Exhibit 10.2

EXECUTION

FIFTH AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

FIFTH AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of April 18, 2007 (the
“Agreement”) among Atlantic Express Transportation Group Inc., a New York
corporation (“Group”), Atlantic Express Transportation Corp., a New York
corporation (the “Company”), and Nathan Schlenker (the “Executive”).

WHEREAS, the Executive is presently employed by the Company, a wholly owned
subsidiary of Group, under the Fourth Amended and Restated Employment Agreement
dated as of October 25, 2004, as amended (the “Prior Agreement”);

WHEREAS, the Company desires to secure the continued services of the Executive,
and the Executive desires to continue in the employment of the Company and, in
connection therewith, the Company, Group and the Executive desire to amend and
restate the terms and provisions of the Prior Agreement to, among other things,
set forth the terms of such continued employment.

NOW, THEREFORE, in consideration of the foregoing and the respective covenants
and agreements hereinafter set forth and for other good and valuable
consideration, the Company, Group and the Executive hereby agree to amend and
restate the Prior Agreement in its entirety, as follows:

1. EMPLOYMENT AND DUTIES

1.1. General. The Company hereby employs the Executive, and the Executive agrees
to serve, as Chief Financial Officer of the Company, upon the terms and
conditions herein contained during the Employment Term (as defined below), and
in such capacity the Executive agrees to serve the Company faithfully and to the
best of his ability under the direction of the Board of Directors (the “Board”).

1.2. Exclusive Services. During the Employment Term, the Executive shall devote
his full-time working hours to his duties hereunder and shall not, directly or
indirectly, render services to any other person or organization or otherwise
engage in activities which would interfere significantly with his faithful
performance of his duties hereunder without the consent of the Board, provided,
however, the Executive may work one day a week from his home office in Palaline
Bridge, New York.

1.3. Term of Employment. The “Employment Term” of Executive’s employment under
this Agreement shall commence as of the date hereof (the “Commencement Date”)
and shall terminate on December 31, 2008, subject to renewal in accordance with
Section 1.4.

 

 

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1.4. Renewal of Employment Term. Unless the Company has provided the Executive
with a written notice at least sixty days prior to December 31, 2008 of its
intent not to extend the Employment Term (the “Termination Notice”), the
Employment Term shall be renewed and extended automatically for a further period
of one year on January 1, 2009, and such extended term shall thereafter be
further extended for successive one year periods unless a Termination Notice is
given to the Executive at least sixty days prior to the next successive December
31.

1.5 Consulting Services. Upon expiration and non-renewal of the Employment Term,
the Company shall retain the Executive for a period of six months (the
“Consulting Term”) as a consultant. During the Consulting Term, the Executive
shall provide such consulting services, at such times as may be reasonably be
requested by the Company; provided, that the Executive may do so primarily
through telephone contact with the Company and shall not be required to travel
from his residence to perform such services or to provide services in excess of
10 hours per month. During the Consulting Term, the Executive shall be entitled
to six months of his Base Salary (the “Consulting Compensation”), payable on the
same terms as in effect at the end of the Employment Term. The Company shall not
have any obligation to retain the Executive as a consultant if the Executive’s
employment is terminated (i) by the Company for Cause, or (ii) by the Executive
without Good Reason. In the event of termination of the Executive’s employment
or of the Consulting Term due to death of the Executive, the Executive’s estate
shall be entitled to receive any unpaid portion of the Consulting Compensation
payable in a lump sum upon such termination.

2. SALARY

2.1. Base Salary. From the Commencement Date, the Executive shall be entitled to
receive a base salary (“Base Salary”) at a rate of $345,909 per annum, payable
monthly on or about the 15th day of each month in equal installments in
accordance with the Company’s payroll practices, with such increases as may be
provided in accordance with the terms hereof. Once increased, such higher amount
shall constitute the Executive’s annual Base Salary.

