Document:

EX-4.3

 

Exhibit 4.3

BRION TECHNOLOGIES, INC.

2002 STOCK PLAN

(As amended on March 25, 2005, March 24, 2006 and November 17, 2006)

     1. Purposes of the Plan. The purposes of this Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide additional incentive to
Employees, Directors and Consultants and to promote the success of the Company’s business. Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined
by the Administrator at the time of grant. Stock Purchase Rights may also be granted under the
Plan.

     2. Definitions. As used herein, the following definitions shall apply:

          (a) “Administrator” means the Board or any of its Committees as shall be administering
the Plan in accordance with Section 4 hereof.

          (b) “Applicable Laws” means the requirements relating to the administration of stock
option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any
stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable
laws of any other country or jurisdiction where Options or Stock Purchase Rights are granted under
the Plan.

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

          (d) “Change in Control” means the occurrence of any of the following events:

                 (i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or more of the total
voting power represented by the Company’s then outstanding voting securities; or

                 (ii) The consummation of the sale or disposition by the Company of all or substantially all of
the Company’s assets; or

                 (iii) The consummation of a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or its parent) at least fifty
percent (50%) of the total voting power represented by the voting securities of the Company or such
surviving entity or its parent outstanding immediately after such merger or consolidation.

          (e) “Code” means the Internal Revenue Code of 1986, as amended.

          (f) “Committee” means a committee of Directors or of other individuals satisfying
Applicable Laws appointed by the Board in accordance with Section 4 hereof.

 

 

          (g) “Common Stock” means the Common Stock of the Company.

          (h) “Company” means Brion Technologies, Inc., a Delaware corporation.

          (i) “Consultant” means any person who is engaged by the Company or any Parent or
Subsidiary to render consulting or advisory services to such entity.

          (j) “Director” means a member of the Board.

          (k) “Disability” means total and permanent disability as defined in Section 22(e)(3)
of the Code.

          (l) “Employee” means any person, including officers and Directors, employed by the
Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a
director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

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

          (n) “Fair Market Value” means, as of any date, the value of Common Stock determined as
follows:

                 (i) If the Common Stock is listed on any established stock exchange or a national market
system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of
The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or
the closing bid, if no sales were reported) as quoted on such exchange or system on the day of
determination, as reported in The Wall Street Journal or such other source as the Administrator
deems reliable;

                 (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked
prices for the Common Stock on the day of determination; or

                 (iii) In the absence of an established market for the Common Stock, the Fair Market Value
thereof shall be determined in good faith by the Administrator.

          (o) “Incentive Stock Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code.

          (p) “Nonstatutory Stock Option” means an Option not intended to qualify as an
Incentive Stock Option.

          (q) “Option” means a stock option granted pursuant to the Plan.

          (r) “Option Agreement” means a written or electronic agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant. The Option
Agreement is subject to the terms and conditions of the Plan.

          (s) “Optioned Stock” means the Common Stock subject to an Option or a Stock Purchase
Right.

-2-

 

          (t) “Optionee” means the holder of an outstanding Option or Stock Purchase Right
granted under the Plan.

          (u) “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.

          (v) “Plan” means this 2002 Stock Plan, as amended and in effect from time to time.

          (w) “Founder’s Stock” means Shares issued pursuant to a Stock Purchase Right or Shares
of Founder’s stock issued pursuant to an Option.

          (x) “Founder’s Stock Purchase Agreement” means a written agreement between the Company
and the Optionee evidencing the terms and restrictions applying to Shares purchased under a Stock
Purchase Right. The Founder’s Stock Purchase Agreement is subject to the terms and conditions of
the Plan and the notice of grant.

          (y) “Securities Act means the Securities Act of 1933, as amended.

          (z) “Service Provider” means an Employee, Director or Consultant.

          (aa) “Share” means a share of the Common Stock, as adjusted in accordance with Section
12 below.

