EMPLOYMENT AGREEMENT
between
ATA AIRLINES, INC.,
ATA HOLDINGS CORP.,
and
JOHN G. DENISON

(Effective September 1, 2005)

 
 

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EMPLOYMENT AGREEMENT
between
ATA AIRLINES, INC.,
ATA HOLDINGS CORP.,
and
JOHN G. DENISON

This Employment Agreement (“Agreement”) is made and entered into by and between
ATA Airlines, Inc. (“ATA”), ATA Holdings Corp. (“Holdings”; ATA and Holdings are
referred to jointly and severally as the "Companies"), and John G. Denison
(“Executive”).
 
Recitals
 
A.  On October 26, 2004, each of the Companies filed with the United States
Bankruptcy Court for the Southern District of Indiana, Indianapolis Division
(the "Bankruptcy Court"), its respective voluntary petition for relief under
Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. as
amended (the "Bankruptcy Code"; the Chapter 11 cases initiated by these filings
are collectively called the "Chapter 11 Cases") The Companies each continue to
operate their businesses and manage their properties as debtors-in-possession
pursuant to the Bankruptcy Code.
 
B.  ATA and Executive are parties to that certain Employment Agreement dated
effective as of February 21, 2005 (the “Initial Employment Agreement”), pursuant
to which Executive serves as President and Chief Executive Officer of ATA.
 
C.   The Companies desire for Executive to continue to be employed by ATA as its
President and Chief Executive Officer and also to serve as President and Chief
Executive Officer of Holdings, all in accordance with the terms of this
Agreement.
 
D.  The Companies intend to seek confirmation of plans of reorganization as soon
as feasible, and if possible, by December 31, 2005. Pursuant to the
reorganization plan confirmed for ATA, Holdings may continue as the sole
shareholder of ATA or a corporation other than Holdings may become the owner and
holder of all of the issued and outstanding capital stock of ATA. The term
"New ATA" as used in this Agreement means the corporation which, after the
confirmation of, and pursuant to a plan of reorganization for ATA or Holdings in
the Chapter 11 Cases, owns and holds all of the issued and outstanding capital
stock of ATA and, by whatever means, is or has become the employer of Executive
as its Chief Executive Officer, or if there is no such corporate owner and
employer, then the term shall mean ATA, as reorganized pursuant to such
confirmed plan of reorganization. As used in this Agreement: (a) the term
"Companies" shall mean, collectively, ATA and Holdings, except that from and
after the confirmation of a plan of reorganization for ATA in ATA's Chapter 11
Case, the term shall mean, collectively, ATA and New ATA; (b) the term "Company"
shall mean any one of the Companies.
 
 
 

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Agreement
 
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises
set forth in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Companies and
Executive agree as follows:
 
1.  Effective Date. This Agreement shall not become effective until it shall
have been authorized by the Bankruptcy Court in the Chapter 11 Cases. Subject to
that approval, this Agreement shall be effective for all purposes as of
September 1, 2005 (the “Effective Date”).
 
2.  Term of Employment. The term of this Agreement shall begin on the Effective
Date and continue through December 31, 2007, subject, however, to earlier
termination as provided in Section 8 of this Agreement (the “Term”).
 
3.  Position and Responsibilities. During the Term, Executive will serve as
President and Chief Executive Officer of each of the Companies and in such
additional executive positions as each of the Companies may designate from time
to time during the Term. Executive agrees to perform all of the duties and
responsibilities associated with such positions as well as other duties and
responsibilities that may be assigned to Executive from time to time by the
Board of Directors of each of the Companies. In addition, Executive's additional
duties shall include providing the Board of Directors of each of the Companies
periodic evaluations of the officers of the Companies working under Executive’s
supervision or review, with a specific view of each individual’s qualifications
and ability as a potential successor President and Chief Executive Officer of
the Companies. Executive will report to the respective Boards of Directors of
the Companies. In recognition of Executive’s role as President and Chief
Executive Officer, it Executive shall continue to serve as a member of the
Boards of Directors of the Companies during the Term.
 
4.  Location and Travel. Executive’s employment positions will be based at ATA’s
corporate headquarters in Indianapolis, Indiana, and Executive will be expected
to spend the vast majority of his employment time at such headquarters. The
Companies understand that Executive’s permanent residence is in Dallas, Texas,
and the Companies acknowledge that Executive may continue to commute weekly or
bi-weekly to such permanent residence consistent with Executive’s commuting
practices during his employment under the Initial Employment Agreement, as long
as such commuting does not interfere unreasonably with the execution of
Executive’s duties for the Companies. Given Executive’s positions for the
Companies and the nature of the Companies’ business, the performance of
Executive’s duties will entail significant travel around North America and
occasionally abroad. ATA will reimburse Executive for all reasonable and actual
travel expenses, subject to Executive’s compliance with applicable employee
travel policies and guidelines of the Companies, as in effect from time to time.
 
5.  Standard of Care. During the Term, Executive (a) will devote his full
working time, attention, energies and skills exclusively to the business and
affairs of the Companies; (b) will exercise the highest degree of loyalty and
the highest standards of conduct in the performance of his duties; (c) will not,
except as noted herein, engage in any other business activity, whether or not
such business activity is pursued for gain, profit or other pecuniary advantage,
without the express written consent of the Companies; and (d) will not take any
action that deprives the Companies of any business opportunities or otherwise
act in a manner that conflicts with the best interests of the Companies or that
is detrimental to the business of the Companies; provided, however, this Section
5 shall not be construed as preventing Executive (x) from investing his personal
assets in such form or manner as will not require his services in any capacity
in the operations and affairs of the businesses in which such investments are
made, or (y) from participating in charitable or other not-for-profit activities
as long as such activities do not interfere with Executive’s work for the
Companies.
 
