Exhibit 4.1


 


THIRD
SUPPLEMENTAL INDENTURE


 


THIRD SUPPLEMENTAL INDENTURE (this “Third
Supplemental Indenture”), dated as of March 31, 2006, among Atlantic
Express Transportation Corp., a New York corporation (the “Company”),
the Guarantors named herein, as guarantors, and The Bank of New York, as
Trustee and Collateral Agent (the “Trustee”).


 


WHEREAS, the Company has duly issued its 12% Senior
Secured Notes due 2004 (the “Fixed Rate Notes”) and its Senior Secured
Floating Rate Notes (the “Floating Rate Notes” and, together with the
Fixed Rate Notes, the “Notes”), in the aggregate principal amount of
$115,000,000 pursuant to an Indenture dated as of April 22, 2004, among the
Company, the Guarantors named therein and the Trustee (the “Base Indenture”),
as supplemented by the First Supplemental Indenture, dated as of March 3, 2005
(the “First Supplemental Indenture”) and the Second Supplemental
Indenture, dated as of June 30, 2005 (the “Second Supplemental Indenture”
and, together with the Base Indenture and the First Supplemental Indenture, the
“Indenture”), and the Notes in the principal amount of $115,000,000 are
outstanding on the date hereof; and


 


WHEREAS, Section 9.02 of the Indenture provides that
the Company and the Trustee may amend any provision of the Indenture (other
than certain provisions enumerated in Section 9.02 of the Indenture, none of
which provisions are implicated hereby) with the written consent of the Holders
(as defined in the Indenture) of at least a majority of the aggregate principal
amount of the then outstanding Notes and execute a supplemental indenture; and


 


WHEREAS, the Company solicited, and has received,
consents upon the terms and subject to the conditions set forth in the Consent
Agreement dated March 27, 2006, from Holders representing at least a majority
in aggregate principal amount of its outstanding Securities to certain
amendments described therein to the Indenture; and


 


WHEREAS, it is provided in Section 9.04 of the
Indenture that a supplemental indenture becomes effective in accordance with
its terms and thereafter binds every Holder;


 


NOW, THEREFORE, the parties hereto agree as follows:


 


DEFINITIONS.


 


Capitalized terms not defined herein shall have the
meaning given to such terms in the Indenture.


 


AMENDMENTS TO THE INDENTURE.


 


Amendment to the definition of “Asset
Sale.”


 


“Asset Sale” means any direct or indirect sale,
issuance, conveyance, transfer, lease (other than operating leases entered into
in the ordinary course of business), assignment or other transfer for value by
the Company or any of its Restricted Subsidiaries (including any Sale and
Leaseback Transaction) to any Person other than the Company or a Wholly Owned
Subsidiary of the Company that is a Guarantor of:  (1) any Capital Stock of any Restricted
Subsidiary of the Company; or (2) any other property or assets of the
Company or any of its Restricted Subsidiaries other than in the ordinary course
of business; provided, however, that “Asset Sale” shall not include:  (a) a transaction or series of related 


 

















 


transactions for which the Company or its Restricted
Subsidiaries receive aggregate consideration of less than $1.0 million;
(b) the sale, lease, conveyance, disposition or other transfer of all or
substantially all of the assets (determined on a consolidated basis) of the
Company as permitted under Section 5.01; (c) any Restricted Payment
permitted by Section 4.10 or that constitutes a Permitted Investment;
(d) the sale of Cash Equivalents; (e) the sale of any accounts receivable
and the sale or other disposition of used, worn out, obsolete or surplus
assets; (f) sales or grants of licenses to use the Company’s or any Restricted
Subsidiary’s patents, trade secrets, know-how and technology to the extent that
such license does not prohibit the licensor from using the patent, trade
secret, know-how or technology or require any payments by the Company or its
Restricted Subsidiaries for any such use; (g) the sale of assets currently
owned by Jersey Bus Sales, Inc.; (h) the sale of real property in Bordentown,
New Jersey and improvements thereon currently owned by Jersey Business Land
Co., Inc.; and (i) the sale of the assets currently
owned by Atlantic North Casualty Company.


 


Amendment to the definition of “Permitted
Indebtedness.”


