Company selects for such purpose on such date.




          “Code” means the United States Internal Revenue Code of 1986, as amended and in effect from
time to time. Any reference herein to a specific section of the Code shall be deemed to include a
reference to any corresponding provision of law in effect in the future.




          “Commission” means the U.S. Securities and Exchange Commission.




          “Company” means the limited liability company formed pursuant to the Original Agreement and
the Certificate, and continued pursuant to this Agreement.




9









 








          “Company Minimum Gain” has the same meaning as the term “partnership minimum gain” in Sections
1.704-2(b)(2) and 1.704-2(d) of the Regulations.




          “Company Only Financial Statements” means, with respect to any accounting period, the
unconsolidated financial statements of the Company prepared in accordance with GAAP.




          “Compass Diversified Investments, Inc.” means Compass Diversified Investments, Inc. a Bahamian
international business corporation wholly owned by Compass Group Investments, Inc.




          “Compensation Committee” means the Compensation Committee of the Board of Directors
established pursuant to Section 6.18(a)(iii).




          “Consolidated Net Equity” shall be equal to, with respect to the Company as of any date, the
sum of (i) the Company’s consolidated total assets (as determined in accordance with GAAP) as of
such date, plus (ii) the aggregate amount of assets impairments (as determined in accordance with
GAAP) that were taken relating to any Subsidiaries of the Company as of such date, plus (iii) the
consolidated accumulated amortization of intangibles (as determined in accordance with GAAP) of the
Company as of such date, minus (iv) the Company’s consolidated total liabilities (as determined in
accordance with GAAP) as of such date plus (v) to the extent included in the Company’s consolidated
total liabilities (as determined in accordance with GAAP) as of such date, the absolute amount of
the Company’s liabilities (as determined in accordance with GAAP) in respect of its obligations
under the Supplemental Put Agreement.




          “Continuing Director” means (i) any director of the Company who (A) is neither the Interested
Shareholder involved in the Business Combination as to which a determination of Continuing
Directors is provided hereunder, nor an Affiliate, Associate, employee, agent or nominee of such
Interested Shareholder, or a relative of any of the foregoing, and (B) was a member of the Board of
Directors prior to the time that such Interested Shareholder became an Interested Shareholder, or
(ii) any successor of a Continuing Director described in clause (i) above who is recommended or
elected to succeed a Continuing Director by the affirmative vote of a majority of Continuing
Directors then on the Board of Directors.




          “Contribution-Based Profits” shall be equal to, with respect to any Profit Distribution
Subsidiary for any Measurement Period as of any Calculation Date, the sum of (i) the aggregate
amount of such Profit Distribution Subsidiary’s net income (loss) (as determined in accordance with
GAAP and adjusted for minority interests) with respect to such Measurement Period (without giving
effect to (x) any Capital Gains or Capital Losses realized by such Profit Distribution Subsidiary
that arise with respect to the sale of capital stock or assets held by such Profit Distribution
Subsidiary and which gave rise to a Sale Event and a calculation of Profit Distribution Amount or
(y) any expense attributable to the accrual or payment of any amount of Profit Distribution or any
amount arising under the Supplemental Put Agreement, in each case, to the extent included in the
calculation of such Profit Distribution Subsidiary’s net income (loss)), plus (ii) the absolute
aggregate amount of such Profit Distribution Subsidiary’s Loan Expense with respect to such
Measurement Period, minus (iii) the absolute aggregate amount of such




10









 





Profit Distribution Subsidiary’s Allocated Share of the Company’s Overhead with respect to
such Measurement Period.




          “Control Date” means the date upon which the Acquirer becomes the Beneficial Owner of at least
90% of the Outstanding Trust Interests.




          “Credit Agreement” means the Credit Agreement, dated as of the date hereof, as may be amended
from time to time, entered into by and between the Company and the Borrower (as defined therein).




          “Cumulative Capital Gains” shall be equal to, as of any Calculation Date, the aggregate amount
of Capital Gains realized by the Company as of such calculation date, after giving effect to any
Capital Gains realized by the Company on such Calculation Date, since its inception.




          “Cumulative Capital Losses” shall be equal to, as of any Calculation Date, the aggregate
amount of Capital Losses realized by the Company, after giving effect to any Capital Losses
realized by the Company on such Calculation Date, since its inception.




          “Cumulative Gains and Losses” shall be equal to, with respect to the Company as of any
Calculation Date, an amount equal to the sum of (i) the amount of Cumulative Capital Gains as of
such Calculation Date, minus (ii) the absolute amount of Cumulative Capital Losses as of such
Calculation Date.




          “Debt” means (i) any indebtedness for borrowed money or the deferred purchase price of
property as evidenced by a note, bonds or other instruments, (ii) obligations as lessee under
capital leases, (iii) obligations secured by any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind existing on any asset owned or held by the Company, whether or not the
Company has assumed or become liable for the obligations secured thereby, (iv) any obligation under
any interest rate swap agreement, (v) accounts payable, and (vi) obligations under direct or
indirect guarantees of (including obligations, contingent or otherwise, to assure a creditor
against loss in respect of) indebtedness or obligations of the kinds referred to in clauses (i),
(ii), (iii), (iv) and (v) above; provided, that Debt shall not include obligations in respect of
any accounts payable that are incurred in the ordinary course of the Company’s business and are not
delinquent or are being contested in good faith by appropriate proceedings.




          “DGCL” means the Delaware General Corporation Law, 8 Del. C. §§ 101 et seq., as amended from
time to time (or any corresponding provisions of succeeding law) and, for the avoidance of doubt,
includes all applicable jurisprudence.




          “Direct Company Expenses” means, with respect to any period, that portion of the
Company’s operating expenses (including any management fees paid by the Company) for such period
that are not incurred with respect to any Subsidiary for such period.




          “Disputed Profit Distribution” has the meaning set forth in Section 5.2(c).




          “Disputed Profit Distribution Date” has the meaning set forth in Section 5.2(c).

11









 









          “Disputed Profit Distribution Payment Date” means, with respect to any Calculation Date, (i)
if the Administrator does not disagree with the Audit Committee’s calculation of Disputed Profit
Distribution in accordance with Section 5.2(e)(i)(B), ten (10) Business Days after the Disputed
Profit Distribution Date as of such Calculation Date or (ii) in all other cases, twenty-one (21)
Business Days after the Disputed Profit Distribution Date as of such Calculation Date.




          “Distribution Entitlement” has the meaning set forth in Section 5.2(l).




          “Distribution Entitlement Amount” shall be equal to, as of any date of a Distribution
Entitlement Notice, the sum of (i) the aggregate amount of all Distribution Entitlements elected to
be such by the Allocation Member on all Profit Distribution Payment Dates occurring prior to the
date of such Distribution Entitlement Notice, minus (ii) the aggregate amount of all Distribution
Entitlement Payments paid by the Company to the Manager on all Distribution Entitlement Payment
Dates occurring prior to the date of such Distribution Entitlement Notice.




          “Distribution Entitlement Notice” has the meaning set forth in Section 5.2(l).




          “Distribution Entitlement Payment” has the meaning set forth in Section 5.2(l).




          “Distribution Entitlement Payment Date” has the meaning set forth in Section 5.2(l).




          “Disinterested Director” means a director of the Company who is not and was not a party to the
proceeding or matter in respect of which indemnification is sought by the claimant.




          “Dissolution Event” has the meaning set forth in Section 14.1.




          “Effective Date” means November 18, 2005, being the date of the effectiveness of the filing of
the Certificate.




          “Election Period” means, with respect to any Holding Date or anniversary thereof, the 30-day
period immediately following such Holding Date or anniversary thereof.




          “Entire Board of Directors” has the meaning set forth in Section 6.17.




          “Escrow Agreement” means the Escrow Agreement, dated as of the date hereof, as may be amended
from time to time, entered into by and between the Company and The Bank of New York, Inc. or any
successor(s) thereto and the other parties names therein.




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




          “Fair Market Value” means, as of any date:




          (i) in the case of any equity securities, the average of the closing sale prices for such
equity securities during the ten (10) Business Days immediately preceding such date:





12









 





               (A) as reported in composite transactions by the Nasdaq National Market;



               (B) if such equity securities are not so reported by the Nasdaq National Market, as reported
in the composite transactions for the principal U.S. securities exchange on which such equity
securities are so listed;



               (C) if such equity securities are not so reported, the last quoted bid price for such equity
securities, in the over-the-counter market as reported by the National Quotation Bureau or a
similar organization; or



          (ii) if such equity securities are not so reported, quoted or listed, or in the case of any
other Property, the fair market value of such equity securities or such Property as of such date as
determined by a majority of the Board of Directors in good faith; provided, that if the Manager
shall dispute any such determination of fair market value by the Board of Directors, fair market
value shall be determined instead by the investment banking or professional valuation firm selected
by the Board of Directors from among no fewer than three qualified candidates provided by the
Manager.




          “Fiscal Quarter” means the Company’s fiscal quarter for purposes of its reporting obligations
under the Exchange Act.




          “Fiscal Year” means the Company’s fiscal year for purposes of its reporting obligations under
the Exchange Act.




          “Future Investments” means contractual commitments to invest represented by definitive
agreements.




          “GAAP” means generally accepted accounting principles in effect in the United States,
consistently applied.




          “Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for U.S.
federal income tax purposes, except as follows:




          (i) the initial Gross Asset Value of any asset contributed by a Member to the Company shall be
the gross fair market value of such asset, as determined by the Board of Directors;




          (ii) the Gross Asset Values of all Company assets shall be adjusted by the Tax Matters Member
to equal their respective gross fair market values (taking Code Section 7701(g) into account), as
determined by the Tax Matters Member as of the following times: (A) the acquisition of an
additional interest in the Company by any new or existing Member in exchange for more than a de
minimis Capital Contribution; (B) the distribution by the Company to a Member of more than a de
minimis amount of Company Property as consideration for an interest in the Company; (C) the
liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) or (D)
upon the declaration of a Holding Event; provided, that an adjustment described in clauses (A) and
(B) of this subparagraph (ii) shall be made only if the Tax Matters




13









 







Member reasonably determines
that such adjustment is necessary to reflect the relative economic interests of the Members in the
Company;




          (iii) the Gross Asset Value of any item of Company assets distributed to any Member shall be
adjusted to equal the gross fair market value (taking Code Section 7701(g) into account) of such
asset on the date of distribution, as determined by the Tax Matters Member; and




          (iv) the Gross Asset Values of Company assets shall be increased (or decreased) to reflect any
adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section
743(b), but only to the extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and subparagraph (vi) of the
definition of “Profits” and “Losses”; provided, however, that Gross Asset Values shall not be
adjusted pursuant to this subparagraph (iv) to the extent that an adjustment pursuant to
subparagraph (ii) is required in connection with a transaction that would otherwise result in an
adjustment pursuant to this subparagraph (iv).



If the Gross Asset Value of an asset has been determined or adjusted pursuant to subparagraph (ii)
or (iv), such Gross Asset Value shall thereafter be adjusted by depreciation taken into account
with respect to such asset for purposes of computing Profits and Losses.




          “High Water Mark” means, as of any Calculation Date, the highest positive amount of the
Company’s Cumulative Gains and Losses as of such Calculation Date that were calculated in
connection with any Qualifying Trigger Event that occurred prior to such Calculation Date.




          “High Water Mark Allocation” shall be equal to, as of any Calculation Date, the product of (i)
the amount of the High Water Mark as of such Calculation Date, multiplied by (ii) 20%.




          “Holding Date” means, with respect to any Subsidiary, the fifth anniversary of the date upon
which the Company acquired a controlling interest in such Subsidiary; provided, that if the
Allocation Member has previously elected that a Holding Event has occurred with respect to any
Subsidiary, then Holding Date shall mean, with respect to such Subsidiary, the fifth anniversary of
the Calculation Date with respect to such previously elected Holding Event.




          “Holding Event” means, with respect to any Subsidiary, (i) the election by the Allocation
Member on or after the Holding Date with respect to such Subsidiary that a Holding Event has
occurred; provided, that the Allocation Member must make such election during the
Election Period with respect to such Holding Date, or (ii) the election by the Allocation
Member on or after each anniversary of any Holding Date with respect to such Subsidiary that a
Holding Event has occurred; provided, that the Allocation Member must make such election during the
Election Period with respect to such anniversary of such Holding Date.




          “Independent Director” means a director who (i) (a) is not an officer or employee of the
Company, or an officer, director or employee of any Subsidiary of the Company, (b) was not
appointed as a director pursuant to the terms of the Management Services Agreement, and (c) for so
long as the Management Services Agreement is in effect, is not




14









 







affiliated with the Manager or any
of its Affiliates, and (ii) who satisfies the independence requirements under the Applicable
Listing Rules as determined by the Board of Directors.




          “Independently Calculated Profit Distribution” has the meaning set forth in Section 5.2(d).




          “Independently Calculated Profit Distribution Payment Date” means, with respect to any
Calculation Date, ten (10) Business Days after the receipt by the Administrator and the Audit
Committee of the calculation of Profit Distribution Amount as of such Calculation Date by the
independent accounting firm in accordance with Section 5.2(d).




          “Initial Board” has the meaning set forth in Section 6.1.




          “Initial Director” has the meaning set forth in Section 6.1.




          “Initial Public Offering” means the initial public offering of Trust Shares by the Trust,
closing on the date hereof.




          “Interested Shareholder” means any Person (other than the Manager, the Members, the Company or
any Subsidiary of the Company, any employee benefit plan maintained by the Company or any
Subsidiary thereof or any trustee or fiduciary with respect to any such plan when acting in such
capacity) that:




          (i) is, or was at any time within the three-year period immediately prior to the date in
question, the Beneficial Owner of fifteen percent (15%) or more of the then Outstanding Trust
Interests and who did not become the Beneficial Owner of such amount of Trust Interests pursuant to
a transaction that was approved by the affirmative vote of a majority of the Entire Board of
Directors; or




          (ii) is an assignee of, or has otherwise succeeded to, any Trust Interests of which an
Interested Shareholder was the Beneficial Owner at any time within the three-year period
immediately prior to the date in question, if such assignment or succession occurred in the course
of a transaction, or series of transactions, not involving a public offering within the meaning of
the Securities Act.




For the purpose of determining whether a Person is an Interested Shareholder, the Trust Interests
that may be issuable or exchangeable by the Company to the Interested Shareholder pursuant to any
agreement, arrangement or understanding, or upon the exercise of conversion rights, warrants or
options, or otherwise, shall be included, but not any other Trust Interests that may be
issuable or exchangeable by the Company pursuant to any agreement, arrangement or understanding, or
upon the exercise of conversion rights, warrants or options, or otherwise, to any Person who is not
the Interested Shareholder.




          “Issuance Items” has the meaning set forth in Section 4.3(g).




          “Level 1 Hurdle Amount” shall be equal to, with respect to any Profit Distribution Subsidiary
as of any Calculation Date, the product of (i) (x) 1.75% multiplied by (y) the number of Fiscal
Quarters ending during the Measurement Period with respect to such Profit




15









 







Distribution Subsidiary
as of such Calculation Date, multiplied by (ii) such Profit Distribution Subsidiary’s Average
Allocated Share of Consolidated Equity for each Fiscal Quarter ending during such Measurement
Period.




          “Level 2 Hurdle Amount” shall be equal to, with respect to any Profit Distribution Subsidiary
as of any Calculation Date, the product of (i) (x) 2.1875%, multiplied by (y) the number of Fiscal
Quarters ending during the Measurement Period with respect to such Profit Distribution Subsidiary
as of such Calculation Date, multiplied by (ii) such Profit Distribution Subsidiary’s Average
Allocated Share of Consolidated Equity for each Fiscal Quarter ending during such Measurement
Period.




          “Liquidation Period” has the meaning set forth in Section 14.7.




          “Liquidator” means a Person appointed by the Board of Directors to oversee the winding up of
the Company.




          “LLC Interests” means, collectively, the Trust Interests and the Allocation Interests.




          “Loan Expense” means, with respect to any Profit Distribution Subsidiary for any Measurement
Period as of any Calculation Date, the aggregate amount of all interest or other expenses paid by
such Profit Distribution Subsidiary with respect to indebtedness of such Profit Distribution
Subsidiary to either the Company or other Subsidiaries of the Company with respect to such
Measurement Period.




          “Losses” has the meaning set forth in the definition of “Profits” and “Losses” below.




          “Management Fee” means the management fee payable by the Company pursuant to the Management
Services Agreement with respect to the provision of management services to the Company.




          “Management Services Agreement” means the Management Services Agreement, dated as of the date
hereof, as may be amended from time to time, entered into by and between the Company and the
Manager.




          “Manager” means Compass Group Management LLC, and any successor thereto.




          “Market Value” means, as of any date, the product of (1) the average number of, if the Trust
is in existence as of such date, Trust Shares or, if the Trust is not in existence as of such date,
Trust Interests, as applicable, issued and Outstanding, other than treasury shares or treasury
Trust Interests, as applicable, during the last fifteen (15) Business Days of the most recently
completed Fiscal Quarter as of such date multiplied by (2) the volume weighted average trading
price per Trust Share or per Trust Interest, as applicable, as determined by reference to the
relevant securities exchange identified in clause (i) of the definition of Fair Market Value, over
such fifteen (15) Business Days.




16









 








          “Measurement Period” means, with respect to any Profit Distribution Subsidiary as of any
Calculation Date, the period from and including the later of: (i) the date upon which the Company
acquired a controlling interest in such Profit Distribution Subsidiary and (ii) the immediately
preceding Calculation Date as of which Contribution-Based Profits were calculated with respect to
such Profit Distribution Subsidiary and with respect to which Profit Distributions were paid (or,
at the election of the Allocation Member, deferred) by the Company, up to and including such
Calculation Date.




          “Member” means, as of any date, any holder of Trust Interests or Allocation Interests, as of
such date.




          “Member Nonrecourse Debt” has the same meaning as the term “partner nonrecourse debt” in
Section 1.704-2(b)(4) of the Regulations.




          “Member Nonrecourse Debt Minimum Gain” means an amount, with respect to each Member
Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse
Debt were treated as a Nonrecourse Liability, determined in accordance with Section 1.704-2(i)(3)
of the Regulations.




          “Member Nonrecourse Deductions” has the same meaning as the term “partner nonrecourse
deductions” in Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the Regulations.




          “Nasdaq National Market” means the Nasdaq National Market or any successor thereto.




          “Net Investment Value” means, as of any date, the sum of:




          (i) the Market Value as of such date; plus




          (ii) the amount of any borrowings (other than intercompany borrowings) of the Company and its
Subsidiaries (but not including borrowings on behalf of any Subsidiary of such Subsidiaries) as of
such date; plus




          (iii) the value of Future Investments of the Company and/or any of its Subsidiaries other than
cash or cash equivalents, as calculated by the Manager and approved by a majority of the Continuing
Directors as of such date; provided, that such Future Investments have not been outstanding for
more than two consecutive full Fiscal Quarters as of such date; less




          (iv) the aggregate amount held by the Company and its Subsidiaries in cash or cash equivalents
(but not including cash or cash equivalents held specifically for the benefit of any Subsidiary of
such Subsidiaries) as of such date.