          (bb) “Stock Purchase Right” means a right to purchase Common Stock pursuant to Section
11 below.

          (cc) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing,
as defined in Section 424(f) of the Code.

     3. Stock Subject to the Plan. Subject to the provisions of Section 13 of the Plan,
the maximum aggregate number of Shares that may be subject to option and sold under the Plan is
9,660,000 Shares. Such share reserve is comprised of (i) 4,660,000 Shares initially authorized for
issuance under the Plan plus (ii) an additional increase of 2,000,000 shares of Common Stock
authorized by the Board on March 25, 2005 and approved by the stockholders on March 25, 2005 plus
(iii) an additional increase of 3,000,000 shares of Common Stock authorized by the Board on March
24, 2006 and approved by the stockholders on March 27, 2006. The Shares may be authorized but
unissued, or reacquired Common Stock.

          If an Option or Stock Purchase Right expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares that were subject thereto shall become available for
future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have
actually been issued under the Plan, upon exercise of either an Option or Stock Purchase Right,
shall not be returned to the Plan and shall not become available for future distribution under the
Plan, except that if Shares of Founder’s Stock are repurchased by the Company at their original
purchase price, such Shares shall become available for future grant under the Plan.

-3-

 

     4. Administration of the Plan.

          (a) Administrator. The Plan shall be administered by the Board or a Committee
appointed by the Board, which Committee shall be constituted to comply with Applicable Laws.

          (b) Powers of the Administrator. Subject to the provisions of the Plan and, in the
case of a Committee, the specific duties delegated by the Board to such Committee, and subject to
the approval of any relevant authorities, the Administrator shall have the authority in its
discretion:

                   (i) to determine the Fair Market Value;

                   (ii) to select the Service Providers to whom Options and Stock Purchase Rights may from time
to time be granted hereunder;

                   (iii) to determine the number of Shares to be covered by each such award granted hereunder;

                   (iv) to approve forms of agreement for use under the Plan;

                   (v) to determine the terms and conditions of any Option or Stock Purchase Right granted
hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time
or times when Options or Stock Purchase Rights may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Option or Stock Purchase Right or the Common Stock relating thereto, based
in each case on such factors as the Administrator, in its sole discretion, shall determine;

                   (vi) to prescribe, amend and rescind rules and regulations relating to the Plan, including
rules and regulations relating to sub-plans established for the purpose of satisfying applicable
foreign laws;

                   (vii) to allow Optionees to satisfy withholding tax obligations by electing to have the
Company withhold from the Shares to be issued upon exercise of an Option or Stock Purchase Right
that number of Shares having a Fair Market Value equal to the minimum amount required to be
withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined. All elections by Optionees to have Shares
withheld for this purpose shall be made in such form and under such conditions as the Administrator
may deem necessary or advisable; and

                   (viii) to construe and interpret the terms of the Plan and Options granted pursuant to the
Plan.

          (c) Effect of Administrator’s Decision. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all Optionees.

-4-

 

     5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may be granted
to Service Providers. Incentive Stock Options may be granted only to Employees.

     6. Limitations.

          (a) Incentive Stock Option Limit. Each Option shall be designated in the Option
Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares
with respect to which Incentive Stock Options are exercisable for the first time by the Optionee
during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds
$100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order in which they were
granted. The Fair Market Value of the Shares shall be determined as of the time the Option with
respect to such Shares is granted.

          (b) At-Will Employment. Neither the Plan nor any Option or Stock Purchase Right shall
confer upon any Optionee any right with respect to continuing the Optionee’s relationship as a
Service Provider with the Company, nor shall it interfere in any way with his or her right or the
Company’s right to terminate such relationship at any time, with or without cause, and with or
without notice.

     7. Term of Plan. Subject to stockholder approval in accordance with Section 19, the
Plan shall become effective upon its adoption by the Board. Unless sooner terminated under Section
15, it shall continue in effect for a term of ten (10) years from the later of (i) the effective
date of the Plan, or (ii) the earlier of the most recent board or stockholder approval of an
increase in the number of Shares reserved for issuance under the Plan.