 


The definition of “Permitted Indebtedness” as set
forth in Section 1.01 of the Indenture is hereby amended and restated to read
in its entirety as follows:


 


“Permitted Indebtedness” means, without duplication, each of the following: (1) Indebtedness
under the Notes issued on the Issue Date or in the Exchange Offer with respect
to such Notes issued on the Issue Date in an aggregate outstanding principal
amount not to exceed $115.0 million and the related Guarantees; (2)
Indebtedness incurred pursuant to the Credit Agreement in an aggregate
principal amount at any time outstanding not to exceed $20.0 million before
September 25, 2006 and $30.0 million on or after September 25, 2006; (3) other
Indebtedness of the Company and its Restricted Subsidiaries outstanding on the
Issue Date (other than Indebtedness 
outstanding under the Credit Agreement); (4) Interest Swap Obligations
of the Company or any of its Restricted Subsidiaries covering Indebtedness of
the Company or any of its Restricted Subsidiaries; provided, however,
that such Interest Swap Obligations are entered into for the purpose of fixing
or hedging interest rates with respect to any fixed or variable rate
Indebtedness that is permitted by this Indenture to be outstanding to the
extent that the notional amount of any such Interest Swap Obligation does not
exceed, at the time of the incurrence thereof, the principal amount of
Indebtedness to which such Interest Swap Obligation relates; (5) Indebtedness
of a Restricted Subsidiary of the Company to the Company or to another
Restricted Subsidiary for so long as such Indebtedness is held by the Company
or a Restricted Subsidiary of the Company, in each case subject to no Lien by
anyone other than the Company; provided  that (a) any such
Indebtedness is subordinated, pursuant to a written agreement, to such
Subsidiary’s Obligations under this Indenture and its Guarantee and (b) if as
of any date any Person other than the Company or a Guarantor owns or holds any
such Indebtedness or holds a Lien in respect of such Indebtedness, such date
shall be deemed the incurrence of Indebtedness not constituting Permitted
Indebtedness by the Issuer of such Indebtedness (unless such Indebtedness may
otherwise be incurred pursuant to the terms of this Indenture); (6) Indebtedness of the
Company to a Restricted Subsidiary of the Company for so long as such
Indebtedness is held by a Restricted Subsidiary of the Company, in each case
subject to no Lien; provided  that (a) any such Indebtedness is
subordinated, pursuant to a written agreement by the holder thereof, to the
Company’s obligations under this Indenture and the Notes and (b) if as of any
date any Person other than a Restricted Subsidiary owns or holds any such
Indebtedness or any Person holds a Lien in respect of such Indebtedness, such
date shall be deemed the incurrence of Indebtedness not constituting Permitted
Indebtedness by the Company (unless such Indebtedness may otherwise be incurred
pursuant to the terms of this Indenture); (7) Indebtedness arising from the
honoring by a bank or other financial institution of a check, draft or similar
instrument inadvertently  (except in the
case of daylight overdrafts) drawn against insufficient funds in the ordinary
course of business; provided, however, that such Indebtedness is
extinguished within three Business Days of incurrence; (8) Indebtedness of the
Company or any of its Restricted Subsidiaries represented by (i) letters of credit for 


 

















 


the account of the Company or such Restricted
Subsidiary, as the case may be, in order to provide security for performance
bonds, bankers’ acceptances, surety or appeal bonds, workers’ compensation
claims, automobile liability loss fund claims, payment obligations in
connection with self-insurance or similar requirements incurred in the ordinary
course of business or (ii) performance bonds, appeal bonds, surety bonds,
insurance obligations or bonds and other similar bonds or obligations incurred
in the ordinary course of business; (9) Indebtedness represented by Capitalized
Lease Obligations and Purchase Money Obligations of the Company and its
Restricted Subsidiaries exiting on the Issue Date, and Indebtedness represented
by Capitalized Lease Obligations and Purchase Money Obligations of the Company
and its Restricted Subsidiaries after the Issue Date up to, but not exceeding
$3.5 million at any time outstanding; (10) Refinancing Indebtedness; (11)
Guarantees by the Company or a Restricted Subsidiary of the Company of
Indebtedness incurred by the Company or a Restricted Subsidiary of the Company
so long as the incurrence of such Indebtedness by the Company or any such
Restricted Subsidiary is otherwise permitted by the terms hereof; (12)
Indebtedness arising from agreements of the Company or a Subsidiary of the
Company providing for indemnification, adjustment of purchase price or similar
obligations, in each case, incurred in connection with the disposition of any
business, assets or Subsidiary, other than guarantees of Indebtedness incurred
by any Person acquiring all or any portion of such business, assets or
Subsidiary for the purpose of financing such acquisition; provided  that
the maximum aggregate liability in respect of all such Indebtedness shall at no
time exceed the gross proceeds actually received by the Company and the
Subsidiary of the Company in connection with such disposition; (13)
Reimbursement obligations for letters of credit issued under the Credit
Agreement in an aggregate principal amount not to exceed $10.0 million at any
time outstanding; (14) additional Indebtedness of the Company and its
Restricted Subsidiaries in an aggregate principal amount not to exceed $5.0
million at any time outstanding (which amount may, but need not be, incurred in
whole or in part under the Credit Agreement); and (15) additional Indebtedness in an
aggregate principal amount not to exceed $15.0 million plus the aggregate
principal amount of New PIK Notes issued in
connection therewith at any one time outstanding of Third Priority Senior
Secured Notes due 2008 and any related Guarantees.