          “Net Long Term Capital Gain” has the meaning set forth in Code Section 1222(7).




          “Nominating and Governance Committee” means the Nominating and Governance Committee of the
Board of Directors established pursuant to Section 6.18(a)(i).




17









 








          “Nonrecourse Deductions” has the meaning set forth in Section 1.704-2(b)(1) of the
Regulations.




          “Nonrecourse Liability” has the meaning set forth in Section 1.704-2(b)(3) of the Regulations.




          “Offer Price” means, as of any Control Date, the average Closing Price per Trust Share or
Trust Interest, as applicable, on the twenty (20) Business Days immediately prior to, but not
including, such Control Date.




          “Original Agreement” has the meaning set forth in the introductory paragraph hereof.




          “Outstanding” means, as of any date, with respect to any security theretofore issued by the
Company, except:




          (i) such securities as represented by certificates or electronic positions evidencing such
securities that have been canceled or delivered for cancellation; and




          (ii) such security as represented by certificates or electronic positions that have been
exchanged for or in lieu of which other securities have been executed and delivered pursuant to
Section 3.5.




          “Overhead” shall be equal to, with respect to the Company for any Fiscal Quarter, the sum of
(i) that portion of the Company’s operating expenses (as determined in accordance with GAAP)
(without giving effect to any expense attributable to the accrual or payment of any amount of
Profit Distribution or any amount arising under the Supplemental Put Agreement to the extent
included in the calculation of the Company’s operating expenses), including any Management Fees
actually paid by the Company to the Manager, with respect to such Fiscal Quarter that are not
attributable to any Subsidiary of the Company (i.e., operating expenses that do not correspond to
operating expenses of a Subsidiary of the Company with respect to such Fiscal Quarter), plus (ii)
the Company’s accrued interest expense (as determined in accordance with GAAP) on any outstanding
Third Party Indebtedness of the Company with respect to such Fiscal Quarter, minus (iii) revenue,
interest income and other income reflected in the Company Only Financial Statements.




          “Over-Paid Profit Distributions” shall be equal to, as of any Calculation Date, the amount by
which (i) the aggregate amount of Profit Distributions that were actually paid by
the Company with respect to all Profit Distribution Payment Dates immediately preceding such
Calculation Date, exceeded (ii) the aggregate amount of Profit Distributions that were actually due
and payable by the Company with respect to all such Profit Distribution Payment Dates, as
determined in accordance with Section 5.2; provided, that such amount shall not be less than zero.




          “Percentage Interest” means, with respect to any Member as of any date, the ratio (expressed
as a percentage) of the number of LLC Interests held by such Member on such date relative to the
aggregate number of LLC Interests then Outstanding as of such date.




18









 








          “Person” means any individual, company (whether general or limited), limited liability
company, corporation, trust, estate, association, nominee or other entity.




          “Profit Distribution” means, as of any Calculation Date, any Approved Profit Distribution as
of such Calculation Date, Disputed Profit Distribution as of such Calculation Date, the
Independently Calculated Profit Distribution as of such Calculation Date or the Profit Distribution
Amount as of such Calculation Date, originally submitted to the Audit Committee by the
Administrator pursuant to Section 5.2(c), as the case may be. For the avoidance of doubt, Profit
Distribution shall also mean any portion of the foregoing payable on any applicable Profit
Distribution Payment Date, including any Independently Calculated Profit Distribution Payment Date
or Submission Failure Payment Date, as the case may be.




          “Profit Distribution Amount” shall be equal to, with respect to any Profit Distribution
Subsidiary as of any Calculation Date, the sum of (i) the amount by which Total Profit Allocation
with respect to such Profit Distribution Subsidiary as of such Calculation Date exceeds such Profit
Distribution Subsidiary’s Level 1 Hurdle Amount as of such Calculation Date but is less than such
Profit Distribution Subsidiary’s Level 2 Hurdle Amount as of such Calculation Date, plus (ii) the
product of (x) the amount by which Total Profit Allocation with respect to such Profit Distribution
Subsidiary as of such Calculation Date exceeds such Profit Distribution Subsidiary’s Level 2 Hurdle
Amount as of such Calculation Date, multiplied by (y) 20%, minus (iii) the High Water Mark
Allocation, if any, as of such Calculation Date.




          “Profit Distribution Payment Date” means any Approved Profit Distribution Payment Date, as of
any Calculation Date, with respect to Approved Profit Distribution, any Disputed Profit
Distribution Payment Date, as of any Calculation Date, with respect to Disputed Profit
Distribution, any Submission Failure Payment Date, as of any Calculation Date, with respect to
Approved Profit Distribution, or any Independently Calculated Profit Distribution Payment Date, as
of any Calculation Date, with respect to the Independently Calculated Profit Distribution, as the
case may be.




          “Profit Distribution Subsidiary” has the meaning set forth in Section 5.2(b).




          “Profits” and “Losses” mean, for each Allocation Year, an amount equal to the Company’s
taxable income or loss for such Allocation Year, determined in accordance with Code Section 703(a)
(for this purpose, all items of income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following
adjustments (without duplication):




          (i) any income of the Company that is exempt from U.S. federal income tax and not otherwise
taken into account in computing Profits or Losses pursuant to this definition of “Profits” and
“Losses” shall be added to such taxable income or loss;




          (ii) any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code
Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i) and not
otherwise taken into account in computing Profits or Losses pursuant to this definition of
“Profits” and “Losses” shall be subtracted from such taxable income or loss;




19









 








          (iii) in the event the Gross Asset Value of any Company asset is adjusted pursuant to
subparagraph (ii) or (iii) of the definition of Gross Asset Value, the amount of such adjustment
shall be treated as an item of gain (if the adjustment increases the Gross Asset Value of the
asset) or an item of loss (if the adjustment decreases the Gross Asset Value of the asset) from the
disposition of such asset and shall be taken into account for purposes of computing Profits or
Losses;




          (iv) gain or loss resulting from any disposition of Property with respect to which gain or
loss is recognized for U.S. federal income tax purposes shall be computed by reference to the Gross
Asset Value of the Property disposed of, notwithstanding that the adjusted tax basis of such
Property differs from its Gross Asset Value;




          (v) to the extent an adjustment to the adjusted tax basis of any Company asset pursuant to
Code Section 734(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be
taken into account in determining Capital Accounts as a result of a distribution other than in
liquidation of a Member’s interest in the Company, the amount of such adjustment shall be treated
as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis) from the disposition of such asset and shall be taken into account for
purposes of computing Profits or Losses; and




          (vi) notwithstanding any other provision of this definition, any items which are specially
allocated pursuant to Sections 4.3 or 4.4 shall not be taken into account in computing Profits or
Losses.



The amounts of the items of Company income, gain, loss or deduction available to be specially
allocated pursuant to Sections 4.3 and 4.4 shall be determined by applying rules analogous to those
set forth in subparagraphs (i) through (v) above.




          “Property” means all real and personal property acquired by the Company, including cash, and
any improvements thereto, and shall include both tangible and intangible property.




          “Qualifying Trigger Event” means any Trigger Event with respect to a Profit Distribution
Subsidiary (i) that gave rise to the calculation of Total Profit Allocation with respect to such
Profit Distribution Subsidiary as of any Calculation Date and (ii) where the amount of Total Profit
Allocation so calculated as of such Calculation Date exceeded such Profit Distribution Subsidiary’s
Level 2 Hurdle Amount as of such Calculation Date.




          “Quarterly Allocated Share of Consolidated Equity” shall be equal to, with respect to any
Profit Distribution Subsidiary for any Fiscal Quarter, the product of (i) the Company’s
Consolidated Net Equity as of the last day of such Fiscal Quarter, multiplied by (ii) a fraction,
the numerator of which is such Profit Distribution Subsidiary’s Adjusted Net Assets as of the last
day of such Fiscal Quarter and the denominator of which is the sum of the Adjusted Net Assets of
all of the Subsidiaries owned by us as of the last day of such Fiscal Quarter.




          “Quarterly Share of Company Overhead” shall be equal to, with respect to any Profit
Distribution Subsidiary for any Fiscal Quarter, the product of (i) the absolute amount of the
Company’s Overhead with respect to such Fiscal Quarter, multiplied by (ii) a fraction, the




20









 







numerator of which is such Profit Distribution Subsidiary’s Adjusted Net Assets as of the last day
of such Fiscal Quarter and the denominator of which is the sum of the Adjusted Net Assets of all of
the Subsidiaries owned by us as of the last day of such Fiscal Quarter.




          “Register” has the meaning set forth in Section 3.3.




          “Regular Trustees” has the meaning set forth in the Trust Agreement.




          “Regulations” means the income tax regulations, including temporary regulations, promulgated
under the Code, as such regulations are amended from time to time.




          “Regulatory Allocations” has the meaning set forth in Section 4.4.




          “Repurchase Date” has the meaning set forth in Section 3.4(b).




          “Rules and Regulations” means the rules and regulations promulgated under the Exchange Act or
the Securities Act.




          “Sale Event” means, with respect to any Subsidiary, the sale of a material amount, as
determined by the Allocation Member and consented to by a majority of the Board of Directors, such
consent not to be unreasonably withheld, conditioned or delayed, of the capital stock or assets of
such Subsidiary or a Subsidiary of such Subsidiary.




          “Secretary” means the Secretary of the Company, with such powers and duties as set forth in
Section 7.7.




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




          “Stock Transfer Agency Agreement” means the Stock Transfer Agency Agreement, dated as of the
date hereof, as may be amended from time to time, entered into by and between the Company and The
Bank of New York, Inc. or any successor(s) thereto.




          “Submission Date” has the meaning set forth in Section 5.2(d).




          “Submission Failure Payment Date” means, with respect to any Calculation Date, ten (10)
Business Date after the Submission Date with respect to such Calculation Date.




          “Subsidiary” means, with respect to any Person, any corporation, company, joint venture,
limited liability company, association or other Person in which such Person owns, directly or
indirectly, more than 50% of the Outstanding equity securities or interests, the holders of which
are generally entitled to vote for the election of the board of directors or other governing body
of such Person.




          “Supplemental Put Agreement” means the Supplemental Put Agreement, dated as of the date
hereof, as may be amended from time to time, entered into by and between the Company and the
Allocation Member.




          “Tax Distribution” has the meaning set forth in Section 5.2(h).




21









 








          “Tax Distribution Payment Date” has the meaning set forth in Section 5.2(h).




          “Tax Matters Member” has the meaning set forth in Section 11.4(a).




          “Third Party Indebtedness” means, with respect to any Person, indebtedness of such Person owed
to any third party lenders that are not Affiliated with such Person.




          “Total Profit Allocation” shall be equal to, with respect to any Profit Distribution
Subsidiary as of any Calculation Date, the sum of (i) the Contribution-Based Profits of such Profit
Distribution Subsidiary for the Measurement Period with respect to such Profit Distribution
Subsidiary as of such Calculation Date, plus (ii) if the Trigger Event underlying the calculation
of Total Profit Allocation as of such Calculation Date is a Sale Event, the Company’s Cumulative
Gains and Losses as of such Calculation Date.




          “Transaction Documents” means the Management Services Agreements, the Trust Agreement, the
Supplemental Put Agreement, the Credit Agreement, the Underwriting Agreement, the Stock Transfer
Agency Agreement, the Escrow Agreement and all documents and certificates contemplated thereby or
delivered in connection therewith.




          “Transfer” means, as a noun, any voluntary or involuntary transfer, sale, pledge or
hypothecation or other disposition and, as a verb, voluntarily or involuntarily to transfer, sell,
pledge or hypothecate or otherwise dispose of.




          “Transfer Agent” means, with respect to the Trust Shares and the LLC Interests, The Bank of
New York, Inc., or any successor(s) thereto.




          “Trigger Event” means, with respect to any Subsidiary, the occurrence of either a Sale Event
or a Holding Event with respect to such Subsidiary.




          “Trust” means Compass Diversified Trust, a Delaware statutory trust.




          “Trust Agreement” means the Amended and Restated Trust Agreement, dated as of the date hereof,
entered into by and among the Company and The Bank of New York (Delaware), a Delaware banking
corporation, as property trustee, and the Regular Trustees.




          “Trust Interests” means the limited liability company interests in the Company designated
under the Original Agreement as the “Class A Interests” and redesignated herein as “Trust
Interests”, as authorized pursuant to Section 3.1(a), and having the rights provided herein.




          “Trust Interest Certificates” means a certificate representing Trust Interests substantially
in the form attached hereto as Exhibit A.




          “Trust Member” means any holder of a Trust Interest, in its capacity as a Member.




          “Trust Shares” means the shares of the Trust, each representing one undivided beneficial
interest in the assets of the Trust.




22









 








          “Under-Paid Profit Distributions” shall be equal to, as of any Calculation Date, the amount by
which (i) the aggregate amount of Profit Distributions that were actually due and payable by the
Company with respect to all Profit Distribution Payment Dates immediately preceding such
Calculation Date, as determined in accordance with Section 5.2 exceeded (ii) the aggregate amount
of Profit Distributions that were actually paid by the Company with respect to all such Profit
Distribution Payment Dates; provided, that such amount shall not be less than zero.




          “Underwriting Agreement” means the Underwriting Agreement, dated as of the date hereof,
entered into by and among the Company, the Trust, the Manager, Ferris, Baker Watts, Incorporated,
and the other parties thereto.




          “Voluntary Exchange” has the meaning set forth in the Trust Agreement.




ARTICLE 2




THE TRUST




     Section 2.1 Trust to Be Sole Holder of Trust Interests. The Company shall issue Trust
Interests to the Trust as the initial Trust Member, and the Trust shall be admitted to the Company
as a Member of the Company in respect thereof upon its execution of a counterpart of this
Agreement. For so long as the Trust remains in existence, subject to Sections 2.3 and 2.4(a), it
is intended that the Trust shall be the sole Trust Member and the sole owner of one hundred percent
(100%) of the Trust Interests, and, during such period, the Company shall not issue, sell or
otherwise transfer any of its Trust Interests to any Person other than the Trust. Each Trust Member
agrees with the Company to be bound by the terms of this Agreement.



     Section 2.2 Trust Shares to Represent Trust Interests. Each Trust Share represents one
undivided beneficial interest in the assets of the Trust, which assets consist of the underlying
Trust Interests.



     Section 2.3 Voluntary Exchange of Trust Shares for Trust Interests. The Company,
acting through its Board of Directors, shall take all actions and do all things necessary to give
effect to a Voluntary Exchange on the terms and conditions set forth in Section 9.2 of the Trust
Agreement.



     Section 2.4 Acquisition Exchange of Trust Shares for Trust Interests.



          (a) Right to Acquisition Exchange. The Company, acting through its Board of Directors,
shall take all actions and do all things necessary to give effect to an Acquisition Exchange on the
terms and conditions set forth in Section 9.3 of the Trust Agreement.




          (b) Right to Acquire Trust Interests of Remaining Holders for Cash. Following the
completion of an Acquisition Exchange, the Acquirer shall have the right to purchase, solely for
cash, and Members other than the Acquirer shall be required to sell, all, but not less than all, of
the Outstanding Trust Interests not then held by the Acquirer, at the Offer




23









 







Price. The Acquirer may
exercise its right to effect such purchase by delivering written notice to the Company and the
Transfer Agent of its election to make the purchase not less than sixty (60) days prior to the
Control Date. Promptly after receipt of such notice, the Board of Directors shall declare a record
date. The Company will cause the Transfer Agent to mail a copy of such notice to the Trust Members
at least thirty (30) days prior to such Control Date.




     Section 2.5 Right of Holders of Trust Shares and Members to Enforce Provisions of this
Agreement and Bring Derivative Action.



          (a) The Allocation Member, individually, and any other Member or Members holding, in the
aggregate, at least ten percent (10%) of the Outstanding Trust Interests, shall have the right to
institute any legal proceeding against the Company to enforce the provisions of this Agreement, and
to the fullest extent permitted by applicable law, no other Member or Members shall have the right
to institute any legal proceeding against the Company to enforce the provisions of this Agreement.




          (b) For so long as the Trust remains the sole holder of Trust Interests, holders of at least
ten percent (10%) of the Outstanding Trust Shares shall have the right to cause the Trust to
institute any legal proceeding for any remedy available to the Trust, as a holder of Trust
Interests and, to the extent permitted by applicable law, such holders of Trust Shares may direct
the time, method and place of conducting any such legal proceeding brought by the Trust. For so
long as the Trust remains the sole holder of Trust Interests, holders of record of at least ten
percent (10%) of the Outstanding Trust Shares shall also have the right to institute directly
against the Company any legal proceeding available to the Trust against the Company to enforce the
provisions of this Agreement. Solely for purposes of this Section 2.5(b) and only to the extent
provided herein, the holders of the Outstanding Trust Shares shall be deemed to be third-party
beneficiaries of this Agreement to the same extent as if they were signatories hereto.




          (c) Except as expressly provided in this Agreement, nothing in this Agreement shall be deemed
to give to any Person any benefit or any legal or equitable right, remedy or claim under this
Agreement.




     Section 2.6 Reimbursement of Regular Trustees. The Company shall reimburse the
Regular Trustees for any expenses, out-of-pocket or otherwise, incurred on behalf of the Trust or
otherwise in connection with performing any of their duties or obligations under the Trust
Agreement.



ARTICLE 3




CLASSES AND ISSUANCE OF LLC INTERESTS; TRANSFER




     Section 3.1 LLC Interests. The Company shall be authorized to issue two classes of
limited liability company interests to the Members: Trust Interests and Allocation Interests as
provided in Sections 3.1(a) and (b).



          (a) Trust Interests.




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     (i) Generally. The Company, and the Board of Directors by resolution on behalf
of the Company, shall initially be authorized to issue up to five hundred million
(500,000,000) Trust Interests in one or more series and, for so long as the Trust remains
the sole holder of Trust Interests, shall cause to be issued to the Trust, as of any date,
the identical number of Trust Interests as the number of Trust Shares that are issued and
Outstanding. The aggregate number of Trust Interests that are authorized may be increased
from time to time by an amendment to this Agreement upon the adoption of a resolution by the
affirmative vote of at least a majority of the Entire Board of Directors declaring such
amendment to be advisable and the approval of such amendment by the affirmative vote of the
holders of a majority of the Trust Interests then Outstanding present in person or
represented by proxy at a meeting of the Members. Each Member holding a Trust Interest shall
have all the rights, privileges and obligations set forth herein pertaining to holders of
Trust Interests, and shall have one vote per Trust Interest in accordance with the terms of
this Agreement. The Trust Interests shall be certificated in the form of a Trust Interest
Certificate or represented by electronic book-entry position.




     (ii) Restrictions on Transfer of Trust Interests. Except as otherwise provided
in Article 2, the Trust to the fullest extent permitted by law shall not be permitted to
transfer, and the Company shall not recognize any purported transfer of, nor in any respect
treat any purported transferee as the owner of, any Trust Interests held by the Trust.



          (b) Allocation Interests.





