Document:

exv10w2

 

Exhibit 10.2

COMPASS DIVERSIFIED TRUST OPTION PLAN

     1. Purpose. Compass Group Diversified Holdings LLC (the “Company”) and its Adopting
Subsidiaries hereby establish the Compass Diversified Trust Option Plan (the “Plan”) for the
purpose of assisting the Company and its Adopting Subsidiaries in attracting, retaining, and
rewarding high-quality executives, employees, and other persons who provide services to the
businesses held by the Company, by enabling these persons to acquire or increase a proprietary
interest in Compass Diversified Trust (the “Trust”).

     2. Definitions. For purposes of the Plan, the following terms shall be defined as set forth
below, in addition to such terms defined in Section 1 hereof:

     (a) “Adopting Subsidiary” means each Subsidiary that adopts this Plan pursuant to Section
3(a) hereof.

     (b) “Affiliate” means any company directly or indirectly controlled by, controlling, or
under common control with another entity.

     (c) “Award” means an award of Options granted under the Plan.

     (d) “Beneficiary” means the person, persons, trust or trusts who or which have been
designated by a Participant in his or her most recent written beneficiary designation filed
with the Trust to receive the benefits specified under the Plan upon such Participant’s death
or to which Options are transferred if and to the extent permitted under Section 7(c) hereof.
If, upon a Participant’s death, there is no designated Beneficiary or surviving designated
Beneficiary, then the term Beneficiary means the person, persons, trust or trusts entitled by
will or the laws of descent and distribution to receive such benefits.

     (e) “Board” means the Board of Directors of the Company.

     (f) “Change of Control” means any of the following:

               (i) An acquisition in one or more transactions (other than directly from
the Trust) of any voting securities of the Trust by any individual, entity, or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, as amended (a
“Person”)) immediately after which such Person has Beneficial Ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent or more of
the combined voting power of the Trust’s then outstanding voting securities; provided,
however, in determining whether a Change of Control has occurred, voting securities
which are acquired in a “Non-Control Acquisition” (as hereinafter defined) shall not
constitute an acquisition which would cause a Change of Control. A “Non-Control
Acquisition” shall mean an acquisition by (A) an employee benefit plan (or a trust
forming a part thereof) maintained by (I) the Trust or (II) an Affiliate of the Trust,
(B) the Trust or its Affiliates, or (C) any Person in connection with a “Non-Control
Transaction” (as hereinafter defined);

               (ii) The individuals who, as of the date hereof, are members of the Board

 

 

(the “Incumbent Board”), cease for any reason to constitute at least a majority of the
members of the Board or, following a Merger (as defined below), the board of directors
of the ultimate Parent Corporation (as defined below); provided, however, that if the
election, or nomination for election by the Trust’s shareholders, of any new director
was approved by a vote of at least a majority of the Incumbent Board (or, with respect
to the directors who are not “interested persons” as defined in the Investment Company
Act of 1940, as amended, by a majority of the directors who are not “interested persons”
serving on the Incumbent Board), such new director shall, for purposes of this Plan, be
considered as a member of the Incumbent Board; or

               (iii) The consummation of:

                    (A) A merger, consolidation or reorganization involving the Trust (a “Merger”) or
an Affiliate of the Trust, or to which securities of the Trust are issued, unless:

                         (I) the shareholders of the Trust, immediately before a Merger, own, directly or
indirectly immediately following the Merger, more than fifty percent of the combined
voting power of the outstanding voting securities of (1) the corporation resulting from
the Merger (the “Surviving Corporation”) if fifty percent or more of the combined voting
power of the then outstanding voting securities of the Surviving Corporation is not
Beneficially Owned, directly or indirectly, by another Person or group of Persons (a
“Parent Corporation”), or (2) if there is one or more Parent Corporations, the ultimate
Parent Corporation,

                         (II) the individuals who were members of the Incumbent Board immediately prior to
the execution of the agreement providing for a Merger constitute at least a majority of
the members of the board of directors of (1) the Surviving Corporation or (2) the
ultimate Parent Corporation, if the ultimate Parent Corporation, directly or indirectly,
owns fifty percent or more of the combined voting power of the then outstanding voting
securities of the Surviving Corporation, and

                         (III) no Person other than (1) the Trust, (2) any Affiliate, (3) any employee
benefit plan (or any trust forming a part thereof) maintained by the Trust, the
Surviving Corporation, any Affiliate, or the ultimate Parent Corporation, or (4) any
Person who, together with its affiliates, immediately prior to a Merger had Beneficial
Ownership of fifty percent or more of the then outstanding voting securities, owns,
together with its affiliates, Beneficial Ownership of fifty percent or more of the
combined voting power of the then outstanding voting securities of (1) the Surviving
Corporation or (2) the ultimate Parent Corporation.

Each transaction described in clauses (I) through (III) above shall herein be referred
to as a “Non-Control Transaction.”

                    (B) A complete liquidation or dissolution of the Trust (other than where assets of
the Trust are transferred to or remain with an Affiliate or Affiliates of the
Trust).

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               (C) The direct or indirect sale or other disposition of all or substantially all of
the assets of the Trust to any Person (other than (1) a transfer to an Affiliate, (2)
under conditions that would constitute a Non-Control Transaction with the disposition of
assets being regarded as a Merger for this purpose, or (3) the distribution to the
Trust’s shareholders of the stock of an Affiliate or any other assets).

               (iv) Any of the events described in clauses (i) through (iii) above, if the Company
or the Adopting Subsidiary that employs the Participant is substituted for the Trust in
such clauses.

     (g) “Code” means the Internal Revenue Code of 1986, as amended from time to time,
including regulations thereunder and successor provisions and regulations thereto.

     (h) “Committee” means not less than the majority of members of the Compensation Committee
of the Board, each of whom shall be (i) a “disinterested director” within the meaning of Rule
16b-3 of the Exchange Act, as amended, unless administration of the Plan by disinterested
directors is not then required in order for exemptions under Rule 16b-3 to apply to
transactions under the Plan, and (ii) an “outside director” as defined under Code section
162(m), unless the action taken under the Plan is not required to be taken by outside
directors in order to qualify for tax deductibility under Code section 162(m).

     (i) “Eligible Employee” means each executive officer and other senior officers and key
executive and management employees of the Company or any of the Company’s Adopting
Subsidiaries.

     (j) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and any
successor thereto.

     (k) “Fair Market Value” means the average of the high and low trading price of Trust
Shares on the business day before the date the value is to be determined on the principal
recognized securities exchange or recognized securities market on which such Trust Shares are
reported, but if selling prices are not reported, fair market value shall be the mean between
the high bid and low asked prices for such Trust Shares on the business day before the date
the value is to be determined. In the absence of an established market for the Trust Shares,
the fair market value thereof shall be determined in good faith by the Compensation Committee,
but shall in any event be determined in a manner consistent with the requirements of Code
section 409A and the regulations thereunder.

     (l) “Option” means a right, granted to a Participant under Section 6 hereof, to purchase
Trust Shares from an Adopting Subsidiary at a specified price during specified time periods.
Options under this Plan shall not be incentive stock options within the meaning of Code
section 422.

     (m) “Participant” means an Eligible Employee who has been granted an Award under the Plan
that remains outstanding, including a person who is no longer an Eligible
Employee.

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     (n) “Subsidiary” means any corporation or other legal entity of which a majority of its
voting power or its voting equity securities or equity interest is owned, directly or
indirectly, by the Company.

     (o) “Trust Shares” mean the shares of the Trust, and such other securities as may be
substituted (or resubstituted) for Trust Shares pursuant to Section 7(d) hereof.

     3. Administration.

     (a) Authority of the Committee. The Plan shall be administered by the Committee. The
Committee shall have full and final authority, in each case subject to and consistent with the
provisions of the Plan, to interpret the provisions of the Plan; permit Subsidiaries of the
Company to adopt this Plan; select Eligible Employees to become Participants; make Awards;
determine the number and other terms and conditions of, and all other matters relating to,
Awards; prescribe Award agreements (which need not be identical for each Participant); adopt,
amend and rescind rules and regulations for the administration of the Plan; construe and
interpret the Plan and Award agreements and correct defects, supply omissions or reconcile
inconsistencies therein; and make all other decisions and determinations as the Committee may
deem necessary or advisable for the administration of the Plan. Except as otherwise determined
by the Board, unless the context otherwise requires, all actions and determinations that the
Plan allows the Board to take may be taken by the Committee in its stead.

     (b) Manner of Exercise of Committee Authority. Any action of the Committee shall be
final, conclusive and binding on all persons, including the Company, the Trust, the Adopting
Subsidiaries, Participants, Beneficiaries, transferees under Section 7(c) hereof or other
persons claiming rights from or through a Participant, and shareholders. The Committee shall
exercise its authority only by a majority vote of its members at a meeting or without a
meeting by a writing signed by a majority of its members. The express grant of any specific
power to the Committee, and the taking of any action by the Committee, shall not be construed
as limiting any power or authority of the Committee. The Committee may delegate to officers
or managers of the Trust or any Adopting Subsidiary, or committees thereof, the authority,
subject to such terms as the Committee shall determine, to perform administrative functions to
the extent permitted under applicable law. The Committee may appoint agents to assist it in
administering the Plan.

