Exhibit 10.1

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 Domenic Gatto (the “Executive”).

WHEREAS, the Executive is presently employed by the Company, a wholly owned
subsidiary of Group, under a Fourth Amended and Restated Employment Agreement
dated as of November 25, 2003, 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 President and Chief Executive Officer of the Company and upon the
Board of Directors of the Company (the “Board”) as Vice Chairman of the Board,
upon the terms and

 

 

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conditions herein contained during the Employment Term. In such capacities the
Executive agrees to serve the Company faithfully and to the best of his ability
under the direction of the Board. The Executive also shall serve as a member of
the Board of Directors of Group during the Employment Term. During the
Employment Term, the Executive also agrees to serve, if elected, at no
compensation in addition to that provided for in this Agreement, in the position
of officer of Group and of any subsidiary of Group or the Company. As long as
the Executive remains either President or Chief Executive Officer, the Executive
shall continue to occupy the same corner office which he has occupied during the
Term of the Prior Agreement.

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 for which he
receives compensation without the unanimous consent of the Board or otherwise
engage in activities which would interfere significantly with his faithful
performance of his duties hereunder. Notwithstanding the foregoing, the
Executive may serve as a managing member of Birdie Holding Company LLC and
affiliates which own and operate the Eagle Oaks Golf Club, provided that such
services shall not interfere with the performance of Executive’s duties
hereunder.

1.3. Term of Employment. The Executive’s employment under this Agreement shall
commence as of the date hereof (the “Commencement Date”) and shall terminate on
the earliest of (i) December 31, 2009, subject to renewal in accordance with
Section 1.4, (ii) the death of the Executive or (iii) the termination of the
Executive’s employment pursuant to this Agreement (the “Employment Term”).

1.4. Renewal of Employment Term. Unless the Company has provided the Executive
with a written notice at least seventy-five days prior to December 31, 2009 of
its intent

 

 

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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, 2010, 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 sevety-five days prior to the next successive December
31.

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 $592,162 per annum, payable
in arrears 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
actual consolidated Adjusted EBITDA exceeds by 10% or more the 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

 

 

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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 Executive without Good Reason or by the Company for Cause, 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 1.5% 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 2.5%

 

 

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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 3.0%
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.

(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

 

 

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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 GSC Group of beneficial ownership, directly
or indirectly, of more than 50% of the aggregate ordinary voting power of Group
or the Company; and

(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

 

 

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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) a disability insurance policy providing $15,000 in monthly benefits
commencing six months after a disability which prevents the Executive from
performing the ordinary and necessary functions and duties of his employment;
provided that the premium therefor shall not exceed the usual and customary
rates charged by underwriters for such a policy for a person of the Executive’s
age in good health. At the option of the Executive and in the place of the
disability policy, the Company shall pay the cash equivalent of the premium for
such policy to the Executive to be used by the Executive to pay such premium;

(c) an automobile allowance of $2,150 per month;

(d) an annual life insurance premium allowance of $35,000, payable in two
installments in June and February of each year of the Employment Term hereof;

(e) continued use of the same Company car and driver which the Executive is
using as of the date of this Agreement; and

 

 

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

3.2. Vacation. The Executive shall be entitled to 25 days paid vacation each
calendar year in accordance with the applicable policies of the Company.

4. TERMINATION OF EMPLOYMENT

4.1. Termination for Cause; Termination Without Cause; Termination for Permanent
Disability; Resignation.

4.1.1. General. (a) If, prior to the expiration of the Employment Term, the
Executive’s employment is terminated by the Company for Cause, the Executive
shall be entitled only to (i) his accrued but unpaid Base Salary through and
including the date of termination (“Accrued Base Salary”); (ii) his accrued but
unpaid Annual Bonus (the “Accrued Annual Bonus”), payable in accordance with
Section 2.3; (iii) the Exit Bonus payable in accordance with Section 2.4; (iv)
twelve months of medical coverage under the same terms as medical coverage
offered to other senior executives of the Company; and (v) as severance, an
amount equal to six months of his Base Salary payable in a lump sum upon
termination, provided that, if such termination is for a Disloyalty Termination
Event, the Executive shall have no right to receive, and the Company shall have
no obligation to pay the Severance Payment.

(b) If the Executive is terminated by the Company Without Cause, the Executive
terminates employment for Good Reason or upon the expiration of the Employment
Term without renewal in accordance with Section 1.4, the Executive shall be
entitled only to (i) his Accrued Base Salary; (ii) his Base Salary from the day
after the termination date through the normal expiration date of the Employment
Term, payable in a lump sum upon termination; (iii) the benefits set forth under
Section 3.1 of this Agreement during such term; provided, in the case

 

 

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of medical coverage, during such period or for a period of one year, which ever
is longer; (iv) the Accrued Annual Bonus and the pro rata portion of the Annual
Bonus for the then current fiscal year, each payable in accordance with Section
2.3; (v) the Exit Bonus payable in accordance with Section 2.4; and (vi) as
severance, an amount equal to his annual Base Salary (the “Severance Payment”)
payable in a lump sum upon termination.