     (i) Generally. The Company is authorized to issue one thousand (1,000)
Allocation Interests. As of the date hereof, all one thousand (1,000) Allocation Interests
have been or are hereby issued to the Allocation Member. One hundred percent (100%)
of the Allocation Interests shall be issued to the Manager. Each Member holding an
Allocation Interest shall have all the rights, privileges and obligations set forth herein
pertaining to holders of Allocation Interests. The Allocation Interests shall be
certificated in the form of an Allocation Interest Certificate. The holders of Allocation
Interests shall not be entitled to vote with respect to any issue relating to the Company
notwithstanding the Act or other applicable law, except as provided in Article 10 (in which
case, the holders of Allocation Interests shall have one vote per Allocation Interest). For
the avoidance of doubt, the parties intend that the Manager not be a “manager” within the
meaning of Section 18-402 of the Act.




     (ii) Restrictions on Transfer of Allocation Interests. Until such time as the
Management Services Agreement is terminated, the Manager (or any Allocation Member holding
Allocation Interests in accordance with this Section 3.1(b)) to the fullest extent permitted
by law shall not be permitted to transfer, and the Company shall not recognize any purported
transfer of, nor in any respect treat any purported transferee as the owner of, any
Allocation Interests held by the Manager; provided, that any Allocation Member may transfer
Allocation Interests to any Affiliate of the Manager, and any Allocation Interests so
transferred shall remain subject to the restrictions of this Section 3.1(b)(i) in the hands
of such permitted transferee.



25









 





     Section 3.2 Issuance of Additional Trust Interests. For so long as the Trust remains
the sole holder of Trust Interests, (a) the Board of Directors shall have authority to issue to the
Trust, from time to time without any vote or other action by the Members, in one or more series,
any or all Trust Interests of the Company at any time authorized, and (b) the Company will issue
additional Trust Interests, in one or more series to the Trust in exchange for an equal number of
Trust Shares which the Company may sell or distribute in any manner, subject to applicable law,
that the Board of Directors in its sole discretion deems appropriate and advisable.



     Section 3.3 Trust Interest Certificates; Admission of Additional Members. The Trust
Interest Certificates shall be conclusive evidence of ownership of the related Trust Interests, and
every holder of record of Trust Interests of the Company shall be entitled to one or more Trust
Interest Certificates representing the number of Trust Interests held by such holder of record. Any
Trust Interest Certificates of the Company to be issued shall be issued under the seal of the
Company, or a facsimile thereof, and shall be numbered and shall be entered in the books of the
Company as they are issued. If and when issued, each Trust Interest Certificate shall bear a serial
number, shall exhibit the holder’s name and the number of Trust Interests evidenced thereby and
shall be signed by the Chief Executive Officer or the Chief Financial Officer. Any or all of the
signatures on the Trust Interest Certificates may be facsimiles. If any officer or Transfer Agent
who has signed or whose facsimile signature has been placed upon a Trust Interest Certificate shall
have ceased to be such officer or Transfer Agent before such Trust Interest Certificate is issued,
the Trust Interest Certificate may be issued by the Company with the same effect as if such Person
or entity were such officer or Transfer Agent at the date of issue. From the time of the closing of
the Initial Public Offering, the Company shall retain the Transfer Agent to maintain a register of
the Trust Interests (the “Register”), the Transfer Agent, in such capacity shall be known as the Registrar, and cause
such Registrar to register thereon any transfer of Trust Interest Certificates. Transfer of Trust
Interests of the Company shall be made on the Register only upon surrender to the Transfer Agent of
the Trust Interest Certificates duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer; provided, however, that such succession, assignment or
transfer is not prohibited by the Trust Interest Certificates, this Agreement, applicable law or
contract. Thereupon, the Company shall issue a new Trust Interest Certificate (if requested) to the
Person entitled thereto, cancel the old Trust Interest Certificate, and shall instruct the
Registrar to record the transaction upon the Register.



     Section 3.4 Repurchase of Trust Interests by the Company.



          (a) The Board of Directors shall have authority to cause the Company to conduct a capital
reduction, including the repurchase of any number of issued and Outstanding Trust Interests;
provided, however, that the Company shall not purchase or redeem its Trust Interests for cash or
other property if any such purchase or redemption would be inconsistent with the requirements of
Section 18-607 or Section 18-804 of the Act; provided, further, that so long as the Trust remains
the sole holder of Trust Interests, the Company, as sponsor of the Trust, acting through its Board
of Directors, shall cause the Trust to conduct a capital reduction on similar terms and shall
ensure that an identical number of Trust Interests and Trust Shares are issued and Outstanding at
any one time.




          (b) In the event the Board of Directors determines that the Company shall make an offer to
repurchase any number of issued and Outstanding Trust Interests, the Board of




26









 







Directors shall
deliver to the Transfer Agent notice of such offer to repurchase indicating the repurchase price
and the date of repurchase (the “Repurchase Date”) and shall cause the Transfer Agent to mail a
copy of such notice to the Members and holders of Trust Shares, as the case may be, at least thirty
(30) days prior to the Repurchase Date. Any Trust Interests tendered and repurchased by the
Company, in accordance with this Section 3.4, shall be deemed to be authorized and issued, but not
Outstanding and, subject to Section 2.1, may subsequently be sold or Transferred for due
consideration.




     Section 3.5 Mutilated, Lost, Destroyed or Stolen Certificates. Each holder of record
of Trust Interests and Allocation Interests shall promptly notify the Company of any mutilation,
loss or destruction of any certificate of which such holder is the record holder. The Company may,
in its discretion, cause the Transfer Agent to issue a new certificate in place of any certificate
theretofore issued by it and alleged to have been mutilated, lost, stolen or destroyed, upon
surrender of the mutilated Share certificate or, in the case of loss, theft or destruction of the
certificate, upon satisfactory proof of such loss, theft or destruction, and the Board of Directors
may, in its discretion, require the holder of record of the Trust Interests or Allocation
Interests evidenced by the lost, stolen or destroyed certificate, or his legal representative, to
give the Transfer Agent a bond sufficient to indemnify the Transfer Agent against any claim made
against it on account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate.



ARTICLE 4




ALLOCATIONS




     Section 4.1 General Application. The rules set forth below in this Article 4 shall
apply for the purposes of determining each Member’s allocable share of the items of income, gain,
loss and expense of the Company comprising Profits or Losses of the Company for each Allocation
Year, determining special allocations of other items of income, gain, loss and expense, and
adjusting the balance of each Member’s Capital Account to reflect the aforementioned general and
special allocations. For each Allocation Year, the special allocations in Section 4.3 shall be
made immediately prior to the general allocations of Section 4.2.



Section 4.2 Allocations of Profits and Losses.




          (a) Special Allocations Following Capital Gain Transactions. If the Company has a
Sale Event during the Allocation Year, any Company Net Long Term Capital Gain shall be allocated:





     (i) First to the Allocation Member to the extent of any amounts payable to the
Allocation Member with respect to the Allocation Year pursuant to Section 5.2, and




     (ii) The balance of such Net Long Term Capital Gain shall be allocated among the
Members in accordance with the general allocation of Profits or Losses for such year, as
provided in Section 4.2(b) or (c).



27









 





          (b) Allocation of Profit. If the Company has Profits during the Allocation Year, after
excluding the amount of any Net Long Term Capital Gain allocated to the Allocation Member pursuant
to Section 4.2(a), such Profits (as so reduced) shall be allocated:





     (i) First to the Allocation Member to the extent of the any amounts payable to the
Allocation Member with respect to the Allocation Year pursuant to Section 5.2, but without
duplicating any allocations of Net Long Term Capital Gain to the Allocation Member for such
Allocation Year pursuant to Section 4.2(a), and




     (ii) The balance to the Members in accordance with their Percentage Interests.



          (c) Allocation of Losses. If the Company has Losses during the Allocation Year, after
excluding the amount of any Net Long Term Capital Gain allocated to the Allocation Member pursuant
to Section 4.2(a), such Losses (as so increased) shall be allocated, subject to the limitations of
Section 4.5:





     (i) First to the Members in accordance with their Percentage Interests, up to, but not
exceeding, the amount that would cause the Capital Account of any Member to be a negative
number; and




     (ii) The balance, if any, shall be allocated among the Trust Members in accordance with
their Percentage Interests.



          (d) Character of Allocations. Allocations to Members of Profits or Losses pursuant to
Sections 4.2(b) and 4.2(c) shall consist of a proportionate share of each Company item of income,
gain, expense and loss entering into the computation of Profits or Losses for such Allocation Year
(other than the portion of each Net Long Term Capital Gain that is specially allocated to the
Allocation Member pursuant to Section 4.2(a)).




     Section 4.3 Special Allocations. The following special allocations shall be made in
the following order:



          (a) Minimum Gain Chargeback. Except as otherwise provided in Section 1.704-2(f) of the
Regulations, notwithstanding any other provision of this Article 4, if there is a net decrease in
Company Minimum Gain during any Allocation Year, each Member shall be specially allocated items of
Company income and gain for such Allocation Year (and, if necessary, subsequent Allocation Years)
in an amount equal to such Member’s share of the net decrease in Company Minimum Gain, determined
in accordance with Regulations Section 1.704-2(g) and (h). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be allocated to each
Member pursuant thereto. The items to be so allocated shall be determined in accordance with
Sections 1.704-2(f)(6) and 1.704-2(j)(2) of the Regulations. This Section 4.3(a) is intended to
comply with the minimum gain chargeback requirement in Section 1.704-2(f) of the Regulations and
shall be interpreted consistently therewith.




          (b) Member Minimum Gain Chargeback. Except as otherwise provided in Section
1.704-2(i)(4) of the Regulations, notwithstanding any other provision of this Article 4, if




28









 







there
is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt
during any Allocation Year, each Member who has a share of the Member Nonrecourse Debt Minimum Gain
attributable to such Member Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(5)
of the Regulations, shall be specially allocated items of Company income and gain for such
Allocation Year (and, if necessary, subsequent Allocation Years) in an amount equal to such
Member’s share of the net decrease in Member Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Member pursuant thereto. The
items to be so allocated shall be determined in accordance with Sections 1.704-2(i)(4) and
1.704-2(j)(2) of the Regulations. This Section 4.3(b) is intended to comply with the minimum gain
chargeback requirement in Section 1.704-2(i)(4) of the Regulations and shall be interpreted
consistently therewith.




          (c) Qualified Income Offset. In the event any Member unexpectedly receives any
adjustments, allocations or distributions described in Section 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6) of the Regulations, items of Company income and
gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate,
to the extent required by the Regulations, the Adjusted Capital Account Deficit of the Member as
quickly as possible; provided, that an allocation pursuant to this Section 4.3(c) shall
be made only if and to the extent that the Member would have an Adjusted Capital Account
Deficit after all other allocations provided for in this Article 4 have been tentatively made as if
this Section 4.3(c) were not in this Agreement.




          (d) Nonrecourse Deductions. Nonrecourse Deductions for any Allocation Year shall be
specially allocated to the Members in the manner elected by the Tax Matters Member in conformity
with the provisions of Regulations 1.704-2, and in the absence of such an election, to the Trust
Members in proportion to their respective Percentage Interests.




          (e) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any
Allocation Year shall be specially allocated to the Member who bears the economic risk of loss with
respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable
in accordance with Regulations Section 1.704-2(i)(1).




          (f) Section 754 Adjustments. To the extent an adjustment to the adjusted tax basis of
any Company asset, pursuant to Code Section 734(b) or Code Section 743(b), is required, pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m)(2) or 1.704-1(b)(2)(iv)(m)(4), to be taken into account in
determining Capital Accounts as the result of a distribution to a Member in complete liquidation of
such Member’s interest in the Company, the amount of such adjustment to Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members
in accordance with their interests in the Company in the event Regulations Section
1.704-1(b)(2)(iv)(m)(2) applies or to the Member to whom such distribution was made in the event
Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.




          (g) Allocations Relating to Taxable Issuance of Company LLC Interests. Any income,
gain, loss or deduction realized as a direct or indirect result of the issuance of LLC Interests by
the Company to a Member (the “Issuance Items”) shall be allocated among the




29









 







Members (the Trust
Members and Allocation Members) so that, to the extent possible, the net amount of such Issuance
Items, together with all other allocations made under this Agreement to each Member, shall be equal
to the net amount that would have been allocated to each such Member if the Issuance Items had not
been realized.




     Section 4.4 Curative Allocations. The allocations set forth in Sections 4.3(a),
4.3(b), 4.3(c), 4.3(d), 4.3(e), 4.3(f), 4.3(g) and 4.5 (the “Regulatory Allocations”) are intended
to comply with certain requirements of the Regulations. It is the intent of the Members that, to
the extent possible, all Regulatory Allocations shall be offset either with other Regulatory
Allocations or with special allocations of other items of Company income, gain, loss or deduction
pursuant to this Section 4.4. Therefore, notwithstanding any other provision of this Article 4
(other than the Regulatory Allocations), the Board of Directors shall make such offsetting special
allocations of Company income, gain, loss or deduction in whatever manner it determines appropriate
so that, after such offsetting allocations are made, each Member’s Capital Account balance is, to
the extent possible, equal to the Capital Account balance such Member would have had if the
Regulatory Allocations were not part of this Agreement and all Company items were allocated
pursuant to Sections 4.1, 4.2 and 4.3(h).



     Section 4.5 Loss Limitation.Losses allocated pursuant to Section 4.2 shall not exceed
the maximum amount of Losses that can be allocated without causing any Member to have an Adjusted
Capital Account Deficit at the end of any Allocation Year. In the event some but not all of the
Members would have Adjusted Capital Account Deficits as a consequence of an allocation of Losses
pursuant to Section 4.2, the limitation set forth in this Section 4.5 shall be applied on a
Member-by-Member basis, and Losses not allocable to any Member as a result of such limitation shall
be allocated to the other Members in accordance with the positive balances in such Members’ Capital
Accounts so as to allocate the maximum permissible Losses to each Member under Section
1.704-1(b)(2)(ii)(d) of the Regulations.



     Section 4.6 Other Allocation Rules.



          (a) For purposes of determining the Profits and Losses or any other items allocable to any
period, Profits, Losses, and any other such items shall be determined on a monthly or other basis,
as determined by the Company using any method permissible under Code Section 706 and the
Regulations thereunder.




          (b) The Members are aware of the income tax consequences of the allocations made by this
Article 4 and hereby agree to be bound by the provisions of this Article 4 in reporting their
shares of Company income and loss for income tax purposes.




          (c) Solely for purposes of determining a Member’s proportionate share of the “excess
nonrecourse liabilities” of the Company within the meaning of Regulations Section 1.752-3(a)(3),
the Member’s interests in Company profits are in proportion to their Percentage Interests.




          (d) To the extent permitted by Section 1.704-2(h)(3) of the Regulations, the Manager shall
endeavor to treat distributions as having been made from the proceeds of a




30









 







Nonrecourse Liability or
a Member Nonrecourse Debt only to the extent that such distributions would cause or increase an
Adjusted Capital Account Deficit for any Member.




          (e) To the extent the Tax Matters Member determines, in consultation with the Company’s tax
advisors, that any distribution pursuant to Article 5 to a Member hereunder (or portion of such
distribution) would more properly be characterized as a payment described in Code Section 707(a) or
707(c), such payment may be so characterized in the Company’s tax filings, and in such event, shall
be taken into account for federal income tax purposes as an expense of the Company, and not as an
allocation of income to a Member affecting such Member’s Capital Account.




     Section 4.7 Tax Allocations: Code Section 704(c). In accordance with Code Section
704(c) and the Regulations thereunder, income, gain, loss and deduction with respect to any
Property contributed to the capital of the Company shall, solely for tax purposes, be allocated
among the Members so as to take account of any variation between the adjusted basis of such
Property to the Company for U.S. federal income tax purposes and its initial Gross Asset Value
(computed in accordance with the definition of Gross Asset Value) using a method, selected in the discretion of the Board of Directors in
accordance with Section 1.704-3 of the Regulations.



          In the event the Gross Asset Value of any Company asset is adjusted pursuant to subparagraph
(ii) of the definition of Gross Asset Value, subsequent allocations of income, gain, loss and
deduction with respect to such asset shall take account of any variation between the adjusted basis
of such asset for U.S. federal income tax purposes and its Gross Asset Value in the same manner as
under Code Section 704(c) and the Regulations thereunder.




          Any elections or other decisions relating to such allocations shall be made by the Board of
Directors in any manner that reasonably reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section 4.7 are solely for purposes of U.S. federal, state and local
taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital
Account or share of Profits, Losses, other items or distributions pursuant to any provision of this
Agreement.




ARTICLE 5




DISTRIBUTIONS




     Section 5.1 Distributions to Members. Except as otherwise provided in Section 5.3 and
Article 14, the Board of Directors may, in its sole discretion and at any time, declare and pay
distributions with respect to the LLC Interests to the Members, as of any record date established
by the Board of Directors with respect to such distributions, from Cash Available for Distribution
to all Members in proportion to their Percentage Interests.



     Section 5.2 Distributions to the Allocation Member.



          (a) In General. Except as otherwise provided in Section 5.3 and Article 14 and
subject to the other terms and conditions set forth in this Section 5.2, for so long as the




31









 







Allocation Interests are Outstanding (i) the Administrator shall calculate (x) the Profit
Distribution Amount, and the components thereof, in accordance with Section 5.2(b) and (y) Tax
Distributions, and the components thereof, in accordance with Section 5.2(i) and (ii) the Company
shall pay (x) Profit Distributions in accordance with Section 5.2(e) and (y) Tax Distributions in
accordance with Section 5.2(h).




          (b) Calculation of Profit Distribution Amount Upon Trigger Event. Subject to Section
5.2(g), upon the occurrence of a Trigger Event with respect to any Subsidiary (the “Profit
Distribution Subsidiary”), the Administrator, as of the relevant Calculation Date with respect to
such Trigger Event, shall:




          (i) calculate, on or promptly following such Calculation Date, the Profit Distribution Amount
with respect to such Profit Distribution Subsidiary as of such Calculation Date; and




          (ii) adjust such Profit Distribution Amount (as adjusted, the “Adjusted Profit Distribution
Amount”) so calculated, on a dollar-for-dollar basis, by:




               (A) reducing such Profit Distribution Amount by the aggregate amount of any Over-Paid Profit
Distributions, if any, existing as of such Calculation Date;



               (B) increasing such Profit Distribution Amount by the aggregate amount of any Under-Paid
Profit Distributions, if any, existing as of such Calculation Date; and



               (C) reducing such Profit Distribution Amount by the aggregate amount of any Tax Distributions,
if any, that were previously received by the Allocation Member on any Tax Distribution Payment Date
prior to such Calculation Date, to the extent such amount of Tax Distributions have not been
previously applied towards a reduction of Profit Distribution Amount in accordance with this
Section 5.2(b).



          If more than one Trigger Event takes place during any Fiscal Quarter which would cause the
calculation of the Profit Distribution Amount with respect to more than one Profit Distribution
Subsidiary as of the Calculation Date with respect to such Trigger Event, then the Profit
Distribution Amount shall be calculated under this Section 5.2(b) with respect to each Profit
Distribution Subsidiary separately and in the order in which controlling interest in each such
Profit Distribution Subsidiary was acquired or otherwise obtained by the Company, and the resulting
amounts so calculated shall be aggregated to determine the total amount of the Profit Distribution
Amount as of such Calculation Date for any purpose hereunder; provided, that if controlling
interest in such Profit Distribution Subsidiaries was acquired or otherwise obtained at the same
time, then the Profit Distribution Amount shall be further calculated under this Section 5.2(b)
with respect to each Profit Distribution Subsidiary separately and in the order in which each such
Profit Distribution Subsidiary was sold.