     4. Shares Subject to Plan.

     (a) Overall Number of Shares Available for Delivery. Subject to adjustment as provided
in Section 7(d) hereof, the total number of shares of Trust Shares available for delivery in
connection with Awards under the Plan shall be equal to 400,000, and the number of shares
subject to Options granted to any individual Eligible Employee shall not exceed 400,000 in any
year. Any Trust Shares delivered under the Plan shall consist of (i) shares purchased on a
securities market and/or (ii) shares that are authorized and issued or unissued by the Trust.
Subject to the adjustments provided in Section 7(d) hereof, no

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contraction of the number of Trust Shares outstanding will affect the validity or
enforceability of any Awards then outstanding.

     (b) Application of Limitation to Grants of Awards. No Award may be granted if the number
of Trust Shares to be delivered in connection with such Award exceeds the number of Trust
Shares remaining available under the Plan minus the number of Trust Shares payable in
settlement of or relating to then-outstanding Options. The Committee may adopt reasonable
counting procedures to ensure appropriate counting, avoid double counting and make adjustments
if the number of Trust Shares actually delivered differs from the number of shares previously
counted in connection with an Option.

     (c) Availability of Shares Not Delivered under Awards. Trust Shares subject to an Award
under the Plan which Award is canceled, expired, forfeited or otherwise terminated without a
delivery of shares to the Participant or with the return to the Trust of shares previously
delivered, including the number of shares surrendered in payment of any taxes relating to any
Award, will again be available for Awards under the Plan, except that if any such shares could
not again be available for Awards to a particular Participant under any applicable law or
regulation, such shares shall be available exclusively for Awards to Eligible Employees who
are not subject to such limitation.

     5. Eligibility. Awards may be granted under the Plan only to Eligible Employees.

     6. Terms of Options.

     (a) General. Options may be granted on the terms and conditions set forth in this
Section 6. In addition, the Committee may impose on any Option or the exercise thereof, at
the date of grant, such additional terms and conditions, not inconsistent with the provisions
of the Plan, as the Committee shall determine, including terms requiring forfeiture of Options
in the event of termination of employment by the Participant and terms permitting a
Participant to make elections relating to his or her Option. The Committee shall (subject to
Section 7(g)) retain full power and discretion to accelerate, waive or modify, at any time,
any term or condition of an Option that is not mandatory under the Plan.

     (b) Option Grant. Unless the Committee determines otherwise, Options shall be issued by
the Adopting Subsidiary employing the Participant receiving the grant. Participants shall
exercise their Options with the relevant Adopting Subsidiary, and such Adopting Subsidiary
shall receive the exercise price and deliver the Trust Shares to the Participant.

     (c) Specific Terms of Options. The Committee is authorized to grant Options to
Participants on the following terms and conditions:

               (1) Exercise Price. The exercise price per Trust Share purchasable under an Option
shall be determined by the Committee, provided that such exercise price shall be not
less than 100% of the Fair Market Value of Trust Shares on the date of grant of such
Option.

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               (2) Vesting. Each Participant shall acquire a nonforfeitable right to Options
awarded to him in accordance with the provisions of the agreement evidencing the Award
of the Options.

               (3) Time and Method of Exercise. The Committee shall determine, at the date of
grant or thereafter, the time or times at which or the circumstances under which an
Option may be exercised in whole or in part (including based on completion of future
service requirements), the methods by which such exercise price may be paid or deemed to
be paid, the form of such payment, including, without limitation, cash or Trust Shares
held for more than six months, and the methods by or forms in which Trust Shares will be
delivered or deemed to be delivered to Participants. The specific circumstances under
which a Participant may exercise an Option will be set forth in the agreement evidencing
the award of the Option to the Participant.

               (4) Term of Options. The term of each Option shall be for such period as may be
determined by the Committee, provided that in no event shall the term of any Option
exceed a period of ten years.

     7. General Provisions.

     (a) Change of Control. Notwithstanding any provision of the Plan to the contrary, the
Committee may provide in an Award agreement that, in the event of any Change of Control, any
Option that was not previously exercisable and vested shall become fully exercisable and
vested as of the time of the Change of Control. The Committee may further provide that any
outstanding Options shall remain exercisable and vested for the balance of the stated term of
such Option without regard to any termination of employment by the Participant, or the
Committee may alternatively provide that any outstanding Options are cancelled and provide for
a payment of the aggregate spread in the cancelled Options.

     (b) Compliance with Legal and Other Requirements. The Trust may, to the extent deemed
necessary or advisable by the Committee, postpone the issuance or delivery of Trust Shares or
payment of other benefits under any Option until completion of such registration or
qualification of such Trust Shares or other required action under any federal or state law,
rule or regulation, listing or other required action with respect to any stock exchange or
automated quotation system upon which the Trust Shares or other securities of the Trust may
in the future be listed or quoted, or compliance with any other obligation of the Trust, as
the Committee may consider appropriate, and may require any Participant to make such
representations, furnish such information and comply with or be subject to such other
conditions as it may consider appropriate in connection with the issuance or delivery of
Trust Shares or payment of other benefits in compliance with applicable laws, rules, and
regulations, listing requirements, or other obligations.

     (c) Limits on Transferability; Beneficiaries. No Award or other right or interest of a
Participant under the Plan shall be pledged, hypothecated or otherwise encumbered or subject
to any lien, obligation or liability of such Participant to any party (other than the

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Trust or a Subsidiary), or assigned or transferred by such Participant otherwise than by
will or the laws of descent and distribution or to a Beneficiary upon the death of a
Participant. Options shall be exercised during the lifetime of the Participant only by the
Participant or his or her guardian or legal representative, except that Options may be
transferred to one or more Beneficiaries or other transferees during the lifetime of the
Participant, and may be exercised by such transferees in accordance with the terms of such
Option, but only if and to the extent such transfers are permitted by the Committee pursuant
to the express terms of an Option agreement (subject to any terms and conditions which the
Committee may impose thereon). A Beneficiary, transferee, or other person claiming any rights
under the Plan from or through any Participant shall be subject to all terms and conditions of
the Plan and any Award agreement applicable to such Participant, except as otherwise
determined by the Committee, and to any additional terms and conditions deemed necessary or
appropriate by the Committee.

     (d) Adjustments. In the event that any dividend or other distribution (whether in the
form of cash, Trust Shares, or other property), capital contribution, recapitalization,
forward or reverse split, reorganization, merger, acquisition, consolidation, spin-off,
combination, repurchase, share exchange, liquidation, dissolution or other corporate
transaction or event affects the Trust Shares such that an adjustment is determined by the
Committee to be appropriate under the Plan, then the Committee shall, in such manner as it may
deem equitable, adjust any or all of (1) the number and kind of Trust Shares which may be
delivered in connection with Awards granted thereafter, (2) the number and kind of Trust
Shares subject to or deliverable in respect of outstanding Options and (3) the exercise price,
grant price or purchase price relating to any Option and/or make provision for payment of cash
or other property in respect of any outstanding Option. In addition, the Committee is
authorized to make such adjustments in the terms and conditions of, and the criteria included
in, Awards as the Committee deems equitable in recognition of unusual or nonrecurring events
(including, without limitation, events described in the preceding sentence, as well as
acquisitions and dispositions of businesses and assets) affecting the Trust, the Company, any
Subsidiary or any business unit, or the financial statements of the Trust, the Company, or any
Subsidiary, or in response to changes in applicable laws, regulations, accounting principles,
tax rates and regulations or business conditions or in view of the Committee’s assessment of
the business strategy of the Trust, the Company, any Subsidiary or business unit thereof,
performance of comparable organizations, economic and business conditions, personal
performance of a Participant, and any other circumstances deemed relevant.

     (e) Foreign Employees. In order to facilitate the making of any grant or combination of
grants under this Plan, the Committee may provide for such special terms for Awards to
Participants who are foreign nationals or who are employed by the Trust or any Subsidiary
outside of the United States of America as the Committee may consider necessary or appropriate
to accommodate differences in local law, tax policy or custom. Moreover, the Committee may
approve such supplements to or amendments, restatements or alternative versions of this Plan
as it may consider necessary or appropriate for such purposes, without thereby affecting the
terms of this Plan as in effect for any other purpose, and the secretary or other appropriate
officer of the Trust may certify any such document as

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having been approved and adopted in the same manner as this Plan. No such special terms,
supplements, amendments or restatements, however, shall include any provisions that are
inconsistent with the terms of this Plan as then in effect unless this Plan could have been
amended to eliminate such inconsistency without further approval by the shareholders of the
Trust.