2.2 Increase in Base Salary. On November 1 of each year during the Employment
Term, the Executive’s Base Salary shall be increased by a percentage which shall
equal the greater of 3% or the percentage increase in the consumer price index
for the New York-Northern New Jersey-Long Island, NY-NJ-CT metropolitan area, as
reported by the United States Department of Labor, for the 12-month period ended
the immediately preceding October 31.

2.3 Annual Bonus. (a) The Executive shall be paid a bonus (an “Annual Bonus”)
equal to 15% of his Base Salary for each fiscal year during the Employment Term,
commencing with the fiscal year ending June 30, 2008, in which the Company’s
consolidated actual Adjusted EBITDA exceeds by 10% or more the Company’s
consolidated Adjusted EBITDA projected by management (which projection has been
accepted by the Board) for such fiscal year; provided, in the event the actual
Adjusted EBITDA exceeds the projected Adjusted EBITDA by 15% or more, the Annual
Bonus amount shall equal 25% of the Base Salary. In the event, the Executive’s
employment is terminated for any reason after June 30, 2007, other than by the

 

 

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Executive without Good Reason or by the Company for Cause, in addition to any
accrued but unpaid Annual Bonus, the Executive shall be entitled to a pro rata
portion of the Annual Bonus, if any, for the fiscal year in which such
termination occurs, in an amount equal to the Annual Bonus which would have been
applicable as determined following the end of such fiscal year, multiplied by a
fraction, the numerator of which shall be the number of days elapsed during such
fiscal year through the date of such termination and denominator of which shall
be 365 days. The Annual Bonus shall be paid on or before 105 days following the
end of the applicable fiscal year.

(b) “Adjusted EBITDA” shall mean operating income, (i) plus depreciation and
amortization, (ii) less the amount by which the actual Capital Expenditure
relating to the projected EBITDA exceeds Capital Expenditures projected by
management (which has been accepted by the Board) for the applicable fiscal
year, and (iii) excluding any extraordinary or nonrecurring expenses or gains.

(c) “Capital Expenditure” shall mean expenditures for fixed or capital assets or
improvements or replacements thereof, which have a useful life of more than one
year, whether financed by cash, capital leases, purchase money mortgages or
other incurrence of debt.

2.4 Exit Bonus. (a) Upon the occurrence of a Change of Control at any time
during or after the termination of the Executive’s employment, the Company shall
pay to the Executive a bonus (“Exit Bonus”) which shall be equal to the Fair
Market Value (as of the date of such Change of Control) of 0.5% of all of the
Company’s outstanding common stock (on a fully diluted basis) immediately
preceding such Change of Control (such percentage being referred to herein as
the “Base Amount”); provided, the Base Amount shall be increased to 1.0% in the
event that the transaction resulting in the Change of Control is based upon an
aggregate Fair Market Value of all of the Company’s outstanding common stock (on
a fully diluted basis) equal to or in excess of $50,000,000 and 1.5% in the
event such Fair Market Value is equal to or exceeds $70,000,000; further,
provided, the Exit Bonus to be paid to the Executive upon a Change of Control
shall be reduced by an amount equal to (i) the Fair Market Value of all of the
Company’s outstanding common stock as of the date of such Change of Control,
multiplied by (ii) a fraction, the numerator of which shall be the aggregate
number of Group Common Shares (as defined below) sold, transferred or otherwise
disposed of by GSC Group (as defined below) prior to such Change of Control and
the denominator of which shall be 107,593, multiplied by (iii) the applicable
Base Amount as determined in accordance with this Section 2.4(a) as of the date
of such Change of Control. Except as provided in Section 2.4(b), the Exit Bonus
shall be payable in the same form of consideration and at the same time as
received by the shareholders of either Group or the Company upon such Change of
Control.

(b) In the event the Company or Group during the Employment Term and prior to a
Change of Control, shall adopt a stock option or restricted stock purchase or
similar plan, the Executive within thirty (30) days following written notice of
the adoption of such a plan, shall have the right, by delivery of written notice
to the Company, to participate in such plan and to receive such number of shares
or options, in substitution and in place of the Exit Bonus, as would be
equivalent to the Base Amount as of the date of such participation in such plan
by the Executive.

