Exhibit 10.18
STOCKHOLDERS AGREEMENT
OF
STANDARD AERO ACQUISITION HOLDINGS, INC.
THIS
STOCKHOLDERS AGREEMENT (this “ Agreement ”) is
entered into as of this 22nd day of December, 2004, by and among
Standard Aero Acquisition Holdings, Inc., a Delaware corporation
(the “ Company ”), Carlyle Partners III, L.P., a
Delaware limited partnership (the “ Principal
Stockholder ”), the Persons listed on
Exhibit A hereto (each individually, a “
Management Stockholder ,” and collectively, the
“ Management Stockholders ”). These parties are
sometimes referred to herein individually by name or as a “
Party ” and together as the “ Parties
”. The Principal Stockholder, together with (i) any
Affiliate (as defined below) of the Principal Stockholder that is a
subsequent transferee of any shares of common stock, par value
$0.01 per share, of the Company (“ Common Stock
”) and (ii) any Affiliates of the Principal Stockholder
to which the Company may hereafter issue shares of Common Stock, in
each case, that executes a copy of this Agreement are sometimes
collectively referred to herein as the “ Acquiring
Stockholder ”. For purposes of this Agreement, “
Affiliate ” shall mean, with respect to any
individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity
of whatever nature (each, a “ Person ” ),
any other Person directly or indirectly controlling, controlled by,
or under common control with, such Person where
“control” shall have the meaning given such term under
Rule 405 of the Securities Act of 1933, as amended (the
“ Act ”), “ Operating Affiliate
” shall mean any Affiliate of the Principal Stockholder which
is an operating company.
RECITALS
WHEREAS,
each of the Management Stockholders is an employee, executive
officer or director of the Company or one or more subsidiaries of
the Company;
WHEREAS,
the Company has issued (or may hereafter issue) to each Management
Stockholder shares of Common Stock as a result of (i) the
exercise by the Management Stockholder of vested options to
purchase shares of Common Stock, which options may be issued to the
Management Stockholder on or after the date hereof pursuant to the
Stock Option and Purchase Plan of Standard Aero Acquisition
Holdings, Inc. (“ Stock Option Plan ”); and any
Stock Option Agreement (as such term is defined in the Stock Option
Plan) granted thereunder (any such options, the “
Options ”) (ii) the purchase of shares of Common Stock
by the Management Stockholders on or around the date hereof at a
per share purchase price equal to U.S. $100.00 (the “
Initial Investment Price ”) pursuant to the Stock
Option Plan and any Subscription and Purchase Agreement entered
into by and between the Company and any Management Stockholder (a
“ Subscription Agreement ”); or (iii) any other
purchase of Common Stock by any Management Stockholder; and
WHEREAS,
the Company, the Principal Stockholder and the Management
Stockholders desire to enter into this Agreement to provide for
certain matters with respect to the ownership and transfer by the
Management Stockholders of the shares of Common Stock now or
hereafter issued or sold to any Management Stockholders as a result
of the (i) the purchase of Common Stock by the Management
Stockholders from the Company or any Acquiring Stockholder;
(ii) the exercise of Options; or (iii) any other issuance of
Common Stock to the
Management Stockholders (collectively, the “ Restricted
Shares ”). Any terms not otherwise defined herein shall
have the meaning set forth in the Stock Option Plan.
AGREEMENT
NOW,
THEREFORE, in consideration of the foregoing and the mutual
agreements set forth herein, and other good and valuable
consideration, the receipt and adequacy of which is hereby
acknowledged, the Parties hereto, intending to be legally bound,
hereby agree as follows:
Section 1. Restrictions on
Transfers .
(a) Except
as otherwise expressly permitted by Section 1(b) or otherwise under
this Agreement, the Management Stockholders shall not sell, assign,
transfer, convey, pledge or otherwise dispose of (collectively,
“ Transfer ”) any Restricted Shares. Any
purported Transfer in violation of the provisions of this
Section 1 shall be null and void and shall have no force or
effect.
