Exhibit 10.4

 

ATLANTIC EXPRESS TRANSPORTATION GROUP INC.
ATLANTIC EXPRESS TRANSPORTATION CORP.
7 North Street
Staten Island, New York 10302

 

As of April 1, 2006

 

Mr. Nathan Schlenker
357 Horning Road
Palaline Bridge, NY 13428

 

Dear Nat:

 

Reference is made to your Fourth Amended and Restated Employment Agreement,
dated as of October 25, 2004, as amended by the letter dated March 1, 2005 (as
amended, the “Agreement”).

 

By this letter agreement, in consideration of the mutual agreements and
covenants contained herein, we hereby agree to amend the Agreement as follows:

 

1.             Section 1 of the Agreement is hereby amended and restated in its
entirety to read as follows:

 

1. EMPLOYMENT AND DUTIES

 

1.1. General. Commencing as of April15, 2006 (the “Effective Date”), the Company
shall employ the Executive, and the Executive agrees to serve, as Chief
Financial Officer of the Company, upon the terms and conditions herein contained
during the 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 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 “Term” of Executive’s employment under this
Agreement shall commence as of the Effective Date and shall terminate on
December 31, 2007.

 

--------------------------------------------------------------------------------

 

2.             Section 2 of the Agreement is hereby amended and restated in its
entirety to read as follows:

 

2. SALARY

 

2.1. Base Salary. During the Term, the Executive shall be entitled to receive a
base salary (“Base Salary”) at a rate equal to $335,833.68 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, 2006, 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.

 

3.             The Agreement is hereby amended by adding new Sections 2.3 and
2.4 as follows:

 

2.3 Exit Bonus. (a) Upon the occurrence of a Change of Control at any time prior
to December 31, 2010, 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 such number of shares of common stock of the Company
which, following the issuance of such shares, would equal 0.5% of all issued and
outstanding shares of the Company’s common stock immediately following the
Effective Date (the “Base Amount”). Except as otherwise provided herein, the
Exit Bonus shall be payable in the same form of consideration as received by the
shareholders of either Group or the Company upon such Change of Control. In the
event the Executive’s employment is terminated (i) by the Company for Cause,
(ii) by the Company for Permanent Disability, (iii) by the Executive without
Good Reason or (iv) as a result of the death of the Executive, prior to December
1, 2006, the amount of the Exit Bonus shall equal 33.3% of the Base Amount. In
the event of such a termination after December 1, 2006 and prior to December 1,
2007, the amount of the Exit Bonus shall equal 66.6% of the Base Amount. In the
event the Executive’s employment is terminated by the Company Without Cause or
the Executive terminates employment for Good Reason, the amount of the Exit
Bonus shall be equal to the Base Amount.

 

(b)     In the event a Change of Control has not occurred prior to December 31,
2010, the Company shall pay the Executive the Exit Bonus in cash on January 1,
2011.

 

(c)     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

 

2

--------------------------------------------------------------------------------

 

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.

 

2.4 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; (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 GSCP II Holdings (AE), LLC or any of its
affiliates, of beneficial ownership, directly or indirectly, of more than 50% of
the aggregate ordinary voting power of Group or the Company; or (iv) the failure
of GSCP II Holdings (AE), LLC and its affiliates to own and control, directly or
indirectly, at least 50% of the aggregate ordinary voting power of Group;

 

(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 if no specific value is specified in such
transaction, the value of the Company’s common stock as reasonably determined by
the Board, in either case without control premiums or minority discounts.

 

(c)     Termination for “Cause” shall mean termination by the Company of the
Executive’s employment because the Executive (i) 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, (ii) has failed to perform in all material
respects (following a written warning specifying such deficiency) the normal and
customary duties required of his position of employment, or (iii) 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.

 

(d)     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.

 

(e)     Termination by Executive for “Good Reason” shall mean termination by the
Executive because of (i) 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 (ii) a material breach by the
Company of its affirmative or negative covenants or undertakings hereunder and
such breach shall not be

 

3

--------------------------------------------------------------------------------

 

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).

 

(f)      Disability shall mean 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.

 

All other terms of your employment contract remain in full force and effect
without any change or modification thereto.

 

 

Very truly yours,

 

 

 

Atlantic Express Transportation Group Inc.

 

Atlantic Express Transportation Corp.

 

 

 

 

 

By:

/s/ Peter Frank

 

 

Peter Frank

 

 

Agreed and accepted:

 

 

 

/s/ Nathan Schlenker

 

 

Nathan Schlenker

 

 

4

--------------------------------------------------------------------------------