     8. Term of Option. The term of each Option shall be stated in the Option Agreement;
provided, however, that the term shall be no more than ten (10) years from the date of grant
thereof. In the case of an Incentive Stock Option granted to an Optionee who, at the time the
Option is granted, owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five
(5) years from the date of grant or such shorter term as may be provided in the Option Agreement.

     9. Option Exercise Price and Consideration.

          (a) Exercise Price. The per share exercise price for the Shares to be issued upon
exercise of an Option shall be such price as is determined by the Administrator, but shall be
subject to the following:

               (i) In the case of an Incentive Stock Option

                        (A) granted to an Employee who, at the time of grant of such Option, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per
Share on the date of grant.

-5-

 

                   (B) granted to any other Employee, the per Share exercise price shall be no less than 100% of
the Fair Market Value per Share on the date of grant.

            (ii) In the case of a Nonstatutory Stock Option

                   (A) granted to a Service Provider who, at the time of grant of such Option, owns stock
representing more than ten percent (10%) of the voting power of all classes of stock of the Company
or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value
per Share on the date of grant.

                   (B) granted to any other Service Provider, the per Share exercise price shall be no less than
85% of the Fair Market Value per Share on the date of grant.

            (iii) Notwithstanding the foregoing, Options may be granted with a per Share exercise price
other than as required above pursuant to a merger or other corporate transaction.

          (b) Forms of Consideration. The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined by the
Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of
grant). Such consideration may consist of, without limitation, (1) cash, (2) check, (3)
promissory note, (4) other Shares, provided Shares acquired directly from the Company (x) have been
owned by the Optionee for more than six months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such
Option shall be exercised, (5) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan, or (6) any combination of the
foregoing methods of payment. In making its determination as to the type of consideration to
accept, the Administrator shall consider if acceptance of such consideration may be reasonably
expected to benefit the Company.

     10. Exercise of Option.

          (a) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder
shall be exercisable according to the terms hereof at such times and under such conditions as
determined by the Administrator and set forth in the Option Agreement. An Option may not be
exercised for a fraction of a Share. Except in the case of Options granted to officers, Directors
and Consultants, Options shall become exercisable at a rate of no less than 20% per year over five
(5) years from the date the Options are granted.

              An Option shall be deemed exercised when the Company receives (i) written or electronic notice
of exercise (in accordance with the Option Agreement) from the person entitled to exercise the
Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be
issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee
and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a stockholder shall exist with respect to the Shares,
notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such

-6-

 

Shares promptly after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are issued, except as
provided in Section 13 of the Plan.

                   Exercise of an Option in any manner shall result in a decrease in the number of Shares
thereafter available, both for purposes of the Plan and for sale under the Option, by the number of
Shares as to which the Option is exercised.

          (b) Termination of Relationship as a Service Provider. If an Optionee ceases to be a
Service Provider, such Optionee may exercise his or her Option within thirty (30) days of
termination, or such longer period of time as specified in the Option Agreement, to the extent that
the Option is vested on the date of termination (but in no event later than the expiration of the
term of the Option as set forth in the Option Agreement). If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion
of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his
or her Option within the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

          (c) Disability of Optionee. If an Optionee ceases to be a Service Provider as a
result of the Optionee’s Disability, the Optionee may exercise his or her Option within six (6)
months of termination, or such longer period of time as specified in the Option Agreement, to the
extent the Option is vested on the date of termination (but in no event later than the expiration
of the term of such Option as set forth in the Option Agreement). If, on the date of termination,
the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

          (d) Death of Optionee. If an Optionee dies while a Service Provider, the Option may
be exercised within six (6) months following Optionee’s death, or such longer period of time as
specified in the Option Agreement, to the extent that the Option is vested on the date of death
(but in no event later than the expiration of the term of such Option as set forth in the Option
Agreement) by the Optionee’s designated beneficiary, provided such beneficiary has been designated
prior to Optionee’s death in a form acceptable to the Administrator. If no such beneficiary has
been designated by the Optionee, then such Option may be exercised by the personal representative
of the Optionee’s estate or by the person(s) to whom the Option is transferred pursuant to the
Optionee’s will or in accordance with the laws of descent and distribution. If, at the time of
death, the Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall immediately revert to the Plan. If the Option is not so
exercised within the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

          (e) Leaves of Absence.

