Exhibit 10.16
CONSULTING AGREEMENT
THIS AGREEMENT is made between GEPHARDT AND ASSOCIATES LLC (the
"Consultant"), a limited liability company existing under the laws of the state
of Delaware, and MID-WESTERN AIRCRAFT SYSTEMS, INC. (the "Company"), a
corporation existing under the laws of the State of Delaware, on February 25,
2005.
WHEREAS the Company intends to purchase the Boeing commercial
aero-structure manufacturing operations that are located in Wichita, Kansas,
Tulsa, Oklahoma and McAlester, Oklahoma (the "Business") pursuant to an
agreement of purchase and sale made between the Company and The Boeing Company
and dated February 22, 2005 (such agreement, the "Purchase Agreement" and the
purchase and sale of the Business as contemplated thereby, the "Transaction");
AND WHEREAS the Company wishes to engage the Consultant to provide: (a)
certain consulting services in respect of the negotiations to be conducted
between the Company and the principal unions representing the employees of the
Business prior to and as a condition of the closing of the Transaction,
including (i) providing strategic advice to the Company in the development of
its proposals to, and the conduct of negotiations with, such unions, (ii)
assisting the Company in identifying and establishing a dialogue with key union
representatives, (iii) participating in such negotiations as reasonably
requested by the Company consistent with the strategic role contemplated for the
Consultant and (iv) assisting the Company in its dealings with relevant
governmental and regulatory agencies and bodies (the services described in this
paragraph (a), the "Transaction Services"); and (b) in the circumstances
contemplated by paragraph 2(d) below, providing such consulting services to
affiliates of the Company (including Onex Corporation, Onex Partners GP LP and
their respective subsidiaries) in respect of their respective businesses and
affairs as may reasonably be requested having regard to the nature of those
businesses and the skills, experience and expertise of the Consultant and,
specifically, of ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), being a director,
officer, employee, owner or independent contractor thereof (the services
described in this paragraph (b), the "Other Services" and together with the
Transaction Services, the "Services");
AND WHEREAS the Consultant wishes to provide the Services on the terms
contemplated hereby;
NOW THEREFORE for the consideration provided for herein and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledges, the Company and the Consultant covenant and agree as follows:
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1. TERM. The term of this Agreement (the "Term") shall be the period
commencing on the date hereof and, subject to paragraph 2(c) below, ending
on the date that is:
(a) if the Transaction has closed within six months following the date
hereof, the date of such closing; and
(b) in any other circumstances, twelve months after the date hereof.
2. PROVISION OF SERVICES. During the Term, the Consultant will provide the
Services in accordance with the reasonable requests of the Company (or, in
the circumstances contemplated by paragraph (d) below, of Onex Corporation
or Onex Partners GP LP) and without limiting the generality of the
foregoing, it is hereby acknowledged and agreed that:
(a) the Consultant shall use its reasonable efforts to cause Gephardt to
be available to the Company by telephone and e-mail during normal
business hours and as otherwise reasonably requested by the Company in
connection with the provision of the Services;
(b) the Consultant may be asked to make Gephardt available to travel to
Wichita, Kansas or elsewhere as reasonably requested by the Company in
connection with the provision of the Transaction Services, and shall
cause Gephardt to use his reasonable efforts to accommodate such
requests;
(c) the Consultant may be requested, but shall not be obliged, to provide
Transaction Services following the date that is six months after the
date hereof. In those circumstances, the Term shall be extended for
the period during which the Consultant, in its sole discretion, may
agree to continue to provide such Transaction Services and the
additional compensation, if any, payable to the Consultant in
connection therewith shall be as negotiated by the Consultant and the
Company in good faith; and
(d) if the Transaction is not completed for any reason within six months
following the date hereof (as such period may be extended as
contemplated by paragraph (c) above), the Consultant shall only be
obliged to provide the Other Services, which Other Services shall be
provided in accordance with the reasonable requests of Onex
Corporation or Onex Partners GP LP.
