Exhibit 10.12


 


NON-COMPETITION
AND CONFIDENTIALITY AGREEMENT


 


J. George Mikelsons (“Mikelsons”) and ATA Holdings
Corp. (“ATA Holdings”), together with ATA Holdings’ subsidiaries ATA Airlines, Inc.
(“ATA Airlines”), Ambassadair Travel Club, Inc., ATA Leisure Corp., Amber
Travel, Inc., American Trans Air Execujet, Inc., ATA Cargo, Inc.,
and C8 Airlines, Inc. (collectively, ATA Airlines and the other
subsidiaries of ATA Holdings identified above shall be referred to as the “ATA
Subsidiaries” and ATA Holdings and the ATA Subsidiaries collectively shall be
referred to as the “ATA Group”), hereby execute this Non-Competition and
Confidentiality Agreement (“Agreement”), and enter into this Agreement
effective as of the 31st of August, 2005.


 


In consideration of Mikelsons’
prior employment by the ATA Group and additional good and valuable
consideration hereunder, Mikelsons and the ATA Group agree as follows:


 


1.             Definitions.
For purposes of this
Agreement, the following terms shall have the meanings set forth below:


 


a.             “Business” shall mean collectively the sale or provision
of air carrier services certificated by the Federal Aviation Association or
United States Department of Transportation, non-military charter and air taxi
services, military charter services to the United States’ military, cargo
services, travel agency services, travel club services, wet leasing or any other
businesses conducted by any member of the ATA Group as such business of each
member of the ATA Group existed at any time prior to or exists upon the
Commencement Date of this Agreement.


 


b.             “Commencement Date” shall mean September 1, 2005.


 


c.             “Confidential Information” shall mean any proprietary,
confidential or competitively-sensitive information and materials which are the
property of or relate to the ATA Group or the Business of any member of the ATA
Group. Confidential Information shall include without limitation all
information and materials, whether or not reduced to writing or other tangible
medium of expression, created by, provided to or otherwise disclosed to
Mikelsons in connection with Mikelsons’ employment with any member of the ATA
Group or continued interim service as the non-executive Chairman of the Board
of ATA Holdings Corp. (excepting only information and materials already known
by the general public), including without limitation (i) trade secrets, (ii) the
names and addresses of any member of the ATA Group’s past, present or
prospective customers or business contacts, and all information relating to
such customers or business contacts, regardless of whether such information was
supplied or produced by any member of the ATA Group or such customers or
business contacts; (iii) the terms of employment between any member of the
ATA Group and its employees; (iv) proprietary information regarding or
with respect to any member of the ATA Group’s services, products, prices,
pricing methods, fees, costs, processes, training materials, financing sources,
marketing plans or techniques, business plans, operational strategies and
tactical plans; and (v) the financial condition and operating results of
any member of the ATA Group.


 


d.             “Expiration Date” shall mean August 31, 2008.


 

















 


e.             “Non-Compete Payments” shall mean the annual aggregate
gross sum of $200,000, payable in each of the final two years of the
Non-Compete Term (as defined herein). The parties agree and acknowledge that
for the first twelve (12) months of the Non-Compete Term, Mikelsons shall
receive certain severance payments from the ATA Group under that certain
Severance Agreement dated August 31, 2005 between Mikelsons and each
member of the ATA Group respectively (the “Severance Agreement”) and that such
severance payments are additional consideration to Mikelsons for the
agreements, covenants, obligations and restrictions under this Agreement.


 


f.              “Non-Compete Term” shall mean that thirty-six (36)
month period beginning on the Commencement Date and extending through and
ending on the Expiration Date.


 


g.             “Territory” shall mean (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 any member of
the ATA Group has flown commercial airline passengers at any time prior to the
Commencement Date; (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 any member of the ATA Group has flown executive
charter passengers within one year prior to the Commencement Date; (iii) 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 any member of the ATA Group has flown United States’ military charters at
any time prior to the Commencement Date; and (iv) any additional
geographic areas in which any member of the ATA Group sold or solicited or
marketed the sale of any aspect of its Business within one year prior to the Commencement
Date. The parties acknowledge and agree that the Business of the ATA Group collectively
is generally located at least within the Territory, extends throughout the
Territory and is not limited to any particular region of the Territory.