          (c) Approval of Profit Distributions. The Administrator shall promptly submit in
writing any calculation of the Adjusted Profit Distribution Amount to the Audit Committee, in
sufficient detail to permit a prompt review and approval by the Audit Committee. Any calculation
of the Adjusted Profit Distribution Amount so submitted by the Administrator shall be deemed
automatically approved by the Audit Committee ten (10) Business Days after




32









 







the date submitted by
the Administrator (such approved Adjusted Profit Distribution Amount, as well as any amounts deemed
to be Approved Profit Distributions pursuant to Sections 5.2(c) or 5.2(d)), the “Approved Profit
Distribution”); provided, that if the Audit Committee, by resolution, disapproves of the
calculation of such Adjusted Profit Distribution Amount submitted to it by the Administrator within
such ten (10) Business Days, then, within ten (10) Business Days after the date of such resolution
of disapproval, the Audit Committee shall recalculate, or cause the recalculation of, such Adjusted
Profit Distribution Amount as of the relevant Calculation Date in accordance with this Section 5.2
(such recalculated Adjusted Profit Distribution Amount, the “Disputed Profit Distribution”) and
present in writing its calculation of the Disputed Profit Distribution to the Administrator in
sufficient detail to permit a prompt review by the Administrator (such date of presentation, the
“Disputed Profit Distribution Date”); provided, further, that if the Audit Committee fails to
present such a calculation of Disputed Profit Distribution to the Administrator by the tenth
(10th) Business Day after the date it disapproves of the calculation of Adjusted Profit
Distribution Amount submitted to it by the Administrator, then the calculation of the Adjusted Profit Distribution Amount originally
submitted to the Audit Committee by the Administrator shall be deemed an Approved Profit
Distribution on such tenth (10th) Business Day.




          (d) Independent Accounting Firm. The Administrator shall have ten (10) Business Days
to review the Audit Committee’s calculation of any Disputed Profit Distribution presented to it
pursuant to Section 5.2(c), and if the Administrator disagrees with such calculation, then the
Administrator shall have the right, pursuant to a written notice that must be delivered during such
ten (10) Business Day period, to direct the Audit Committee to engage, at the Company’s cost and
expense, an independent accounting firm to calculate the Adjusted Profit Distribution Amount as of
the relevant Calculation Date in accordance with this Section 5.2. Such notice from the
Administrator shall state any points of disagreement with the Audit Committee’s calculation and
shall designate no fewer than three independent accounting firms to calculate the Adjusted Profit
Distribution Amount. The Audit Committee shall engage one of the designated independent accounting
firms within ten (10) Business Days. If the Audit Committee fails to engage one of the designated
independent accounting firms within ten (10) Business Days, then the calculation of the Adjusted
Profit Distribution Amount originally submitted to the Audit Committee by the Administrator
pursuant to Section 5.2(c) shall be deemed an Approved Profit Distribution. The Audit Committee
shall direct the designated independent accounting firm to deliver its calculation of the Adjusted
Profit Distribution Amount, calculated in accordance with this Section 5.2 (as calculated, the
“Independently Calculated Profit Distribution”), within twenty (20) Business Days of its engagement
(the “Submission Date”) to both the Administrator and the Audit Committee at the same time. If the
independent accounting firm so engaged fails to deliver its calculation of the Adjusted Profit
Distribution Amount within the time required hereby, then the calculation of the Adjusted Profit
Distribution Amount originally submitted to the Audit Committee by the Administrator pursuant to
Section 5.2(c) shall be deemed an Approved Profit Distribution. In making its calculation of the
Adjusted Profit Distribution Amount, the independent accounting firm shall (i) review and consider
any documentation submitted by the Administrator and the Audit Committee in support of their
respective calculations of the Adjusted Profit Distribution Amount, and (ii) be based on the most
recently available consolidated financial statements of the Company and its Subsidiaries (audited
or unaudited). The Independently Calculated Profit Distribution shall be final,





33










 




conclusive and
binding on the Administrator, the Audit Committee, the Company and the Allocation Member.




          (e) Payment of Profit Distributions. Subject to 5.2(l), the Company shall pay, on the
applicable Profit Distribution Payment Date with respect to any Calculation Date, Profit
Distribution in the following manner:




          (i) First, one of the following amounts of Profit Distribution:




               (A) if the calculation of the Adjusted Profit Distribution Amount as of such Calculation Date
submitted by the Administrator to the Audit Committee is deemed approved in accordance with Section
5.2(c) or 5.2(d), then the Company shall pay to the Allocation Member on the Approved Profit
Distribution Payment Date an amount equal to the Approved Profit Distribution as of such
Calculation Date, or



               (B) if (x) the calculation of the Adjusted Profit Distribution Amount as of such Calculation
Date submitted by the Administrator to the Audit Committee is disapproved by the Audit Committee
and recalculated by the Audit Committee and (y) the Administrator does not disagree with such
calculation of Disputed Profit Distribution pursuant to Section 5.2(d), then the Company shall pay
to the Allocation Member on the Disputed Profit Distribution Payment Date an amount equal to the
Disputed Profit Distribution as of such Calculation Date; or



               (C) if (x) the calculation of the Adjusted Profit Distribution Amount as of such Calculation
Date submitted by the Administrator to the Audit Committee is disapproved by the Audit Committee
and recalculated by the Audit Committee and (y) the Administrator disagrees with such calculation
of Disputed Profit Distribution and directs the Audit Committee to engage an independent accounting
firm pursuant to Section 5.2(d) and the Audit Committee engages such independent accounting firm,
then the Company shall pay to the Allocation Member on the Disputed Profit Distribution Payment
Date the lesser of an amount equal to (A) the Profit Distribution Amount, as of such Calculation
Date, originally submitted to the Audit Committee by the Administrator pursuant to Section 5.2(c),
and (B) the Disputed Profit Distribution as of the relevant Calculation Date; and



          (ii) Second, one of the following amounts of Profit Distribution:




               (A) if an independent accounting firm delivers its Independently Calculated Profit
Distribution as of such Calculation Date to the Administrator and the Audit Committee in accordance
with Section 5.2(d), then the Company shall pay to the Allocation Member on the Independently
Calculated Profit Distribution Payment Date an amount equal to the amount by which (x) the
Independently Calculated Profit Distribution as of such Calculation Date exceeds (y) the amount of
Profit Distribution, as the case may be and as of such Calculation Date, paid by the Company in
accordance with Section 5.2(e)(i)(C), or



               (B) if (x) an independent accounting firm fails to delivers its calculation of Adjusted Profit
Distribution Amount as of such Calculation Date to the Administrator and the Audit Committee in
accordance with Section 5.2(d) and (y) the Profit Distribution Amount originally submitted to the
Audit Committee by the Administrator pursuant



34









 







to Section 5.2(c) is greater than the Disputed Profit
Distribution, then the Company shall pay to the Allocation Member on the Submission Failure Payment
Date, the amount by which Approved Profit Distribution as of such Calculation Date exceeds (y) the
amount of Profit Distribution, as the case may be and as of such Calculation Date, paid by the
Company in accordance with Section 5.2(e)(i)(C).



          Any Profit Distributions will be due and payable on the applicable Profit Distribution Payment
Date by the Company, in arrears, in immediately available funds by wire transfer to an account
designated by the Allocation Member from time to time.




          (f) Reserved.




          (g) True-Up and Review of Profit Distributions. The calculation to be made by any
Person hereunder of any Profit Distribution or Adjusted Profit Distribution Amount, in
each case, as of any Calculation Date, shall be based on, in the following order (i) audited
consolidated financial statements to the extent available with respect to any Person underlying
such calculation of Profit Distribution, (ii) if audited consolidated financial statements are not
available with respect to such Person, then unaudited consolidated financial statements to the
extent available with respect to such Person, and (iii) if neither audited nor unaudited
consolidated financial statements are available with respect to such Person, then the books and
records of such Person then available; provided, that, with respect to any calculation of the
Profit Distribution based on the books and records of any Person related to such calculation of
Profit Distribution, upon availability of, in the first instance, audited consolidated financial
statements with respect to such Person or, in the second instance, unaudited consolidated financial
statements with respect to such Person, in each case, relating to amounts previously calculated on
such Calculation Date by reference to the books and records of such relevant Person, the Profit
Distribution Amount, and any components thereof, as of such Calculation Date shall be recalculated
to determine if any Over-Paid Profit Distributions or Under-Paid Profit Distributions were created
as of such Calculation Date. In making any determination under this Section 5.2 with respect to
any individual calculation of the Profit Distribution Amount or Adjusted Profit Distribution
Amount, in each case, as of any Calculation Date, such determination shall be based on only one of
the following, in the following order, with respect to such calculation of Profit Distribution
Amount or Adjusted Profit Distribution Amount, as the case may be: (x) the Independently Calculated
Profit Distribution calculated as of such Calculation Date, (y) if no Independently Calculated
Profit Distribution was calculated as of such Calculation Date, the Approved Profit Distribution as
of such Calculation Date, and (z) if no Approved Profit Distribution or Independently Calculated
Profit Distribution, in each case, was calculated as of such Calculation Date (i.e., if the
Profit Distribution Amount calculated by the Administrator as of such Calculation Date was not
approved by the Audit Committee, automatically or otherwise, or the Administrator did not disagree
with the Audit Committee’s calculated of Disputed Profit Distribution as of such Calculation Date),
the Disputed Profit Distribution as calculated as of the Calculation Date.




          (h) Payment of Tax Distributions. With respect to any calendar year in which the
Allocation Member shall be allocated income pursuant to Article 4, but with respect to which the
Allocation Member has not, prior to April 15 of the following year, received Profit Distributions
from the Company pursuant to Section 5.2(e) in amounts at least equal to the

35









 








Allocation Member’s
tax liability arising from allocations of income hereunder to the Allocation Member with respect to
such calendar year, the Company shall make a distribution to the Allocation Member in an amount
calculated in accordance with Section 5.2(i) (the “Tax Distribution”) by April 15 of such following
year (such date of payment, the “Tax Distribution Payment Date”).




          (i) Calculation of Tax Distributions. The amount of Tax Distributions to be paid on
any Tax Distribution Payment Date pursuant to Section 5.2(h) shall be calculated as if the items of
income, gain, deduction, loss and credit in respect of the Company were the only such items
entering into the computation of tax liability of the Allocation Member for the calendar year and
as if the Allocation Member were subject to tax at the highest marginal effective rate of Federal,
state and local income tax applicable to an individual resident in New York City, taking account of
any difference in rates applicable to ordinary income and long
terms capital gains and any allowable deductions in respect of such state and local taxes in
computing the Allocation Member’s liability for Federal income taxes.




          (j) Books and Records. The Administrator shall maintain cumulative books and records
with respect to the details of any calculations made pursuant to this Section 5.2, which records
shall be available for inspection and reproduction at any time upon request by the Board of
Directors and the Allocation Member.




          (k) Sufficient Liquidity. If the Company does not have sufficient liquid assets to pay
the entire amount of Profit Distributions and/or Tax Distributions, including any accrued and
unpaid Profit Distributions and/or Tax Distribution to date, on any applicable Profit Distribution
Date, the Company shall liquidate assets or incur indebtedness in order to pay such Profit
Distribution and/or Tax Distribution, as the case may be, in full on such Profit Distribution
Payment Date; provided, that the Allocation Member may elect, in its sole discretion, on such
Profit Distribution Payment Date and/or Tax Distribution Payment Date, as the case may be, to allow
the Company to defer the payment of all or any portion of the Profit Distribution and/or Tax
Distribution, as the case may be, then accrued and unpaid until the next succeeding Profit
Distribution Payment Date or Tax Distribution Payment Date, as the case may be, and, thereby,
enable to the Company to avoid such liquidation or incurrence. For the avoidance of doubt, the
Allocation Member may make such election to allow the Company to defer the payment of the Profit
Distributions and/or Tax Distributions more than once.




          (l) Distribution Entitlement. The Allocation Member shall have the right to elect, in
its sole discretion, on any applicable Profit Distribution Payment Date to defer payment by the
Company of all or any portion of the amount of Profit Distribution payable by the Company in
accordance with Section 5.2(e) on such Profit Distribution Payment Date. Such election shall
become effective upon the delivery of a written notice to the Company indicating the amount of
Profit Distribution that the Allocation Member is electing to defer (such amount, the “Distribution
Entitlement”). Once deferred, the Company shall pay, on twenty (20) Business Days prior written
notice delivered by the Allocation Member and received by the Company (the “Distribution
Entitlement Notice”), all or any portion of the Distribution Entitlement Amount as designated by
the Allocation Member in the Distribution Entitlement Notice (the “Distribution Entitlement
Payment”) on the date specified in the Distribution Entitlement Notice (the “Distribution
Entitlement Payment Date”). Any Distribution

36









 








Entitlement Notice delivered by the Allocation Member
pursuant to this Section 5.2(l) shall specify (i) the Distribution Entitlement Amount as of the
date of such Distribution Entitlement Notice, (ii) the calculation of the Distribution Entitlement
Amount, (iii) the portion of the Distribution Entitlement that the Allocation Member is electing to
receive, and (iv) the Distribution Entitlement Payment Date with respect to the amount so elected
to be received by the Allocation Member.




     Section 5.3 Amounts Withheld. All amounts withheld pursuant to the Code or any
provision of any state, local or foreign tax law with respect to any payment, dividend or other
distribution or allocation to the Company or the Members shall be treated as amounts paid to the
Members with respect to which such amounts were withheld pursuant to this Section 5.3 for all
purposes under this Agreement.
The Company is authorized to withhold from payments or with respect to allocations to the
Members, and to pay over to any U.S. federal, state and local government or any foreign government,
any amounts required to be so withheld pursuant to the Code or any provisions of any other U.S.
federal, state or local law or any foreign law, and shall allocate any such amounts to the Members
with respect to which such amounts were withheld. For so long as the Trust is the sole Trust
Member, all amounts withheld in accordance with this Section 5.3 will be treated as amounts paid to
holders of the Trust Shares and any such amounts shall be allocated to the holders of the Trust
Shares in the same proportion as any such allocations were made per Trust Interest.



     Section 5.4 Limitations on Dividends and Distributions.



          (a) The Company shall pay no distributions to the Members except as provided in this Article 5
and Article 14.




          (b) A Member may not receive, and the Company, and Board of Directors on behalf of the Company
may not make, distributions from the Company to the extent such distribution is inconsistent with,
or in violation of, the Act or any provision of this Agreement.




ARTICLE 6




BOARD OF DIRECTORS




     Section 6.1 Initial Board. The Board of Directors is comprised of the seven following
individuals: I. Joseph Massoud, C. Sean Day, James J. Bottiglieri, D. Eugene Ewing, Ted Waitman,
Mark H. Lazarus and Harold S. Edwards (each, an “Initial Director” and, collectively, the “Initial
Board”). Each Initial Director shall hold office until his successor is elected or appointed and
qualified, or until his or her earlier death, resignation or removal in accordance with this
Article 6. The Initial Board shall have all of the powers and authorities accorded to the Board of
Directors, and each Initial Director shall have all of the powers and authorities accorded the
directors of the Company under the terms of this Agreement.



     Section 6.2 General Powers. The business and affairs of the Company shall be managed
by or under the direction of its Board of Directors. Each director of the Company, when acting in
such capacity, is a “manager” within the meaning of Section 18-402 of the Act and as such is



37









 







vested
with the powers and authorities necessary for the management of the Company, subject to the terms
of this Agreement and the Management Services Agreement; provided, that no director is authorized
to act individually on behalf of the Company and the Board of Directors shall only take action in
accordance with the requirements of this Agreement. In addition to the powers and authorities
expressly conferred upon it by this Agreement, the Board of Directors may exercise all such powers
of the Company and do all such lawful acts and things as are not prohibited by applicable law,
including the Rules and Regulations, or by this Agreement required to be
exercised or done by the Members. Without limiting the generality of the foregoing, it shall
be the responsibility of the Board of Directors to establish broad objectives and the general
course of the business, determine basic policies, appraise the adequacy of overall results, and
generally represent and further the interests of the Members.



     Section 6.3 Duties of Directors. Except as provided in this Agreement or otherwise
required by the Act, each director of the Company shall have the same fiduciary duties to the
Company and the Members as a director of a corporation incorporated under the DGCL has to such
corporation and its stockholders, as if such directors of the Company were directors of a
corporation incorporated under the DGCL. Except as provided in this Agreement, the parties intend
that the fiduciary duties of the directors of the Company shall be interpreted consistently with
the jurisprudence regarding such fiduciary duties of directors of a corporation under the DGCL. It
shall be expressly understood that, to the fullest extent permitted by law, no director of the
Company has any duties (fiduciary or otherwise) with respect to any action or inaction of the
Manager, and that, to the fullest extent permitted by law, any actions or inactions of the
directors of the Company that cause the Company to act in compliance or in accordance with the
Management Services Agreement shall be deemed consistent and compliant with the fiduciary duties of
such directors and shall not constitute a breach of any duty hereunder or existing in law, in
equity or otherwise.



     Section 6.4 Number, Tenure and Qualifications. As provided by Section 6.1, the
Initial Board shall be comprised of seven (7) Initial Directors and at all times from and after the
closing of the Initial Public Offering the composition of the Board of Directors shall consist of
at least a majority of Independent Directors. Subject to this Section 6.4, the number of directors
shall be fixed from time to time exclusively pursuant to a resolution adopted by the Board of
Directors, but shall consist of not less than five (5) nor more than thirteen (13) directors.
However, no decrease in the number of directors constituting the Board of Directors shall shorten
the term of any incumbent director.



          Subject to the next sentence, the Board of Directors shall be divided into three classes:
Class I, Class II, Class III, with the holders of Trust Interests entitled to elect or appoint the
Class I, II, and III directors. In addition, the Board of Directors shall include one (1) director
(or, if there are nine (9) or more directors then serving on the Board of Directors, two (2)
directors), who shall not be a member of any class (each, an “Appointed Director”), and who shall
be elected or appointed by the Allocation Member.




          Classes I, II and III shall be divided as nearly equal in numbers as the then total number of
directors constituting such classes permits, with the term of office of each class expiring in
succeeding years, so that (except for the initial terms provided below) each such director shall be
elected for a three year term. If the number of such directors is not evenly

38









 








divisible by three,
the greatest number of such directors shall be in Class III and the least number in Class I. The
initial Class I directors shall hold office for a term expiring at the first annual meeting of the
Members following closing of the Initial Public Offering, the initial Class II directors shall hold
office for a term expiring at the second succeeding annual meeting of the
Members following closing of the Initial Public Offering, and the initial Class III directors
shall hold office for a term expiring at the third succeeding annual meeting of the Members
following closing of the Initial Public Offering. The initial Class I directors are Mark H. Lazarus
and Harold S. Edwards. The initial Class II directors are James J. Bottiglieri and Ted Waitman.
The initial Class III directors are C. Sean Day and D. Eugene Ewing. Any director filling any Class
I, II or III vacancy pursuant to Section 6.8 shall hold office until the next election of the class
for which such directors shall have been chosen and until their successors shall be elected and
qualified. The term of each director in Classes I, II and III shall be the period from the
effective date of such director’s election until the end of the term provided in this paragraph, or
until such director’s successor is duly elected and qualified, or until such director’s earlier
death, resignation or removal. Directors need not be residents of the State of Delaware or Members.




