COMPASS GROUP DIVERSIFIED HOLDINGS
LLC,
COMPASS DIVERSIFIED TRUST
SUBSCRIPTION INSTRUCTIONS —
PLEASE READ CAREFULLY
THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND HAVE NOT BEEN QUALIFIED
UNDER THE SECURITIES LAWS OF ANY STATE. THE PURCHASER OF THESE
SECURITIES, BY MAKING SUCH PURCHASE, AGREES FOR THE BENEFIT OF THE
ISSUER THAT THE SECURITIES OFFERED HEREBY MAY BE SOLD, OFFERED FOR
SALE, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A)(1) PURSUANT TO RULE
144A UNDER THE SECURITIES ACT TO AN INSTITUTIONAL INVESTOR THAT THE
PURCHASER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER, WHOM THE SELLER
HAS INFORMED, IN EACH CASE, THAT THE SALE, OFFER FOR SALE OR
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO AN
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT, OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION
IN ACCORDANCE WITH RULES 903 OR 904 OF REGULATION S UNDER THE
SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES.
COMPASS DIVERSIFIED
TRUST
SHARE PURCHASE
AGREEMENT (this “Agreement” ), dated
as of [
], 2006 by and among Compass Group Diversified Holdings LLC, a
Delaware limited liability company (the
“Company” ), on its own behalf and as
sponsor of Compass Diversified Trust, a Delaware statutory business
trust ( “Issuer” ), the Issuer and Pharos
I LLC, a Delaware limited liability company (
“Buyer” ).
A. The
Company and Issuer wish to sell, and Buyer wishes to purchase,
shares of the Issuer representing an undivided beneficial interest
in the Issuer (the “ Shares ”) upon the
terms and subject to the conditions set forth in this
Agreement;
B. The Shares
(such Shares, the “ Restricted Shares ”)
will be sold pursuant to an exemption from registration under the
Securities Act of 1933, as amended (the “1933
Act” ), and the
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rules and
regulations promulgated thereunder by the United States Securities
and Exchange Commission (the “ SEC
”);
C. Simultaneous
with the closing of the purchase of Shares by the Buyer, the
Company and the Issuer intend and expect to close an initial public
offering (the “ IPO ”) of Shares to the
public (such Shares, the “ Registered Shares
”), as described in the Issuer’s prospectus dated May
___, 2006 (the “ Prospectus
”);
D. The
Restricted Shares and the Registered Shares will be identical in
all respects and constitute the same class of equity of the Issuer,
except as to the status of the Restricted Shares under the 1933
Act; and
E. The
Company and Issuer will, in connection with the issuance of the
Restricted Shares and pursuant to the terms of the Registration
Rights Agreement substantially in the form of Exhibit A
attached hereto (the “Registration Rights
Agreement” ), grant to Buyer certain rights to
register the Restricted Shares for resale by Buyer under the 1933
Act and the rules and regulations promulgated thereunder by the
SEC, and applicable state securities laws.
NOW
THEREFORE , in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and of
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. PURCHASE AND SALE OF SHARES
a. Purchase
of Restricted Shares . Subject to Section 1(b)
below, at the Closing (defined below), the Company, as sponsor of
the Issuer, will cause the Issuer to issue the Restricted Shares to
the Company in exchange for, and as consideration for, an equal
number of trust interests of the Company, as provided for in the
Company’s Amended and Restated Operating Agreement, dated as
of April 25, 2006 (the “ Operating
Agreement ”), and the Company shall sell that number
of Restricted Shares to the Buyer equal to the result of
(i) the Aggregate Purchase Price (as defined below) divided
by (ii) the Per Share Price (as defined below), and the
Buyer shall purchase that number of Restricted Shares from the
Company. The per share purchase price (the “Per Share
Price” ) for the Restricted Shares shall be the same
as the per Share purchase price of the Registered Shares to be
offered in the IPO of the Issuer, as set forth in the Prospectus.
The aggregate purchase price (the “Aggregate Purchase
Price” ) for the Restricted Shares shall be Four
Million Dollars ($4,000,000); provided, however , that in
the event the Per Share Price would otherwise result in the
issuance of a fraction of a Share, the Company shall sell and the
Buyer shall purchase one more Restricted Share and the Aggregate
Purchase Price to be paid by Buyer shall be increased accordingly.
The Restricted Shares shall be sold at the Closing as hereinafter
provided.
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b.
Closing . The closing (the
“Closing” ) of the issuance and sale of
the Restricted Shares shall occur contemporaneously with, and shall
be conditioned upon, the closing of the IPO with respect to the
sale and delivery of any firm securities thereat. The date of the
occurrence of the Closing shall be referred to herein as the
“Closing Date.” For the avoidance of
doubt, if for whatever reason the IPO is not completed, Issuer will
not be obligated to issue the Restricted Shares, the Company shall
not be obligated to sell the Restricted Shares and Buyer shall not
be required to purchase the Restricted Shares and this Agreement
may be terminated in accordance with Section 5(k) below.
c. Form of
Payment . At the Closing, the Buyer shall pay the
Aggregate Purchase Price by net settlement process in accordance
with the Escrow Agreement entered into by and among the Buyer, the
Company and other parties named therein, to be dated as of the
Closing Date.
d. Form of
Delivery . At the Closing, the Company shall deliver to the
Buyer a Trust Interest Certificate (as defined in the Operating
Agreement), duly executed by the Issuer and authenticated by the
Transfer Agent (as defined in the Operating Agreement) representing
that number of Restricted Shares purchased by the Buyer in
accordance with Section 1(a) above and including appropriate
legends for the Restricted Shares.
e.
Registration Rights Agreement . At the Closing, the
parties hereto shall execute and deliver the Registration Rights
Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE
BUYER
Buyer hereby
represents and warrants to the Company and Issuer as of the date
hereof and as of the date of the Closing that:
a.
Organization and Qualification . Buyer is duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its formation, has the requisite corporate
power to own its properties and to carry on its business as now
being conducted.
b.
Authorization; Enforceability . (i) Buyer
has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement and the Registration
Rights Agreement; (ii) the execution and delivery of this
Agreement and the Registration Rights Agreement by Buyer and the
consummation by Buyer of the transactions contemplated hereby and
thereby have been duly authorized and no further consent or
corporate authorization is required therefor; (iii) this
Agreement has been, and at Closing the Registration Rights
Agreement will be, duly executed and delivered by Buyer; and (iv)
assuming due execution and delivery by the Company and Issuer, this
Agreement constitutes, and the Registration Rights Agreement will
constitute, the valid and binding obligations of Buyer enforceable
against it in accordance with their respective terms, except as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization,
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moratorium,
liquidation or similar laws relating to, or affecting generally,
the enforcement of creditors’ rights and remedies or by other
equitab
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