     (f) Taxes. The Adopting Subsidiaries (and, if applicable, the Trust and the Company) are
authorized to withhold from any payment to a Participant amounts of withholding and other
taxes due or potentially payable in connection with any transaction involving an Award, and to
take such other action as the Committee may deem advisable to enable the Trust and
Participants to satisfy obligations for the payment of withholding taxes and other tax
obligations relating to any Award. This authority shall include authority to withhold or
receive Trust Shares or other property and to make cash payments in respect thereof in
satisfaction of a Participant’s tax obligations (not to exceed the minimum statutorily
required tax withholding), either on a mandatory or elective basis in the discretion of the
Committee.

     (g) Changes to the Plan and Awards. The Board, or the Committee acting pursuant to such
authority as may be delegated to it by the Board, may amend, alter, suspend, discontinue or
terminate the Plan or the Committee’s authority to grant Awards under the Plan, provided that,
without the consent of an affected Participant, except as otherwise contemplated by the Plan
or the terms of an Award agreement, no such Board action may materially and adversely affect
the rights of a Participant under any previously granted and outstanding Award. The Committee
may waive any conditions or rights under, or amend, alter, suspend, discontinue or terminate
any Award theretofore granted and any Award agreement relating thereto, provided that, without
the consent of an affected Participant, no Committee action may materially and adversely
affect the rights of such Participant under such Award except as otherwise contemplated by the
Plan or the terms of an Award agreement.

     (h) Limitation on Rights Conferred under Plan. Neither the Plan nor any action taken
hereunder shall be construed as (i) giving any Eligible Employee or Participant the right to
continue as an Eligible Employee or Participant or in the employ or service of an Adopting
Subsidiary, the Company, or the Trust (ii) interfering in any way with the right of an
Adopting Subsidiary, the Company, or the Trust to terminate any Eligible Employee’s or
Participant’s employment or service at any time, (iii) giving an Eligible Employee or
Participant any claim to be granted any Award under the Plan or to be treated uniformly with
other Participants and employees, or (iv) conferring on a Participant any of the rights of a
shareholder of the Trust unless and until the Participant is duly issued or transferred Trust
Shares in accordance with the terms of an Option.

     (i) Nonexclusivity of the Plan. The adoption of the Plan by the Board shall not be
construed as creating any limitations on the power of the Board or a committee thereof to
adopt such other compensation and incentive arrangements for employees, agents and brokers of
the Adopting Subsidiaries, the Company, and the Trust as it may deem desirable.

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     (j) Governing Law. The validity, construction and effect of the Plan, any rules and
regulations under the Plan, and any Award agreement shall be determined in accordance with
Delaware law, without giving effect to principles of conflicts of laws, and applicable federal
law.

     (k) Plan Effective Date. The Plan is effective as of the date it is adopted by the
Company’s Board of Directors and each of the Adopting Subsidiaries.

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Exhibit 10.3

Exhibit A

[FORM OF REGISTRATION RIGHTS AGREEMENT]

REGISTRATION RIGHTS AGREEMENT

by and among

COMPASS GROUP DIVERSIFIED HOLDINGS LLC,

COMPASS DIVERSIFIED TRUST

and

CERTAIN SHAREHOLDERS

Dated May [___], 2006

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REGISTRATION RIGHTS AGREEMENT

     THIS REGISTRATION RIGHTS AGREEMENT 
(this “Agreement”) is entered into as of the l day of
l, 2006, by and among: Compass Group Diversified Holdings LLC, a Delaware limited liability
company (the “Company”), on its own behalf and as the sponsor of Compass Diversified Trust, a
statutory trust under the Delaware Statutory Trust Act (the
“Trust” and, together with the Company,
the “Registrants”), the Trust, and each of the undersigned parties listed under “Shareholders” on
the signature page hereto (each, a
“Shareholder” and collectively, the
“Shareholders”). Each party
hereto shall be referred to as, individually, a
“Party” and, collectively, the “Parties.”

     WHEREAS, the Trust has issued undivided beneficial interests in the Trust (collectively,
“Shares”);

     WHEREAS, the Shareholders, collectively, hold as of the date hereof (or contemporaneously
herewith are acquiring) that number of Shares set beside their respective names on Schedule A
hereto (collectively, the “Restricted Shares,” as further defined herein);

     WHEREAS, the parties hereto desire to enter into this Agreement to provide the Shareholders
with certain rights relating to the registration of the Restricted Shares;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

     1. DEFINITIONS. Except as otherwise noted, for all purposes of this Agreement, the
following terms shall have the respective meanings set forth in this Agreement, which meanings
shall apply equally to the singular and plural forms of the terms so defined and the words
“herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a
whole: The following capitalized terms used herein have the following meanings:

          “Agreement”
means this Agreement, as amended, restated, supplemented, or otherwise modified
from time to time.

          “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.

          “Commission”
means the Securities and Exchange Commission, or such successor federal agency or
agencies as may be established in lieu thereof.

          “Company”
is defined in the preamble to this Agreement.

          “Demand
Registration” is defined in Section 2.2.1.

          “Demanding
Holder” is defined in Section 2.2.1.

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          “Exchange Act”  means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder.

          “Indemnifying Party”  is defined in Section 4.3.

          “Maximum Number of Shares”  is defined in Section 2.2.5.

          “Notices”  is defined in Section 6.3.

          “Piggy-Back Registration”  is defined in Section 2.3.1.

          “Prospectus”  means a prospectus relating to a Registration Statement, as amended or
supplemented, and all materials incorporated by reference in such Prospectus.

          “Register,”
 “registered”  and “registration”  mean a registration effected by preparing and
filing a registration statement or similar document under the Securities Act and such registration
statement becoming effective.

          “Registrants”  is defined in the preamble to this Agreement.

          “Registration Statement”  means a registration statement filed by the Registrants with the
Commission in compliance with the Securities Act and the rules and regulations promulgated
thereunder for a public offering and sale of Shares (other than a registration statement on Form
S-4 or Form S-8, or their successors, or any registration statement covering only securities
proposed to be issued in exchange for securities or assets of another entity).

          “Regular
Trustees”  means the Persons identified as the “Regular Trustee” in the Amended and
Restated Trust Agreement of the Trust dated [___], each solely in his own capacity as Regular
Trustee of the Trust and not in his own individual capacity, or such Regular Trustee’s successor in
interest in such capacity, or any successor in interest in such capacity, or any successor Regular
Trustee appointed as herein provided.

          “Restricted Shares”  mean all of the Shares owned or held by Shareholders or their permitted
transferees; provided, that such Shares shall cease to be Restricted Shares when: (a) a
Registration Statement with respect to the sale of such Restricted Shares shall have become
effective under the Securities Act (as defined below) and such Restricted Shares shall have been
sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (b)
such Restricted Shares shall have been otherwise transferred pursuant to Rule 144 of the Securities
Act (or any similar provisions thereunder, but not Rule 144A), and new certificates for them not
bearing a legend restricting further transfer shall have been delivered by the Trust and subsequent
public distribution of them shall not require registration under the Securities Act or such
Restricted Securities are saleable pursuant to Rule 144(k) of the Securities Act; or (c) such
Restricted Shares shall have ceased to be outstanding.

          “Securities Act”  means the Securities Act of 1933, as amended, and the rules and regulations
of the Commission promulgated thereunder.

          “Shareholder”  is defined in the preamble to this Agreement.

          “Shareholder Indemnified Party”  is defined in Section 4.1.

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          “Shares” means the shares of the Trust, each representing one undivided beneficial interest
issued by the Trust corresponding to one underlying Trust Interest held by the Trust.

          “Shelf Registration Statement” is defined in Section 2.1.1.

          “Trust” is defined in the preamble to this Agreement.

          “Trust Interests” means limited liability company membership interests issued by the Company
to the Trust, each of which corresponds to one share issued by the Trust.

          “Underwriter” means a securities dealer who purchases any Restricted Shares as principal in an
underwritten offering and not as part of such dealer’s market-making activities.