(b) Nothing
in Section 1(a) shall prevent the Transfer of any Restricted Shares
by any Management Stockholder who is not established, resident or
domiciled in The Netherlands to any of that Management
Stockholder’s spouse, children or trusts for their benefit
provided the Management Stockholder retains the sole and exclusive
right to vote and dispose of any Restricted Shares transferred to
the family member or trust; or (ii) by any Management
Stockholder, upon a Management Stockholder’s death, to the
Management Stockholder’s executors, administrators,
testamentary trustees, legatees and beneficiaries; or (iii) by
any Management Stockholder to any other Management Stockholder;
provided, however, that any Transfer of Restricted Shares pursuant
to this Section 1(b)(iii) shall be subject to the provisions
of Section 1(d).
(c) Each
Management Stockholder agrees that, as a condition precedent to any
transfer described in Section 1(b), each transferee described
in Section 1(b) (other than the Company, the Principal Stockholder
or any Affiliate of each) shall deliver to the Company a copy of
this Agreement signed by such transferee together with such other
documentation as may be reasonably requested by the Company.
(d) Prior
to a Transfer of Restricted Shares pursuant to
Section 1(b)(iii), the Management Stockholder transferring the
Restricted Shares (the “ Management Transferor
”) shall give written notice thereof (the “ Offering
Notice ”) to the Principal Stockholder, setting forth the
number and type of Restricted Shares it desires to sell (the
“ Offered Shares ”) and the price and the other
terms and conditions relating to such proposed sale. The Principal
Stockholder shall have the right, within the twenty
(20) business day period following the date on which the
Offering Notice shall have been given (the “ Option
Period ”), to purchase all of the Offered Shares at the
price and on the other terms and conditions as set forth in the
Offering Notice. In the event the Principal Stockholder elects not
to purchase the Offered Shares, upon the expiration of the Option
Period, the Management Transferor may Transfer the Offered Shares
to any other Management Stockholder at the price and on the other
terms and conditions as set forth in the Offering Notice. For the
avoidance of doubt, in no event shall the Principal
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Stockholder be permitted to pay a price that is greater than the
Fair Market Value of the Offered Shares.
Section 2. Bring-Along
Rights .
(a) If
any Acquiring Stockholder at any time, or from time to time, in one
transaction or a series of related transactions, proposes to
Transfer shares of Common Stock to one or more Persons that is
(i) not an Affiliate of such Acquiring Stockholder or
(ii) is an Operating Affiliate (for such purposes an Operating
Affiliate will not be deemed to be an Affiliate) (both (i) and
(ii) being a “ Third Party Purchaser ”), then
the Acquiring Stockholder(s) shall have the right (a “
Bring-Along Right ”), but not the obligation, and
subject to the provision of Section 2(e) below, to require each
Management Stockholder to tender for purchase to the Third Party
Purchaser, on the same terms and conditions as apply to the selling
Acquiring Stockholder(s), all or any portion of a number of shares
of Common Stock and Options (including any Options that vest as a
result of the consummation of the Transfer to the Third Party
Purchaser) that, in the aggregate, equal the lesser of (A) the
number derived by multiplying (1) the total number of shares
of Common Stock owned by the Management Stockholder (including
shares of Common Stock issuable in respect of all Options held by
any Management Stockholder, whether or not exercised, and including
any Options that vest as a result of the consummation of the
Transfer to the Third Party Purchaser); by (2) a fraction, the
numerator of which is the total number of shares of Common Stock to
be sold by the Acquiring Stockholder(s) in connection with the
transaction or series of related transactions and the denominator
of which is the total number of the then outstanding shares of
Common Stock held by all Acquiring Stockholder(s); or (B) the
number of shares of Common Stock as the Acquiring Stockholder(s)
shall designate in the Bring-Along Notice (as defined below);
provided, however, all Bring-Along Rights will be exercised on a
pro rata basis among the Management Stockholders based upon their
relative holdings of Common Stock and Options.
(b) If
any Acquiring Stockholder elects to exercise its Bring-Along Right
under this Section 2 with respect to the Restricted Shares
held by the Management Stockholders and/or Options held by the
Management Stockholders, the Acquiring Stockholder shall notify
each Management Stockholder in writing (collectively, the “
Bring-Along Notices ”). Each Bring-Along Notice shall
set forth: (i) the name of the Third Party Purchaser(s) and
the number of shares of Common Stock proposed to be sold by the
Acquiring Stockholder to the Third Party Purchaser(s);
(ii) the proposed amount and form of consideration and terms
and conditions of payment offered by the Third Party Purchaser(s)
and a summary of any other material terms pertaining to the
Transfer (“ Third Party Terms ”); and
(iii) the number of shares of Common Stock and Options that
the Acquiring Stockholder elects each Management Stockholder to
sell in the Transfer. The Bring-Along Notices shall be given at
least five (5) days before the closing of the proposed
Transfer.