          The Allocation Member has designated I. Joseph Massoud as the initial Appointed Director. The
Appointed Director shall hold office until his successor is elected or appointed and qualified, or
until his or her earlier death, resignation or removal in accordance with this Article 6. Any
director filling a Appointed Director vacancy pursuant to Section 6.8 shall hold office until his
successor is elected or appointed and qualified, or until his or her earlier death, resignation or
removal in accordance with this Article 6.




     Section 6.5 Election of Directors. Except as provided in Sections 6.1, 6.4 and 6.8,
the Class I, II and III directors shall be elected at the annual meeting of Members. At any meeting
of Members duly called and held for the election of directors at which a quorum is present,
directors shall be elected by a plurality of the Trust Interests present in person or represented
by proxy at the meeting of Members. Except as provided in Sections 6.1 and 6.8, the Appointed
Director shall be elected or appointed at such time or times as the Allocation Member so
determines, pursuant to written notice delivered to the Chairman or, if none then serving, the
Board of Directors as constituted immediately prior to such election or appointment.



     Section 6.6 Removal. Any director may be removed from office, with or without cause,
by the affirmative vote of the Members holding at least eighty-five percent (85%) of the applicable
issued and Outstanding Trust Interests that so elected or appointed such director. In the case of
an Appointed Director, any such removal shall be evidenced in writing by the Allocation Member,
which shall be delivered to the Chairman or, if none then serving, the Board of Directors as
constituted immediately after such removal.



     Section 6.7 Resignations. Any director, whether elected or appointed, may resign at
any time upon notice of such resignation to the Company. An Independent Director who ceases to be
independent shall promptly resign to the extent required for the Company or the Allocation Member
to comply with applicable laws, rules and regulations.



     Section 6.8 Vacancies and Newly Created Directorships.
Until the second annual election of directors following the Initial Public Offering and other
than with respect to the Appointed Director, any vacancies on the Board of Directors, including
vacancies resulting from



39









 







any increase in the authorized number of directors, shall be filled by the
Chairman for the applicable term relating to director position so filled. Thereafter, subject to
Section 6.9 and other than with respect to an Appointed Director and except as otherwise provided
herein, any vacancies on the Board of Directors, including vacancies resulting from any increase in
the authorized number of directors, shall be filled by a majority vote of the directors then in
office, although less than a quorum, or by a sole remaining director. Notwithstanding anything to
the contrary contained in the preceding sentences of this Section 6.8, any director filling any
such vacancy shall satisfy the Applicable Listing Standards and the Rules and Regulations, and any
necessary or required qualifications under the Applicable Listing Standards and the Rules and
Regulations for applicable committee membership. Subject to Section 6.9, any vacancies in the
Appointed Director for any reason, and any newly created directorships resulting from any increase
in the authorized number of Appointed Directors may be filled by the Allocation Member at such time
or times as the Allocation Member so determines, pursuant to written notice delivered to the
Chairman or, if none then serving, the Board of Directors as constituted immediately prior to
filling such vacancy, or such election or appointment.



     Section 6.9 Appointment of or Nomination and Election of Chairman. C. Sean Day shall
be the initial Chairman, and shall hold office for a term expiring at the second annual meeting of
the Members following the closing of the Initial Public Offering, or until such Chairman’s
successor is duly elected and qualified, or until such Chairman’s earlier death, resignation or
removal. As of the expiration of the term of the initial Chairman (and of any subsequent Chairman)
or upon any such Chairman’s earlier death, resignation or removal, a majority of the Board of
Directors shall elect a Chairman, who shall hold office for at least one (1) year, or until such
Chairman’s successor is duly elected and qualified, or until such Chairman’s earlier death,
resignation or removal.



     Section 6.10 Chairman of the Board. The Chairman shall be a member of the Board of
Directors. The Chairman is not required to be an employee of the Company. The Chairman, if present,
shall preside at all meetings of the Board of Directors. If the Chairman is unavailable for any
reason, the duties of the Chairman shall be performed, and the Chairman’s authority may be
exercised, by a director designated for this purpose by the remaining directors of the Board of
Directors. The Chairman shall perform such other duties and have such other powers as may be
prescribed by the Board of Directors or this Agreement, all in accordance with basic policies as
may be established by the Company, and subject to the approval and oversight of the Board of
Directors.



     Section 6.11 Regular Meetings. A regular meeting of the Board of Directors shall be
held without any other notice than this Agreement, immediately after, and at the same place (if
any) as, each annual meeting of Members. The Board of Directors may, by resolution, provide the
time and place (if any) for the holding of additional regular meetings without any other notice
than such resolution.
Unless otherwise determined by the Board of Directors, the Secretary of the Company shall act
as Secretary at all regular meetings of the Board of Directors and in the Secretary’s absence a
temporary Secretary shall be appointed by the chairman of the meeting.



     Section 6.12 Special Meetings. Special meetings of the Board of Directors shall be
called at the request of the Chief Executive Officer, the Chairman or of eighty-five percent (85%)
of the directors of the Board of Directors. The Person or Persons authorized to call special



40









 







meetings of the Board of Directors may fix the place and time of the meetings. Unless otherwise
determined by the Board of Directors, the Secretary of the Company shall act as Secretary at all
special meetings of the Board of Directors and in the Secretary’s absence a temporary Secretary
shall be appointed by the chairman of the meeting.



     Section 6.13 Notice for Special Meetings. Notice of any special meeting of the Board
of Directors shall be mailed by first class mail, postage paid, to each director at his or her
business or residence or shall be sent by telegraph, express courier service (including, without
limitation, Federal Express) or facsimile (directed to the facsimile number to which the director
has consented to receive notice) or other electronic transmission (including, but not limited to,
an e-mail address at which the director has consented to receive notice) not later than three (3)
days before the day on which such meeting is to be held if called by the Chief Executive Officer or
the Chairman and twenty one (21) days before the day on which such meeting is to be held in all
other cases. Except in the case where the business to be transacted at such special meeting
includes a proposed amendment to this Agreement, neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board of Directors need be specified in the
notice of such meeting. A meeting may be held at any time without notice if all the directors are
present or if those not present waive notice of the meeting in accordance with Section 9.12, either
before or after such meeting.



     Section 6.14 Waiver of Notice. Whenever any notice is required to be given to any
director of the Company under the terms of this Agreement, a waiver thereof in writing, signed by
the Person or Persons entitled to such notice, or a waiver thereof by electronic transmission by
the Person or Persons entitled to notice, whether before or after the time stated in such notice,
shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at,
nor the purpose of, any meeting of the Board of Directors or committee thereof need be specified in
any written waiver of notice or any waiver by electronic transmission of notice of such meeting.



     Section 6.15 Action Without Meeting. Any action required or permitted to be taken at
any meeting by the Board of Directors or any committee or subcommittee thereof, as the case may be,
may be taken without a meeting, without a vote and without prior notice if a consent thereto is
signed or transmitted electronically, as the case may be, by the Chairman and at least eighty-five
percent (85%) of the directors of the Board of Directors or of such committee or subcommittee, as
the case may be, and the writing or writings or electronic transmission or transmissions are filed
with the minutes
of proceedings of the Board of Directors or such committee or subcommittee; provided, however,
that such electronic transmission or transmissions must either set forth or be submitted with
information from which it can be determined that the electronic transmission or transmissions were
authorized by the director. 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 6.16 Conference Telephone Meetings. Directors of the Board of Directors, or
any committee or subcommittee thereof, may participate in a meeting of the Board of Directors or
such committee or subcommittee by means of conference telephone or other communications equipment
by means of which all Persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at such meeting.



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     Section 6.17 Quorum. Except as otherwise provided in this Agreement, at all meetings
of the Board of Directors, at least thirty-five percent (35%) of the then total number of directors
in office (such total number of directors, the “Entire Board of Directors”) shall constitute a
quorum for the transaction of business. At all meetings of any committee of the Board of Directors,
the presence of a majority of the total number of members of such committee (assuming no vacancies)
shall constitute a quorum. The act of a majority of the directors or committee members present at
any meeting at which there is a quorum shall be the act of the Board of Directors or such
committee, as the case may be. If a quorum shall not be present at any meeting of the Board of
Directors or any committee, a majority of the directors or members, as the case may be, present
thereat may adjourn the meeting from time to time without further notice other than announcement at
the meeting. The directors of the Board of Directors present at a duly organized meeting at which a
quorum is present may continue to transact business until adjournment, notwithstanding the
withdrawal of enough directors of the Board of Directors to leave less than a quorum.



     Section 6.18 Committees.



          (a) Upon the effectiveness of the Initial Public Offering, the Company shall have three
standing committees: the Nominating and Governance Committee, the Audit Committee and the
Compensation Committee, as set out below. Each of the Nominating and Governance Committee, the
Audit Committee and the Compensation Committee shall adopt by resolution a charter to establish the
rules and responsibilities of such committee in accordance with applicable law, including the Rules
and Regulations and the Applicable Listing Rules.





          (i) Nominating and Corporate Governance Committee. The Board of Directors, by
resolution adopted by a majority of the Entire Board of Directors, has designated a
Nominating and Corporate Governance Committee comprised solely of Independent Directors,
which committee shall oversee the Company’s commitment to good corporate governance, develop
and recommend to the Board a set of corporate governance principles and oversee the
evaluation of the performance of the Board of Directors. The Nominating and Corporate
Governance Committee shall have the duties
and responsibilities enumerated in its charter, as amended from time to time by the
Board of Directors.




          Subject to Section 6.8, the Nominating and Corporate Governance Committee will solicit
recommendations for director nominees (other than the Appointed Director) from the Chairman
and the Chief Executive Officer. The Nominating and Corporate Governance Committee may also
recommend to the Board specific policies or guidelines concerning the structure and
composition of the Board of Directors or committees of the Board of Directors, and the
tenure and retirement of directors (other than the Appointed Director) and matters related
thereto.




          (ii) Audit Committee. The Board of Directors, by resolution adopted by a
majority of the Entire Board of Directors, has designated an Audit Committee comprised of
not fewer than three (3) nor more than seven (7) directors, all of whom shall be Independent
Directors, who shall collectively meet the financial literacy requirements of the Exchange
Act, the Rules and Regulations and of the Applicable Listing Rules. At



42









 







least one member of
the Audit Committee will meet the accounting or related financial management expertise
required to be established by the Board of Directors. The Audit Committee shall have the
duties and responsibilities enumerated in its charter, as amended from time to time by the
Board of Directors.




          The Company shall provide appropriate funding, as determined by the Audit Committee, in
its capacity as a committee of the Board of Directors for payment of:




     (A) compensation to any registered public accounting firm engaged for the
purpose of preparing or issuing an audit report or performing other audit, review or
attest services for the Company;




     (B) compensation to independent counsel and other advisors engaged for any
reason by the Audit Committee; and




     (C) ordinary administrative expenses of the Audit Committee that are necessary
or appropriate in carrying out its duties.




     (iii) Compensation Committee. The Board of Directors, by resolution adopted by
a majority of the Entire Board of Directors, has designated a Compensation Committee
comprised solely of Independent Directors. The Compensation Committee shall have the duties
and responsibilities enumerated in its charter, as amended from time to time by the Board of
Directors.



          (b) In addition, the Board of Directors may designate one or more additional committees or
subcommittees, with each such committee or subcommittee consisting of such number of directors of
the Company and having such powers and authority as shall be determined by resolution of the Board
of Directors.




          (c) All acts done by any committee or subcommittee within the scope of its powers and
authority pursuant to this Agreement and the resolutions adopted by the Board of
Directors in accordance with the terms hereof shall be deemed to be, and may be certified as
being, done or conferred under authority of the Board of Directors. The Secretary is empowered to
certify that any resolution duly adopted by any such committee is binding upon the Company and to
execute and deliver such certifications from time to time as may be necessary or proper to the
conduct of the business of the Company.




          (d) Regular meetings of committees shall be held at such times as may be determined by
resolution of the Board of Directors or the committee or subcommittee in question and no notice
shall be required for any regular meeting other than such resolution. A special meeting of any
committee or subcommittee shall be called by resolution of the Board of Directors or by the
Secretary upon the request of the Chief Executive Officer, the Chairman or a majority of the
members of any committee. Notice of special meetings shall be given to each member of the committee
in the same manner as that provided for in Section 6.13.




     Section 6.19 Committee Members.



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          (a) Each member of any committee of the Board of Directors shall hold office until such
member’s successor is elected and has qualified, unless such member sooner dies, resigns or is
removed.




          (b) Subject to Section 6.8, the Board of Directors may designate one or more directors as
alternate members of any committee to fill any vacancy on a committee and to fill a vacant
chairmanship of a committee, occurring as a result of a member or chairman leaving the committee,
whether through death, resignation, removal or otherwise.




     Section 6.20 Committee Secretary. The Secretary of the Company shall act as Secretary
of any committee or subcommittee, unless otherwise provided by the Board of Directors or the
committee or subcommittee, as applicable.



     Section 6.21 Compensation. The directors may be paid their expenses, if any, incurred
with respect to their attendance at each meeting of the Board of Directors in their capacities as
directors, any expenses reasonably incurred in their capacities as directors and, other than an
Appointed Director or any executive officer serving in a director capacity who is an employee of
the Manager, may be paid compensation as director or chairman of any committee or subcommittee, as
the case may be, as determined by the Initial Board or, following the first annual meeting of
Members, the Compensation Committee, as the case may be; provided, however, that the directors
shall not receive any compensation prior to the issuance of the Trust Interests. Members of
special or standing committees may be allowed like compensation and payment of expenses for
attending committee meetings.



     Section 6.22 Indemnification, Advances and Insurance.



          (a) Each Person who was or is made a party or is threatened to be made a party to or is
involved in any manner in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason of the fact
that he, she or a Person of whom he or she is the legal representative is or was a director,
officer, manager, Member of the Company or the Manager of the Company, or is or was serving at the
request of the Company as a director, officer, manager, member of a Subsidiary of the Company or
the Manager of the Company, if the Person acted in good faith and in a manner the Person reasonably
believed to be in or not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe the Person’s conduct was
unlawful, shall be indemnified against expenses (including attorneys’ fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by the Person in connection with any
such action, suit or proceeding, and held harmless by the Company to the fullest extent permitted
from time to time as such Person would be if the Company were a corporation incorporated under the
DGCL as the same exists or may hereafter be amended (but, if permitted by applicable law, in the
case of any such amendment, only to the extent that such amendment permits the Company to provide
broader indemnification rights than said law permitted the Company to provide prior to such
amendment) or any other applicable laws as presently or hereafter in effect, and such
indemnification shall continue as to a Person who has ceased to be a director, officer, manager,
Member (or member) or the Manager of the Company and shall inure to the benefit of his or her
heirs, executors and administrators (if applicable); provided, however, that the Company shall
indemnify any such Person seeking indemnification

44









 








in connection with any such action, suit or
proceeding (or part thereof) initiated by such Person only if such action, suit or proceeding (or
part thereof) was authorized by the Board of Directors or is an action, suit or proceeding to
enforce such Person’s claim to indemnification pursuant to the rights granted by this Agreement.
The Company shall pay, to the fullest extent permitted by law, the expenses (including attorneys’
fees) incurred by such Person in defending any such action, suit or proceeding in advance of its
final disposition upon receipt (unless the Company upon authorization of the Board of Directors
waives such requirement to the extent permitted by applicable law) of an undertaking by or on
behalf of such Person to repay such amount if it shall ultimately be determined by final judicial
decision from which there is no further right of appeal that such Person is not entitled to be
indemnified by the Company as authorized in this Agreement or otherwise.




          With respect to any Person who is a present or former director, officer, manager, Member of
the Company or the Manager of the Company, the undertaking required by this Section 6.22(a) shall
be an unlimited general obligation but need not be secured and shall be accepted without reference
to financial ability to make repayment; provided, however, that such present or former director,
officer, manager, Member of the Company or the Manager of the Company does not transfer assets with
the intent of avoiding such repayment. With respect to any Person who is a present or former
director, officer, manager, Member of the Company or the Manager of the Company, the provisions of
Section 6.22(b) relating to a determination that indemnification is proper in the circumstances
shall not be a condition to such Person’s right to receive advances pursuant to this Section
6.22(a).




          (b) Any indemnification of a present or former director, officer, manager, Member or the
Manager of the Company under this Section 6.22 shall be made by the Company only as authorized in
the specific case upon a determination that indemnification of the present or former director,
officer, manager, Member or the Manager of the Company is proper in the circumstances because the
Person has met the applicable standard of conduct set forth in Section
6.3 or the applicable section of Article 7, as the case may be, and acted in good faith and in
a manner the Person reasonably believed to be in, or not opposed to, the best interests of the
Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe
that its conduct was unlawful. Such determination shall be made, with respect to a Person who is a
director, officer, manager, Member or the Manager of the Company at the time of such determination,
(1) by a majority vote of the directors who are not parties to any such action, suit or proceeding,
even though less than a quorum, (2) by a committee of such directors designated by a majority vote
of such directors, even though less than a quorum, (3) if there are no such directors, or if a
majority, even though less than a quorum, of such directors so direct, by independent legal counsel
in a written opinion, or (4) by the Members. The indemnification and the advancement of expenses
incurred in defending a action, suit or proceeding prior to its final disposition provided by or
granted pursuant to this Agreement shall not be exclusive of any other right which any Person may
have or hereafter acquire under any statute, provision of the Certificate, other provision of this
Agreement, vote of Members or Disinterested Directors (as defined below) or otherwise. No repeal,
modification or amendment of, or adoption of any provision inconsistent with, this Section 6.22,
nor, to the fullest extent permitted by applicable law, any modification of law, shall adversely
affect any right or protection of any Person granted pursuant hereto existing at, or with respect
to any events that occurred prior to, the time of such repeal, amendment, adoption or modification.

45









 









          (c) The Company may maintain insurance, at its expense, to protect itself and any Person who
is or was a director, officer, partner, the Manager (or manager), Member (or member), employee or
agent of the Company or a Subsidiary of the Company or of another corporation, partnership, limited
liability company, joint venture, trust or other enterprise against any expense, liability or loss,
whether or not the Company would have the power to indemnify such Person against such expense,
liability or loss under the DGCL (if the Company were a corporation incorporated thereunder) or the
Act.




          (d) The Company may, to the extent authorized from time to time by the Board of Directors,
grant rights to indemnification, and rights to be paid by the Company the expenses incurred in
defending any such action, suit or proceeding in advance of its final disposition, to any Person
who is or was an employee or agent of the Company or any Subsidiary of the Company (other than
those Persons indemnified pursuant to clause (a) of this Section 6.22) and to any Person who is or
was serving at the request of the Company or a Subsidiary of the Company as a director, officer,
partner, manager, member, employee or agent of another corporation, partnership, limited liability
company, joint venture, trust or other enterprise, including service with respect to employee
benefit plans maintained or sponsored by the Company or a Subsidiary of the Company, to the fullest
extent of the provisions of this Agreement with respect to the indemnification and advancement of
expenses of directors, officers, managers and Members of the Company. The payment of any amount to
any Person pursuant to this clause (d) shall subrogate the Company to any right such Person may
have against any other Person or entity.