 


Amendment to the “Limitation on
Asset Sales” Covenant.


 


Section 4.16 of the Indenture is hereby amended and
restated to read in its entirety as follows:


 


The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:


 


(1)           the Company or the applicable
Restricted Subsidiary, as the case may be, receives consideration at the time
of such Asset Sale at least equal to the Fair Market Value of the assets sold
or otherwise disposed of (as determined in good faith by senior management or,
in the case of an Asset Sale in excess of $5.0 million, the Company’s Board of
Directors); and


 


(2)           at least 75% of the consideration
received by the Company or the Restricted Subsidiary, as the case may be, from
such Asset Sale shall be in the form of cash or Cash Equivalents and is
received at the time of such disposition; provided  that (a) the
amount of any liabilities (as shown on the most recent applicable balance
sheet) of the Company or such Restricted Subsidiary (other than liabilities
that are by their terms subordinated to the Notes) that are assumed by the
transferee of any such assets shall be deemed to be cash for the purposes of
this clause (2) so long as the documents governing such liabilities
provide that there is no further recourse to the Company or any of its
Subsidiaries with respect to such liabilities and (b) any securities, notes or
other obligations received by the Company or any such Restricted Subsidiary
from the transferee that are contemporaneously, subject to ordinary settlement 


 

















 


periods, converted by
the Company or such Restricted Subsidiary into cash, shall be deemed to be cash
to the extent of the cash received in that conversion.


 


The Company may apply an
aggregate of $10.0 million of the Net Cash Proceeds from one or more Asset
Sales occurring on or after the date of the Third Supplemental Indenture in any
manner not prohibited by the Indenture. If the Company generates aggregate Net
Cash Proceeds from one or more Asset Sales on or after the date of the Third
Supplemental Indenture in excess of $10.0 million, then the Company shall apply
the amount of such excess (but only such excess, and not the first $10.0
million) as set forth in the next succeeding paragraph. The first date on which
the Company generates such aggregate Net Cash Proceeds in excess of $10.0
million, and each subsequent date on which the Company generates additional Net
Cash Proceeds from an Asset Sale, are each referred to as a “Net Proceeds
Offer Trigger Date.”


 


The Company shall apply an
amount equal to 80% of such excess Net Cash Proceeds (such amount being the “Net
Proceeds Offer Amount”)  to make an
offer to purchase (the “Net Proceeds Offer”) on a date (the “Net
Proceeds Offer Payment Date”) not less than 30 nor more than 60 days
following the applicable Net Proceeds Offer Trigger Date, from all Holders on a
pro rata basis, that amount of Notes equal to the Net Proceeds Offer Amount at
a price equal to 100% of the principal amount of the Notes to be purchased,
plus accrued and unpaid interest and Additional Interest and Additional PIK Interest (which, for such purpose, shall be payable in
cash), if any, thereon, to the date of purchase; provided, however,
that if at any time any non-cash consideration received by the Company or any
of its Restricted Subsidiaries, as the case may be, in connection with any
Asset Sale is converted into or sold or otherwise disposed of for cash (other
than interest received with respect to any such non-cash consideration), then
such conversion or disposition shall be deemed to constitute an Asset Sale
hereunder on the date of such conversion or disposition, as the case may be,
and the Net Cash Proceeds thereof shall be applied in accordance with this Section
4.16.


