NON-COMPETITION AND CONFIDENTIALITY AGREEMENT
Exhibit 10.2
J.
Xxxxxx
Xxxxxxxxx ("Xxxxxxxxx") 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 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
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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.
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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, 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 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.
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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 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.
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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 Xxxxxx
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.
By:
/s/ Xxxxx X. Xxxx, Senior Vice President and General Counsel
(Title)
Dated:
August 31, 2005
ATA
Airlines, Inc.
By:
s/
Xxxxx X. Xxxx, Senior Vice President and General Counsel
(Title)
Dated:
August 31, 2005
Ambassadair
Travel Club, Inc.
By:
s/
Xxxxx X. Xxxx, Senior Vice President and General Counsel
(Title)
Dated:
August 31, 2005
ATA
Leisure Corp.
By:
s/
Xxxxx X. Xxxx, Senior Vice President and General Counsel
(Title)
Dated:
August 31, 2005
Amber
Travel, Inc.
By:
s/
Xxxxx X. Xxxx, Senior Vice President and General Counsel
(Title)
Dated:
August 31, 2005
American
Trans Air Execujet, Inc.
By:
s/
Xxxxx X. Xxxx, Senior Vice President and General Counsel
(Title)
Dated:
August 31, 2005
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ATA
Cargo, Inc.
By:
s/
Xxxxx X. Xxxx, Senior Vice President and General Counsel
(Title)
Dated:
August 31, 2005
C8
Airlines, Inc.
By:
s/
Xxxxx X. Xxxx, Senior Vice President and General Counsel
(Title)
Dated:
August 31, 2005
By:
/s/ J. Xxxxxx Xxxxxxxxx
J.
Xxxxxx
Xxxxxxxxx
Date:
August 31, 2005
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