 
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6.  Compensation and Benefits. As remuneration for all services to be rendered
by Executive during the Term pursuant to this Agreement, and as consideration
for complying with the covenants herein, the Companies shall pay and provide to
Executive the following:
 
6.1.  Annual Base Salary. Executive’s base salary shall be the nominal amount of
Three Hundred Fifty Thousand Dollars ($350,000) on an annualized basis;
provided, however, consistent with salary reductions taken by other executives
of the Companies, the Companies shall pay Executive a reduced base salary of Two
Hundred Eighty Thousand Dollars ($280,000) on an annualized basis (the “Base
Salary”) unless and until Executive and the Companies agree to a different
amount. The Companies will review the Base Salary on an annual basis to
determine any appropriate annual increase in Base Salary, based on
considerations such as Executive's performance, market compensation conditions,
the financial performance of the Companies and inflation. The Base Salary shall
be paid to Executive consistent with the Companies customary payroll practices.
 
6.2.  Incentive Bonus. Executive will be eligible to earn annual incentive bonus
compensation from the Companies. The amount of the incentive bonus compensation,
if any, shall be determined at the discretion of the Board of Directors of New
ATA, with Executive not participating in the determination. Such annual
incentive compensation will target 50% to 125% of Executive’s Base Salary and
will be based on a combination of the achievement by the Companies on a
consolidated basis of performance goals established by the Board of Directors of
New ATA prior to the start of the calendar year for which the bonus is being
determined, as well as such Board’s assessment of Executive’s performance as
President and Chief Executive Officer of the Companies. The first annual
incentive bonus compensation will be considered in January, 2007, relating to
performance during calendar year 2006. New ATA also will consider in January,
2008, an incentive bonus for Executive relating to performance during calendar
year 2007, notwithstanding that the term of Executive’s employment is to end at
December 31, 2007.
 
 
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6.3.  Equity Participation. An important part of Executive’s compensation as
President and Chief Executive Officer of the Companies is to be in the form of
equity participation, particularly given that Executive has agreed to a
below-market annual Base Salary under this Agreement. The parties further
acknowledge that it is not possible at the Effective Date of this Agreement for
the parties to specify with precision the form of such equity participation
because, among other reasons, the ultimate capital structure and valuation of
New ATA upon emergence from bankruptcy are not yet known. Accordingly,
Executive’s equity participation will be determined by mutual agreement at a
future time closer to the actual date of the confirmation of a plan of
reorganization and the emergence of ATA from bankruptcy, when the issues of
capital structure and valuation of New ATA have been resolved, provided such
equity participation is guided by the following principles: (a) the structure
and form of Executive’s equity participation will align Executive’s long term
interests with those of New ATA and its shareholders pursuant to which Executive
will gain from the increase in shareholder equity that is created; (b)
Executive’s equity participation will vest ratably over the remaining scheduled
term of his employment and will vest immediately if New ATA or ATA terminates
Executive’s employment without Cause or if Executive terminates his employment
because of a Change in Control occurring after ATA’s exit from bankruptcy (and
not in connection with that exit); (c) the life of the equity vehicle will be
set in a manner to allow Executive to benefit from the potential long-term
appreciation in New ATA equity. For example, if stock options are deployed, such
options will have a minimum life of seven (7) years and a maximum life of ten
(10) years, and Executive will be able to hold all vested options for their full
term even after Executive is no longer employed by any of the Companies; (d) the
value of the equity participation, over the full life of the equity vehicle
deployed and as determined by the Black-Scholes method, should be set at a level
consistent with comparable CEO-level appointments (post-bankruptcy and normal
course of business) at mid-size carriers in the airline industry subject to
reasonableness standards; (e) the value of the equity participation will also
reflect Executive’s assistance to ATA in connection with its cost control and
reduction efforts by Executive’s election to forego the bankruptcy exit bonus
that would have been due Executive under the Initial Employment Agreement; (f)
the strike price for any equity vehicle will be equal to the lower of (i) the
valuation set forth in the final Disclosure Statement issued in connection with
the confirmed reorganization plan for the Companies or (ii) the average closing
price of the capital stock of New ATA over the first thirty (30) days after (A)
exit from bankruptcy protection, and (B) at least twenty-five percent (25%) of
New ATA’s capital stock having been distributed, so as to place Executive on the
same basis as the shareholders of New ATA; and (g) the specific vehicle(s)
selected for equity participation will reflect the parties’ objective of
aligning Executive’s equity participation interest with the creation of
long-term value for New ATA shareholders while serving Executive and New ATA in
a tax efficient manner; the parties currently believe that the most advantageous
vehicle would be stock options. At the appropriate juncture during the Term but
in no event later than seventy-five (75) days after the effective date of a
confirmed plan of reorganization of ATA and/or Holdings (the "Effective
Reorganization Date"), the parties agree to negotiate and implement an equity
participation benefits and awards for Executive consistent with the foregoing
general principles.
 
 
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6.4.  Employee Benefits. The Companies shall provide to Executive and his
eligible dependents employee fringe benefits to which other employees of the
Companies and their eligible dependents are generally entitled, subject to the
eligibility requirements and other terms and conditions of such plans. Nothing
contained in this Section shall obligate the Companies to institute, maintain or
refrain from changing, amending or discontinuing any employee fringe benefit
plan, so long as such changes are similarly applicable to other employees
generally.
 