 

 

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(c) In the event prior to the occurrence of a Change of Control, GSCP II
Holdings (AE), LLC or any of its affiliates (collectively, the “GSC Group”)
sells, transfers or otherwise disposes of any of the shares (the “Group Common
Shares”) of common stock of Group it beneficially owns as of the date hereof and
excluding any shares of common stock of Group the GSC Group may acquire after
the date hereof (a “Disposition Event”), the Executive shall be entitled to a
portion of his Exit Bonus equal to (i) the Fair Market Value of all of the
Company’s outstanding common (on a fully diluted basis) as of the date of such
Disposition Event, multiplied by (ii) a fraction, the numerator of which shall
be the number of Group Common Shares sold, transferred or otherwise disposed of
in such transaction and the denominator of which shall be 107,593, multiplied by
(iii) the applicable Base Amount as determined in accordance with Section 2.4(a)
as of the date of such Disposition Event. Except as provided in Section 2.4(b),
the portion of the Exit Bonus payable upon a Disposition Event shall be payable
in the same form of consideration and at the same time as received by the GSC
Group upon such Disposition Event.

2.5 Definitions. (a) Change of Control shall mean (i) the transfer (in one
transaction or a series of transactions) of all or substantially all of the
assets of Group or the Company to any person or group (as such term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)); (ii) the liquidation or dissolution of Group or the Company or
the adoption of a plan by the stockholders of Group or the Company relating to
the dissolution or liquidation of either Group or the Company; or (iii) the
acquisition by any person or group (as such term is used in Section 13(d)(3) of
the Exchange Act), except for by the GSCP Group of beneficial ownership,
directly or indirectly, of more than 50% of the aggregate ordinary voting power
of Group or the Company;

(b) Fair Market Value of the Company’s common stock shall mean the value of the
Company’s common stock as specified in accordance with any transaction resulting
in a Change of Control or Disposition Event, as the case may be, or if no
specific value is specified in such transaction, the value of the Company’s
common stock as reasonably determined by the Board (provided, in the event the
Executive disagrees with the value determined by the Board, as determined by a
nationally recognized independent investment banking or accounting firm
reasonably acceptable to the Company and the Executive), in either case without
control premiums or minority discounts.

3. EMPLOYEE BENEFITS

3.1. General Benefits. The Executive shall receive the following benefits during
the Employment Term:

(a) the Executive will be eligible to participate in benefit programs of the
Company consistent with those benefit programs provided from time to time to
other senior executives of the Company;

(b) an annual life insurance premium allowance of $2,500 payable annually in
February of each year;

 

 

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(c) an automobile allowance of $250 per month and the exclusive use of a company
car;

(d) a travel allowance not to exceed $15,000 annually; and

(e)  participation in any executive incentive plan which might be implemented by
the Board during the Employment Term.

3.2. Vacation. During the Employment Term, the Executive shall be entitled to 20
days paid vacation each year in accordance with the applicable policies of the
Company.

3.3. Reimbursement of Expenses. The Company will reimburse the Executive for
reasonable, ordinary and necessary business expenses incurred by him in the
fulfillment of his duties hereunder upon presentation by the Executive of an
itemized account of such expenditures in accordance with the Company practices
consistently applied.

3.4. Consulting Term Benefits. During the Consulting Term, the Company shall
provide, without charge, the Executive with medical coverage under the same
terms as medical coverage offered to other senior executives of the Company.

3.5. Benefits upon Termination. Upon the termination of the Executive’s
employment and the Consulting Term, the Company shall provide, without charge,
the Executive with eighteen (18) months of medical coverage under the same terms
as medical coverage offered to other senior executives of the Company.

3.6. Severance Pay. (a) Upon termination of the Executive’s employment for any
reason (including, without limitation, upon non-renewal of the Employment Term),
other than (i) by the Company for Cause, (ii) due to death or Permanent
Disability of the Executive or (iii) by the Executive without Good Reason, the
Executive shall be entitled to receive an amount equal to his six months of his
Base Salary (the “Severance Pay”), payable commencing upon the expiration of the
Consulting Term on the same terms as in effect at the end of the Consulting
Term; provided, the Severance Pay shall be paid to the Executive’s estate in a
lump sum payment in the event of the Executive’s death during the Consulting
Term.