(c) Upon
the giving of a Bring-Along Notice, each Management Stockholder
shall be obligated to sell the number of shares of Common Stock and
Options set forth in each Management Stockholder’s
Bring-Along Notice on the Third Party Terms.
(d) At
the closing of the Transfer to any Third Party Purchaser(s)
pursuant to this Section 2, the Third Party Purchaser(s) shall
remit to the Management Stockholder the consideration for the
Common Stock and Options held by the Management Stockholder
sold
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pursuant hereto minus any consideration to be escrowed or
otherwise held back in accordance with the Third Party Terms, and
minus the aggregate exercise price of any Options being
Transferred by the Management Stockholder to the Third Party
Purchaser(s), against delivery by the Management Stockholder of
certificates for Common Stock, duly endorsed for Transfer or with
duly executed stock powers and an instrument evidencing the
transfer or the cancellation of the Options subject to the
Bring-Along Right reasonably acceptable to the Company, and the
compliance by the Management Stockholder with any other conditions
to closing generally applicable to the Acquiring Stockholder(s) and
all other holders of Common Stock selling shares in such
transaction.
(e) Notwithstanding
any of the foregoing, if the Management Stockholder is established,
resident or domiciled in The Netherlands (a “ Netherlands
Management Stockholder ”), neither the Common Stock nor
Options held by any such Management Stockholder shall be subject to
the Bring-Along Right set forth in this Section 2 unless and
until the Third Party Purchaser holds, directly or indirectly, at
least a majority of the equity ownership and the voting rights of
the Common Stock.
Section 3. Tag-Along
Rights .
(a) In
the event that, at any time prior to the date on which the Company
consummates a sale of shares of Common Stock in an initial public
offering of shares of Common Stock registered pursuant to the
Securities Act of 1933, as amended, the Acquiring Stockholder
proposes to Transfer shares of Common Stock to a Third Party
Purchaser, in a single Transfer or a series of related Transfers
constituting a Company Sale (as defined in Section 3(f) below) then
each Management Stockholder shall have the right, subject to
Section 3(e) below (the “ Tag-Along Right ”) to
require that the proposed Third Party Purchaser purchase from such
Management Stockholder up to the number of whole shares of Common
Stock (including any Restricted Shares issuable upon the exercise
of Options that are vested as of the date of such Transfer,
including any Options that vest as a result of the consummation of
the Transfer to the Third Party Purchaser (collectively, the
“ Vested Options ”)) equal to the number derived
by multiplying (x) the total number of shares of Common Stock
that the proposed Third Party Purchaser has agreed or committed to
purchase, by (y) a fraction, the numerator of which is
the total number of shares of Common Stock (including shares of
Common Stock issuable upon exercise of Vested Options) owned by the
Management Stockholder, and the denominator of which is the
aggregate number of shares of Common Stock owned by all Acquiring
Stockholders, the Management Stockholder and all other holders of
Common Stock or Options (whether or not vested). The intent of this
computation is to accord to the Management Stockholder the right to
sell the same percentage of its holdings of Common Stock as the
Acquiring Stockholder are entitled to sell in such a transaction.
Any shares of Common Stock and Options purchased from the
Management Stockholder pursuant to this Section 3(a) shall be
purchased upon the same terms and conditions as such proposed
Transfer by the selling Acquiring Stockholder(s).
(b) The
Acquiring Stockholder(s) shall notify each Management Stockholder
in writing in the event such Acquiring Stockholder(s) propose to
make a Transfer or series of Transfers giving rise to the Tag-Along
Right at least ten (10) business days prior to the date on
which such Acquiring Stockholder(s) expect to consummate such
Transfer (the “ Sale Notice ”) which notice
shall specify the number of shares of Common Stock which the Third
Party
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Purchaser intends to purchase in such Transfer. The Tag-Along Right
may be exercised by any Management Stockholder by delivery of a
written notice to the Acquiring Stockholder proposing to sell
Restricted Shares (the “ Tag-Along Notice ”)
within ten (10) business days following receipt of the Sale
Notice from such Acquiring Stockholder(s). The Tag-Along Notice
shall state the number of shares of Common Stock and Options that
the Management Stockholder proposes to include in such Transfer to
the proposed Third Party Purchaser (not to exceed the number as
determined above). In the event that the proposed Third Party
Purchaser does not purchase the specified number of shares of
Common Stock and Options from the Management Stockholder on the
same terms and conditions as specified in the Sale Notice, then the
Acquiring Stockholder(s) shall not be permitted to sell any shares
of Common Stock to the proposed Third Party Purchaser unless the
Acquiring Stockholder(s) purchase from the Management Stockholder
such specified number of Restricted Shares and Options on the same
terms and conditions as specified in such Sale Notice.