6.5.  Vacation. Executive shall be entitled to twenty (20) vacation days per
year.
 
6.6.  Relocation Benefits. If Executive relocates his permanent residence to the
Indianapolis, Indiana area before December 31, 2006, Executive will be entitled
to relocation benefits in accordance with the executive relocation package
policy of the Companies, or if there is more than one, the policy of Holdings.
 
6.7.  Travel Benefits. Executive shall be entitled to participate in ATA’s
travel benefits program subject to the terms and conditions of such program,
which program may be amended from time to time.
 
6.8.  Joint and Several Obligations. All compensation, benefit and other
commitments, liabilities and obligations of the Companies to Executive arising
under, pursuant to, by virtue of or in connection with this Agreement while
Executive serves as Chief Executive Officer of the Companies shall be the joint
and several obligations and liabilities of the Companies. If for any reason
Executive shall cease to be employed as Chief Executive Officer of one of the
Companies but continues to be employed as the Chief Executive Officer of the
other Companies, then the compensation, benefits and other commitments,
liabilities, and obligations to Executive arising under, pursuant to, by virtue
of or in connection with this Agreement from and after termination of
Executive's employment with that one Company shall be joint and several among
such of the Companies as then continue to employ Executive. The Companies may
elect to allocate among themselves the costs of the employment of Executive
under and pursuant to this Agreement, with the allocation being based on
whatever factors the Companies mutually determine are appropriate, but in the
absence of such an allocation agreement, all costs of the employment of
Executive shall be allocated to ATA. As a matter of convenience to the
Companies, one of the Companies may pay compensation and benefits to Executive
on behalf of the Companies.
 
7.  Reimbursement of Business Expenses. The Companies shall pay or reimburse
Executive for all ordinary and necessary expenses, in a reasonable amount, which
Executive incurs in performing his duties under this Agreement. Such expenses
shall be paid or reimbursed to Executive consistent with the expense
reimbursement policies of the Companies in effect from time to time and
Executive agrees to abide by any such expense reimbursement policies.
 
8.  Termination of Employment.
 
8.1.  Termination Due to Death. If Executive dies during the Term, this
Agreement shall terminate on the date of Executive’s death. Upon the death of
Executive, the obligation to pay and provide to Executive compensation and
benefits under this Agreement shall immediately terminate, except: (a) Executive
shall be paid by the Companies that portion of his Base Salary, at the rate then
in effect, which shall have been earned through the termination date; and (b) 
Executive shall be paid or provided by the Companies such other payments and
benefits, if any, which had accrued hereunder before Executive’s death. Other
than the foregoing, the Companies shall have no further obligations to Executive
(or Executive’s estate, heirs, executors, administrators and personal
representatives) under this Agreement.
 
 
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8.2.  Termination Due to Disability. If Executive suffers a Disability, the
Companies shall have the right to terminate this Agreement and Executive’s
employment with the Companies. The Companies shall deliver written notice to
Executive of the Companies’ termination because of Disability, pursuant to this
Section 8.2, specifying in such notice a termination date, and this Agreement
and Executive’s employment by the Companies shall terminate at the close
business on the specified termination date.
 
Upon the termination of this Agreement because of Disability, the obligation to
pay and provide to Executive compensation and benefits under this Agreement
shall immediately terminate, except: (a)  Executive shall be paid by the
Companies that portion of his Base Salary, at the rate then in effect, which
shall have been earned through the termination date; and (b)  Executive shall be
paid or provided by the Companies such other payments and benefits, if any,
which had accrued hereunder before the termination for Disability.
 
The term “Disability” shall mean either (i) when Executive is deemed disabled in
accordance with the long-term disability insurance policy or plan, if any, of
the Companies in effect at the time of the illness or injury causing the
disability and under which Executive is insured, or if no such policy or plan is
in effect, (ii) the inability of Executive, because of injury, illness, disease
or bodily or mental infirmity as determined by a physician reasonably acceptable
to the Companies, to perform the essential functions of his job (with or without
reasonable accommodation) for more than one hundred twenty (120) days during any
period of twelve (12) consecutive months.
 
8.3.  Termination Without Cause. At any time during the Term, the Companies may
terminate this Agreement and Executive’s employment with the Companies without
cause for any reason or no reason by notifying Executive in writing of the
Companies’ intent to terminate, specifying in such notice the effective
termination date, and this Agreement and Executive’s employment with the
Companies shall terminate at the close of business on the termination date
specified in the Companies’ notice. Upon termination of Executive’s employment
by the Companies without cause, the obligation to pay and provide Executive
compensation and benefits under this Agreement shall immediately terminate,
except: (a)  Executive shall be paid that portion of his Base Salary, at the
rate then in effect, which shall have been earned through the termination date;
(b)  Executive shall be paid or provided such other payments and benefits, if
any, which had accrued hereunder before the termination date; (c) the Companies
shall pay Executive severance compensation in the form of salary continuation at
Executive’s Base Salary rate, as then in effect, for a period of twelve (12)
months following the termination date; and (d) the Companies shall pay Executive
supplemental severance compensation consisting of twelve (12) monthly payments
each equal to the sum of (i) an amount equal to the monthly COBRA premium
Executive would pay if he elected to exercise his COBRA rights to continue group
health and dental insurance coverage for himself and any eligible dependents,
and (ii) an amount equal to the estimated federal and state tax liability that
Executive will incur as a result of his receipt of the amounts set forth in this
subpart (d) so that such supplemental payments are fully grossed-up (the
payments set forth in this subpart (d) shall hereinafter be referred to as the
“Supplemental Severance Payments”). Other than the foregoing, the Companies
shall have no further obligations to Executive under this Agreement.
 