          (e) The indemnification provided in this Section 6.22 is intended to comply with the
requirements of, and provide indemnification rights substantially similar to those available to
corporations incorporated under, the DGCL as it relates to the indemnification of officers,
directors, employees and agents of a Delaware corporation and, as such (except to the
extent greater rights are expressly provided in this Agreement), the parties intend that they
should be interpreted consistently with the provisions of, and jurisprudence regarding, the DGCL.




          (f) Any notice, request or other communications required or permitted to be given to the
Company under this Section 6.22 shall be in writing and either delivered in person or sent by
facsimile, telex, telegram, overnight mail or courier service, or certified or registered mail,
postage prepaid, return receipt requested, to the Secretary of the Company and shall be effective
only upon receipt by the Secretary, as the case may be.




          (g) To the fullest extent permitted by the law of the State of Delaware, each Member, manager,
director, officer, employee and agent of the Company agrees that all actions for the advancement of
expenses or indemnification brought under this Section 6.22 or under any vote of Members or
Disinterested Directors or otherwise shall be a matter to which Section 18-111 of the Act shall
apply and which shall be brought exclusively in the Court of Chancery of the State of Delaware.
Each of the parties hereto agree that the Court of Chancery may summarily determine the Company’s
obligations to advance expenses (including attorneys’ fees) under this Section 6.22.




     Section 6.23 Reliance; Limitations in Liability.



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          (a) Each director of the Company shall, in the performance of such director’s duties, be fully
protected in relying in good faith upon the records of the Company and upon such information,
opinions, reports or statements presented to the Company by the Manager, or employees of the
Manager, or any of the officers of the Company, 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, including, without limitation, information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits or losses of the Company,
or the value and amount of assets or reserves or contracts, agreements or other undertakings that
would be sufficient to pay claims and obligations of the Company or to make reasonable provision to
pay such claims or obligations, or any other facts pertinent to the existence and amount of the
assets of the Company from which distributions to Members might properly be paid.




          (b) No director shall be liable to the Company or the Members for monetary damages for any
breach of fiduciary duty by such director as a director; provided, however, that a director shall
be liable to the same extent as if he or she were a director of a Delaware corporation pursuant to
the DGCL (i) for breach of the director’s duty of loyalty to the Company or its Members, (ii) for
acts or omissions not in good faith or a knowing violation of applicable law, or (iii) for any
transaction for which the director derived an improper benefit. To the extent the provisions of
this Agreement restrict or eliminate the duties and liabilities of a director of the Company or the
Members or the Manager otherwise existing at law or in equity, the provisions of this Agreement
shall replace such duties and liabilities.




          (c) To the fullest extent permitted by law, a director of the Company shall not be liable to
the Company, any Member, the Trust or any other Person for: (i) any action taken or not taken as
required by this Agreement; (ii) any action taken or not taken as permitted by this
Agreement and, with respect to which, such director acted on an informed basis, in good faith
and with the honest belief that such action, taken or not taken, was in the best interests of the
Company; or (iii) the Company’s compliance with an obligation incurred or the performance of any
agreement entered into prior to such director having become a director of the Company.




          (d) Any director shall not be liable to the Company or to any other director or Member of the
Company or any such other Person for breach of fiduciary duty for the director’s good faith
reliance on the provisions of this Agreement.




          (e) Except as otherwise required by the Act, the debts, obligations and liabilities of the
Company shall be solely the debts, obligations and liabilities of the Company and no director shall
be obligated personally for any such debt, obligation or liability of the Company solely by reason
of being a director of the Company.




ARTICLE 7




OFFICERS




     Section 7.1 General.



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          (a) The officers of the Company shall be elected by the Board of Directors, subject to Section
7.1(b) and Article 8. The officers of the Company shall consist of a Chief Executive Officer, a
Chief Financial Officer and a Secretary and, subject to Section 7.1(b), such other officers as in
the judgment of the Board of Directors may be necessary or desirable. All officers elected by the
Board of Directors shall have such powers and duties as generally pertain to their respective
offices for a corporation incorporated under the DGCL, subject to the specific provisions of this
Article 7. Such officers shall also have powers and duties as from time to time may be conferred by
the Board of Directors or any committee thereof. Any number of offices may be held by the same
Person, unless otherwise prohibited by applicable law or this Agreement. The officers of the
Company need not be Members or directors of the Company.




          (b) For so long as the Management Services Agreement is in effect, the Manager shall second
personnel to serve as the Chief Executive Officer and the Chief Financial Officer and in such other
capacities as set forth in the Management Services Agreement, subject to Section 8.5. The Board of
Directors shall elect nominated personnel as officers of the Company in accordance with this
Article 7. Upon termination of the Management Services Agreement, if no replacement manager is
retained by the Company to assume the Manager’s rights and obligations hereunder, the Nominating
and Corporate Governance Committee shall nominate and the Board of Directors shall elect the
officers of the Company.




     Section 7.2 Duties of Officers. Except as provided in this Agreement (or as required
by the Act), each officer of the Company shall have the same fiduciary duties applicable to
officers of a corporation incorporated under the DGCL, as if such officers were officers of a
corporation incorporated under the DGCL. Except as provided in this Agreement, the parties hereto
intend that the
fiduciary duties of the officers of the Company shall be interpreted consistently with the
jurisprudence regarding such fiduciary duties of officers of a corporation under the DGCL. It shall
be expressly understood that, to the fullest extent permitted by law, no officer of the Company
owes any duties (fiduciary or otherwise) to the Members or the Company with respect to any action
or inaction of the Manager pursuant to the terms of the Management Services Agreement.



     Section 7.3 Election and Term of Office. Subject to Section 7.1(b), the elected
officers of the Company shall be elected annually by the Board of Directors at the regular meeting
of the Board of Directors held after each annual meeting of the Members. If the election of
officers shall not be held at such meeting, such election shall be held as soon thereafter as is
convenient. Each officer shall hold office until his or her successor shall have been duly elected
and qualified or until his or her death or resignation or removal.



     Section 7.4 Chief Executive Officer. The Chief Executive Officer of the Company shall,
subject to the oversight of the Board of Directors, supervise, coordinate and manage the Company’s
business and operations, and supervise, coordinate and manage its activities, operating expenses
and capital allocation, shall have general authority to exercise all the powers necessary for the
Chief Executive Officer of the Company and shall perform such other duties and have such other
powers as may be prescribed by the Board of Directors or this Agreement, all in accordance with
basic policies as may be established by the Board of Directors.



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     Section 7.5 Chief Financial Officer. The Chief Financial Officer shall have
responsibility for the financial affairs of the Company, including the preparation of financial
reports, managing financial risk and overseeing accounting and internal control over financial
reporting, subject to the responsibilities of the Audit Committee. The Chief Financial Officer
shall also be the Company’s chief compliance officer, with responsibility for overseeing and
managing compliance issues, including, without limitation, ensuring compliance with regulatory
requirements, and internal controls, policies and procedures. In the absence of a Secretary, the
Chief Financial Officer shall be responsible for the performance of the duties of Secretary. The
Chief Financial Officer shall perform such other duties and have such other powers as may be
prescribed by the Board of Directors or this Agreement, all in accordance with basic policies as
may be established by the Board of Directors and subject to the oversight of the Board of Directors
and the Chief Executive Officer.



     Section 7.6 Reserved.




     Section 7.7 Secretary.
The Secretary shall act as secretary of all meetings of Members and the Board of Directors and
any meeting of any committee of the Board of Directors. The Secretary shall prepare and keep or
cause to be kept in books provided for such purpose minutes of all meetings of Members and the
Board of Directors and any meeting of any committee of the Board of Directors, ensure that all
notices are duly given in accordance with the provisions of this Agreement and applicable laws, and
perform all duties incident to the office of Secretary and as required by law and such other duties
as may be assigned to him or her from time to time by the Board of Directors.



     Section 7.8 Resignations. Any officer of the Company may resign at any time upon
notice of such resignation to the Company.



     Section 7.9 Vacancies. Subject to Section 7.1(b), a newly created office and a vacancy
in any office because of death, resignation or removal may be filled by the Board of Directors for
the unexpired portion of the term at any meeting of the Board of Directors.



ARTICLE 8




MANAGEMENT




     Section 8.1 Duties of the Manager. For so long as the Management Services Agreement is
in effect and subject at all times to the oversight of the Board of Directors, the Manager will
manage the business of the Company and provide its services to the Company in accordance with the
terms and conditions of the Management Services Agreement.



     Section 8.2 Secondment of the Chief Executive Officer and Chief Financial Officer.
Pursuant to the terms of the Management Services Agreement, the Manager will second to the Company
natural Persons to serve as the Chief Executive Officer and Chief Financial Officer. The Chief
Executive Officer and the Chief Financial Officer shall report directly to the Board.



49









 





     Section 8.3 Secondment of Additional Officers. Pursuant to the terms of the Management
Services Agreement, the Manager and the Company may agree from time to time that the Manager will
second to the Company one or more additional natural Persons to serve as officers of the Company,
upon such terms as the Manager and the Company may mutually agree. Any such natural Persons will
have such titles and fulfill such functions as the Manager and the Company may mutually agree.



     Section 8.4 Status of Seconded Officers and Employees. Any officers or employees of
the Manager seconded to the Company pursuant to Section 8.3 shall not be employees of the Company;
provided, that, except as provided in this Agreement (or as required by the Act), any such seconded
officers and employees of the Manager shall have the same fiduciary duties with respect to the
Company applicable to officers or similarly situated employees, as the case may be, of a
corporation incorporated under the DGCL, as if such officers or employees, as the case may be, were
officers or employees, as the case may be, of a corporation incorporated under the DGCL. Except as
provided in this Agreement, the parties hereto intend that the fiduciary duties of any such
seconded officers and employees of the Manager shall be interpreted consistently with the
jurisprudence regarding such fiduciary duties of officers or similarly situated employees, as the
case may be, of a corporation under the DGCL. It shall be expressly understood that, to the fullest
extent permitted by applicable law, no seconded officer or employee of the Manager owes any duties
(fiduciary or otherwise) to the Members or the Company with respect to any action or inaction of
the Manager except in accordance with the terms of the Management Services Agreement.



     Section 8.5 Removal of Seconded Officers. The Board of Directors shall have the right
to remove any officer of the Company at any time, with or without cause; provided, however, that
for so long as the Management Services Agreement is in effect, the Board of Directors may remove
officers of the Company seconded by the Manager only pursuant to the terms of the Management
Services Agreement.



     Section 8.6 Replacement Manager. In the event that the Management Services Agreement
is terminated and the Board of Directors determines that a replacement manager should be retained
to provide for the management of the Company pursuant to a management or other services agreement,
the affirmative vote of a majority of the holders of Trust Interests present in person or
represented by proxy at the meeting of Members shall be required to retain such replacement
manager.



ARTICLE 9




THE MEMBERS




     Section 9.1 Rights or Powers. The Members acting as such shall not have any right or
power to take part in the management or control of the Company or its business and affairs or to
act for or bind the Company in any way. Notwithstanding the foregoing, the Members have all the
rights and powers specifically set forth in this Agreement, including, without limitation, those



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rights and powers set forth in Article 12 and, to the extent not inconsistent with this Agreement,
in the Act.



     Section 9.2 Annual Meetings of Members.
The annual meeting of the Members of the Company shall be held at such date, at such time and
at such place (if any) within or without the State of Delaware as may be fixed by resolution of the
Board of Directors. Any other business may be transacted at the annual meeting; provided, that it
is properly brought before the meeting.



     Section 9.3 Special Meetings of Members. Special meetings of the Members of the
Company shall be held on such date, at such time and at such place (if any) within or without the
State of Delaware as shall be designated from time to time by the Board of Directors and stated in
the notice of the meeting. Special meetings of the Members may be called at any time only by the
Chairman or by the Board of Directors pursuant to a resolution adopted by the Board of Directors.
Business transacted at any special meeting of Members shall be limited to the purposes stated in
such notice.



     Section 9.4 Place of Meeting. The Board of Directors may designate the place (if any)
of meeting for any meeting of the Members. If no designation is made by the Board of Directors, the
place of meeting shall be the principal executive office of the Company. In lieu of holding any
meeting of Members at a designated place, the Board of Directors may, in its sole discretion,
determine that any meeting of Members may be held solely by means of remote communication.



     Section 9.5 Notice of Meeting.



          (a) A notice of meeting, stating the place (if any), day and hour of the meeting, and the
means of remote communication, if any, by which Members and proxy holders may be deemed to be
present in person and vote at such meeting, shall be prepared and delivered by the Company not less
than twenty (20) days and not more than sixty (60) days before the date of the meeting, either
personally, by mail or, to the extent and in the manner permitted by applicable law,
electronically, to each Member of record. In the case of special meetings, the notice shall state
the purpose or purposes for which such special meeting is called. Such further notice shall be
given as may be required by applicable law. Any previously scheduled meeting of the Members may be
postponed, and (unless this Agreement otherwise provides) any special meeting of the Members may be
canceled, by resolution of the Board of Directors upon public notice given prior to the time
previously scheduled for such meeting of Members. Any notice of meeting given to Members pursuant
to this Section 9.5 shall be effective if given by a form of electronic transmission consented to
by the Member to whom the notice is given. Any such consent shall be revocable by the Member by
written notice to the Company and shall also be deemed revoked if (1) the Company is unable to
deliver by electronic transmission two consecutive notices given by the Company in accordance with
such consent, and (2) such inability becomes known to the Secretary of the Company, the Transfer
Agent or other person responsible for the giving of notice; provided, that, the inadvertent failure
to treat such inability as a revocation shall not invalidate any meeting or other action.




          (b) Notice to Members shall be given personally, by mail or, to the extent and in the manner
permitted by applicable law, electronically to each Member of record. If mailed,
such notice shall be delivered by postage prepaid envelope directed to each holder at such

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Member’s address as it appears in the records of the Company and shall be deemed given when
deposited in the United States mail.




          (c) In order that the Company may determine the Members entitled to notice of or to vote at
any meeting of Members or any adjournment thereof, the Board of Directors may fix a record date,
which record date shall not precede the date upon which the resolution fixing the record date is
adopted by the Board of Directors, and which record date shall not be more than sixty (60) or fewer
than twenty (20) days before the date of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining Members entitled to notice of or to vote at any meeting
of Members or any adjournment thereof shall be at the close of business on the day next preceding
the day on which notice 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.




          (d) Notice given by electronic transmission pursuant to this subsection shall be deemed given:
(1) if by facsimile telecommunication, when directed to a facsimile telecommunication number at
which the Member has consented to receive notice; (2) if by electronic mail, when directed to an
electronic mail address at which the Member has consented to receive notice; (3) if by posting on
an electronic network together with separate notice to the Member of such specific posting, upon
the later of (A) such posting and (B) the giving of such separate notice; and (4) if by any other
form of electronic transmission, when directed to the Member. An affidavit of the Secretary or an
assistant Secretary or of the Transfer Agent or other agent of the Company that the notice has been
given by personal delivery, mail or a form of electronic transmission shall, in the absence of
fraud, be prima facie evidence of the facts stated therein.




     Section 9.6 Quorum and Adjournment. Except as otherwise provided by applicable law or
by the Certificate or this Agreement, the Members present in person or by proxy holding a majority
of each class of the Outstanding LLC Interests entitled to vote hereunder, shall constitute a
quorum at a meeting of Members. The Chairman or the holders of a majority of each class of the LLC
Interests entitled to vote hereunder so represented may adjourn the meeting from time to time,
whether or not there is such a quorum. The Members present at a duly organized meeting at which a
quorum is present in person or by proxy may continue to transact business until adjournment,
notwithstanding the withdrawal of enough Members to leave less than a quorum.



          When a meeting is adjourned to another time and place, if any, unless otherwise provided by
this Agreement, notice need not be given of the reconvened meeting if the date, time and place, if
any, thereof and the means of remote communication, if any, by which Members and proxyholders may
be deemed to be present in person and vote at such reconvened meeting are announced at the meeting
at which the adjournment is taken. If the time, date and place of the reconvened meeting are not
announced at the meeting at which the adjournment is taken, then the Secretary of the Company shall
give written notice of the time, date and place of the reconvened meeting not less than twenty (20)
days prior to the date of the reconvened meeting. At the reconvened meeting, the Members may
transact any business that might have been transacted at the original meeting. A determination of
Members of record entitled to notice of or
to vote at a meeting of Members shall apply to any adjournment of such meeting; provided,
however, that the Board of Directors may fix a new record date for the reconvened meeting. If an

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adjournment is for more than thirty (30) days or if, after an adjournment, a new record date is
fixed for the reconvened meeting, a notice of the reconvened meeting shall be given to each Member
entitled to vote at the meeting.




     Section 9.7 Proxies. For so long as the Trust is the sole holder of Trust Interests,
actions by Trust Members required to be taken hereunder will be taken by the Trust pursuant to
instructions given to the Trust by the holders of the Trust Shares in accordance with the Trust
Agreement or otherwise pursuant to terms set forth in the Trust Agreement. In addition, for so long
as the Trust is the sole holder of Trust Interests, the Company shall provide to the Trust, for
transmittal to the holders of Trust Shares, the appropriate form of proxy to enable the holders of
Trust Shares to direct, in proportion to their percentage ownership of the Trust Shares, the vote
of the Trust Member, and the Trust Member shall vote its Trust Interests in the same proportion as
the vote of holders of Trust Shares. At all meetings of Members, a Member may vote by proxy as may
be permitted by law; provided, that no proxy shall be voted after three (3) years from its date
unless, in the case of the Trust Member and for so long as the Trust is the sole holder of Trust
Interests, the proxy provides for a longer period in accordance with the Trust Agreement. Any proxy
to be used at a meeting of Members must be filed with the Secretary of the Company or his or her
representative at or before the time of the meeting. A Member may revoke any proxy which is not
irrevocable by attending the meeting and voting in person or by delivering to the Secretary of the
Company a revocation of the proxy or a new proxy bearing a later date.



     Section 9.8 Notice of Member Business and Nominations. 



          (a) Annual Meetings of Members.





          (i) Except in the case of the Initial Board, nominations of individuals for election to
the Board of Directors by a Member (other than any Appointed Director, who shall be
appointed by the Manager for so long as the Manager is entitled to appoint one or more
directors to the Board of Directors pursuant to the terms of this Agreement), and the
proposal of business to be considered by the Members, may be made at an annual meeting of
Members (A) pursuant to the Company’s notice of meeting delivered pursuant to Section 9.5,
(B) by or at the direction of the Board of Directors or (C) by any Member of the Company who
is entitled to vote at the meeting, who complies with the notice procedures set forth in
clauses (ii) and (iii) of this Section 9.8(a).