 


2.             Authority. ATA Holdings and each
member of the ATA Subsidiaries, respectively, is the subject of a case under
chapter 11 of the United States Bankruptcy Code pending in the United States
Bankruptcy Court, Southern District of Indiana, Indianapolis Division (the “Bankruptcy
Court”), jointly administered under case number 04-19866 (collectively, the “Bankruptcy
Cases;” individually, a “Bankruptcy Case”). The parties agree and acknowledge
that (i) this Agreement is being entered into pursuant to an Order of the
Bankruptcy Court dated August 25, 2005, approving generally the terms of
this Agreement (the “Order”); and (ii) the counsel for the Official
Committee of Unsecured Creditors appointed in the chapter 11 cases of the ATA
Group, shall have the right to review the terms hereof to confirm that such
terms are consistent with the Order.


 


3.             Acknowledgments. Mikelsons
acknowledges and agrees that in connection with Mikelsons’ employment with the
members of the ATA Group, respectively, Mikelsons (a) directed, developed,
received, participated and engaged in all proprietary information involving,
concerning or relating to the Business, (b) established business
relationships or had contact with


 


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the customers, prospective customers, regulatory agencies, airport
authorities and others who do business with the ATA Group, and/or (c) had
access to, generated or otherwise came into contact with or become aware of
Confidential Information, including without limitation, Confidential
Information concerning the operations of each member of the ATA Group,
including the requirements, habits and/or preferences of the regulatory
agencies, airport authorities and customers of each member of the ATA Group.
Mikelsons therefore acknowledges and agrees to the restrictions set forth in
Sections 4, 6 and 7 of this Agreement are reasonably necessary to protect the
legitimate business interests of the members of the ATA Group


 


4.            Use; Confidentiality. Mikelsons
acknowledges and agrees that Confidential Information is the property of the
ATA Group and its customers, and that Mikelsons has no ownership rights in
Confidential Information. Mikelsons (a) shall not directly or indirectly
disclose, use or exploit any Confidential Information for Mikelsons’ own
benefit or for the benefit of any person or entity, other than the ATA Group at
any and all times up to and through the Expiration Date; and (b) shall
hold Confidential Information in trust and confidence, and use all reasonable
means to assure that it is not directly or indirectly disclosed to or copied by
unauthorized persons or used in an unauthorized manner, at any and all times up
to and through the Expiration Date.


 


5.            Disclosure; Assistance. To the extent that Mikelsons created or
developed any Confidential Information during the course of Mikelsons’
employment with the ATA Group, Mikelsons agrees and acknowledges such
Confidential Information is the sole and exclusive property of the ATA Group.


 


6.            Non-Competition.  Mikelsons agrees commencing on the
Commencement Date and up to and through the Expiration Date, to be subject to
the following restrictions on competition:


 


a.             During the Non-Compete Term, Mikelsons (on Mikelsons’
own behalf or that of any other person or entity) shall not directly or
indirectly 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 Mikelsons’ name
to be used in, any business (including the sale of any product or service)
which directly or indirectly competes with any Business of the ATA Group.


 


b.             During the Non-Compete Term, Mikelsons (on Mikelsons’
own behalf or that of any other person or entity) shall not within the
Territory directly or indirectly 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
Mikelsons’ name to be used in, any business (including the sale of any product
or service) which directly or indirectly competes with any Business of the ATA
Group.


 


c.              During the Non-Compete Term, Mikelsons (on Mikelsons’
own behalf or that of any other person or entity) shall not directly or
indirectly own, manage, operate, control,


 


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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 Mikelsons’ name to be used in, any business (including the sale
of any product or service) which directly or indirectly competes with any FAA
or DOT certificated air carrier operations, non-military charter and air taxi
operations, military charter services to the United States’ military, cargo
services, travel agency services, travel club services, wet leasing or any
other businesses conducted by any member of the ATA Group, as such exist on the
Commencement Date or existed within twenty-four (24) months prior to the
Commencement Date.


 


d.              During
the Non-Compete Term, Mikelsons (on Mikelsons’ own behalf or that of any other
person or entity) shall not directly or indirectly 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 Mikelsons’ name to be used in, any business (including
the sale of any product or service) which competes with directly or indirectly
any charter or commercial air carrier routes flown by any member of the ATA
Group as such exist on the Commencement Date or existed within twenty-four (24)
months prior to the Commencement Date.