 
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8.4.  Termination For Cause. At any time during the Term, the Companies may
terminate this Agreement and Executive’s employment with the Companies for
“Cause” as provided in this Section 8.4. The term “Cause” shall mean the
occurrence of one or more of the following events: (a) Executive’s gross or
habitual neglect of his employment duties and responsibilities; (b) Executive’s
conviction of, pleading guilty to, or pleading nolo contendere or its equivalent
to, a felony or any crime involving moral turpitude; (c) Executive’s engaging in
any illegal conduct or willful misconduct in the performance of his employment
duties for any of the Companies (or their affiliates); (d) Executive’s engaging
in any fraudulent or dishonest conduct in his dealings with, or on behalf of,
any of the Companies (or their affiliates); (e) Executive’s failure or refusal
to follow the lawful instructions of the Board of Directors of any of the
Companies, if such failure or refusal continues for a period of five (5)
calendar days after the Board of Directors of any of the Companies delivers to
Executive a written notice stating the instructions which Executive has failed
or refused to follow; (f) Executive’s breach of his obligations under this
Agreement; (g) Executive’s gross negligence in the performance of his employment
duties under this Agreement; or (h) Executive’s misuse of alcohol or drugs which
interferes materially with the performance of Executive’s employment duties for
any of the Companies.
 
Upon the occurrence of any of the events specified above, the Companies may
terminate Executive’s employment for Cause by notifying Executive in writing of
its decision to terminate his employment for Cause, and Executive’s employment
and this Agreement shall terminate at the close of business on the date on which
the Companies give such notice.
 
Upon termination of Executive’s employment by the Companies for Cause, the
obligation to pay or provide Executive compensation and benefits under this
Agreement shall terminate, except: (a)  Executive shall be paid that portion of
his Base Salary, at the rate then in effect, which shall have been earned
through the termination date; and (b)  Executive shall be paid or provided such
other payments or benefits, if any, which had accrued hereunder before the
termination date.
 
 
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8.5.  Termination by Executive Without Good Reason. At any time during the Term,
Executive may terminate his employment without Good Reason by giving the
Companies at least ninety (90) calendar days written notice of termination
without Good Reason. Upon termination of Executive’s employment by Executive
without Good Reason, the obligation to pay or provide Executive compensation and
benefits under this Agreement shall terminate, except: (a) Executive shall be
paid that portion of his Base Salary, at the rate then in effect, which shall
have been earned through the termination date; and (b) Executive shall be paid
or provided such other payments or benefits, if any, which had accrued hereunder
before the termination date.
 
8.6.  Termination by Executive for Good Reason. At any time during the Term,
Executive may terminate his employment with the Companies for Good Reason by
giving the Companies written notice of termination for Good Reason. For purposes
of this Agreement, the term “Good Reason” shall mean any of the following:
 
(a)  any material breach by any of the Companies of any provision of this
Agreement which is not cured by the breaching Company within ten (10) business
days of receipt by that Company of written notice from Executive specifying with
particularity the existence and nature of the breach; or
 
(b)  Executive’s termination of his employment for any reason within three (3)
months immediately following a Change in Control.
 
If this Agreement and Executive’s employment are terminated by Executive for
Good Reason pursuant to this Section 8.6, the obligation to pay or provide
Executive compensation and benefits under this Agreement shall terminate,
except:  (a)  Executive shall be paid that portion of his Base Salary, at the
rate then in effect, which shall have been earned through the termination date;
(b)  Executive shall be paid or provided such other payments or benefits, if
any, which had accrued hereunder before the termination date; (c) the Companies
shall pay Executive severance compensation in the form of salary continuation
payments at Executive’s Base Salary rate, at the rate then in effect, for a
period of twelve (12) months following the termination date; and (d) the
Companies shall pay Executive the Supplemental Severance Payments.
 
8.7.  Definition of Change in Control. For purposes of this Agreement, the term
“Change in Control” means and shall be deemed to have occurred upon the
occurrence of any one or more of the following:
 
(a)  entry by the Court in the Bankruptcy Proceeding of a final, non-appealable
order confirming a plan of reorganization of both or either of the Companies;
 
(b)  consummation of a sale or other disposition of all or substantially all of
the assets of ATA, or of all of the issued and outstanding capital stock of ATA
which is now owned by Holdings, other than to New ATA;
 
(c)  following the confirmation of a plan of reorganization for ATA, and not
pursuant to such plan, the acquisition by any individual, entity, or group of
beneficial ownership of more than percent (50%) of the outstanding equity
interests of ATA or New ATA;
 
 
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(d)  a majority of the members of the Board of Directors of New ATA or ATA are
not Continuing Directors; or
 
(e)  following the confirmation of a plan of reorganization for ATA, and not
pursuant to such plan, there shall occur a consummation of a plan of merger or
consolidation involving ATA or New ATA pursuant to which after the merger or
consolidation more than fifty percent (50%) of the equity interests of the
surviving entity is owned or controlled by a person or entity other than New
ATA.
 
As used above, the term "Continuing Directors" means, as of any date of
determination, any member of the board of directors of ATA or New ATA who (i)
was a member of such board of directors thirty (30) days following the date on
which a confirmed plan of reorganization for ATA, as confirmed in the Chapter 11
case, becomes effective, or (ii) was nominated for election or elected to such
board of directors by a majority of the Continuing Directors who were members of
such Board at the time of such nomination or election.
 