(b) Release by Executive. As a condition to receipt of the Severance Pay, the
Executive shall deliver a release (the “Release”) to the Company and the Group,
in a form reasonably requested by the Company, releasing and discharging on
behalf of the Executive, his heirs, administrators, executors, agents, or
employees, the Company, Group and all other affiliates, divisions, subsidiaries
and each of their predecessors, successors, assigns, agents, directors,
officers, employees, representatives, attorneys, and all persons acting by,
through, under or in concert with any of them (collectively, the “Releasee”)
from any and all charges, claims, demands, judgments, actions, causes of action,
damages, expenses, costs, attorneys’ fees, and liabilities of any kind
whatsoever, whether known or unknown, vested or contingent, in law, equity or
otherwise, which the Executive ever had, then has, or may hereafter have against
a Releasee for or on account of any matter, cause or thing whatsoever which has
occurred at any

 

 

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time up to the date of the Release, but excluding any liabilities or obligations
of a the Company or Group set forth in this Agreement to the extent such
liabilities or obligations survive the termination of the Executive’s
employment, and excluding any liabilities or obligations of a Releasee arising
out of any indemnity agreement in the Executive’s favor whether contained in
such Releasee’s articles of incorporation, bylaws, corporate resolutions or in
any employment agreement or arising by operation of law.

(c) Definitions. (i) Termination for “Cause” shall mean termination by the
Company of the Executive’s employment because the Executive (A) admits to, has
been convicted of or has entered into a plea of nolo contendere to a crime
punishable by imprisonment for more that one year, (B) has failed to perform in
all material respects the normal and customary duties required of his position
of employment, following a written warning specifying such deficiency and
affording the Executive a reasonable period to cure such failure; or (C) has
been disloyal to Group, the Company or any of their respective affiliates by
assisting transportation competitors of Group, the Company or any of their
respective affiliates to the disadvantage of Group, the Company or any of their
respective affiliates by a breach of Section 6 or by otherwise actively
assisting such competitors to the disadvantage of Group, the Company or any of
their respective affiliates.

(ii) Termination “Without Cause” shall mean any termination by the Company of
the Executive’s employment at any time during the Employment Term for any reason
other than Cause, death or Permanent Disability.

(iii) Termination by Executive for “Good Reason” shall mean termination by the
Executive because of (A) a material reduction in the nature or scope of
Executive’s position as Chief Financial Officer or his authorities, powers,
duties, or responsibilities in such capacity; or (B) a material breach by the
Company of its affirmative or negative covenants or undertakings hereunder and
such breach shall not be remedied within fifteen (15) days after notice to
Company thereof (which notice shall be signed by Executive and refer to a
specific breach of this Agreement).

(iv) Termination due to Permanent Disability shall mean termination by the
Company due to the failure of the Executive because of illness, physical or
mental disability or other incapacity, for a period of six consecutive months,
or for shorter periods aggregating six months during any twelve-month period, to
render the services provided for by this Agreement. The determination of the
Executive’s Permanent Disability shall be made by an independent physician who
is reasonably acceptable to the Executive and the Company and shall be final and
binding and shall be based on such competent medical evidence as shall be
presented to it by the Executive or by any physician or group of physicians or
other competent medical experts employed by the Executive and/or the Company to
advise such independent physician.