                (i) Unless the Administrator provides otherwise, vesting of Options granted hereunder to
officers and Directors shall be suspended during any unpaid leave of absence.

-7-

 

            (ii) A Service Provider shall not cease to be an Employee in the case of (A) any leave of
absence approved by the Company or (B) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor.

            (iii) For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days,
unless reemployment upon expiration of such leave is guaranteed by statute or contract. If
reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed,
then three (3) months following the 91st day of such leave, any Incentive Stock Option held by the
Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax
purposes as a Nonstatutory Stock Option.

     11. Stock Purchase Rights.

            (a) Rights to Purchase. Stock Purchase Rights may be issued either alone, in addition
to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the
Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan,
it shall advise the offeree in writing or electronically of the terms, conditions and restrictions
related to the offer, including the number of Shares that such person shall be entitled to
purchase, the price to be paid, and the time within which such person must accept such offer. The
terms of the offer shall comply in all respects with Section 260.140.42 of Title 10 of the
California Code of Regulations. The offer shall be accepted by execution of a Fonder’s Stock
Purchase Agreement in the form determined by the Administrator.

            (b) Repurchase Option. Unless the Administrator determines otherwise, the Founder’s
Stock Purchase Agreement shall grant the Company a repurchase option exercisable within 90 days of
the voluntary or involuntary termination of the purchaser’s service with the Company for any reason
(including death or disability). The purchase price for Shares repurchased pursuant to the
Founder’s Stock Purchase Agreement shall be the original price paid by the purchaser and may be
paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option
shall lapse at such rate as the Administrator may determine.

            (c) Other Provisions. The Founder’s Stock Purchase Agreement shall contain such other
terms, provisions and conditions not inconsistent with the Plan as may be determined by the
Administrator in its sole discretion.

            (d) Rights as a Stockholder. Once the Stock Purchase Right is exercised, the
purchaser shall have rights equivalent to those of a stockholder and shall be a stockholder when
his or her purchase is entered upon the records of the duly authorized transfer agent of the
Company. No adjustment shall be made for a dividend or other right for which the record date is
prior to the date the Stock Purchase Right is exercised, except as provided in Section 13 of the
Plan.

     12. Limited Transferability of Options and Stock Purchase Rights. Unless determined
otherwise by the Administrator, Options and Stock Purchase Rights may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by will or the laws of
descent and distribution, and may be exercised during the lifetime of the Optionee, only by the
Optionee. If the Administrator in its sole discretion makes an Option or Stock Purchase Right
transferable, such Option or Stock Purchase Right may only be transferred (i) by will, (ii) by the
laws of descent and distribution, or (iii) to family members
(within the meaning of Rule 701 of the Securities Act) through gifts or domestic relations orders, as permitted by Rule 701 of the
Securities Act.

-8-

 

     13. Adjustments; Dissolution or Liquidation; Merger or Change in Control.

          (a) Adjustments. In the event that any dividend or other distribution (whether in the
form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or
exchange of Shares or other securities of the Company, or other change in the corporate structure
of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or
enlargement of the benefits or potential benefits intended to be made available under the Plan, may
(in its sole discretion) adjust the number and class of Shares that may be delivered under the Plan
and/or the number, class, and price of Shares covered by each outstanding Option or Stock Purchase
Right; provided, however, that the Administrator shall make such adjustments to the extent required
by Section 25102(o) of the California Corporations Code.