8.8.  Severance Release. Executive acknowledges and agrees that as a condition
to receiving any of the severance compensation (including the Supplemental
Severance Payments) pursuant to Section 8.3 or 8.6 of this Agreement (such
severance compensation being collectively referred to as the "Severance
Compensation"), Executive shall execute and deliver to the Companies a Release
Agreement in form and substance reasonably satisfactory to the Companies
pursuant to which Executive releases and waives any and all claims against the
Companies and their affiliates arising out of this Agreement, Executive’s
employment with the Companies, Executive’s work for the Companies or their
affiliates and/or the termination of Executive’s employment with the Companies;
provided, however, that such Release Agreement shall not affect or relinquish
(a) any vested rights Executive may have under any insurance or other employee
benefit plans sponsored by any of the Companies, (b) any claims for salary or
other compensation earned by Executive prior to the employment termination date;
(c) any claims for reimbursement of business expenses incurred prior to the
employment termination date, (d) any rights to Severance Compensation; or (e)
Executive's rights to indemnification pursuant to Section 12 of this Agreement
or by law. In the event Executive dies during the period he is receiving any
Severance Compensation, the Companies' obligation to pay such Severance
Compensation shall not terminate, and the unpaid portion of such Severance
Compensation shall be paid in a lump sum to Executive's estate as soon as
administratively feasible.
 
8.9.  Resignation as Officer and/or Director Upon Employment Termination. In the
event Executive’s employment with the Companies terminates for any reason
(including, without limitation, pursuant to Sections 8.1 - 8.6 herein),
Executive agrees and covenants that he will immediately resign any and all
positions, including, without limitation, as an officer and/or member of the
Board of Directors or any other governing boards, he may hold with the Companies
or any of their affiliates.
 
 
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8.10.  No Duplication. Executive acknowledges that, unless otherwise provided
for in any policy or plan governing severance benefits for employees of either
of the Companies, including Executive, Executive shall be entitled only to the
Severance Compensation as a severance benefit related to his employment under
this Agreement.
 
9.  Non-Disclosure. Executive acknowledges that during the course of Executive’s
employment with the Companies Executive will be creating, making use of,
acquiring, and/or adding to confidential information relating to the business
and affairs of the Companies (and their affiliates), which information will
include, without limitation, procedures, methods, manuals, lists of customers,
suppliers and other contacts, sales and other reports, marketing plans, business
plans, financial data, and personnel information. Executive covenants and agrees
that Executive shall not, at any time during Executive’s employment with the
Companies or thereafter at any time, directly or indirectly, use, divulge or
disclose for any purpose whatsoever any of the Companies’ (or their affiliates’)
confidential information or trade secrets, except in the course of Executive’s
work for and on behalf of the Companies (or their affiliates). During
Executive’s employment by the Companies, any inventions, new devices or
procedures, as well as any patent, copyright or trademark applications filed, or
patents, copyrights or trademarks obtained, as a result of Executive’s efforts
on behalf of the Companies (or any of their affiliates) shall belong and inure
to the exclusive benefit of the Companies. Upon the termination of Executive’s
employment with the Companies, or at any of the Companies’ request, Executive
shall immediately deliver to the Companies any and all records, documents, or
electronic data (in whatever form or media), and all copies thereof, in
Executive’s possession or under Executive’s control, whether prepared by
Executive or others, containing confidential information or trade secrets
relating to the Companies (or their affiliates). Executive acknowledges and
agrees that his obligations under this Section shall survive the expiration or
termination of this Agreement and the cessation of his employment with the
Companies for whatever reason.
 
10.  Restrictive Covenants. Executive acknowledges that in connection with his
employment with the Companies, he will provide executive-level services that are
of a unique and special value and that he will be entrusted with confidential
and proprietary information concerning the Companies and their affiliates.
Executive further acknowledges that the Companies and their affiliates are
engaged in highly competitive businesses and that the Companies and their
affiliates expend substantial amounts of time, money and effort to develop trade
secrets, business strategies, customer relationships, employee relationships and
goodwill. Therefore, as an essential part of this Agreement, Executive agrees
and covenants to comply with the following restrictive covenants.
 
10.1.  Non-Competition. Executive agrees to comply with the non-competition
covenants set forth in this Section 10.1. Executive may at any time waive his
right to receive Severance Compensation (including during the period that he is
receiving Severance Compensation) by notifying ATA in writing of such waiver, at
which point Executive will no longer be entitled to receive any further
Severance Compensation and Executive will no longer be bound by the
non-competition covenants set forth in Section 10.1 of this Agreement. If
Executive violates any of the non-competition covenants set forth in Section
10.1 of this Agreement, Executive will not be entitled to payment of any further
Severance Compensation.
 
 
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(a)  During the term of Executive’s employment with the Companies under this
Agreement and thereafter during the period that Executive is actually receiving
Severance Compensation after the termination of such employment (the
"Post-Termination Period"), Executive will not own, manage, operate, control,
invest in, lend to, acquire an interest in, or otherwise engage or participate
in (whether as an employee, independent contractor, consultant, partner,
shareholder, joint venturer, investor or any other type of participant), or use
or permit Executive’s name to be used in, any business which competes with any
Business (as defined below). For purposes of clarity, if this Agreement
terminates and Executive is not to receive Severance Compensation following such
termination, the non-competition covenants in this Section 10.1 shall no longer
be in effect. Further, if following a termination of this Agreement Executive is
to be receiving Severance Compensation but the Companies default in its payment
following ten (10) days' written notice to the Companies from Executive, the
non-competition covenants in this Section 10.1 shall expire and shall no longer
be in effect.
 