(c) If, prior to the expiration of the Employment Term, the Executive’s
employment is terminated by the Company for Permanent Disability (as defined in
Section 5), the Executive shall be entitled only to (i) the payments and
benefits as provided for in Section 4.1.1(a)(i), (ii) and (iii); (ii) the
benefits set forth under Section 3.1 of this Agreement for a period of 12 months
following the date of termination; (iii) the pro rata portion of the Annual
Bonus for the then current fiscal year, payable in accordance with Section 2.3;
and (iv) the Severance Payment payable in a lump sum upon termination.

(d) If the Executive resigns from his employment hereunder without Good Reason,
the Executive shall be entitled only to (i) payment of his Accrued Base Salary,
if any, payable in a lump sum not later than 30 days following the date of
termination; (ii) the Accrued Annual Bonus, payable in accordance with Section
2.3; and (iii) the Exit Bonus payable in accordance with Section 2.4.

(e) In the event of termination hereunder as a result of death of the Executive,
the Executive’s estate shall be entitled to (i) the compensation provided for in
Section 4.1.1(a)(i), (ii) and (iii); (ii) the pro rata portion of the Annual
Bonus for the then current fiscal year, payable in accordance with Section 2.3;
and (iii) the Severance Payment payable in a lump sum upon termination.

 

 

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(f) Except as otherwise provided herein, the Executive shall have no further
right to receive any other compensation, or to participate in any other plan,
arrangement, or benefit, after any termination or resignation of employment,
subject to the terms of such plans or arrangements.

(g) In the event of the termination of the Executive’s employment by the Company
for any reason, the Company or Group shall, within 30 days of such termination
of employment, (x) obtain releases that release the Executive from any
guarantees made by the Executive in respect of obligations of Group, the Company
or any of their respective subsidiaries (the “Guarantees”), if any such
Guarantees are then in effect, or (y) provide letters of credit to the Executive
in respect thereof, if any such Guarantees are then in effect.

4.1.2. Date of Termination/Resignation. The date of termination for a
termination by the Company for Cause shall be the date of the written notice of
termination provided for in Section 4.1.3. The date of termination for a
Termination Without Cause shall be as provided in Section 4.1.4. The date of
termination for a termination for Permanent Disability shall be as provided in
Section 5. The date of resignation shall be the date specified in the written
notice of resignation from the Executive to the Company, or if no date is
specified therein, 10 business days after receipt by the Company of written
notice of resignation from the Executive.

4.1.3. Notice of Termination for Cause. Termination of the Executive’s
employment by the Company for Cause shall be effected by delivery of a written
notice of termination from the Company to the Executive, which notice shall
specify the event or events set forth in Section 4.2 giving rise to such
termination.

4.1.4. Notice of Termination Without Cause. Termination of the Executive’s
employment for a Termination Without Cause shall be effected by written notice
of termination

 

 

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from the Company to the Executive, specifying a termination date no earlier than
10 business days after the date on which such notice is given.

4.2. Termination for Cause. Termination for “Cause” shall mean termination by
the Company of the Executive’s employment because the Executive (a) has been
convicted of 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 (a “Disloyalty Termination
Event”).

4.3. Termination Without Cause. “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.

4.4. Termination by Executive for “Good Reason”. In the event of: (i) a material
reduction in the nature or scope of Executive’s position as President and Chief
Executive Officer or his authorities, powers, duties, or responsibilities in
such capacity; or (ii) 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);
then the

 

 

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Executive may at any time by notice terminate Executive’ employment hereunder
for “Good Reason”.

4.5. Release by Executive. As a condition to receipt of the Severance Payment,
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 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.

5. PERMANENT DISABILITY

If, prior to the expiration of the Employment Term, the Executive shall fail
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

 

 

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period, to render the services provided for by this Agreement, then the Company
may, by written notice to the Executive after the last day of the six
consecutive months of disability or the day on which the shorter periods of
disability equal an aggregate of six months, terminate the Executive’s
employment for “Permanent Disability”, specifying a termination date no earlier
than 10 business days after the date on which such notice is given. 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.

6. NONCOMPETITION/NONSOLICITATION 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, Group and any of their
subsidiaries: (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

 

 

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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.

 

 

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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 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. In addition to any right to indemnification as provided in
the By Laws or Certificate of Incorporation of the Group and/or Company, 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

 

 

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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. [intentionally deleted]

9. MISCELLANEOUS

9.1. 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 each of:

 

 

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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

To the Executive:

Domenic Gatto

136 Monmouth Road

Monmouth Township, NJ 08831

Fax: (732) 251-5519

with a copy to:

Silverman Sclar Shin & Byrne PLLC

381 Park Avenue South, Suite 1601

New York, NY 10016

Fax: (212) 779-8858

Attention: Peter R. Silverman

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.

9.2. 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.

9.3. 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

 

 

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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.

9.4. 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.

9.5. 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.

9.6. 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.

9.7. Survival. Articles 4 (relating to early termination), 5 (relating to
Permanent Disability) and 6 (relating to noncompetition, nonsolicitation and
confidentiality) and Section 8.6 (relating to governing law) shall survive the
termination hereof, whether such termination shall be by expiration of the
Employment Term or an early termination pursuant to Sections 4 or 5 hereof.

9.8. 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.

 

 

18

 

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9.9. 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]

 

 

19

 

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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/ Domenic Gatto

 

 

 

 

Domenic Gatto

 

 

20

 

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