     2. REGISTRATION RIGHTS.

          2.1 Mandatory Shelf Registration.

          2.1.1 Filing of Shelf Registration Statement. Unless a Registration Statement with
respect to a Demand Registration or Piggy-Back Registration has been sooner filed in accordance
with Section 2.2 or 2.3, respectively, and is still effective on the first anniversary of the date
of this Agreement (which Demand Registration or Piggy-Back Registration may or may not involve a
“shelf” or “delayed” offering), the Registrants shall use commercially reasonable efforts to
prepare, and, promptly following the first anniversary of the date of this Agreement, file with the
Commission a Registration Statement or Registration Statements (as is necessary) on Form S-3 or, if
such form is unavailable for such a registration, on such other form as is available for such a
registration (the form or forms so filed referred to collectively as the “Shelf Registration
Statement”), covering the resale of Restricted Shares, the amount of which shall be governed by
Section 2.1.2 below. In the event a Registration Statement with respect to a Demand Registration or
Piggy-Back Registration has been filed prior to, and is still effective on, the first anniversary
of the date of this Agreement, the Registrants shall prepare and file the Shelf Registration
Statement at the following times, and with respect to the following number of Restricted Shares:
(i) if the maximum number of Restricted Shares that could be registered pursuant to Section 2.1.2
have been registered in such Demand Registration or Piggy-Back Registration, as applicable, the
Registrants shall file the Shelf Registration Statement promptly following the termination of the
Demand Registration or Piggy-Back Registration, as applicable, with respect to the maximum number
of Restricted Shares that may be registered pursuant to Section 2.1.2 (taking into account the
number of Shares previously sold in such Demand Registration or Piggy-Back Registration, as
applicable); and (ii) if the maximum number of Restricted Shares that could be registered pursuant
to Section 2.1.2 have not been registered in such Demand Registration or Piggy-Back Registration,
as applicable, then (A) the Registrants shall file a Shelf Registration Statement promptly
following the first anniversary of the date of this Agreement with respect to the Restricted Shares
that may be registered under Section 2.1.2 below and are not being offered pursuant to the
then-effective Demand Registration or Piggy-Back Registration, as applicable, and (B) the
Registrants shall file a Shelf Registration Statement promptly following the termination of the
offering made pursuant to such Demand Registration or Piggy-Back Registration, as applicable, with
respect to the Restricted Shares that were registered, but not sold, under such Demand Registration
or Piggy-Back Registration, as applicable. In each case above, the number of Restricted Shares to
be registered on the Shelf

4

 

Registration Statement shall take into account the limitations of Section 2.1.2 below and the
amount of Restricted Shares previously sold pursuant to any Demand Registration or Piggy-Back
Registration. The date upon which the Shelf Registration Statement is actually filed is referred
to herein as the “Initial Filing Date.” The Registrants shall use commercially reasonable efforts
to have the Shelf Registration Statement declared effective by the Commission within ninety (90)
days after the Initial Filing Date. The Registrants further undertake to use commercially
reasonable efforts to keep the Shelf Registration Statement effective during the Initial
Registration Period (as defined below) with respect to all Shares and the resale thereof at all
times during the Initial Registration Period. The Shelf Registration Statement (including each
amendment or supplement thereto, and each request for acceleration of effectiveness thereof) shall
be provided to and approved by the Shareholders and one legal counsel selected by all such
Shareholders prior to the Registrants’ filing or other submission (such approval not to be
unreasonably withheld) and the Registrants will not file any document in a form to which such
counsel reasonably objects. For purposes hereof, the term “Initial Registration Period” shall mean
the period beginning on the date the Shelf Registration Statement is declared effective by the
Commission (the “Shelf Registration Effective Date”) and ending on the first to occur of (i) the
date on which all Restricted Shares have been sold, (ii) the date on which the Shelf Registration
Statement is no longer effective, or (iii) the date that is three (3) years from the Shelf
Registration Effective Date.

          2.1.2 Shares to be Registered. To the extent permitted by the Securities Act and the
regulations thereunder (including without limitation Rule 415) and the rules governing the use of a
particular form of Registration Statement, the Registrants shall include all Restricted Shares in
the Shelf Registration Statement; provided, however, that the number of Restricted Shares that may
be offered and sold hereunder at any time, after giving effect to the number of Restricted Shares
that may be offered and sold pursuant to any Shelf Registration Statement in accordance with this
Section 2.1 together with the number of Restricted Shares that may be offered and sold pursuant to
any Demand Registration in accordance with Section 2.2, shall be subject to the following
limitations:

          (a) until the date that is eighteen (18) months from the date hereof, in no event may the
number of Restricted Shares offered for resale on behalf of a Shareholder pursuant to the Shelf
Registration Statement or a Demand Registration made in accordance with Section 2.2 below, exceed
thirty percent (30%) of the Restricted Shares initially held by the relevant Shareholder;

          (b) until the date that is three (3) years from the date hereof, in no event may the number of
Restricted Shares offered for resale on behalf of a Shareholder pursuant to the Shelf Registration
Statement or a Demand Registration made in accordance with Section 2.2 below, exceed sixty-five
(65%) of the Restricted Shares initially held by the relevant Shareholder;

          (c) following the date that is three (3) years from the date hereof, all previously unsold
Restricted Shares may be offered and sold on behalf of a Shareholder pursuant to the Shelf
Registration Statement.

          2.1.3 Additional Shelf Registration. In the event that the Securities Act or the
rules governing the use of a particular form of Registration Statement prohibit the registration of
all Restricted Shares on the Shelf Registration Statement, or if following the Initial Registration

5

 

Period any Restricted Shares registered thereon remain unsold, the Registrants shall promptly
use commercially reasonable efforts to prepare, file with the Commission, and cause to become
effective a Registration Statement or Registration Statements (as is necessary) on Form S-3 (or, if
such form is unavailable for such a registration, on such other form as is available for such a
registration) covering the resale of the then-unsold Restricted Shares, and to keep such
Registration Statement Effective until such time as all Restricted Shares have been sold.

          2.2 Demand Registration.

               2.2.1 General Request for Registration. At any time, each Shareholder or
such Shareholder’s permitted transferee may make a written demand for registration under the
Securities Act of all or part of their Restricted Shares (a
“Demand Registration”) provided,
however, that the amount of Restricted Shares that may be offered in connection with such Demand
Registration shall be subject to the limitations set forth in Section 2.1.2 above. Subject to the
limitations set forth in Section 2.1.2, any demand for a Demand Registration shall specify the
number of Restricted Shares proposed to be sold and the intended method(s) of distribution thereof.
The Registrants will notify all other holders of Restricted Shares of any demand pursuant to this
Section 2.2.1, or pursuant to Section 2.2.2 below, as the case may be, within five (5) Business
Days, and each holder of Restricted Shares who wishes to include all or a portion of such holder’s
Restricted Shares in such Demand Registration, as the case may be, and is otherwise permitted to do
so under this Agreement (each such holder including shares of Restricted Shares in such Demand
Registration, a “Demanding Holder”) shall so notify the Registrants within ten (10) Business Days
after the receipt by the holder of the notice from the Registrants; provided, that if any such
holder fails to participate in such Demand Registration, then such holder may not make a written
demand for registration of Restricted Securities under this Section 2.2 until thirty (30) days
after the Registration Statement filed with the Commission with respect to such Demand Registration
is declared effective. Upon any such request, the Demanding Holders shall be entitled to have
their Restricted Shares included in the Demand Registration, subject to Section 2.1.2, Section
2.2.5 and the provisions set forth in Section 3.1.1. The Registrants shall not be obligated to
effect more than an aggregate of three (3) Demand Registrations under this Section 2.2.1; provided,
however, that the number of Demand Registrations permitted hereby shall be reduced by the number of
Demand Registrations effected by the Registrants pursuant to Section 2.2.2 below.

               2.2.2 Effective Registration. A registration will not count as a Demand
Registration until the Registration Statement filed with the Commission with respect to such Demand
Registration has been declared effective and the Registrants have complied with all of their
obligations under this Agreement with respect thereto; provided, however, that if, after such
Registration Statement has been declared effective, the offering of Restricted Shares pursuant to a
Demand Registration, is subject to any stop order or injunction of the Commission or any other
governmental agency or court, the Registration Statement with respect to such Demand Registration
will be deemed not to have been declared effective, unless and until, (i) such stop order or
injunction is removed, rescinded or otherwise terminated, and (ii) with respect to a Demand
Registration, the Shareholder initiating the Demand Registration thereafter elects to continue the
offering; provided, further, that the Registrants shall not be obligated to file a second
Registration Statement with respect to a Demand Registration until a Registration Statement that
has been filed is counted as a Demand Registration, or is otherwise terminated.

6

 

               2.2.3 Underwritten Offering. If a majority-in-interest of the Demanding
Holders so elect and such holders so advise the Registrants as part of their written demand
for a Demand Registration, the offering of such Restricted Shares pursuant to such Demand
Registration shall be in the form of an underwritten offering. In each such case, the right of any
holder to include such holder’s Restricted Shares in such registration shall be conditioned upon
such holder’s participation in such underwriting and the inclusion of such holder’s Restricted
Shares in the underwriting to the extent provided herein. All Demanding Holders who propose to
distribute their Restricted Shares through such an underwriting shall enter into an underwriting
agreement in customary form with the Underwriter or Underwriters selected for such underwriting by
the Shareholder initiating the Demand Registration and complete and execute any questionnaires,
powers of attorney, indemnities, lock-up agreements, securities escrow agreements and other
documents reasonably required under the terms of such underwriting agreement, and furnish to the
Registrants such information as the Registrants may reasonably request in writing for inclusion in
the Registration Statement.