The Consultant: (i) acknowledges that the Company has agreed to engage the
Consultant hereunder based exclusively upon, and solely as a result of, the
skills, experience and expertise of Gephardt and (ii) agrees that the
Services shall be rendered by Gephardt, acting in his capacity as a
director, officer, employee, owner or independent contractor of the
Consultant, and that the Consultant shall not be entitled to substitute the
services of an individual other than Gephardt to provide the Services
without the prior written consent of the Company, which the Company may
withhold in its sole and absolute discretion.
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3. FEE FOR SERVICES. The Company shall pay to the Consultant for the provision
of the Services a consulting fee (the "Fee") as follows:
(a) not later than the second business day following the date hereof, the
Company shall pay to the Consultant the sum of US$550,000 by check or
wire transfer to an account designated by the Consultant in writing on
or before the date hereof;
(b) not later than the second business day following the date, if any,
during the Term that the Transaction is completed, the Company shall
pay to the Consultant the sum of US$600,000 by check or wire transfer
to an account designated by the Consultant in writing not later than
two business days prior to such date of payment;
(c) not later than the tenth day following the day during the Term on
which the Transaction closes, the Company shall issue to the
Consultant, for no additional consideration, options (the "Options")
to acquire such number of shares of the Company (the "Shares") as have
a value based upon the price at which the Company actually acquires
the Business, including all transaction expenses, equal to US$550,000.
Notwithstanding the foregoing, it is acknowledged and agreed that the
Options shall not be issuable to the Consultant and he shall have no
right or entitlement in respect thereof if the Transaction is
completed during the Term, Gephardt is invited to become a member of
the board of directors of the Company upon or following such closing
and he fails to accept such appointment. Each Option issued pursuant
hereto: (i) shall be exercisable at any time prior to expiry to
acquire one Share; (ii) shall be exercisable by payment of a cash
exercise price equal to US$550,000 divided by the aggregate number of
Options so issued; (iii) shall vest immediately upon issuance; and
(iv) shall expire ten years following the date of issuance.
4. EXPENSES. The Company shall reimburse the Consultant for its reasonable
out-of-pocket expenses actually incurred in the provision of the Services,
including all travel costs of Gephardt.
5. DIRECTORS' COMPENSATION. The Company acknowledges and agrees that in
addition and without regard to the compensation and entitlements of the
Consultant hereunder, Gephardt shall be entitled to all such cash and
non-cash compensation and benefits as are made available to other outside
directors of the Company in the event that Gephardt is elected or appointed
as a member of the Company's board.
6. POWER OF ATTORNEY, STOCKHOLDERS' AGREEMENT, ETC. The Consultant hereby:
(a) agrees that its right to receive the Options as described in paragraph
3(c) above is subject to the timely execution and delivery by the
Consultant of all such documents, certificates and other instruments
as the Company may reasonably request in order to ensure that the
issuance of the Options and
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of the Shares issuable on the exercise thereof is made is full
compliance with all applicable laws;
(b) acknowledges that not later than the time at which the Options and/or
the Shares are issued, it may be required to enter into a
securityholders agreement, voting trust and/or other similar agreement
(in any such case, the "Securityholders' Agreement") with the other
securityholders of the Company dealing with, among other things:
(i) the transfer of securities of the Company or any interest
therein;
(ii) drag-along rights, tag-along rights, rights of first offer and/or
rights of first refusal relating to the securities of the Company
and other liquidity events;
(iii) governance, including the composition of the board of directors
of the Company; and/or
(iv) board approval and/or securityholder approval requirements,
and pursuant to which the Consultant will irrevocably appoint the
Company and/or one or more of its affiliates and/or one or more of its
or their respective directors, officers or employees as its attorney
and agent, with full power of substitution, to, among other things:
(A) vote as proxy all of the securities of the Company standing
in the name of the Consultant at any meeting of
securityholders or members of the Company or to provide
written consent on behalf of the securityholders of the
Company, with discretionary authority with respect to such
matters as may properly come before any such meeting, any
adjournment thereof or any request for written consent; and
(B) to execute and deliver on behalf of the Consultant any and
all agreements, certificates, receipts, instruments or other
documentation, to do any and all acts, and to give and
receive any and all notices, requests or other
communications, in its capacity as a securityholder of the
Company (other than a notice of exercise of Options); and
(c) provided that all other holders of securities of the Company also
enter into the Securityholders' Agreement (or an agreement with the
Company and/or the other securityholders thereof having substantially
identical terms and conditions) prior to or contemporaneously with the
entering into of the Securityholders' Agreement by the Consultant
(whether personally or through its attorney appointed hereunder), the
Consultant hereby irrevocably appoints each of Onex Partners Advisor
GP Inc., Onex Partners Manager GP Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ as its
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attorney and agent, with full power of substitution, to execute and
deliver on behalf of the Consultant the Securityholders' Agreement and
all agreements, certificates, receipts, instruments or other
documentation arising thereunder or relating thereto.