(c) At
the closing of the Transfer to any Third Party Purchaser pursuant
to this Section 3, the Third Party Purchaser shall remit to
each Management Stockholder who exercised his Tag-Along Right the
consideration for the Common Stock and Vested Options held by the
Management Stockholder and sold pursuant hereto minus any
consideration to be escrowed or otherwise held back in accordance
with the Third Party Terms, and minus the aggregate exercise
price of such Vested Options, against delivery by the Management
Stockholder of certificates for Common Stock, duly endorsed for
Transfer or with duly executed stock powers and an instrument
evidencing the transfer or the cancellation of the Options subject
to the Tag-Along Right reasonably acceptable to the Company, and
the compliance by the Management Stockholder with any other
conditions to closing generally applicable to the Acquiring
Stockholder(s) and all other holders of Common Stock selling shares
in such transaction.
(d) At
the closing of the Transfer to any Third Party Purchaser pursuant
to this Section 3, any amounts remitted to each Management
Stockholder in respect of his Vested Options and/or Common Stock,
as applicable, shall be net of any withholding and employment taxes
required by such payments.
(e) Notwithstanding
any of the foregoing, if the Management Stockholder is a
Netherlands Management Stockholder, such Management Stockholder
shall not be permitted to exercise any of the rights set forth in
this Section 3 unless and until the Third Party Purchaser
holds, directly or indirectly, at least a majority of the equity
ownership and the voting rights of the Common Stock.
(f)
“ Company Sale ” shall mean (i) the
consummation of any transaction or series of transactions pursuant
to which one or more persons or entities or group of persons or
entities (other than the Principal Stockholder, Acquiring
Stockholder, or any transfer thereto as a result of any liquidation
or dissolution of any Principal Stockholder) acquires capital stock
of the Company (or its successors) possessing the voting power
sufficient to elect a majority of the members of the Board of
Directors of the Company or its successor(s) (whether such
transaction is effected by merger, consolidation, recapitalization,
sale or transfer of the Company’s capital stock or otherwise)
or (ii) any Liquidity Event (as such term is defined in the
Stock Option Plan).
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Section 4. Rights to
Repurchase Shares of Management Stockholders .
(a) Following
the Termination of Employment or the Termination of Directorship of
any Management Stockholder, the Company may elect, but shall not be
required, to repurchase or (for Management Stockholders other than
Netherlands Management Stockholders only, to require a designee) to
purchase all or any portion of (i) the Options held by any
Management Stockholders that are not Canadian Management
Stockholders (as such term is defined below) that are vested as of
the date of such termination or that are otherwise subject to
vesting after such termination and/or (ii) shares of Common
Stock acquired upon the exercise of any Options or otherwise
pursuant to the execution of a Subscription Agreement (the Options
and shares described in clauses (i) and (ii) herein,
collectively, the “ Repurchased Securities ”)
held by such Management Stockholder or his or her successor in
interest thereunder (“ Call Right ”). In
accordance with the terms of each Stock Option Agreement, any
Options that are not vested or not subject to vesting after the
date of any Termination of Employment or Termination of
Directorship shall then terminate without payment for such Options.
For purposes of this Agreement, the term “ Canadian
Management Stockholder ” shall mean an Management
Stockholder that is established, resident or domiciled in Canada or
who otherwise pays income taxes under the laws of Canada.
(b) The
Company may exercise its Call Right for a period of six
(6) months following the later of (i) the Termination of
Employment or the Termination of Directorship or (ii) with
respect to Options that vest after the date of Termination of
Employment or Termination of Directorship the date on which such
Options vest. Any Call Right as described herein shall be exercised
by written notice (“Call Notice”) to the Management
Stockholder given in accordance with Section 9(g) of this Agreement
on or prior to the last date on which the Call Right may be
exercised by the Company.
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