          (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable
prior to the effective date of such proposed transaction. To the extent it has not been previously
exercised, an Option or Stock Purchase Right will terminate immediately prior to the consummation
of such proposed action.

          (c) Merger or Change in Control. In the event of a merger of the Company with or into
another corporation, or a Change in Control, each outstanding Option and Stock Purchase Right shall
be assumed or an equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor corporation in a merger
or Change in Control refuses to assume or substitute for the Option or Stock Purchase Right, then
the Optionee shall fully vest in and have the right to exercise the Option or Stock Purchase Right
as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or
exercisable. If an Option or Stock Purchase Right becomes fully vested and exercisable in lieu of
assumption or substitution in the event of a merger or Change in Control, the Administrator shall
notify the Optionee in writing or electronically that this Option or Stock Purchase Right shall be
fully exercisable for a period of fifteen (15) days from the date of such notice, and the Option or
Stock Purchase Right shall terminate upon expiration of such period. For the purposes of this
paragraph, the Option or Stock Purchase Right shall be considered assumed if, following the merger
or Change in Control, the option or right confers the right to purchase or receive, for each Share
of Optioned Stock subject to the Option or Stock Purchase Right immediately prior to the merger or
Change in Control, the consideration (whether stock, cash, or other securities or property)
received in the merger or Change in Control by holders of Common Stock for each Share held on the
effective date of the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares); provided, however,
that if such consideration received in the merger or Change in Control is not solely common stock
of the successor corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the exercise of the Option
or Stock Purchase Right, for each Share of Optioned Stock subject to the Option or Stock Purchase
Right, to be solely common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of common stock in the merger or Change in
Control.

-9-

 

     14. Time of Granting Options and Stock Purchase Rights. The date of grant of an
Option or Stock Purchase Right shall, for all purposes, be the date on which the Administrator
makes the determination granting such Option or Stock Purchase Right, or such later date as is
determined by the Administrator. Notice of the determination shall be given to each Service
Provider to whom an Option or Stock Purchase Right is so granted within a reasonable time after the
date of such grant.

     15. Amendment and Termination of the Plan.

            (a) Amendment and Termination. The Board may at any time amend, alter, suspend or
terminate the Plan.

            (b) Stockholder Approval. The Board shall obtain stockholder approval of any Plan
amendment to the extent necessary and desirable to comply with Applicable Laws.

            (c) Effect of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise
between the Optionee and the Administrator, which agreement must be in writing and signed by the
Optionee and the Company. Termination of the Plan shall not affect the Administrator’s ability to
exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to
the date of such termination.

     16. Conditions Upon Issuance of Shares.

            (a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an
Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply
with Applicable Laws and shall be further subject to the approval of counsel for the Company with
respect to such compliance.

            (b) Investment Representations. As a condition to the exercise of an Option, the
Administrator may require the person exercising such Option to represent and warrant at the time of
any such exercise that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.

     17. Inability to Obtain Authority. The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of
any liability in respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.

     18. Reservation of Shares. The Company, during the term of this Plan, shall at all
times reserve and keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.

     19. Stockholder Approval. The Plan shall be subject to approval by the stockholders
of the Company within twelve (12) months after the date the Plan is adopted. Such stockholder
approval shall be obtained in the degree and manner required under Applicable Laws.

-10-

 

     20. Information to Optionees. The Company shall provide to each Optionee and to each
individual who acquires Shares pursuant to the Plan, not less frequently than annually during the
period such Optionee has one or more Options or Stock Purchase Rights outstanding, and, in the case
of an individual who acquires Shares pursuant to the Plan, during the period such individual owns
such Shares, copies of annual financial statements. The Company shall not be required to provide
such statements to key employees whose duties in connection with the Company assure their access to
equivalent information.