4. [intentionally deleted]

5. [intentionally deleted]

 

 

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6. NON COMPETITION/NON SOLICITATION AND CONFIDENTIALITY

6.1. Noncompetition/Nonsolicitation. The Executive shall not, directly or
indirectly, as a sole proprietor, member of a partnership, stockholder or
investor, officer or director of a corporation, or as an employee, associate,
consultant or agent of any person, partnership, corporation or other business
organization or entity other than the Company: (a) engage in, or acquire an
interest in any entity or enterprise which engages in, any business that is in
competition with any business actively conducted by Group, the Company or any of
their respective subsidiaries within (i) the counties then served by Group, the
Company or their respective subsidiaries as well as adjacent counties, and (ii)
any other counties in which Group, the Company or their respective subsidiaries
has made a bid within 36 months prior to the Executive’s termination and any
adjacent counties in which Group, the Company or their respective subsidiaries
conducts business; (b) solicit or endeavor to entice away from Group, the
Company or any of their respective subsidiaries any person who is, or was during
the then most recent 36-month period, employed by or associated with Group, the
Company or any of their respective subsidiaries, or (c) solicit or endeavor to
entice away from Group, the Company or any of their respective subsidiaries, or
otherwise interfere with the business relationship of Group, the Company or any
of their respective subsidiaries with, any person or entity who is, or was
within the then most recent 36-month period, a customer, client or prospect of
Group, the Company or any of their respective subsidiaries. The obligations of
this Section 6.1 shall apply for 18 months, or a period of 24 months if, as of
termination of the employment of the Executive, more than a majority of the
Common Stock of Group is then owned by the current shareholders of Group, after
termination of employment of the Executive as well as during employment and
shall be extended by a period of time equal to any period during which the
Executive shall be in breach of such obligations.

6.2. Confidentiality. The Executive covenants and agrees with the Company that
he will not at any time, except in performance of his obligations to the Company
hereunder or with the prior written consent of the Company, directly or
indirectly, disclose any secret or confidential information that he may learn or
has learned by reason of his association with Group, the Company or any of their
respective subsidiaries and affiliates. The term “confidential information”
includes information not previously disclosed to the public or to the trade by
the Company’s or Group’s management, or otherwise in the public domain, with
respect to the Company’s or Group’s or any of their respective affiliates’ or
subsidiaries’ products, services, facilities, applications and methods, trade
secrets and other intellectual property, systems, procedures, manuals,
confidential reports, product or service price lists, customer lists, technical
information, financial information (including the revenues, costs or profits
associated with any of the Company’s or Group’s products), business plans,
prospects or opportunities.

6.3. Exclusive Property. The Executive confirms that all confidential
information is and shall remain the exclusive property of Group and the Company.
All business records, papers and documents kept or made by the Executive
relating to the business of Group, the Company or their respective subsidiaries
shall be and remain the property of Group and the Company.

6.4. Injunctive Relief. Without intending to limit the remedies available to
Group and the Company, the Executive acknowledges that a breach of any of the
covenants contained

 

 

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in this Section 6 may result in material and irreparable injury to Group, the
Company or their respective affiliates or subsidiaries for which there is no
adequate remedy at law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of such a breach or threat thereof,
Group and the Company shall be entitled to obtain a temporary restraining order
and/or a preliminary or permanent injunction restraining the Executive from
engaging in activities prohibited by this Section 6 or such other relief as may
be required specifically to enforce any of the covenants in this Section 6. If
for any reason a final decision of any court determines that the restrictions
under this Section 6 are not reasonable or that consideration therefor is
inadequate, such restrictions shall be interpreted, modified or rewritten by
such court to include as much of the duration and scope identified in this
Section 6 as will render such restrictions valid and enforceable.

7. GUARANTEES

7.1. Indemnification. Group, the Company and each of their subsidiaries, jointly
and severally, shall indemnify the Executive and his spouse, heirs, estate,
executors and administrators (collectively, the “Indemnitees”) and hold such
Indemnitees harmless from and against, and pay and reimburse the Indemnitees
for, any and all demands, payments, claims, actions, losses, damages,
liabilities, obligations, fines, taxes, deficiencies, costs and expenses
(including reasonable attorneys’ fees), whether or not resulting from
third-party claims, including interest and penalties with respect thereto,
asserted against or incurred or sustained by an Indemnitee in connection with or
arising out of any personal guaranty or undertaking by the Executive of any
obligation of Group, the Company or any of their subsidiaries (collectively a
“Guaranty”).