               2.2.4 Reduction of Offering. If the managing Underwriter or Underwriters
for a Demand Registration that is to be an underwritten offering advises the Registrants and the
Demanding Holders that the dollar amount or number of shares of Restricted Shares which the
Demanding Holders desire to sell taken together with all other shares or other securities which the
Registrants desire to sell and the Shares, if any, as to which registration has been requested
pursuant to written contractual piggy-back registration rights held by other holders of the Trust’s
securities who desire to sell securities, exceeds the maximum dollar amount or maximum number of
shares that can be sold in such offering without adversely affecting the proposed offering price,
the timing, the distribution method, or the probability of success of such offering (such maximum
dollar amount or maximum number of shares, as applicable, the
“Maximum Number of Shares”), then the
Registrants shall include in such registration: (i) first, in the case of a Demand Registration,
the Restricted Shares as to which the Demand Registration has been requested (pro rata in
accordance with the number of shares of Restricted Shares which such Demanding Holder has requested
be included in such registration, regardless of the number of shares of Restricted Shares held by
each Demanding Holder); (ii) second, to the extent that the Maximum Number of Shares has not been
reached under the foregoing clause (i), the Shares or other securities that the Trust desires to
sell that can be sold without exceeding the Maximum Number of Shares; (iii) third, to the extent
that the Maximum Number of Shares has not been reached under the foregoing clauses (i) and (ii),
the Shares for the account of other persons that the Company is obligated to register pursuant to
written contractual arrangements with such persons and that can be sold without exceeding the
Maximum Number of Shares; and (iv) fourth, to the extent that the Maximum Number of Shares have not
been reached under the foregoing clauses (i), (ii), and (iii), the Shares that other shareholders
desire to sell that can be sold without exceeding the Maximum Number of Shares.

               2.2.5 Withdrawal. In the case of a Demand Registration, if a
majority-in-interest of the Demanding Holders disapprove of the terms of any underwriting or are
not entitled to include all of their Restricted Shares in any offering, such majority-in-interest
of the Demanding Holders may elect to withdraw from such offering by giving written notice to the
Registrants and the Underwriter or Underwriters of their request to withdraw prior to the
effectiveness of the Registration Statement filed with the Commission with respect to such Demand
Registration. In such event, the Company need not seek effectiveness of such Registration
Statement for the benefit of other Shareholders. If the majority-in-interest of the Demanding
Holders, withdraws from a proposed offering relating to a Demand Registration, then such
registration shall not count as a Demand Registration provided for in Sections 2.2.1
and 2.2.2 hereof, respectively.

7

 

          2.3 Piggy-Back Registration.

               2.3.1 Piggy-Back Rights. If at any time on or after the date that is six
(6) months from the date hereof, the Registrants propose to file a Registration Statement under the
Securities Act with respect to an offering of equity securities, or securities or other obligations
exercisable or exchangeable for, or convertible into, equity securities, by the Trust for its own
account or for shareholders of the Trust for their account (or by the Trust and by shareholders of
the Trust including, without limitation, pursuant to Section 2.2), other than a Registration
Statement (i) filed in connection with any employee stock option or other benefit plan, (ii) for an
exchange offer or offering of securities solely to the Trust’s existing shareholders, (iii) for an
offering of debt securities that are convertible into equity securities of the Trust, (iv) for a
dividend reinvestment plan or (v) filed on From S-4, then the Registrants shall (x) give written
notice of such proposed filing to the holders of Restricted Shares as soon as practicable but in no
event less than ten (10) Business Days before the anticipated filing date, which notice shall
describe the amount and type of securities to be included in such offering, the intended method(s)
of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, of the
offering, and (y) offer to the holders of Restricted Shares in such notice the opportunity to
register the sale of such number of Restricted Shares as such holders may request in writing
within five (5) Business Days following receipt of such notice
(a “Piggy-Back Registration”). The
Registrants shall cause such Restricted Shares to be included in such registration and shall use
commercially reasonable efforts to cause the managing Underwriter or Underwriters of a proposed
underwritten offering to permit the Restricted Shares requested to be included in a Piggy-Back
Registration to be included on the same terms and conditions as any similar securities of the Trust
and to permit the sale or other disposition of such Restricted Shares in accordance with the
intended method(s) of distribution thereof. All holders of Restricted Shares who propose to
distribute securities through a Piggy-Back Registration that involves an Underwriter or
Underwriters shall enter into an underwriting agreement in customary form with the Underwriter or
Underwriters selected for such Piggy-Back Registration and complete and execute any questionnaires,
powers of attorney, indemnities, lock-up agreements, securities escrow agreements and other
documents reasonably required under the terms of such underwriting agreement, and furnish to the
Registrants such information as the Registrants may reasonably request in writing for inclusion in
the Registration Statement.

               2.3.2 Reduction of Offering. If the managing Underwriter or Underwriters
for a Piggy-Back Registration that is to be an underwritten offering advises the Registrants and
the holders of Restricted Shares in writing that the dollar amount or number of Shares which the
Registrants desire to sell, taken together with Shares, if any, as to which registration has been
demanded pursuant to written contractual arrangements with persons other than the holders of
Restricted Shares hereunder, the Restricted Shares as to which registration has been requested
under this Section 2.3, and the Shares, if any, as to which registration has been requested
pursuant to the written contractual piggy-back registration rights of other shareholders of the
Trust, exceeds the Maximum Number of Shares, then the Registrants shall include in any such
registration:

   (a)
If the registration is undertaken for the Registrants’ account: (i) first, the shares or other securities that the Registrants desire to sell that can be sold without
exceeding the Maximum Number of Shares; (ii) second, to the extent that the Maximum

8

 

Number of Shares has not been reached under the foregoing clause (i), the shares, if
any, including the Restricted Shares as to which registration has been requested pursuant to
written contractual piggy-back registration rights of security holders (pro rata in
accordance with the number of shares which each such person has actually requested to be
included in such registration, regardless of the number of shares with respect to which such
persons have the right to request such inclusion) that can be sold without exceeding the
Maximum Number of Shares; and

   (b) If the registration is a “demand” registration undertaken at the demand of persons
other than the Shareholders pursuant to written contractual arrangements with such persons,
(i) first, the shares for the account of the demanding persons that can be sold without
exceeding the Maximum Number of Shares; (ii) second, to the extent that the Maximum Number
of Shares has not been reached under the foregoing clause (i), the Shares or other
securities that the Registrants desire to sell that can be sold without exceeding the
Maximum Number of Shares; and (iii) third, to the extent that the Maximum Number of Shares
has not been reached under the foregoing clauses (i) and (ii), the Restricted Shares as to
which registration has been requested under this Section 2.3 (pro rata in accordance with
the number of shares of Restricted Shares held by each such Shareholder); and (iv) fourth,
to the extent that the Maximum Number of Shares has not been reached under the foregoing
clauses (i), (ii) and (iii), the shares, if any, as to which registration has been requested
pursuant to written contractual piggy-back registration rights which other holders of Shares
desire to sell that can be sold without exceeding the Maximum Number of Shares.

               2.3.3 Withdrawal. Any holder of Restricted Shares may elect to withdraw
such holder’s request for inclusion of Restricted Shares in any Piggy-Back Registration by giving
written notice to the Registrants of such request to withdraw prior to the effectiveness of the
Registration Statement. The Registrants may also elect to withdraw a registration statement at any
time prior to the effectiveness of the Registration Statement. Notwithstanding any such
withdrawal, the Registrants shall pay all expenses incurred by the holders of Restricted Shares in
connection with such Piggy-Back Registration as provided in Section 3.3.

     3. REGISTRATION PROCEDURES.

          3.1 Filings; Information. Whenever the Registrants are required to effect
the registration of any Restricted Shares pursuant to Section 2, the Registrants shall use
commercially reasonable efforts to effect the registration and sale of such Restricted Shares in
accordance with the intended method(s) of distribution thereof as expeditiously as practicable, and
in connection with any such request:

               3.1.1 Filing Registration Statement. The Registrants shall, as
expeditiously as possible and in any event within sixty (60) days after receipt of a request for a
Demand Registration pursuant to Section 2.2, prepare and file with the Commission a Registration
Statement on any form for which the Registrants then qualify or which counsel for the Registrants
shall deem appropriate and which form shall be available for the sale of all Restricted Shares to
be registered thereunder in accordance with Section 2.1.2 and the intended method(s) of
distribution thereof, and shall use commercially reasonable efforts to cause such Registration
Statement to become and remain effective for the period required by Section 3.1.3; provided,
however, that the Registrants shall have the right to defer any Demand Registration for

9

 

up to thirty (30) days, and any Piggy-Back Registration for such period as may be applicable
to deferment of any demand registration to which such Piggy-Back Registration relates, in each case
if the Registrants shall furnish to the holders a certificate signed by the Chief Executive Officer
of the Trust stating that, in the good faith judgment of the Board of Directors of the Trust, it
would be materially detrimental to the Trust and its shareholders for such Registration Statement
to be effected at such time; provided, further, however, that the Registrants shall not have the
right to exercise the right set forth in the immediately preceding proviso for more than one
hundred and twenty (120) days in any 365-day period in respect of a Demand Registration hereunder;
provided, further, that the Shareholders shall provide at least fifteen (15) Business Days notice
of the date on which they wish the Registrants to prepare and file a Registration Statement with
the Commission in accordance with this Agreement.