 


The Company may defer any
Net Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer
Amount equal to or in excess of $5.0 million resulting from one or more Asset
Sales in which case the accumulation of such amount shall constitute a Net
Proceeds Offer Trigger Date (at which time, the entire unutilized Net Proceeds
Offer Amount, and not just the amount in excess of $5.0 million, shall be
applied as required pursuant to the immediately preceding paragraph). For the
avoidance of doubt, the Company shall not be required to make a Net Proceeds
Offer with the 20% of the Net Cash Proceeds from any Asset Sale that does not
constitute part of the Net Proceeds Offer Amount, and the Company may apply
such 20% in any manner not prohibited by the indenture.


 


For purposes of this Section
4.16 hereof, the term “Notes” shall include the Third Priority Senior
Secured Notes due 2008 plus the New PIK Notes issued
in connection therewith and the term “Holder” shall include the holders of the
Third Priority Senior Secured Notes due 2008 and the New PIK
Notes issued in connection therewith.


 


In the event of the transfer
of substantially all (but not all) of the property and assets of the Company
and its Restricted Subsidiaries as an entirety to a Person in a transaction
permitted under Section 5.01, which transaction does not constitute a
Change of Control, the successor corporation shall be deemed to have sold the
properties and assets of the Company and its Restricted Subsidiaries not so
transferred for purposes of this covenant, and shall comply with the provisions
of this Section 4.16 with respect to such deemed sale as if it
constituted an Asset Sale. In addition, the Fair Market Value of such
properties and assets of the Company or its Restricted Subsidiaries deemed to
be sold shall be deemed to be Net Cash Proceeds for purposes of this Section
4.16.


 

















 


Each notice of a Net
Proceeds Offer shall be mailed to the record Holders as shown on the register
of Holders within 25 days following the Net Proceeds Offer Trigger Date, with a
copy to the Trustee, and shall comply with the procedures set forth in this
Indenture. Upon receiving notice of the Net Proceeds Offer, Holders may elect
to tender their Notes in whole or in part in integral multiples of $1,000 in
exchange for cash. To the extent Holders properly tender Notes in an amount exceeding
the Net Proceeds Offer Amount, Notes of tendering Holders will be purchased on
a pro rata basis (based on amounts tendered). To the extent that the aggregate
amount of the notes tendered pursuant to a Net Proceeds Offer is less than the
Net Proceeds Offer Amount, the Company may use such excess Net Proceeds Offer
Amount for general corporate purposes or for any other purposes not prohibited
by this Indenture. Upon completion of any such Net Proceeds Offer, the Net
Proceeds Offer Amount shall be reset at zero. A Net Proceeds Offer shall remain
open for a period of 20 Business Days or such longer period as may be required
by law.


 


Pending the final
application of the Net Cash Proceeds, the Company and any its Restricted
Subsidiaries may temporarily reduce Indebtedness or otherwise use such Net Cash
Proceeds in any manner not prohibited by this Indenture.


 


The Company will comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations
are applicable in connection with the repurchase of Notes pursuant to a Net
Proceeds Offer. To the extent that the provisions of any securities laws or
regulations conflict with this Section 4.16, the Company shall comply with
the applicable securities laws and regulations and shall not be deemed to have
breached its obligations under Section 4.16 by virtue thereof.


 


Amendment to the “Maintenance
of Consolidated EBITDA” Covenant.


 


Section 4.25 of the Indenture is hereby amended and
restated to read in its entirety as follows:


 


The Consolidated EBITDA of
the Company shall not be less than $23.0 million on the last day of each fiscal
quarter of the Company (beginning with the fiscal quarter ending December 31,
2006 and for so long as the Notes remain outstanding) during the four
consecutive full fiscal quarters of the Company ending as of such date.


 


EFFECTIVE DATE.


 


This Third Supplemental Indenture shall become
effective on the date hereof.


 


MISCELLANEOUS.


 


Governing Law.


 


THIS THIRD SUPPLEMENTAL INDENTURE SHALL BE
CONSTRUED, INTERPRETED AND THE RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND
PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THE COMPANY AND EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OF OR RELATING TO THIS AGREEMENT, 


 

















 


AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS. THE COMPANY AND EACH GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO 
SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. THE COMPANY AND EACH GUARANTOR IRREVOCABLY CONSENTS, TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE SERVICE OF
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
TO THE COMPANY AT ITS ADDRESS SET FORTH IN THE INDENTURE, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
ANY HOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY OR ANY GUARANTOR IN
ANY OTHER JURISDICTION.