7. CONFIDENTIALITY. The Consultant hereby:
(a) acknowledges that both at the date hereof and subsequently, it and
Gephardt may have access to and be entrusted with confidential or
non-public data or information of or concerning the Business, the
Company and/or one or more of its affiliates, including, without
limitation, Onex Corporation and Onex Partners LP (collectively, the
"Onex Group"), including information relating to their respective
businesses, operations, affairs, assets, liabilities, condition
(financial or otherwise), business plans and prospects (including,
without limitation, in respect of human resources matters), the
disclosure of which would be highly detrimental to the interests of
the Onex Group or one or more of the members thereof;
(b) acknowledges that applicable securities laws may prohibit the
disclosure of confidential or non-public information of or concerning
any member of the Onex Group that is a reporting issuer or public
company, including Onex Corporation; and
(c) accordingly, agrees that neither it nor Gephardt shall at any time,
whether during the Term or thereafter, (i) disclose any confidential
or non-public information of or concerning any member of the Onex
Group to any person or entity except with the prior written consent or
at the written direction of the Company or as required by law or (ii)
use any such information for its or his own benefit or for any purpose
detrimental to the interests of the Onex Group or of any member
thereof.
8. NATURE OF RELATIONSHIP. The Consultant will at all times be deemed to be
performing as an independent contractor and neither it nor Gephardt shall
be deemed to be an agent, representative or employee of the Company or any
of its affiliates. This Agreement shall not be deemed to create any
partnership, joint venture, co-venture, agency or employer-employee
relationship between the Company or any of its affiliates and the
Consultant or Gephardt. Neither the Company nor any of its affiliates will
have any liability to withhold, collect, remit or pay any income taxes,
other taxes, levies, premiums, deductions, payments, charges or withholding
relating in any way to the performance of the Services by the Consultant or
Gephardt and/or the payment of the Fee.
9. NOTICES. Any notice or other communication required or permitted to be
delivered to any party shall be in writing and shall be deemed properly
delivered, given and received upon receipt when delivered by hand
(including commercial courier), by fax or by e-mail, provided that in each
case the notice or other communication is sent to the particulars set forth
beneath the name of such party below (or to such
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other address or facsimile telephone number as such party shall have
specified in a written notice given to the other parties hereto):
(a) if to the Company or any of its affiliates, to:
c/o Onex Partners Advisor GP Inc.
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No: ▇▇▇-▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇ and ▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
(b) if to the Consultant to:
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Fax No: ▇▇▇-▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇@▇▇▇.▇▇▇
10. PUBLIC ANNOUNCEMENT. The Company shall be permitted to publicly announce,
by press release or otherwise, the fact that Gephardt has been engaged to
provide the Services and, in the event that Gephardt is appointed to the
board of directors of the Company as contemplated by paragraph 3(c) hereof,
the fact of such appointment; provided, however, that the Company shall use
its reasonable best efforts to provide Gephardt with the reasonable
opportunity to review and comment upon the text of any such public
announcement prior to its release.
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11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
MID-WESTERN AIRCRAFT SYSTEMS, INC.
by: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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by: /s/ ▇▇▇▇ ▇▇▇▇▇▇
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GEPHARDT AND ASSOCIATES LLC
by: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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by: /s/ Gephardt and Associates, LLC
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