               3.1.2 Copies. The Registrants shall, prior to filing a Registration
Statement or Prospectus, or any amendment or supplement thereto, furnish without charge to the
holders of Restricted Shares included in such registration, and such holders’ legal counsel, copies
of such Registration Statement as proposed to be filed, each amendment and supplement to such
Registration Statement (in each case including all exhibits thereto and documents incorporated by
reference therein), the Prospectus included in such Registration Statement (including each
preliminary Prospectus), and such other documents as the holders of Restricted Shares included in
such registration or legal counsel for any such holders may reasonably request in order to
facilitate the disposition of the Restricted Shares owned by such holders.

               3.1.3 Amendments and Supplements. The Registrants shall prepare and file
with the Commission such amendments, including post-effective amendments, and supplements to such
Registration Statement and the Prospectus used in connection therewith as may be necessary to keep
such Registration Statement effective and in compliance with the provisions of the Securities Act
until all Restricted Shares, and all other securities covered by such Registration Statement, have
been disposed of in accordance with the intended method(s) of distribution set forth in such
Registration Statement (which period shall not exceed the sum of one hundred eighty (180) days plus
any period during which any such disposition is interfered with by any stop order or injunction of
the Commission or any governmental agency or court) or such securities have been withdrawn.

10

 

               3.1.4 Notification. After the filing of a Registration Statement, the
Registrants shall promptly, and in no event more than two (2) Business Days after such filing,
notify the holders of Restricted Shares included in such Registration Statement of such filing, and
shall further notify such holders promptly and confirm such advice in writing in all events within
two (2) Business Days of the occurrence of any of the following: (i) when such Registration
Statement becomes effective; (ii) when any post-effective amendment to such Registration Statement
becomes effective; (iii) the issuance or threatened issuance by the Commission of any stop order
(and the Company shall take all actions required to prevent the entry of such stop order or to
remove it if entered); and (iv) any request by the Commission for any amendment or supplement to
such Registration Statement or any Prospectus relating thereto or for additional information or of
the occurrence of an event requiring the preparation of a supplement or amendment to such
Prospectus so that, as thereafter delivered to the purchasers of the securities covered by such
Registration Statement, such Prospectus will not contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to make the statements
therein not misleading, and promptly make available to the holders of Restricted Shares included in
such Registration Statement any such supplement or amendment; except that before filing with the
Commission a Registration Statement or Prospectus or any amendment or supplement thereto, including
documents incorporated by reference, the Registrants shall furnish to the holders of Restricted
Shares included in such Registration Statement and to the legal counsel for any such holders,
copies of all such documents proposed to be filed sufficiently in advance of filing to provide such
holders and legal counsel with a reasonable opportunity to review such documents and comment
thereon, and the Registrants shall not file any Registration Statement or Prospectus or amendment
or supplement thereto, including documents incorporated by reference, to which such holders or
their legal counsel shall reasonably object.

               3.1.5 State Securities Laws Compliance. The Registrants shall use
commercially reasonable efforts to (i) register or qualify the Restricted Shares covered by the
Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United
States as the holders of Restricted Shares included in such Registration Statement (in light of
their intended plan of distribution) may request and (ii) take such action necessary to cause such
Restricted Shares covered by the Registration Statement to be registered with or approved by such
other federal or state authorities as may be necessary by virtue of the business and operations of
the Registrants and do any and all other acts and things that may be necessary or advisable to
enable the holders of Restricted Shares included in such Registration Statement to consummate the
disposition of such Restricted Shares in such jurisdictions; provided, however, that the
Registrants shall not be required to qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3.1.5 or subject itself to taxation
in any such jurisdiction.

               3.1.6 Agreements for Disposition. The Registrants shall enter into
customary agreements (including, if applicable, an underwriting agreement in customary form) and
take such other actions as are reasonably required in order to expedite or facilitate the
disposition of such Restricted Shares. The representations, warranties and covenants of the
Registrants in any underwriting agreement which are made to or for the benefit of any Underwriters,
to the extent applicable, shall also be made to and for the benefit of the holders of Restricted
Shares included in such registration statement. For the avoidance of doubt, the holders of
Restricted Shares may not require the Registrants to accept terms, conditions or provisions in any
such agreement which the Registrants determine is not reasonably acceptable

11

 

to the Registrants, notwithstanding any agreement to the contrary herein. No holder of
Restricted Shares included in such registration statement shall be required to make any
representations or warranties in the underwriting agreement except as reasonably requested by the
Registrants and, if applicable, with respect to such holder’s organization, good standing,
authority, title to Restricted Shares, lack of conflict of such sale with such holder’s material
agreements and organizational documents, and with respect to written information relating to such
holder that such holder has furnished in writing expressly for inclusion in such Registration
Statement.

               3.1.7 Cooperation. The Regular Trustees of the Trust and the Chief
Executive Officer and Chief Financial Officer of the Company and the principal accounting officer
of the Company and all other officers and members of the management of the Company shall cooperate
fully in any offering of Restricted Shares hereunder, which cooperation shall include, without
limitation, the preparation of the Registration Statement with respect to such offering and all
other offering materials and related documents, and participation in meetings with Underwriters,
attorneys, accountants and potential investors. Holders of Restricted Shares shall not be required
to make any representations or warranties to or agreements with the Registrants or the underwriters
except as they may relate to such holders and their intended methods of distribution. Such
holders, however, shall agree to such covenants and indemnification and contribution obligations
for selling stockholders as are customarily contained in agreements of that type. Further, such
holders shall cooperate fully in the preparation of the registration statement and other documents
relating to any offering in which they include securities pursuant to this Section 3. Each holder
shall also furnish to the Registrants such information regarding itself, the Restricted Shares held
by such holder, and the intended method of disposition of such securities as shall be reasonably
required to effect the registration of the Restricted Shares.

               3.1.8 Records. The Registrants shall make available for inspection by the
holders of Restricted Shares included in such Registration Statement, any Underwriter participating
in any disposition pursuant to such registration statement and any attorney, accountant or other
professional retained by any holder of Restricted Shares included in such Registration Statement or
any Underwriter, all financial and other records, pertinent corporate documents and properties of
the Company and Trust, as shall be necessary to enable them to exercise their due diligence
responsibility, and cause the Company’s officers, directors and employees to supply all information
reasonably requested by any of them in connection with such Registration Statement.

               3.1.9 Opinions and Comfort Letters. The Registrants shall use commercially
reasonable efforts to furnish to each holder of Restricted Shares included in any Registration
Statement a signed counterpart, addressed to such holder, of (i) any opinion of counsel to the
Registrants delivered to any Underwriter and (ii) any comfort letter from the Registrants’
independent public accountants delivered to any Underwriter. In the event no legal opinion is
delivered to any Underwriter, the Registrants shall furnish to each holder of Restricted Shares
included in such Registration Statement, at any time that such holder elects to use a Prospectus,
an opinion of counsel to the Registrants to the effect that the Registration Statement containing
such Prospectus has been declared effective and that no stop order is in effect.

               3.1.10 Earnings Statement. The Registrants shall comply with all applicable
rules and regulations of the Commission and the Securities Act, and make generally

12

 

available to its shareholders, as soon as practicable, an earnings statement covering a period
of twelve (12) months, beginning within six (6) months after the effective date of the Registration
Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder.

               3.1.11 Listing. The Registrants shall use commercially reasonable efforts
to cause all Restricted Shares included in any registration to be listed on such exchanges or
otherwise designated for trading in the same manner as similar Shares of the Trust are then listed
or designated or, if no such similar securities are then listed or designated, in a manner
satisfactory to the Shareholder initiating a Demand Registration or, if otherwise, the holders of a
majority of the Restricted Shares that are included in such registration.

          3.2 Obligation to Suspend Distribution. Upon receipt of any notice from the
Registrants of the happening of any event of the kind described in Section 3.1.4(iv), or, in the
case of a resale registration pursuant to Section 2.1 hereof, upon any suspension by the
Registrants, pursuant to a written insider trading compliance program adopted by the Company’s
Board of Directors, of the ability of all “insiders” covered by such program to transact in the
Trust’s securities because of the existence of material non-public information, each holder of
Restricted Shares included in any registration shall immediately discontinue disposition of such
Restricted Shares pursuant to the Registration Statement covering such Restricted Shares until such
holder receives the supplemented or amended Prospectus contemplated by Section 3.1.4(iv) or the
restriction on the ability of “insiders” to transact in the Trust’s securities is removed, as
applicable, and, if so directed by the Registrants, each such holder will deliver to the
Registrants all copies, other than permanent file copies then in such holder’s possession, of the
most recent Prospectus covering such Restricted Shares at the time of receipt of such notice.