          In addition to any other applicable requirements, for a nomination for election of a
director to be made by a Member (other than any Appointed Director, who shall be appointed
by the Manager for so long as the Manager is entitled to appoint one or more directors to
the Board of Directors pursuant to the terms of this Agreement) or for business to be
properly brought before an annual meeting by a Member, such Member must (A) be a Member of
record on both (1) the date of the delivery of such nomination or the date of the giving of
the notice provided for in this Section 9.8(a) and (2) the record date for the determination
of Members entitled to vote at such annual meeting, and
(B) have given timely notice thereof in proper written form in accordance with the
requirements of this Section 9.8(a) to the Secretary.



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          (ii) For nominations or other business to be properly brought before an annual meeting
by a Member pursuant to Section 9.8(a)(i)(C), the Member must have given timely notice
thereof in writing to the Secretary of the Company and, in the case of business other than
nominations, such other business must otherwise be a proper matter for Member action.
Except to the extent otherwise required by applicable law, to be timely, a Member’s notice
shall be delivered to the Secretary at the principal executive offices of the Company not
less than one hundred and twenty (120) days nor more than one hundred and fifty (150) days
prior to the first anniversary of the preceding year’s annual meeting; provided, however,
that, in the event that the date of the annual meeting is more than thirty (30) days before
or more than seventy (70) days after such anniversary date, notice by a Member must be so
delivered not earlier than the close of business on the one hundred twentieth (120th) day
prior to such annual meeting or the tenth (10th) day following the day on which public
announcement of the date of such meeting is first made by the Company. In the case of the
first annual meeting of Members, a Member’s notice shall be timely if it is delivered to the
Secretary at the principal executive offices of the Company not earlier than the one hundred
and twentieth (120th) day prior to such annual meeting and not later than the close of
business on the later of the ninetieth (90th) day prior to such annual meeting or the tenth
(10th) day following the day on which public announcement of the date of such meeting is
first made. In no event shall the public announcement or an adjournment or postponement of
an annual meeting commence a new time period for the giving of a Member’s notice as
described in this Section 9.8(a).




          Subject to Section 9.8(a)(i), such Member’s notice shall set forth: (A) as to each
individual whom the Member proposes to nominate for election or reelection as a director,
all information relating to such individual that is required to be disclosed in
solicitations of proxies for election of directors in an election contest, or is otherwise
required, pursuant to Regulation 14A under the Exchange Act, including such individual’s
written consent to being named in the proxy statement as a nominee and to serving as a
director if elected; (B) as to any other business that the Member proposes to bring before
the meeting, a brief description of the business desired to be brought before the meeting,
the text of the proposal or business (including the text of any resolutions proposed for
consideration), the reasons for conducting such business at the meeting and any material
interest in such business of such Member and the Beneficial Owner or holder of Trust Shares,
if any, on whose behalf the proposal is made; and (C) as to the Member giving the notice and
the Beneficial Owner, if any, on whose behalf the nomination or proposal is made, (1) the
name and address of such Member as they appear on the Company’s books and of such Beneficial
Owner, (2) the number of, and evidence of such number of, LLC Interests which are owned
beneficially and of record by such Member and such Beneficial Owner, (3) a representation
that the Member intends to appear in person or by proxy at the meeting to propose such
business or nomination, and (4) a representation whether the Member or the Beneficial Owner,
if any, intends or is part of a group which intends (i) to deliver a proxy statement and/or
form of proxy to holders of at least the percentage of the LLC Interests required to approve
or adopt the
proposal or elect the nominee and/or (ii) otherwise to solicit proxies from Members in
support of such proposal or nomination. The foregoing notice requirements shall be deemed
satisfied by a Member if the Member has notified the Company of the Member’s



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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 Member’s proposal has been included in
a proxy statement that has been prepared by the Company to solicit proxies for such annual
meeting. The Company 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 Company or on any committee of the Board of Directors.




          (iii) Notwithstanding anything in the second sentence of clause (ii) of this Section
9.8(a) 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 Company at
least one hundred (100) days prior to the first anniversary of the preceding year’s annual
meeting, a Member’s notice required by this Section 9.8 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 at the principal executive offices of the Company not later than
the close of business on the tenth (10th) day following the day on which such public
announcement is first made by the Company.



          (b) Special Meeting of Members. Only such business shall be conducted at a special
meeting of Members as shall have been brought before the meeting pursuant to the Company’s notice
of meeting pursuant to Section 9.5. Nominations of individuals for election to the Board of
Directors by a Member (other than any Appointed Director, who shall be appointed by the Manager for
so long as the Manager is entitled to appoint one or more directors to the Board of Directors
pursuant to the terms of this Agreement) may be made at a special meeting of Members at which
directors are to be elected pursuant to the Company’s notice of meeting (i) by or at the direction
of the Board of Directors, or (ii) by any Member who is entitled to vote at the meeting who
complies with the notice procedures set forth in this Section 9.8.




          In addition to any other applicable requirements, for a nomination for election of a director
to be made by a Member, such Member must (A) be a Member of record on both (1) the date of the
delivery of such nomination and (2) the record date for the determination of Members entitled to
vote at such special meeting, and (B) have given timely notice thereof in proper written form in
accordance with the requirements of this Section 9.8(b) to the Secretary.




          In the event the Company calls a special meeting of Members for the purpose of electing one or
more directors to the Board of Directors, any Member entitled to vote thereon may nominate such
number of individuals for election to such position(s) as are specified in the Company’s Notice of
Meeting, if such Member’s notice as required by Section 9.8(a)(ii) shall be delivered to the
Secretary at the principal executive offices of the Company not earlier than the one hundred and
twentieth (120th) day prior to such special meeting and not later than the close of business on the
later of the ninetieth (90th) day prior to such special meeting or the tenth (10th) 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. In no event shall the public announcement of an adjournment or postponement of a
special meeting commence a new time period for the giving of a Member’s notice as described above.




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          (c) General.





          (i) Only individuals who are nominated in accordance with the procedures set forth in
this Section 9.8 shall be eligible to be considered for election as directors at a meeting
of Members and only such business shall be conducted at a meeting of Members as shall have
been brought before the meeting in accordance with the procedures set forth in this Section
9.8. Except as otherwise provided by applicable law or this Section 9.8, the Chairman shall
have the power and duty 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 9.8 and, if any proposed nomination or business is not in compliance with this
Section 9.8, to declare that such defective proposal or nomination shall be disregarded.




          (ii) For purposes of this Section 9.8, “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 Company with the Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act.




          (iii) Notwithstanding the foregoing provisions of this Section 9.8, a Member shall also
comply with all applicable requirements of the Exchange Act, the Rules and Regulations
thereunder and the Listing Rules with respect to the matters set forth in this Section 9.8.
Nothing in this Section 9.8 shall be deemed to affect any rights of Members to request
inclusion of proposals in the Company’s proxy statement pursuant to Rule 14a-8 under the
Exchange Act.



     Section 9.9 Procedure for Election of Directors; Voting. The election of directors
submitted to Members at any meeting shall be decided by a plurality of the votes cast by the
Members entitled to vote thereon. Except as otherwise provided by applicable law or this Agreement,
all matters other than the election of directors submitted to the Members at any meeting shall be
decided by the affirmative vote of the holders of a majority of the then Outstanding LLC Interests
entitled to vote thereon present in person or represented by proxy at the meeting of Members. The
vote on any matter at a meeting, including the election of directors, shall be by written ballot.
Each ballot shall be signed by the Member voting, or by such Member’s proxy, and shall state the
number of LLC Interests voted.



     Section 9.10 Inspectors of Elections; Opening and Closing the Polls.



          (a) The Board of Directors by resolution shall appoint one or more inspectors, which inspector
or inspectors shall not be directors, officers or employees of the Company, to act at the meeting
and make a written report thereof. One or more individuals may be designated as alternate
inspectors to replace any inspector who fails to act. If no inspector or alternate has been so
appointed to act, or if all inspectors or alternates who have been appointed are unable to act, at
a meeting of Members, the Chairman shall appoint one or more inspectors to act at the meeting.
Each such inspector, before discharging his or her duties, 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 have the duties prescribed by the DGCL as if the Company
were a Delaware corporation.




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          (b) The Chairman shall fix and announce at the meeting the date and time of the opening and
the closing of the polls for each matter upon which the Members will vote at the meeting.




     Section 9.11 Confidential Member Voting. All proxies, ballots and votes, in each case
to the extent they disclose the specific vote of an identified Member, shall be tabulated and
certified by an independent tabulator, inspector of elections and/or other independent parties and
shall not be disclosed to any director, officer or employee of the Company; provided, however,
that, notwithstanding the foregoing, any and all proxies, ballots and voting tabulations may be
disclosed: (a) as necessary to meet legal requirements or to assist in the pursuit or defense of
legal action; (b) if the Company concludes in good faith that a bona fide dispute exists as to the
authenticity of one or more proxies, ballots or votes, or as to the accuracy of any tabulation of
such proxies, ballots or votes; (c) in the event of a proxy, consent or other solicitation in
opposition to the voting recommendation of the Board of Directors; and (d) if a Member requests or
consents to disclosure of such Member’s vote or writes comments on such Member’s proxy card or
ballot.



     Section 9.12 Waiver of Notice. Whenever any notice is required to be given to any
Member by the terms of this Agreement, a waiver thereof in writing, signed by the Person or Persons
entitled to such notice, or a waiver thereof by electronic transmission by the Person or Persons
entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Neither the business to be transacted at, nor the purpose of, any annual
or special meeting of the Members need be specified in any written waiver of notice or any waiver
by electronic transmission of such meeting. Notice of any meeting of Members need not be given to
any Member if waived by such Member either in a writing signed by such Member or by electronic
transmission, whether such waiver is given before or after such meeting is held. If any such waiver
is given by electronic transmission, the electronic transmission must either set forth or be
submitted with information from which it can be determined that the electronic transmission was
authorized by the Member.



     Section 9.13 Remote Communication. For the purposes of this Agreement, if authorized
by the Board of Directors in its sole discretion, and subject to such guidelines and procedures as
the Board of Directors may adopt, Members and proxyholders may, by means of remote communication:



          (a) participate in a meeting of Members; and




          (b) to the fullest extent permitted by applicable law, be deemed present in person and vote at
a meeting of Members, whether such meeting is to be held at a designated place or solely by means
of remote communication;



provided, however, that (i) the Company shall implement reasonable measures to verify that each
Person deemed present and permitted to vote at the meeting by means of remote communication is a
Member or proxyholder, (ii) the Company shall implement reasonable measures to provide such Members
and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters
submitted to the Members, including an opportunity to read or hear the proceedings of the meeting
substantially and concurrently with such proceedings, and (iii) if any





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Member or proxyholder votes
or takes other action at the meeting by means of remote communication, a record of such vote or
other action shall be maintained by the Company.




     Section 9.14 Member Action Without a Meeting. For so long as the Trust remains the
sole holder of Trust Interests, the Trust shall take any action required or permitted to be taken
at any meeting of Members, by executing a written consent that shall reflect the vote of the
holders of Trust Shares as required by the terms of the Trust Agreement, without such meeting,
without prior notice, and without a vote. Proxy materials completed by the holders of Trust Shares
evidencing the result of a vote taken at a meeting of the holders of Trust Shares with at least the
minimum number of votes required to constitute an affirmative vote of the holders of Trust Shares
under the Trust Agreement shall be delivered to the Company indicating the vote or action being
approved or disapproved by such holders with respect to those matters reserved to the Trust Members
of the Company by this Agreement. If the Trust is not the sole owner of the Trust Interests,
Members shall take any action required or permitted only at a meeting of Members duly called and
noticed, and shall not be entitled to take any action by written consent.



     Section 9.15 Return on Capital Contribution. Except as otherwise provided in Article
14, no Member shall demand a return on or of its Capital Contributions.



     Section 9.16 Member Compensation. No Member shall receive any interest, salary or
draw with respect to its Capital Contributions or its Capital Account or for services rendered on
behalf of the Company, or otherwise, in its capacity as a Member, except as otherwise provided in
this Agreement or in the Management Services Agreement.



     Section 9.17 Member Liability. Except as required by the Act, no Member shall be
liable under a judgment, decree or order of a court, or in any other manner, for the Debts or any
other obligations or liabilities of the Company. A Member shall be liable only to make its Capital
Contributions and shall not be required to restore a deficit balance in its Capital Account or to
lend any funds to the Company or, after its Capital Contributions have been made, to make any
additional contributions, assessments or payments to the Company; provided, however, that a Member
may be required to repay any distribution made to it in contravention of Section 5.3 or Sections
18-607 or 18-804 of the Act. The Manager shall not have any personal liability for the repayment of
any Capital Contributions of any Member.



ARTICLE 10




MEMBER VOTE REQUIRED IN CONNECTION WITH

CERTAIN BUSINESS COMBINATIONS OR TRANSACTIONS




     Section 10.1 Vote Generally Required. Except as provided in Sections 2.3 and 2.4 and
subject to the provisions of Section 10.2, the Company shall not (a) merge or consolidate with or
into any limited liability company, corporation, statutory trust, business trust or association,
real estate investment trust, common-law trust or any other unincorporated business, including a
partnership, or (b) sell, lease or exchange all or substantially all of its Property and assets,
unless the Board of Directors shall adopt a resolution, by the affirmative vote of at least a
majority of the Entire Board of Directors, approving such action and unless such action shall be
approved by



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the affirmative vote of the holders of a majority of each class of LLC Interests, in
each case, Outstanding and entitled to vote thereon. The notice of the meeting at which such
resolution is to be considered will so state.



     Section 10.2 Vote for Business Combinations. The affirmative vote of the holders of
record of at least sixty-six and two-thirds percent (66 2/3%) of each class of LLC Interests then
Outstanding (excluding LLC Interests Beneficially Owned by the Interested Shareholder or any
Affiliate or Associate of the Interested Shareholder) shall be required to approve any Business
Combination. Such affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that a lesser percentage may be specified, by applicable law or in any agreement with
any securities exchange or otherwise.



     Section 10.3 Power of Continuing Directors. The Continuing Directors shall have the
power and duty to determine, on the basis of information known to them after reasonable inquiry,
all facts necessary to determine compliance with this Article 10, including, without limitation,
(a) whether a Person is an Interested Shareholder, (b) the number of Trust Interests of the Company
beneficially owned by any Person, (c) whether a Person is an Affiliate or Associate of another, and
(d) the Fair Market Value of the equity securities of the Company or any Subsidiary thereof, and
the good faith determination of the Continuing Directors on such matters shall be conclusive and
binding for all the purposes of this Article 10.



     Section 10.4 No Effect on Fiduciary Obligations.
Nothing contained in this Article shall be construed to relieve the directors of the Board of
Directors or an Interested Shareholder from any fiduciary obligation imposed by applicable law.



ARTICLE 11




BOOKS AND RECORDS




Section 11.1 Books and Records; Inspection by Members.




          (a) The Company, other than as provided in the Management Services Agreement, shall keep or
cause to be kept at its principal executive office appropriate books and records with respect to
the Company’s business, including, without limitation, all books and records necessary to provide
to the Members any information, lists and copies of documents required to be provided pursuant to
applicable law. Any books and records maintained by or on behalf of the Company in the regular
course of its business, including, without limitation, the record of the Members, books of account
and records of Company proceedings, may be kept in electronic or any other form; provided, that the
books and records so maintained are convertible into clearly legible written form within a
reasonable period of time.




          (b) The Secretary shall make, at least ten (10) days before every meeting of Trust Members, a
complete list of the Trust Members entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each Trust Member and the number of Trust Interests registered in the
name of each Trust Member. Such list shall be open to the examination of any Trust Member, for any
purpose germane to the meeting for a period of at least ten (10)

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days prior to the meeting: (i) on
a reasonably accessible electronic network; provided, that the information required to gain access
to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at
the principal place of business of the Company. In the event that the Company determines to make
the list available on an electronic network, the Company may take reasonable steps to ensure that
such information is available only to Members. The list shall be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any Member who is
present.




          (c) Any Member or Beneficial Owner, in person or by attorney or other agent, shall, upon
written demand stating the purpose thereof, have the right during the usual business hours to
inspect for any proper purpose, and to make copies and extracts from the Register, a list of the
Members, and its other books and records; provided, that as of the date of the making of the demand
inspection of such books and records would not constitute a breach of any confidentiality
agreement. In every instance where a person purports to be a Beneficial Owner of LLC Interests but
who is not the holder of record as identified on the Register, the demand shall state such Person’s
status as a Beneficial Owner of LLC Interests, be accompanied by documentary evidence of beneficial
ownership of LLC Interests, and state that such documentary evidence is a true and correct copy of
what it purports to be. A proper purpose shall mean a purpose reasonably related to such Person’s
interest as a Member or Beneficial Owner of LLC Interests.




     Section 11.2 Reports.



          (a) In General. The Chief Financial Officer of the Company shall be responsible for
causing the preparation of financial reports of the Company and the coordination of financial
matters of the Company with the Company’s accountants.




          (b) Periodic and Other Reports. The Company shall cause to be delivered to each Member
the financial statements listed in clauses (i) and (ii) below, prepared in each case (other than
with respect to Members’ Capital Accounts, which shall be prepared in accordance with this
Agreement) in accordance with GAAP consistently applied (and, if required by any Member or its
controlled Affiliates for purposes of reporting thereunder, Regulation S-X of the Exchange Act).
The monthly and quarterly financial statements referred to in clause (ii) below may be subject to
normal year-end audit adjustments.




          (i) As soon as practicable following the end of each Fiscal Year (and in any event not later
than the date on which the Rules and Regulations provide) and at such time as distributions are
made to the Members pursuant to Article 14 following the occurrence of a Dissolution Event, a
balance sheet of the Company as of the end of such Fiscal Year and the related statements of
operations, Members’ Capital Accounts and changes therein, and cash flows for such Fiscal Year,
together with appropriate notes to such financial statements and supporting schedules, all of which
shall be audited and certified by the Company’s accountants, and in each case, to the extent the
Company was in existence, setting forth in comparative form the corresponding figures for the
immediately preceding Fiscal Year end (in the case of the balance sheet) and the two (2)
immediately preceding Fiscal Years (in the case of the statements); and





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          (ii) As soon as practicable following the end of each of the first three Fiscal Quarters of
each Fiscal Year (and in any event not later than the date on which the Rules and Regulations
require), a balance sheet of the Company as of the end of such Fiscal Quarter and the related
statements of operations and cash flows for such Fiscal Quarter and for the Fiscal Year to date, in
each case, to the extent the Company was in existence, setting forth in comparative form the
corresponding figures for the prior Fiscal Year’s Fiscal Quarter and the interim period
corresponding to the Fiscal Quarter and the interim period just completed.




          The quarterly statements described in clause (ii) above shall be accompanied by such written
certifications as the Rules and Regulations require.




     Section 11.3 Preparation of Tax Returns. The Company shall arrange for the preparation
and timely filing of all returns of Company income, gains, deductions, losses and other items
required of the Company for U.S. federal and state income tax purposes. The classification,
realization and recognition of income, gains, deductions, losses and other items shall be on the
accrual method of accounting for U.S. federal income tax purposes. The taxable year of the Company
shall be the calendar year.



     Section 11.4 Tax Elections.