(b)  During Executive’s employment under this Agreement and thereafter during
the Post-Termination Period, Executive will not within the Restricted Geographic
Territory own, manage, operate, control, invest in, lend to, acquire an interest
in, or otherwise engage or participate in (whether as an employee, independent
contractor, consultant, partner, shareholder, joint venturer, investor or any
other type of participant), or use or permit Executive’s name to be used in, any
business which competes with any Business. The parties acknowledge and agree
that the Business is generally located at least within the Restricted Geographic
Territory, extends throughout the Restricted Geographic Territory and is not
limited to any particular region of the Restricted Geographic Territory.
 
(c)  During Executive’s employment under this Agreement and thereafter during
the Post-Termination Period, Executive will not within the Restricted Geographic
Territory own, manage, operate, control, invest in, lend to, acquire an interest
in, or otherwise engage or participate in (whether as an employee, independent
contractor, consultant, partner, shareholder, joint venturer, investor or any
other type of participant), or use or permit Executive’s name to be used in, any
business which competes with any Business, as such Business existed during
Executive’s employment with ATA and as of the termination of Executive’s
employment with ATA.
 
(d)  During Executive’s employment under this Agreement and thereafter during
the Post-Termination Period, Executive will not within the Restricted Geographic
Territory own, manage, operate, control, invest in, lend to, acquire an interest
in, or otherwise engage or participate in (whether as an employee, independent
contractor, consultant, partner, shareholder, joint venturer, investor or any
other type of participant) or use or permit Executive’s name to be used in, any
business which competes with any charter or scheduled service commercial air
carrier routes flown by ATA as such existed during Executive’s employment with
ATA and as of the termination of Executive’s employment with ATA.
 
 
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(e)  Notwithstanding the provisions of Sections 10.1(a), 10.1(b), 10.1(c), and
10.1(d) hereof, the parties agree that Executive is not prohibited from owning
for investment purposes securities of any public company provided such ownership
does not exceed five percent (5%) of any class of securities of such public
company.
 
(f)  Notwithstanding the provisions of Sections 10.1(a), 10.1(b), 10.1(c), and
10.1(d) hereof, the parties agree that during the Post-Termination Period,
Executive may be employed by or render services to Southwest Airlines Co. or any
of its subsidiaries, without limitation, and also to any entity that owns at
least ten percent (10%) of one of the Companies, if Executive’s principal
function for such entity is to assist in monitoring, and counseling such entity
with respect to, its investment in both or either of the Companies.
 
(g)  For purposes of this Agreement, the term “Business” means, collectively,
the sale or provision of air carrier services certified by the Federal Aviation
Association (“FAA”) or United States Department of Transportation (“DOT”),
non-military charter and air taxi services, military charter services to the
United States’ military, cargo services, wet leasing or any other business
conducted by either of the Companies as such business existed at any time during
Executive’s employment with either of the Companies and as of the termination of
such employment. For purposes of this Agreement, the term “Restricted Geographic
Territory” means (i) the geographic area of the continental United States plus
the State of Hawaii plus any geographic area within a 100-mile radius of any
destination in the world to which ATA has flown commercial airline passengers at
any time during Executive’s employment with either of the Companies; (ii) the
geographic area of the continental United States, plus the State of Hawaii, plus
any geographic area within a 50-mile radius of any destination in the world to
which ATA has flown United States’ military charters at any time during the
Executive’s employment with either of the Companies; and (iii) any additional
geographic areas in which either of the Companies sold or solicited or marketed
the sale of any aspect of its Business at any time during Executive’s employment
with either of the Companies.
 
10.2.  Non-Solicitation of Employees. During the term of Executive’s employment
under this Agreement and for a period of one (1) year immediately after the
termination of such employment, Executive will not solicit, recruit, hire,
employ or attempt to hire or employ any person who is then an employee of any of
the Companies, or was employed by either of the Companies within the one
(1) year period immediately prior to termination of Executive's employment under
this Agreement, or urge, influence, induce or seek to induce any employee of any
of the Companies to terminate such employee's relationship with either of the
Companies.
 
 
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10.3.  Non-Interference With Contractors and Vendors. During the term of
Executive’s employment under this Agreement and for a period of one (1) year
immediately after the termination of such employment, Executive will not urge,
induce or seek to induce any of the Companies’ independent contractors,
subcontractors, consultants, vendors, suppliers or lessors to terminate their
relationship with, or representation of, any of the Companies or to cancel,
withdraw, reduce, limit, or in any manner modify any of such person’s or
entity’s business with, or representation of, any of the Companies.
 
10.4.  Direct or Indirect Activities. Executive acknowledges and agrees that the
covenants contained in Sections 9 and 10 prohibit Executive from engaging in
certain activities directly or indirectly, whether on Executive’s own behalf or
on behalf of any other person or entity, and regardless of the capacity in which
Executive is acting, including without limitation as an employee, independent
contractor, owner, partner, officer, agent, consultant, or advisor.
 
10.5.  Survival of Restrictive Covenants. Executive acknowledges and agrees that
his obligations under Sections 9 and 10 of this Agreement shall survive the
expiration or termination of this Agreement and the cessation of his employment
with the Companies for whatever reason.
 
10.6.  Severability; Modification of Restrictions. The covenants and
restrictions in Sections 9 and 10 of this Agreement are separate and divisible,
and to the extent any covenant, provision or portion of Sections 9 and 10 of
this Agreement is determined to be unenforceable or invalid for any reason, such
unenforceability or invalidity shall not affect the enforceability or validity
of the remainder of Sections 9 and 10 of this Agreement. If any particular
covenant, provision or portion of Sections 9 and 10 is determined to be
unreasonable for unenforceable for any reason, such covenant, provision or
portion thereof shall automatically be deemed reformed such that the contested
covenant, provision or portion will have the closest effect permitted by
applicable law to the original form and shall be given effect and enforced as so
reformed to whatever extent would be reasonable and enforceable under applicable
law. The parties agree that any court interpreting any of the restrictions and
covenants contained in Sections 9 and 10 of this Agreement shall, if necessary,
reform any such covenant to make it enforceable under applicable law.
 