          3.3 Registration Expenses. The Registrants shall bear all customary costs
and expenses incurred in connection with any shelf registration effected pursuant to Section 2.1,
any Demand Registration effected pursuant to Section 2.2, and any Piggy-Back Registration effected
pursuant to Section 2.3, and all reasonable expenses incurred in performing or complying with its
other obligations under this Agreement, whether or not the Registration Statement becomes
effective, including, without limitation: (i) all registration and filing fees; (ii) fees and
expenses of compliance with securities or “blue sky” laws (including fees and disbursements of
counsel in connection with blue sky qualifications of the Restricted Shares, subject to the limit
set forth in paragraph (ix) below); (iii) printing expenses; (iv) the Registrants’ internal
expenses (including, without limitation, all salaries and expenses of their respective officers and
employees); (v) the fees and expenses incurred in connection with the listing of the Restricted
Shares, as required by Section 3.1.11; (vi) National Association of Securities Dealers, Inc. fees;
(vii) fees and disbursements of counsel for the Registrants and fees and expenses for independent
certified public accountants retained by the Registrants (including the expenses or costs
associated with the delivery of any opinions or comfort letters requested pursuant to Section
3.1.9); (viii) the fees and expenses of any special experts retained by the Registrants in
connection with such registration and (ix) the fees and expenses of one legal counsel selected by
the Shareholder initiating a Demand Registration or, if otherwise, the holders of a
majority-in-interest of the Restricted Shares that are included in such registration (not to
exceed, including the reasonable fees and disbursements to counsel in paragraph (ii) above,
$20,000. The Registrants shall have no obligation to pay any underwriting discounts or selling
commissions attributable to the Restricted Shares being sold by the holders thereof, which
underwriting discounts or selling commissions shall be borne solely by such holders. Additionally,
in an underwritten offering, all

13

 

selling shareholders and the Registrants shall bear the expenses of the underwriter pro rata
in proportion to the respective amount of shares each is selling in such offering.

          3.4 Information. The holders of Restricted Shares shall provide such
information as may reasonably be requested by the Registrants, or the managing Underwriter, if any,
in connection with the preparation of any Registration Statement, including amendments and
supplements thereto, in order to effect the registration of any Restricted Shares under the
Securities Act pursuant to Section 2 and in connection with the Registrants’ obligation to comply
with federal and applicable state securities laws.

          3.5 Holder Obligations. No holder of Restricted Shares may participate in
any underwritten offering pursuant to Section 2 unless such holder (i) agrees to sell only such
holder’s Restricted Shares on the basis reasonably provided in any underwriting agreement, and (ii)
completes, executes and delivers any and all questionnaires, lock-up agreements, powers of
attorney, custody agreements, indemnities, underwriting agreements and other documents reasonably
required by or under the terms of any underwriting agreement or as reasonably requested by the
Registrants.

     4. INDEMNIFICATION AND CONTRIBUTION.

          4.1 Indemnification by the Company. The Registrants agree to indemnify and
hold harmless each Shareholder and each other holder of Restricted Shares, and each of their
respective officers, employees, affiliates, directors, partners, members, attorneys and agents, and
each person, if any, who controls a Shareholder and each other holder of Restricted Shares (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) (each, a
“Shareholder Indemnified Party”), from and against any expenses, losses, judgments, claims, damages
or liabilities, whether joint or several, arising out of or based upon any untrue statement (or
allegedly untrue statement) of a material fact contained in any Registration Statement under which
the sale of such Restricted Shares was registered under the Securities Act, any preliminary
Prospectus, final Prospectus or summary Prospectus contained in the Registration Statement, or any
amendment or supplement to such Registration Statement, or arising out of or based upon any
omission (or alleged omission) to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as such expense, loss, claim, damage
or liability arises out of or is based upon any untrue statement or allegedly untrue statement or
omission or alleged omission made in such Registration Statement, preliminary Prospectus, final
Prospectus, or summary Prospectus, or any such amendment or supplement, in reliance upon and in
conformity with information furnished to the Registrants, in writing, by such selling holder
expressly for use therein, the use of any Registration Statement, any preliminary Prospectus, final
Prospectus or summary Prospectus during a period when a stop order has been issued in respect
thereof or any proceeding for that purpose have been initiated, or the use of any Registration
Statement, any preliminary Prospectus, final Prospectus or summary Prospectus has been suspended by
the Registrants pursuant to the terms of this Agreement; provided, however, that the foregoing
indemnity shall not inure to the benefit of any holder (or to the benefit of any person controlling
such holder) from whom the person asserting such losses, claims or liabilities purchased the
Restricted Shares, if a copy of the Prospectus (as then amended or supplemented if the Registrants
shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf
of such holder to such person, if required by law so to have been delivered at or prior to the
written confirmation of the sale of the Restricted Shares to such person, and if the Prospectus (as
so

14

 

amended or supplemented) would have cured the defect giving wise to such losses, claims,
damages or liabilities, unless such failure is the result of noncompliance by the Registrants with
Section 3.1.3 hereof.

          4.2 Indemnification by Holders of Restricted Shares. Each selling holder of
Restricted Shares will, with respect to any Registration Statement where Restricted Shares were
registered under the Securities Act, indemnify and hold harmless the Trust, the Trust’s Regular
Trustees, the Company, each of the Company’s directors and officers, and each other person, if any,
who controls the Trust and the Company (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act), against any losses, claims, judgments, damages or liabilities,
whether joint or several, insofar as such losses, claims, judgments, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement or allegedly untrue
statement of a material fact contained in any Registration Statement under which the sale of such
Restricted Shares was registered under the Securities Act, any preliminary Prospectus, final
Prospectus or summary Prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, or arise out of or are based upon any omission or the
alleged omission to state a material fact required to be stated therein or necessary to make the
statement therein not misleading, if the statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Registrants by such selling holder
expressly for use therein, and shall reimburse the Trust, the Trust’s Regular Trustees, the
Company, the Company’s directors and officers, and each such controlling person for any legal or
other expenses reasonably incurred by any of them in connection with investigation or defending any
such loss, claim, damage, liability or action. Each selling holder’s indemnification obligations
hereunder shall be several and not joint and shall be limited to the amount of any net proceeds
actually received by such selling holder.

          4.3 Conduct of Indemnification Proceedings. Promptly after receipt by any
person of any notice of any loss, claim, damage or liability or any action in respect of which
indemnity may be sought pursuant to Section 4.1 or 4.2, such
person (the “Indemnified Party”)
shall, if a claim in respect thereof is to be made against any other person for indemnification
hereunder, promptly notify such other person (the
“Indemnifying Party”) in writing of the loss,
claim, judgment, damage, liability or action. If the Indemnified Party is seeking indemnification
with respect to any claim or action brought against the Indemnified Party, then the Indemnifying
Party shall be entitled to participate in such claim or action, and, to the extent that it elects,
retain counsel reasonably satisfactory to the Indemnified Party to represent the Indemnified Party,
and any others the Indemnifying Party may designate in such proceeding and shall pay the reasonable
fees and disbursements of such counsel related to such proceeding. In any such proceeding, the
Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party unless (i) the Indemnified Party and the
Indemnifying Party shall have mutually agreed to the retention of such counsel, or (ii) the named
parties to any such proceeding (including any impleaded parties) include both the Indemnified Party
and the Indemnifying Party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interest between them. The Indemnifying Party
shall not be liable for any settlement of any proceeding effected without its written consent, but
if settled with such consent or there is a final judgment for the plaintiff, the Indemnifying Party
agrees to indemnify the Indemnified Party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified
Party shall have requested an Indemnifying Party to reimburse the Indemnified Party for fees and
expenses of counsel as contemplated in this Section 4.3, the

15

 

Indemnifying Party agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (x) such settlement is entered into more than thirty (30)
days after receipt by such Indemnifying Party of the aforesaid request, and (y) such Indemnifying
Party shall not have reimbursed the Indemnified Party in accordance with such request prior to the
date of such settlement (other than reimbursement for fees and expenses the Indemnifying Party is
contesting in good faith). No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, consent to entry of judgment or effect any settlement of any claim or pending or
threatened proceeding in respect of which the Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless such judgment or
settlement includes an unconditional release of such Indemnified Party from all liability arising
out of such claim or proceeding.

     4.4 Contribution.

          4.4.1 If the indemnification provided for in the foregoing Sections 4.1, 4.2 and 4.3
is unavailable to any Indemnified Party in respect of any loss, claim, damage, liability or action
referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such
loss, claim, damage, liability or action in such proportion as is appropriate to reflect the
relative benefits received by the Indemnified Parties on the one hand and the Indemnifying Parties
on the other from the offering. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or if the Indemnified Party failed to give the notice
required under Section 4.3 above, then each Indemnifying Party shall contribute to such amount paid
or payable by such Indemnified Party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Indemnified Parties on the one hand and the
Indemnifying Parties on the other in connection with the actions or omissions which resulted in
such loss, claim, damage, liability or action, as well as any other relevant equitable
considerations. The relative fault of any Indemnified Party and any Indemnifying Party shall be
determined by reference to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact relates to information
supplied by such Indemnified Party or such Indemnifying Party and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or omission.