 


e.            Notwithstanding
the provisions of Sections 6a, 6b,  6c and 6d hereof, each member of
the ATA Group agrees that at all times during the Non-Compete Term, Mikelsons shall
be permitted to directly or indirectly 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 Mikelsons’ name to be used in connection with any certificated
non-military charter or air taxi service that exclusively flies aircraft each
of which holds no more than eighteen (18) passengers.


 


7.            Non-Solicitation. During the
Non-Compete Term, Mikelsons (on Mikelsons’ own behalf or that of any other
person or entity) shall not directly or indirectly solicit, induce or influence
any customer of any member of the ATA Group, any employee of any member of the
ATA Group or any other person or entity who has an actual or prospective
business or employment relationship with any member of the ATA Group to
discontinue, reduce, reject or otherwise change in any manner adverse to the
interests of the ATA Group the nature or extent of such relationship with the
ATA Group.


 


8.            Non-Compete Payments. The Non-Compete Payments shall be paid
quarterly to Mikelsons beginning September 1, 2006 and on each December 1,
March 1, June 1 and September 1 thereafter until paid in full.
All Non-Compete Payments shall be paid as a credit against the JGM Obligations
(as defined below). The Non-Compete Payments shall be deemed fully earned in
the event of Mikelsons’ death during the Non-Compete Term, with any remaining
Non-Compete Payments owed to him to be applied to the JGM Obligations.
Mikelsons acknowledges and affirms that (i) he is indebted to one or more
members of the ATA Group, as affirmed in that certain letter agreement dated as
of October 26, 2004 (the “JGM Debt Agreement”), in the initial principal
amount of Six Hundred Fifty-three Thousand Two Hundred


 


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Twenty-five Dollars and Nine Cents($653,225.09) (the “JGM Obligations”),
and (ii) nothing herein shall alter the repayment terms or obligations of
Mikelsons with respect to the JGM Obligations, except as contemplated by the
payment of the Non-Compete Payments as credits to be applied to the JGM
Obligations. The ATA Group represents and agrees that all payments under the
JGM Debt Agreement have been made as agreed prior to the date of this Agreement
and that, as of July 31, 2005, the outstanding principal balance of the
JGM Obligations is Six Hundred Twelve Thousand Two Hundred Twenty-five Dollars
and No Cents ($612,285). Each member of the ATA Group, respectively, expressly
agrees and acknowledges that the obligations of each member of the ATA Group
under this Agreement shall in no way depend on the continued existence,
operation or solvency of any other member of the ATA Group.


 


9.            Breach of Agreement and Remedies.
Mikelsons
acknowledges and agrees that Mikelsons’ actual or threatened breach of this
Agreement will cause or threaten irreparable injury to the ATA Group that
cannot adequately be measured in money damages. The ATA Group shall therefore
be entitled to obtain injunctive relief with respect to any such actual or
threatened breach by Mikelsons in addition to and not in lieu of any other
available remedies. Mikelsons shall also pay any and all costs, damages and
other expenses, including without limitation all attorneys’ fees, witness fees
and other legal expenses which are incurred by the ATA Group in enforcing this
Agreement


 


10.          Entire Agreement. Except for the Severance Agreement, this
Agreement sets forth the entire agreement between the parties hereto, and fully
supersedes any and all prior agreements or understandings, written or oral,
between the parties hereto pertaining to the subject matter of this Agreement.
It may be modified only by the agreement of the parties hereto memorialized in
writing and executed by each of them.


 


11.          Other Agreements. Mikelsons represents and warrants to the ATA
Group that Mikelsons’ agreements herein do not breach, violate, interfere with
or otherwise conflict with any oral or written agreement between Mikelsons and
any other person or entity, including without limitation non-competition and/or
non-disclosure provisions in any such agreement. Mikelsons shall indemnify,
defend and hold harmless the ATA Group and all of its officers, directors,
shareholders, employees and agents against any and all claims, damages, losses
and expenses (including without limitation attorneys’ fees) incurred by the ATA
Group in connection with Mikelsons’ breach of this representation and warranty.