11.  Remedies. Executive recognizes that a breach or threatened breach by
Executive of Sections 9 or 10 of this Agreement will give rise to irreparable
injury to the Companies and that money damages will not be adequate relief for
such injury and, accordingly, Executive agrees that the Companies shall be
entitled to obtain injunctive relief, including, but not limited to, temporary
restraining orders, preliminary injunctions and/or permanent injunctions,
without having to post any bond or other security, to restrain or prohibit such
breach or threatened breach, in addition to any other legal remedies which may
be available, including without limitations, the cessation of payments and
benefits under this Agreement and recovery of money damages.
 
 
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12.  Indemnification.
 
(a)  The Companies shall indemnify Executive against all Liability and Expense
that may be incurred by him in connection with or resulting from any Claim to
the fullest extent authorized or permitted by law, as the same exists or may
hereafter be amended (but in the case of any such amendment, only to the extent
that such amendment permits the Companies to provide broader indemnification
rights than such law permitted the Companies to provide prior to such
amendment), or otherwise consistent with the public policy of the State of
Indiana. In furtherance of the foregoing, and not by way of limitation,
Executive shall be indemnified by the Companies against all Liability and
reasonable Expense that may be incurred by him in connection with or resulting
from any Claim, (1) if Executive is Wholly Successful with respect to the Claim,
or (2) if not Wholly Successful, then if Executive is determined, as provided in
either subsection (e) or (f) below, to have acted in good faith, in what he
reasonably believed to be the best interests of the Companies or at least not
opposed to its best interests and, in addition, with respect to any criminal
claim is determined to have had reasonable cause to believe that his conduct was
lawful or had no reasonable cause to believe that his conduct was unlawful. The
termination of any Claim, by judgment, order, settlement (whether with or
without court approval), or conviction or upon a plea of guilty or of nolo
contendere, or its equivalent, shall not create a presumption that Executive did
not meet the standards of conduct set forth in clause (2) of this
subsection (a).
 
(b)  The term “Claim” as used in this Section shall include every pending,
threatened, or completed claim, action, suit, or proceeding and all appeals
thereof (whether brought by or in the right of any of the Companies or
otherwise), civil, criminal, administrative, or investigative, formal or
informal, in which Executive may become involved, as a party or otherwise:
 

(1)  
by reason of his or her being or having been an officer or employee of any of
the Companies, or

 

(2)  
by reason of any action taken or not taken by him in his capacity as an officer
or employee of any of the Companies, whether or not he continued in such
capacity at the time such Liability or Expense shall have been incurred.

 
(c)  The terms “Liability” and “Expense” as used in this Section  shall include,
but shall not be limited to, counsel fees and disbursements and amounts of
judgments, fines, or penalties against (including excise taxes assessed with
respect to an employee benefit plan), and amounts paid in settlement by or on
behalf of Executive.
 
 
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(d)  The term “Wholly Successful” as used in this Section shall mean
(1) termination of any Claim, whether on the merits or otherwise, against
Executive in question without any finding of liability or guilt against him,
(2) approval by a court, with knowledge of the indemnity herein provided, of a
settlement of any Claim, or (3) the expiration of a reasonable period of time
after the making or threatened making of any Claim without the institution of
the same, without any payment or promise made to induce a settlement.
 
(e)  If Executive is claiming indemnification hereunder (other than if Executive
has been Wholly Successful with respect to any Claim), Executive shall be
entitled to indemnification (1) if special independent legal counsel, which may
be regular counsel of the Companies, or other disinterested person or persons,
in either case selected by the Board of Directors of the Companies (such counsel
or person or persons being hereinafter called the “Referee”), shall deliver to
the Companies a written finding that Executive has met the standards of conduct
set forth in subsection (a)(2) above, and (2) if the Board of Directors of any
of the Companies, acting upon such written finding, so determines. Such Board of
Directors shall, if Executive is found to be entitled to indemnification
pursuant to the preceding sentence, also determine the reasonableness of
Executive’s Expenses. Executive shall, if requested, appear before the Referee,
answer questions that the Referee deems relevant and shall be given ample
opportunity to present to the Referee evidence upon which Executive relies for
indemnification. The Companies shall, at the request of the Referee, make
available facts, opinions, or other evidence in any way relevant to the
Referee’s findings that are within the possession or control of the Companies.
 
(f)  If Executive is claiming indemnification pursuant to subsection (e) above
and if the Board of Directors fails to select a Referee within a reasonable
amount of time following a written request of Executive for the selection of a
Referee, or if the Referee or the Board of Directors fails to make a
determination under subsection (e) above within a reasonable amount of time
following the selection of a Referee, Executive may apply for indemnification
with respect to a Claim to a court of competent jurisdiction, including a court
in which the Claim is pending against Executive. On receipt of an application,
the court, after giving notice to the Companies and giving the Companies
opportunity to present to the court any information or evidence relating to the
claim for indemnification that the Companies deems appropriate, may order
indemnification if it determines that Executive is entitled to indemnification
with respect to the Claim because Executive met the standards of conduct set
forth in subsection (a)(2) above. If the court determines that Executive is
entitled to indemnification, the court shall also determine the reasonableness
of Executive’s Expenses.
 