7.2. Future Subsidiaries. In the event, Group, the Company or any of their
subsidiaries acquires or forms a subsidiary after the date hereof, Group and the
Company shall cause such newly acquired or formed subsidiary to execute and
deliver a supplement to this Amendment, which supplement shall provide that such
newly acquired or formed subsidiary will indemnify the Indemnitees in accordance
with Section 7.1 hereof.

8. MISCELLANEOUS

8.1. Notices. All notices or communications hereunder shall be in writing,
addressed as follows:

To the Company or Group, to it at:

Atlantic Express Transportation Corp.

7 North Street

Staten Island, NY 10302

Attention: Corporate Secretary

with a copy to:

 

 

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GSCP III Holdings (AE), LLC

c/o Greenwich Street Capital Partners, Inc.

500 Campus Drive, Suite 220

Florham Park, NJ 07932

Fax: (973) 593-5454

Attention: Matthew Kaufman

and:

To the Executive:

Nathan Schlenker

347 Horning Road

Palatine Bridge, NY 13428

Fax: (518) 673-5071

Any such notice or communication shall be sent certified or registered mail,
return receipt requested, or by facsimile, addressed as above (or to such other
address as such party may designate in writing from time to time), and the
actual date of receipt shall determine the time at which notice was given.

8.2. Severability. If a court of competent jurisdiction determines that any term
or provision hereof is invalid or unenforceable, (a) the remaining terms and
provisions hereof shall be unimpaired and (b) such court shall have the
authority to replace such invalid or unenforceable term or provision with a term
or provision that is valid and enforceable and that comes closest to expressing
the intention of the invalid or unenforceable term or provision.

8.3. Assignment. This Agreement shall inure to the benefit of the heirs and
representatives of the Executive and the assigns and successors of the Company,
but neither this Agreement nor any rights hereunder shall be assignable or
otherwise subject to hypothecation by the Executive. Each of Group and the
Company may assign this Agreement without prior written approval of the
Executive upon the transfer of all or substantially all of its business and/or
assets (whether by purchase, merger, consolidation or otherwise), provided that
the successor to such business and/or assets shall expressly assume and agree to
perform this Agreement.

8.4. Entire Agreement; Amendment. This Agreement represents the entire agreement
of the parties with respect to the subject matter hereof and shall supersede any
and all previous contracts, arrangements or understandings between or among
Group, the Company and the Executive, including the Prior Agreement. The
Agreement may be amended at any time by mutual written agreement of the parties
hereto.

8.5. Withholding. The Company shall be entitled to withhold, or cause to be
withheld, from payment any amount of withholding taxes required by law with
respect to payments made to the Executive in connection with his employment
hereunder.

 

 

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8.6. Governing Law. This Agreement shall be construed, interpreted, and governed
in accordance with the laws of the State of New York without reference to
principles of conflict of laws.

8.7. Survival. Section 2.3 (relating to Annual Bonus), Section 2.4 (relating to
Exit Bonus), Article 6 (relating to noncompetition, nonsolicitation and
confidentiality) and Section 8.6 (relating to governing law) shall survive the
termination hereof.

8.8. Headings. Headings to sections in this Agreement are for the convenience of
the parties only and are not intended to be a part of or to affect the meaning
or interpretation hereof.

8.9. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.

[signature page follows]

 

 

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IN WITNESS WHEREOF, the Company and Group have caused this Agreement to be duly
executed by their authorized representatives and the Executive has hereunto set
his hand, in each case effective as of the day and year first above written.

 

 

 

ATLANTIC EXPRESS
TRANSPORTATION GROUP INC.

 

By: 

/s/ Peter Frank

 

 

 

Name: Peter Frank

 

 

 

Title: Chairman of the Board of Directors

 

 

 

ATLANTIC EXPRESS
TRANSPORTATION CORP.

 

By: 

/s/ Peter Frank

 

 

 

Name: Peter Frank

 

 

 

Title: Chairman of the Board of Directors

 

 

 

EXECUTIVE:

 

/s/ Nathan Schlenker

 

 

Nathan Schlenker

 

 

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