          4.4.2 The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 4.4 were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations referred to in the
immediately preceding Section 4.4.1. The amount paid or payable by an Indemnified Party as a
result of any loss, claim, damage, liability or action referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth above, any legal or
other expenses incurred by such Indemnified Party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section 4.4, no holder of Restricted
Shares shall be required to contribute any amount in excess of the dollar amount of the net
proceeds (after payment of any underwriting fees, discounts, commissions or taxes) actually
received by such holder from the sale of Restricted Shares which gave rise to such contribution
obligation. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

16

 

     5. UNDERWRITING AND DISTRIBUTION.

          5.1 Rule 144. The Registrants covenant that it shall file any reports
required to be filed by them under the Securities Act and the Exchange Act and shall take such
further action as the holders of Restricted Shares may reasonably request, all to the extent
required from time to time to enable such holders to sell Restricted Shares without registration
under the Securities Act within the limitation of the exemptions provided by Rule 144 under the
Securities Act, or any similar provision thereto, but not Rule 144A.

     6. MISCELLANEOUS.

          6.1 Assignment; No Third Party Beneficiaries. This Agreement and the
rights, duties and obligations of the Registrants hereunder may not be assigned or delegated by the
Registrants in whole or in part. This Agreement and the rights, duties and obligations of the
holders of Restricted Shares hereunder may be freely assigned or delegated by such holder of
Restricted Shares in conjunction with and to the extent of any permitted transfer of Restricted
Shares by any such holder in accordance with applicable law. This Agreement and the provisions
hereof shall be binding upon and shall inure to the benefit of each of the parties and their
respective successors and the permitted assigns of the Shareholder or holder of Restricted Shares
or of any assignee of the Shareholder or holder of Restricted Shares. This Agreement is not
intended to confer any rights or benefits on any persons that are not party hereto other than as
expressly set forth in Section 4 and this Section 6.1.

          6.2 Notices. All notices, demands, requests, consents, approvals or other
communications (collectively, “Notices”) required or permitted to be given hereunder or which are
given with respect to this Agreement shall be in writing and shall be personally served, delivered
by reputable air courier service with charges prepaid, or transmitted by hand delivery, telegram,
telex or facsimile, addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice provided in accordance with this Section 6.2. Notice
shall be deemed given on the date of service or transmission if personally served or transmitted by
telegram, telex or facsimile; provided, that if such service or transmission is not on a Business
Day or is after normal business hours, then such notice shall be deemed given on the next Business
Day. Notice otherwise sent as provided herein shall be deemed given on the next Business Day
following timely delivery of such notice to a reputable air courier service with an order for
next-day delivery.

To the Registrants:

Compass Diversified Trust

Sixty One Wilton Road, Second Floor

Westport, CT 06880

Attention: I. Joseph Massoud

with a copy to:

Sutherland Asbill & Brennan LLP

1275 Pennsylvania Avenue

Washington, DC 20004

Attention: Cynthia Krus; and

17

 

Alston & Bird LLP

The Atlantic Building

950 F Street, N.W.

Washington, D.C. 20004

Attention: Michael P. Reed

     To a Shareholder, to the address specified in writing from time to time sent to the
Registrants in accordance with this Section 6.2.

          6.3 Severability. This Agreement shall be deemed severable, and the
invalidity or unenforceability of any term or provision hereof shall not affect the validity or
enforceability of this Agreement or of any other term or provision hereof. Furthermore, if any
term or provision hereof shall be deemed to be invalid or unenforceable, the parties hereto shall
mutually agree upon an amendment to this Agreement to include a term or provision as similar in
purpose to such invalid or unenforceable term or provision as may be reasonably possible and which
term or provision is valid and enforceable.

          6.4 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, and all of which taken together shall constitute one and
the same instrument.

          6.5 Entire Agreement. This Agreement (including all agreements entered into
pursuant hereto and all certificates and instruments delivered pursuant hereto and thereto)
constitute the entire agreement of the parties with respect to the subject matter hereof and
supersede all prior and contemporaneous agreements, representations, understandings, negotiations
and discussions between the parties, whether oral or written.

          6.6 Modifications and Amendments. No amendment, modification or termination
of this Agreement shall be binding upon any party unless executed in writing by such party.

          6.7 Titles and Headings. Titles and headings of sections of this Agreement
are for convenience only and shall not affect the construction of any provision of this Agreement.

          6.8 Waivers and Extensions. Any party to this Agreement may waive any
right, breach or default which such party has the right to waive, provided, that such
waiver will not be effective against the waiving party unless it is in writing, is signed by such
party, and specifically refers to this Agreement. Waivers may be made in advance or after the
right waived has arisen or the breach or default waived has occurred. Any waiver may be
conditional. No waiver of any breach of any agreement or provision herein contained shall be
deemed a waiver of any preceding or succeeding breach thereof nor of any other agreement or
provision herein contained. No waiver or extension of time for performance of any obligations or
acts shall be deemed a waiver or extension of the time for performance of any other obligations or
acts.

          6.9 Remedies Cumulative. In the event that the Registrants fail to observe
or perform any covenant or agreement to be observed or performed under this Agreement, the
Shareholder or any other holder of Restricted Shares may proceed to protect and enforce its rights
by suit in equity or action at law, whether for specific performance of any term contained in this
Agreement or for an injunction against the breach of any such term or in aid of the

18

 

exercise of any power granted in this Agreement or to enforce any other legal or equitable
right, or to take any one or more of such actions, without being required to post a bond. None of
the rights, powers or remedies conferred under this Agreement shall be mutually exclusive, and each
such right, power or remedy shall be cumulative and in addition to any other right, power or
remedy, whether conferred by this Agreement or now or hereafter available at law, in equity, by
statute or otherwise.

          6.10 Governing Law. This Agreement shall be governed by and interpreted and
construed in accordance with the laws of the State of New York applicable to contracts formed and
to be performed entirely within the State of New York, without regard to the conflicts of law
provisions thereof to the extent such principles or rules would require or permit the application
of the laws of another jurisdiction. The Company and the holders of the Restricted Shares
irrevocably and unconditionally submit to the exclusive jurisdiction of the United States District
Court for the Southern District of New York or, if such court does not have jurisdiction, the New
York State Supreme Court in the Borough of Manhattan, in any action arising out of or relating to
this Agreement, agree that all claims in respect of the action may be heard and determined in any
such court and agree not to bring any action arising out of or relating to this Agreement in any
other court. In any action, the Registrants and the holders of the Restricted Shares irrevocably
and unconditionally waive and agree not to assert by way of motion, as a defense or otherwise any
claims that it is not subject to the jurisdiction of the above court, that such action is brought
in an inconvenient forum or that the venue of such action is improper. Without limiting the
foregoing, the Registrants and the holders of the Restricted Shares agree that service of process
at each parties respective addresses as provided for in Section 6.2 above shall be deemed effective
service of process on such party.

          6.11 Waiver of Trial by Jury. Each party hereby irrevocably and
unconditionally waives the right to a trial by jury in any action, suit, counterclaim or other
proceeding (whether based on contract, tort or otherwise) arising out of, connected with or
relating to this Agreement, the transactions contemplated hereby, or the actions of the Shareholder
in the negotiation, administration, performance or enforcement hereof.

          6.12 Lock-Up Period. The Shareholders and their transferees hereby agree
that in no event may any Restricted Shares be offered for resale on behalf of such Shareholders or
transferees pursuant to the terms hereof except in accordance with the terms and conditions of any
lock-up agreement to which they may be subject from time to time.

19

 

IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be executed and
delivered by their duly authorized representatives as of the date first written above.

	 	 	 	 	 
	 	COMPASS GROUP DIVERSIFIED
 HOLDINGS LLC

 	 
	 	 	 
	 	Name: I. Joseph Massoud 	 
	 	Title: Chief Executive Officer 	 
	 
	 	
COMPASS DIVERSIFIED TRUST
 	 
	 	By:  	COMPASS GROUP DIVERSIFIED 	 
	 	 HOLDINGS, LLC,	 	 
	 	 	   as Sponsor 	 	 
	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	SHAREHOLDERS:

 	 
	 	

CGI DIVERSIFIED HOLDINGS, LP
 	 
	 	By:  	NAVCO MANAGEMENT INC., 	 
	 	 	   as General Partner 	 
	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	Lindsey Cancino 	 
	 	 	Title:  	Director 	 
	 
	 	PHAROS I LLC

 	 
	 	By:  	 	 
	 	 	Name:  	I. Joseph Massoud 	 
	 	 	Title:  	Manager

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