 
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(g)  Expenses incurred by Executive in defending any Claim shall be paid by the
Companies in advance of the final disposition of such Claim promptly as they are
incurred upon receipt of an undertaking by or on behalf of Executive to repay
such amount if he is determined not to be entitled to indemnification.
 
(h)  The rights of indemnification and advancement of Expenses provided in this
Section shall be in addition to any rights to which Executive may otherwise be
entitled, provided that the Companies shall not be obligated to make any payment
in connection with a Claim to the extent Executive has received payment of such
amount from another source, including without limitation any insurer.
 
(i)  The provisions of this Section shall be applicable to Claims made or
commenced after the date of this Agreement, whether arising from acts or
omissions to act occurring before or after the date of this Agreement.
 
(j)  If this Section or any portion hereof shall be invalidated on any ground by
any court of competent jurisdiction, then the Companies shall nevertheless
indemnify Executive as to costs, charges and expenses (including attorneys’
fees), judgments, fines and amounts paid in settlement with respect to any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Companies, to the
fullest extent permitted by any applicable portion of this Section that shall
not have been invalidated and to the fullest extent permitted by applicable law.
 
13.  Assignment.
 
13.1.  Assignment by the Companies. The Companies shall have the right to assign
this Agreement, and this Agreement shall inure to the benefit of, and may be
enforced by, any and all successors and assigns of the Companies, including
without limitation by asset assignment, stock sale, merger, consolidation or
other corporate reorganization.
 
13.2.  Non-Assignment by Executive. The services to be provided by Executive to
the Companies hereunder are personal to Executive, and Executive’s duties may
not be assigned by Executive.
 
14.  Notice. Any notice required or permitted under this Agreement shall be in
writing and either delivered personally or sent by nationally recognized
overnight courier, express mail, or certified or registered mail, postage
prepaid, return receipt requested, at the following respective address unless
the party notifies the other party in writing of a change of address:
 
 
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If to any of the Companies:

ATA Airlines, Inc.
7337 West Washington Street
P.O. Box 51609
Indianapolis, Indiana 46231-1300
Attention: Brian Hunt, Senior Vice President and General Counsel

If to Executive:

John G. Denison
_____________________________________
_____________________________________

A notice delivered personally shall be deemed delivered and effective as of the
date of delivery. A notice sent by overnight courier or express mail shall be
deemed delivered and effective one (1) day after it is deposited with the postal
authority or commercial carrier. A notice sent by certified or registered mail
shall be deemed delivered and effective two (2) days after it is deposited with
the postal authority.
 
15.  Miscellaneous.
 
15.1.  Entire Agreement and Cancellation of Initial Employment Agreement. This
Agreement supersedes any prior agreements or understandings, oral or written,
between the parties hereto, with respect to the subject matter hereof, and
constitutes the entire agreement of the parties with respect thereto. ATA and
Executive acknowledge and agree that this Agreement supersedes and cancels the
Initial Employment Agreement for all purposes.
 
15.2.  Modification. This Agreement shall not be varied, altered, modified,
canceled, changed, or in any way amended except by mutual agreement of the
parties in a written instrument executed by Executive and the Boards of
Directors of ATA and Holdings.
 
15.3.  Counterparts. This Agreement may be executed in one (1) or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
 
15.4.  Tax Withholding. The Companies may withhold from any compensation or
benefits payable under this Agreement all federal, state, city, or other taxes
as may be required pursuant to any law or governmental regulation or ruling.
 
15.5.  Contractual Rights to Benefits. Nothing herein contained shall require or
be deemed to require, or prohibit or be deemed to prohibit, the Companies to
segregate, earmark or otherwise set aside any funds or other assets, in trust or
otherwise, to provide for any payments to be made or required hereunder.
 
 
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15.6.  Employment Policies. Executive agrees to abide by any employment rules or
policies applicable to ATA’s employees generally that ATA currently has or may
adopt, amend or implement from time to time during Executive’s employment under
this Agreement.
 
15.7.  No Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions of this Agreement shall not be deemed a waiver of
such term, covenant or condition, nor shall any waiver or relinquishment of any
right or power hereunder at any one or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.
 
15.8.  Governing Law; Choice of Forum. To the extent not preempted by federal
law, the provisions of this Agreement shall be construed and enforced in
accordance with the laws of the State of Indiana, notwithstanding any state’s
choice-of-law or conflicts-of-law rules to the contrary. This Agreement is
intended, among other things, to supplement the provisions of the Uniform Trade
Secrets Act, as amended from time to time, and the duties Executive owes to the
Companies under the common law, including, but not limited to, the duty of
loyalty. The parties agree that any legal action relating to this Agreement
shall be commenced and maintained exclusively before any appropriate state court
of record in Marion County, Indiana, or in the United States District Court for
the Southern District of Indiana, Indianapolis Division, and the parties hereby
irrevocably consent and submit to the jurisdiction and venue of such courts and
waive any right to challenge or otherwise object to personal jurisdiction or
venue in any action commenced or maintained in such courts.
 
[SIGNATURES ON FOLLOWING PAGE; REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 
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IN WITNESS WHEREOF, ATA, Holdings, and Executive have executed this Agreement,
intending it to be effective as provided in Section 1 of this Agreement.
 
ATA AIRLINES, INC.

By: /s/ Brian T. Hunt    
Name: Brian T. Hunt

Title: Senior Vice President and General Counsel

ATA HOLDINGS CORP.

By: /s/ Brian T. Hunt    
Name: Brian T. Hunt

Title: Senior Vice President and General Counsel

 

EXECUTIVE

/s/ John G. Denison
John G. Denison

 
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