     21. Local Law; Foreign Exchange and Tax Compliance. Notwithstanding anything else
contained herein to the contrary, due to certain foreign exchange regulations in the People’s
Republic of China (“PRC”), the Administrator may, at its discretion, limit the method of
Option exercise to a cashless method for Optionees resident in the PRC not having permanent
residence in a country other than the PRC (“PRC Optionees”). Such discretion includes and
is not limited to the required exchange of proceeds by the Administrator into Renminbi for
transmittal to PRC Participants, deductions for fees associated with the exchange, and deductions
for PRC taxes, as may be necessary to comply with applicable PRC foreign exchange and tax
regulations. PRC Optionees acknowledge and consent that all relevant data concerning exercise
events will be disclosed by the Company to the relevant PRC local tax bureau to the extent required
by PRC law.

-11-EX-10.3

 

Exhibit 10.3

REGISTRATION RIGHTS AGREEMENT

by and among

COMPASS GROUP DIVERSIFIED HOLDINGS LLC,

COMPASS DIVERSIFIED TRUST

and

CGI DIVERSIFIED HOLDINGS, LP

Dated as of April 3, 2007

 

 

REGISTRATION RIGHTS AGREEMENT

     THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of the
3rd day of April, 2007, 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 CGI Diversified Holdings, LP
(“Shareholder). 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 Shareholder holds as of the date hereof (or contemporaneously herewith is
acquiring) that number of Shares set beside its name 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 Shareholder
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.

          “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 2.2.2.

          “Notices” is defined in Section 6.3.

          “Piggy-Back Registration” is defined in Section 2.2.1.

2

 

          “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 Second Amended
and Restated Trust Agreement of the Trust dated January 9, 2007, 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 Shareholder or its 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.

          “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.

3

 

     2. REGISTRATION RIGHTS.

          2.1 Mandatory Shelf Registration.

          2.1.1 Filing of Shelf Registration Statement. The Registrants shall use commercially
reasonable efforts to prepare, and, promptly following May 16, 2007, 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 all of the Restricted Shares. 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 Shareholder and one legal counsel
selected by such Shareholder 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 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 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 Piggy-Back Registration.

               2.2.1 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), 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 Form 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

4

 

“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.

               2.2.2 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 2.2, 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 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 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 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 Shareholder 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.

5

 

               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 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 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 the filing of the Shelf Registration Statement for 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, that the Shareholder 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.

6

 

               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 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

7

 

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 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 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

8

 

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 and
any Piggy-Back Registration effected pursuant to Section 2.2, 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 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 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.

9

 

     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 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.

10

 

          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 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’

11

 

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.

     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.

12

 

To the Registrants:

Compass Diversified Trust

Sixty One Wilton Road, Second Floor

Westport, Connecticut 06880

with a copy to:

Squire, Sanders and Dempsey, L.L.P.

312 Walnut Street, Suite 3500

Cincinnati, Ohio 45202

Attention: Stephen C. Mahon

     To 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 ten ii 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

13

 

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 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 Shareholder and its transferees hereby agree that in no event
may any Restricted Shares be offered for resale on behalf of such Shareholder 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.

14

 

          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: James J. Bottiglieri
	 	 	 	 	Title: Chief Financial Officer
	 
	 	 	 	 	 	 
	 	 	SHAREHOLDER:
	 
	 	 	 	 	 	 
	 	 	CGI DIVERSIFIED HOLDINGS, LP
	 
	 	 	 	 	 	 
	 	 	 	 	By: NAVCO MANAGEMENT, INC.,
as General
Partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	 
	 

	 	 	 	 	 	 
	 	 	 	 	Name: Lindsey Cancino
	 	 	 	 	Title: Director

 

 

Schedule A

To

Registration Rights Agreement

	 	 	 
	 

	 	Number of Shareholder
	 

	 	Restricted Shares
	 
	 	 
	CGI Diversified Holdings, LP

	 	[                    ]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00121-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00121-of-00352.parquet"}]]