 


Continuing Agreement.


 


Except as herein amended, all terms, provisions and
conditions of the Indenture, all Exhibits thereto and all documents executed in
connection therewith shall continue in full force and effect and shall remain
enforceable and binding in accordance with their terms.


 


Conflicts.


 


In the event of a conflict between the terms and
conditions of the Indenture and the terms and conditions of this Third
Supplemental Indenture, then the terms and conditions of this Third
Supplemental Indenture shall prevail.


 


Counterpart Originals.


 


The parties may sign any number of copies of this
Third Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.


 


Headings,
Etc.


 


The headings of the Sections of this Third
Supplemental Indenture have been inserted for convenience of reference only,
are not to be considered a part hereof and shall in no way modify or restrict
any of the terms or provisions hereof.


 


Trustee’s
Disclaimer.


 


The recitals contained herein shall be taken as the
statements of the Company and the Guarantors and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representation as to
the validity or sufficiency of this Third Supplemental Indenture.


 


[Signatures on following pages]


 

















 


SIGNATURES


 


IN WITNESS WHEREOF, the parties hereto have executed
and delivered this Third Supplemental Indenture as of the date first written
above.


 


	
   

  	
  ATLANTIC EXPRESS TRANSPORTATION CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Domenic Gatto

  
	
   

  	
   

  	
  Name:

  	
  Domenic Gatto

  
	
   

  	
   

  	
  Title:

  	
  President

  



 


 


Attest:


 


 


	
  /s/
  Neil J. Abitabilo

  	
   

  
	
  Name:

  	
  Neil
  J. Abitabilo

  
	
  Title:

  	
  Chief
  Financial Officer

  
			



 

















 


	
  GUARANTORS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  180 Jamaica Corp.

  201 West Sotello Realty, Inc.
Amboy Bus Co., Inc.
Atlantic Escorts Inc.
Atlantic Express Coachways, Inc.
Atlantic Express New England, Inc.
Atlantic Express of California, Inc.
Atlantic Express of Illinois, Inc.
Atlantic Express of L.A. Inc.
Atlantic Express of Missouri Inc.
Atlantic Express of New Jersey, Inc.
Atlantic Express of Pennsylvania, Inc.
Atlantic Paratrans of Arizona, Inc.
Atlantic Paratrans of NYC, Inc.
Atlantic Paratrans, Inc.
Atlantic Queens Bus Corp.
Atlantic Transit, Corp.
Atlantic-Conn. Transit, Inc.
Atlantic-Hudson, Inc.
Block 7932, Inc.
Brookfield Transit Inc.
Central New York Reorganization Corp.
Courtesy Bus Co., Inc.

  	
   

  	
  Fiore Bus Service, Inc.

  Groom Transportation, Inc.
G.V.D.
  Leasing Co., Inc.
James McCarty Limo Service, Inc.
Jersey Bus Sales, Inc.
Jersey Business Land Co., Inc.
K. Corr, Inc.
Merit Transportation Corp.
Metro Affiliates, Inc.
Metropolitan Escort Service, Inc.
Midway Leasing Inc.
Mountain Transit, Inc.
R. Fiore Bus Service, Inc.
Raybern
  Bus Service, Inc.
Raybern
  Capital Corp.
Raybern
  Equity Corp.
Robert L. McCarthy & Son, Inc.
Staten Island Bus, Inc.
Temporary Transit Service, Inc.
T-NT Bus Service, Inc.
Transcomm,
  Inc.
Winsale,
  Inc.
Wrightholm
  Bus Line, Inc.

  



 


[Signature on following page]


 

















 


	
   

  	
  By:

  	
  /s/ Domenic Gatto

  
	
   

  	
   

  	
  Name:

  	
  Domenic Gatto

  
	
   

  	
   

  	
  Title:

  	
  President

  



 

















 


 


	
   

  	
  THE BANK OF NEW YORK, as
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Julie Salovitch-Miller

  
	
   

  	
   

  	
  Name:

  	
  Julie Salovich-Miller

  
	
   

  	
   

  	
  Title:

  	
  Vice President