 


12.          Severability. Should any provision of this Agreement be
declared or determined by any court of competent jurisdiction to be illegal,
invalid or unenforceable, the legality, validity and enforceability of the
remaining parts, terms or provisions shall not be affected thereby and said
illegal, unenforceable or invalid part, term or provision shall be deemed not
to be a part of this Agreement. Should any particular confidentiality covenant,
provision or clause of this Agreement be held unreasonable or contrary to
public policy for any reason, including, without limitation, the time period,
geographic area and/or scope of activity covered by any confidentiality
covenant, provision or clause, Mikelsons and each member of the ATA Group
acknowledge and agree that such covenant, provision or clause shall
automatically be deemed modified such that the contested covenant, provision or
clause will have the closest effect


 


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permitted by applicable law to the original form and shall be given
effect and enforced as so modified to whatever extent would be reasonable
and/or enforceable under applicable law.


 


13.          Amendment; Waiver; Successors. This
Agreement may not be modified, amended or waived in any manner except by a
written document executed by the ATA Group and Mikelsons, with the approval of
the Bankruptcy Court to the extent required. The waiver by either party of
compliance with any provision of this Agreement by the other party shall not
operate or be construed as a waiver of any other provision of this Agreement
(whether or not similar), or a continuing waiver or a waiver of any subsequent
breach by such party of a provision of this Agreement. This Agreement and the
covenants herein shall extend to and inure to the benefit of and shall be
binding upon the legal representatives, heirs, successors and assigns of
Mikelsons and the legal representatives, successors and assigns of the ATA
Group. Further, the parties agree that this Agreement shall be incorporated
into, and assumed as part of, any plan of reorganization confirmed in any of
the pending chapter 11 cases of the members of the ATA Group.


 


14.          Governing Law and Forum. Mikelsons
acknowledges and agrees that the State of Indiana has a substantial connection
with this Agreement. This Agreement shall therefore be governed by and
construed according to the internal laws of the State of Indiana, without
regard to conflict of law principles. The parties further agree that any
disputes arising under this Agreement and/or any action brought to enforce this
Agreement may be brought in a state court of competent jurisdiction in Marion
County, Indiana, or in the federal court for the Southern District of Indiana,
and the parties consent to personal jurisdiction of such courts and waive any
defense of forum non-conveniens.


 


 


	
  ATA
  Holdings Corp

  	
   

  
	
  By:

  	
  /s/ Brian T. Hunt

  	
  ,

  	
  General Counsel

  	
  (Title)

  
	
  Dated:
  August 31, 2005

  	
   

  
	
   

  	
   

  
	
  ATA
  Airlines, Inc.

  	
   

  
	
  By:

  	
  /s/ Brian T. Hunt

  	
  ,

  	
  General Counsel

  	
  (Title)

  
	
  Dated:
  August 31, 2005

  	
   

  
	
   

  	
   

  
	
  Ambassadair
  Travel Club, Inc.

  	
   

  
	
  By:

  	
  /s/ Brian T. Hunt

  	
  ,

  	
  General Counsel

  	
  (Title)

  
	
  Dated:
  August 31, 2005

  	
   

  
	
   

  	
   

  
	
  ATA
  Leisure Corp.

  	
   

  
	
  By:

  	
  /s/ Brian T. Hunt

  	
  ,

  	
  General Counsel

  	
  (Title)

  
	
  Dated:
  August 31, 2005

  	
   

  
	
   

  	
   

  
	
  Amber
  Travel, Inc.

  	
   

  
	
  By:

  	
  /s/ Brian T. Hunt

  	
  ,

  	
  General Counsel

  	
  (Title)

  
	
  Dated:
  August 31, 2005

  	
   

  
						



 


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  American
  Trans Air Execujet, Inc.

  	
   

  
	
  By:

  	
  /s/ Brian T. Hunt

  	
  ,

  	
  General Counsel

  	
  (Title)

  
	
  Dated:
  August 31, 2005

  	
   

  
	
   

  	
   

  
	
  ATA
  Cargo, Inc.

  	
   

  
	
  By:

  	
  /s/ Brian T. Hunt

  	
  ,

  	
  General Counsel

  	
  (Title)

  
	
  Dated:
  August 31, 2005

  	
   

  
	
   

  	
   

  
	
  C8
  Airlines, Inc.

  	
   

  
	
  By:

  	
  /s/ Brian T. Hunt

  	
  ,

  	
  General Counsel

  	
  (Title)

  
	
  Dated:
  August 31, 2005

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ J. George Mikelsons

  	
   

  
	
              J.
  George Mikelsons

  	
   

  
	
  Date: August 31, 2005

  	
   

  
								



 


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