          (a) The Board of Directors shall, without any further consent of the Members being required
(except as specifically required herein), make (i) the election to adjust the basis of Property
pursuant to Code Sections 754, 734(b) and 743(b), or comparable provisions of state, local or
foreign law, in connection with Transfers of LLC Interests and Company distributions; and (ii) any
and all other elections for U.S. federal, state, local and foreign tax purposes, including, without
limitation, any election, if permitted by applicable law: (x) to extend the statute of limitations
for assessment of tax deficiencies against the Members with respect to adjustments to the Company’s
U.S. federal, state, local or foreign tax returns; and (y) to the extent provided in Code Sections
6221 through 6231 and similar provisions of U.S. federal, state, local or foreign law, to represent
the Company and the Members before taxing authorities or courts of competent jurisdiction in tax
matters affecting the Company or the Members in their capacities as Members, and to file any tax
returns and execute any agreements or other documents relating to or affecting such tax matters,
including agreements or other documents that bind the Members with respect to such tax matters or
otherwise affect the rights of the Company and the Members. The Manager is specifically authorized
to act as the “Tax Matters Member” under the Code and in any similar capacity under state or local
law.




          (b) In circumstances where the Trust has been dissolved, the Board of Directors may, by the
affirmative vote of at least a majority of the Entire Board of Directors, and without any further
consent of the Members being required, cause the Company to elect to be treated as a corporation
for U.S. federal income tax purposes; provided, however, that such action shall be taken only if
(i) the Board of Directors first obtains an opinion from a nationally recognized financial advisor
to the effect that it expects the market valuation of the Company to be significantly lower as a
result of the Company continuing to be treated as a partnership for U.S. federal income tax
purposes than if the Company instead elected to be treated as a corporation for U.S. federal income
tax purposes and (ii) the effective date for such election is no

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earlier than the date on which the
Trust has been dissolved pursuant to clause (i) of Section 10.02 of the Trust Agreement.




     Section 11.5 Tax Information. Necessary tax information shall be delivered to each
Member as soon as practicable after the end of the Fiscal Year of the Company but not later than
February 15.



ARTICLE 12




AMENDMENTS




          The Board of Directors is authorized to amend the terms of this Agreement by resolution
adopted by the affirmative vote of a majority of the Entire Board of Directors; provided, however,
that Sections 1.3, 2.4, 2.5, 3.1(a), 5.1, 8.6, 14.1(i) or (ii), Article 10 and this Article 12 may
not be amended without the affirmative vote of Trust Members holding a majority of the Trust
Interests present in person or represented by proxy at a meeting of Trust Members; provided,
further, however, that Sections 5.1, 5.2, 6.1 , 6.4 (excluding provisions relating to
classification of the Board of Directors), 6.5 (solely with respect to the provision
relating to an Appointed Director), 6.6 (solely with respect to the Allocation Member’s right
to remove an Appointed Director), 6.8 (solely with respect to the provision relating to an
Appointed Director), 6.9 (solely with respect to the provision relating to the initial Chairman),
6.12 (solely with respect to the Chief Executive Officer’s right to call special meetings of the
Board of Directors), 6.17, 6.22, 6.23, Article 10 and this Article 12, and any other amendment that
would adversely affect the rights of the Allocation Member may not be amended without the prior
written consent of the Allocation Member. Notwithstanding anything to the contrary contained in
this Agreement, the Board of Directors is authorized by resolution adopted by the affirmative vote
of a majority of the Entire Board of Directors to (x) amend, modify or supplement this Agreement to
correct any administrative or ministerial error or omission contained in this Agreement or to
clarify, or to correct any error in, the calculation of the Profit Distribution Amount consistent
with the intent of the Company and the Allocation Member, as determined by the Board of Directors
and the Allocation Member in their sole discretion and (y) without limiting the generality of the
foregoing provisions of this Article 12, amend, modify or supplement the provisions of Section 6.18
(relating to committees of the Board) from time to time.




ARTICLE 13




TRANSFERS; MONTHLY ALLOCATIONS




          Profits, Losses, each item thereof and all other items attributable to LLC Interests for any
Allocation Year shall, for U.S. federal income tax purposes, be determined on an annual basis and
prorated on a monthly basis and the pro rata portion for each month shall be allocated to those
Persons who are Members as of the close of the Nasdaq National Market on the last day of the
preceding month. With respect to any LLC Interest that was not treated as Outstanding as

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of the
close of the Nasdaq National Market on the last day of the preceding month, the first Person who is
treated as the Member with respect to such LLC Interest will be treated as the Member with respect
to such LLC Interest for this purpose as of the close of the Nasdaq National Market on the last day
of the preceding month. All distributions having a record date on or before the date of a Transfer
of LLC Interests shall be made to the transferor, and all distributions having a record date
thereafter shall be made to the transferee. The Board of Directors may revise, alter or otherwise
modify such methods of allocation as it determines necessary, to the extent permitted or required
by Code Section 706 and the Regulations or rulings promulgated thereunder.




ARTICLE 14




DISSOLUTION AND WINDING UP




     Section 14.1 Dissolution Events. The Company shall dissolve and shall commence
winding up upon the first to occur of any of the following (each a “Dissolution Event”):




     (i) the Board of Directors adopts a resolution, by the affirmative vote of at least a
majority of the Entire Board of Directors, approving the dissolution, winding up and
liquidation of the Company and such action has been approved by the affirmative vote of the
holders of a majority of the Outstanding Trust Interests and entitled to vote thereon;




     (ii) the unanimous vote of the Trust Members to dissolve, wind up and liquidate the
Company;




     (iii) the entry of a decree of judicial dissolution under Section 18-802 of the Act; or




     (iv) upon the termination of the legal existence of the last remaining Member or the
occurrence of any other event that terminates the continued membership of the last remaining
Member unless the Company is continued without dissolution in a manner permitted by this
Agreement or the Act.


The Members hereby agree that, notwithstanding any provision of the Act, the Company shall not
dissolve prior to the occurrence of a Dissolution Event.




     Section 14.2 Winding Up. Upon the occurrence of a Dissolution Event, the Company shall
continue solely for the purposes of winding up its affairs in an orderly manner, liquidating its
assets, and satisfying the claims of its creditors and Members, and no Member shall take any action
that is inconsistent with, or not necessary to or appropriate for, the winding up of the Company’s
business and affairs; provided, however, that all covenants contained in this Agreement and
obligations provided for in this Agreement shall continue to be fully binding upon the Members
until such time as the Property has been distributed pursuant to this Section 14.2 and the
Certificate has been canceled pursuant to the Act. The Liquidator shall be responsible for
overseeing the winding up of the Company, which winding up shall be completed



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no later than ninety
(90) days after the later of the occurrence of the Dissolution Event. The Liquidator shall take
full account of the Company’s liabilities and Property and shall cause the Property or the proceeds
from the sale thereof (as determined pursuant to Section 14.9), to the extent sufficient therefor,
to be applied and distributed, to the maximum extent permitted by law, in the following order:



          (a) First, to creditors (including the Manager and the Members who are creditors, to the
extent otherwise permitted by law) in satisfaction of all of the Company’s Debts and other
liabilities (whether by payment or the making of reasonable provision for payment thereof), other
than liabilities for distributions to Members under Section 18-601 or 18-604 of the Act;




          (b) Second, except as provided in this Agreement, to Members and former Members of the Company
in satisfaction of liabilities for distributions under Section 18-601 or 18-604 of the Act; and




          (c) The balance, if any, to the Members in accordance with the positive balance in their
Capital Accounts, after giving effect to all contributions, distributions and allocations for all
periods.



Notwithstanding Section 14.9, no Member or Manager shall receive additional compensation for any
services performed pursuant to this Article 14.




     Section 14.3 Compliance with Certain Requirements of Regulations; Deficit Capital
Accounts. In the event the Company is “liquidated” within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), distributions shall be made pursuant to this Article 14 to the Members who
have positive Capital Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2). If
any Member has a deficit balance in its Capital Account (after giving effect to all contributions,
distributions and allocations for all Allocation Years, including the Allocation Year during which
such liquidation occurs), such Member shall have no obligation to make any contribution to the
capital of the Company with respect to such deficit, and such deficit shall not be considered a
debt owed to the Company or to any other Person for any purpose whatsoever. In the discretion of
the Liquidator, a pro rata portion of the distributions that would otherwise be made to the Members
pursuant to this Article 14 may be:



          (a) Distributed to a trust established for the benefit of the Members for the purposes of
liquidating Company assets, collecting amounts owed to the Company, and paying any contingent,
conditional or unmatured liabilities or obligations of the Company; the assets of any such trust
shall be distributed to the Members from time to time, in the reasonable discretion of the
Liquidator, in the same proportions as the amount distributed to such trust by the Company would
otherwise have been distributed to the Members pursuant to Section 14.2; or




          (b) Withheld to provide a reasonable reserve for Company liabilities (contingent or otherwise)
and to reflect the unrealized portion of any installment obligations owed to the Company; provided,
however, that such withheld amounts shall be distributed to the Members as soon as practicable.





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     Section 14.4 Deemed Distribution and Recontribution. Notwithstanding any other
provision of this Article 14, in the event the Company is liquidated within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g) but no Dissolution Event has occurred, the Property shall
not be liquidated, the Company’s Debts and other Liabilities shall not be paid or discharged, and
the Company’s affairs shall not be wound up. Instead, solely for U.S. federal income tax purposes,
the Company shall be deemed to have contributed all its Property and liabilities to a new limited
liability company in exchange for interests in such new company and, immediately thereafter, the
Company will be deemed to liquidate by distributing interests in the new company to the Members.



     Section 14.5 Rights of Members. Except as otherwise provided in this Agreement, each
Member shall look solely to the Property of the Company for the return of its Capital Contribution
and has no right or
power to demand or receive Property other than cash from the Company. If the assets of the
Company remaining after payment or discharge of the debts or liabilities of the Company are
insufficient to return such Capital Contribution, the Members shall have no recourse against the
Company or any other Member or the Manager.



     Section 14.6 Notice of Dissolution/Termination.



          (a) In the event a Dissolution Event occurs or an event occurs that would, but for the
provisions of Section 14.1, result in a dissolution of the Company, the Board of Directors shall,
within thirty (30) days thereafter, provide written notice thereof to each of the Members and to
all other parties with whom the Company regularly conducts business (as determined in the
discretion of the Board of Directors) and shall publish notice thereof in a newspaper of general
circulation in each place in which the Company regularly conducts business (as determined in the
discretion of the Board of Directors).




          (b) Upon completion of the distribution of the Company’s Property as provided in this Article
14, the Board of Directors shall cause the filing of the Certificate of Cancellation pursuant to
Section 18-203 of the Act and shall take all such other actions as may be necessary to terminate
the Company.




     Section 14.7 Allocations During Period of Liquidation. During the period commencing on
the first day of the Fiscal Year during which a Dissolution Event occurs and ending on the date on
which all of the assets of the Company have been distributed to the Members pursuant to Section
14.2 (the “Liquidation Period”), the Members shall continue to share Profits, Losses, gain, loss
and other items of Company income, gain, loss or deduction in the manner provided in Article 4.



     Section 14.8 Character of Liquidating Distributions. All payments made in liquidation
of the interest of a Member in the Company shall be made in exchange for the interest of such
Member in Property pursuant to Section 736(b)(1) of the Code, including the interest of such Member
in Company goodwill.



     Section 14.9 The Liquidator.



          (a) Fees. Subject to Section 14.2, the Company is authorized to pay a reasonable fee
to the Liquidator for its services performed pursuant to this Article 14 and to

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reimburse the
Liquidator for its reasonable costs and expenses incurred in performing those services.




          (b) Indemnification. The Company shall indemnify, hold harmless and pay all judgments
and claims against the Liquidator or any officers, directors, agents or employees of the Liquidator
relating to any liability or damage incurred by reason of any act performed or omitted to be
performed by the Liquidator or any officers, directors, agents or employees of the Liquidator in
connection with the liquidation of the Company, including reasonable attorneys’ fees incurred by
the Liquidator, officer, director, agent or employee in connection with the defense of any action
based on any such act or omission, which attorneys’ fees may be paid as
incurred, except to the extent such liability or damage is caused by the fraud or intentional
misconduct of, or a knowing violation of the laws by, the Liquidator which was material to the
cause of action.




     Section 14.10 Form of Liquidating Distributions. For purposes of making distributions
required by Section 14.2, the Liquidator may determine whether to distribute all or any portion of
the Property in kind or to sell all or any portion of the Property and distribute the proceeds
therefrom.



ARTICLE 15




MISCELLANEOUS




     Section 15.1 Notices. Subject to Sections 6.11, 6.13, 9.5 and 9.8, any notice,
payment, demand or communication required or permitted to be given by any provision of this
Agreement shall be in writing and delivered personally, or, when the same is actually received, if
sent either by registered or certified mail, postage and charges prepaid, or by facsimile, if such
facsimile is followed by a hard copy of the facsimile communication sent promptly thereafter by
registered or certified mail, postage and charges prepaid, addressed as follows, or to such other
address as such Person may from time to time specify by notice to the Members and the Manager:




	(a)	 	If to the Company:




61 Wilton Road

Westport CT 06880

Attention: I. Joseph Massoud

Facsimile No.: (212) 581-8037





	(b)	 	If to the Allocation Members:




61 Wilton Road

Westport CT 06880

Attention: I. Joseph Massoud

Facsimile No.: (212) 581-8037






66









 









	(c)	 	If to the Trust Members:




61 Wilton Road

Westport CT 06880

Attention: I. Joseph Massoud

Facsimile No.: (212) 581-8037




     Section 15.2 Binding Effect. Except as otherwise provided in this Agreement, every covenant, term and provision of this
Agreement shall be binding upon and inure to the benefit of the Members and their respective
successors, transferees and assigns.



     Section 15.3 Construction. It is the intent of the parties hereto that every covenant,
term and provision of this Agreement shall be construed simply according to its fair meaning and
not strictly for or against any Member.



     Section 15.4 Time. In computing any period of time pursuant to this Agreement, the day
of the act, event or default from which the designated period of time begins to run shall not be
included, but the time shall begin to run on the next succeeding day. The last day of the period so
computed shall be included, unless it is a Saturday, Sunday or any other day on which banks in The
City of New York are required or authorized by law or executive order to close, in which event the
period shall run until the end of the next day which is not a Saturday, Sunday or any other day on
which banks in The City of New York are required or authorized by law or executive order to close.



     Section 15.5 Headings. Section and other headings contained in this Agreement are for
reference purposes only and are not intended to describe, interpret, define or limit the scope,
extent or intent of this Agreement or any provision hereof.



     Section 15.6 Severability. Except as otherwise provided in the succeeding sentence,
every provision of this Agreement is intended to be severable, and, if any term or provision of
this Agreement is illegal or invalid for any reason whatsoever, such illegality or invalidity shall
not affect the validity or legality of the remainder of this Agreement. The preceding sentence of
this Section 15.6 shall be of no force or effect if the consequence of enforcing the remainder of
this Agreement without such illegal or invalid term or provision would be to cause any Member to
lose the material benefit of its economic bargain.



     Section 15.7 Incorporation by Reference. Every exhibit, schedule and other appendix
attached to this Agreement and referred to herein is not incorporated in this Agreement by
reference unless this Agreement expressly otherwise provides.



     Section 15.8 Variation of Terms. All terms and any variations thereof shall be deemed
to refer to masculine, feminine or neuter, singular or plural, as the identity of the Person or
Persons may require.



     Section 15.9 Governing Law and Consent to Jurisdiction/Service of Process. The laws of
the State of Delaware shall govern this Agreement, including the validity of this Agreement, the
construction of its terms and the interpretation of the rights and duties arising hereunder.



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          Each party hereto and any Person acquiring an LLC Interest, from time to time, (i) irrevocably
submits to the non-exclusive jurisdiction and venue of any Delaware state court or U.S. federal
court sitting in Wilmington, Delaware in any action arising out of this Agreement and (ii) consents
to the service of process by mail. Nothing herein shall affect the right of any party to serve
legal process in any manner permitted by law or affect its right to bring any action in any other
court.




     Section 15.10 Waiver of Jury Trial. Each of the Members irrevocably waives, to the
extent permitted by law, all rights to trial by jury and all rights to immunity by sovereignty or
otherwise in any action, proceeding or counterclaim arising out of or relating to this Agreement.



     Section 15.11 Counterpart Execution. This Agreement may be executed in any number of
counterparts with the same effect as if all of the Members had signed the same document. All
counterparts shall be construed together and shall constitute one agreement.



     Section 15.12 Specific Performance. Each Member agrees with the other Members that the
other Members would be irreparably damaged if any of the provisions of this Agreement were not
performed in accordance with their specific terms and that monetary damages would not provide an
adequate remedy in such event. Accordingly, it is agreed that, in addition to any other remedy to
which the nonbreaching Members may be entitled, at law or in equity, the nonbreaching Members shall
be entitled to injunctive relief to prevent breaches of the provisions of this Agreement and
specifically to enforce the terms and provisions hereof in any action instituted in any court of
the United States or any state thereof having subject matter jurisdiction thereof.



— Signature page follows —




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     IN WITNESS WHEREOF, the Members have executed and entered into this Second Amended and
Restated Operating Agreement of the Company as of the day first above set forth.



	 	 	 	 	 
	 	COMPASS DIVERSIFIED TRUST

 	 
	 	By:  	                                     /s/
 	 
	 	 	Name:  	 	 
	 	 	Title:  	Regular Trustee 	 
	 
	 	COMPASS GROUP MANAGEMENT LLC

 	 
	 	By:  	/s/
 	 
	 	 	Name:  	 	 
	 	 	 	 
	 




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EXHIBIT A




SPECIMEN LLC INTEREST CERTIFICATE




COMPASS GROUP DIVERSIFIED HOLDINGS LLC INTEREST



                                                                     
                                                   *
This Certifies that                                                             is the owner of           
           Trust Interests or
                     Allocation Interests of Compass Group Diversified Holdings LLC, a Delaware limited liability
company (the “Company”), with such rights and privileges as are set forth in the Amended and
Restated Operating Agreement of the Company dated as of April 25, 2006 (the “Agreement”), as it may
be amended from time to time.



THE LLC INTERESTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER SECURITIES ACT
OF 1933, AS AMENDED (THE SECURITIES ACT”), THE SECURITIES LAWS OF ANY STATE (THE “STATE ACTS”) OR
THE SECURITIES LAWS OF ANY OTHER JURISDICTION, AND ARE BEING OFFERED AND SOLD IN RELIANCE ON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURIITES ACT AND SUCH LAWS. THE LLC
INTERESTS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISION, BY AN
STATE SECURITIES COMMISSION OR BY ANY OTHER REGULATORY AUTHORITY OF ANY OTHER JURISDICTION. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.



THE LLC INTERESTS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TRANSFER RESTRICTIONS
CONTAINED IN THE AGREEMENT. EVERY HOLDER OF THIS CERTIFICATE, BY HOLDING AND RECEIVING THE SAME,
AGREES WITH THE COMPANY TO BE BOUND BY THE TERMS OF THE AGREEMENT. THE AGREEMENT WILL BE FURNISHED
BY THE COMPANY TO THE HOLDER HEREOF UPON REQUEST WITHOUT CHARGE.



                                                                  
                                                                        
                                           In Witness
Whereof, said Company has caused this Certificate to be signed by its Chief Executive Officer this
___day of ___, A.D. ___.




      ______________________________,