Exhibit 10.34

                                FOURTH AMENDMENT
                                     TO THE
                   SECURITY AND PLEDGE AGREEMENT, WITH ADDENDA

      Fourth Amendment,  dated as of December 22, 2000 (the "Fourth  Amendment")
to the Security and Pledge  Agreement  (the "Security  Agreement"),  dated as of
February 4, 1997, among Atlantic Express  Transportation  Group Inc., a New York
corporation (together with its successors and assigns, "AETG"), Atlantic Express
Transportation  Corp., a New York corporation and a subsidiary of AETG (together
with its successors and assigns, the "Company"), the subsidiaries of the Company
that are  party  thereto  and The Bank of New  York,  as the  trustee  under the
Indenture  (as  defined  below) for the  benefit of the holders of the Notes (as
defined  below)(together  with its successors and assigns, the "Secured Party"),
as amended by the First Amendment to the Security and Pledge Agreement, dated as
of August 14, 1997, the Second  Amendment to the Security and Pledge  Agreement,
dated as of December  12,  1997,  and the Third  Amendment  to the  Security and
Pledge Agreement,  dated as of April 28, 1999, each among AETG, the Company, the
subsidiaries  of the  Company  that are party  thereto  and the  Secured  Party.
Capitalized terms not defined herein shall have the respective meaning set forth
for such terms in the Security Agreement.

      WHEREAS,  the  parties  to the  Security  Agreement  desire  to amend  the
Security Agreement as set forth below.

      NOW,  THEREFORE,  in  consideration of the agreements set forth herein and
for other and good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto hereby agree as follows:

      1. New definitions  are added to Section 1.1 of the Security  Agreement to
read as follows:

            "Equipment"  shall  mean all of the  Company's  and each  Restricted
            Subsidiary's now owned or hereafter acquired  equipment,  machinery,
            computers  and  computer  hardware and  software  (whether  owned or
            licensed),  vehicles,  tools, furniture,  fixtures, all attachments,
            accessions and property now or hereafter  affixed thereto or used in
            connection  therewith,  and substitutions and replacements  thereof,
            wherever located.

            "Real Property" shall mean all now owned or hereafter  acquired real
            property of the Company or any Restricted Subsidiary,  together with
            all buildings,  structures,  and other improvements  located thereon
            and all licenses,  easements  and  appurtenances  relating  thereto,
            wherever located.

      2. The term "Loan  Agreement"  as defined in Section  1.1 of the  Security
Agreement is hereby amended and restated in its entirety, as follows:

<PAGE>

            "Loan Agreement" shall mean the Loan and Security  Agreement,  dated
            December 22, 2000,  among the Lender,  certain  subsidiaries  of the
            Company, as borrowers and the Company, as guarantor.

      3. Section 2.1 of the Security Agreement is hereby amended and restated in
its entirety, as follows:

            2.1  Security  Interest.  As  security  for the prompt and  complete
            payment and performance in full of all the Obligations,  the Company
            and each Restricted  Subsidiary  hereby grants to the Secured Party,
            for the benefit of itself and the  Holders,  a security  interest in
            and continuing lien on, all of its right,  title and interest in, to
            and under the following, in each case, whether now owned or existing
            or hereafter acquired or arising, and wherever located (all of which
            being the "NonSecurity Collateral"):

            (i) Accounts;

            (ii) subject to the final paragraph of this Section 2.1, all present
            and future  contract  rights  (including,  without  limitation,  all
            rights under service contracts  pursuant to which the Company or any
            Restricted  Subsidiary renders to its customers,  which rights shall
            include  any  and all  rights  to all  retainages  which  may  arise
            thereunder),  general intangibles (including but not limited to, tax
            and duty refunds, patents, trade secrets, trademarks, service marks,
            copyrights,  trade names,  applications  and  registrations  for the
            foregoing,  goodwill,  processes,  drawings,  blueprints,   customer
            lists, licenses,  whether as licensor or licensee,  choses in action
            and other  claims and  existing  and future  leasehold  interests in
            Equipment,  Real Property and fixtures),  chattel paper,  documents,
            instruments, letters of credit, bankers' acceptances and guaranties;

            (iii) all present and future monies,  securities,  credit  balances,
            deposits,  deposit accounts and other property of the Company or any
            Restricted  Subsidiary  now or  hereafter  held or received by or in
            transit to Lender or its  Affiliates  or at any other  depository or
            other  institution  from or for the  account  of the  Company or any
            Restricted  Subsidiary,  whether for safekeeping,  pledge,  custody,
            transmission,  collection or  otherwise,  and all present and future
            liens, security interests,  rights, remedies, title and interest in,
            to and in respect of  Accounts  and other  Non-Security  Collateral,
            including,  without  limitation,  (a) rights and  remedies  under or
            relating to guaranties,  contracts or suretyship,  letters of credit
            and  credit  and  other   insurance   related  to  the   NonSecurity
            Collateral,   (b)  rights  of   stoppage   in   transit,   replevin,
            repossession, reclamation and other rights and remedies of an unpaid
            vendor,  lienor or secured party,  (c) goods  described in invoices,
            documents,  contracts or  instruments  with respect to, or otherwise
            representing   or   evidencing,   Accounts   or  other   NonSecurity
            Collateral, including, without limitation, returned, repossessed and
            reclaimed goods, and (d) deposits by and property of account debtors
            or other persons securing the obligations of account debtors;

            (iv) Inventory;

<PAGE>

            (v) Equipment,  including  without  limitation,  all buses and other
            vehicles, all attachments,  accessions and property now or hereafter
            affixed thereto or used in connection  therewith,  and substitutions
            and replacements thereof, wherever located;

            (vi) Real Property

            (vii) Records; and

            (viii) all  products  and  proceeds of the  foregoing,  in any form,
            including,  without  limitation,  insurance  proceeds and all claims
            against third parties for loss or damage to or destruction of any or
            all of the foregoing.

                  In no event shall the Secured Party's  security  interest in a
            contract or agreement of the Company or any Restricted Subsidiary be
            deemed to be a present assignment, transfer, conveyance,  subletting
            or other disposition (an "Assignment") of such contract or agreement
            prohibiting,  or  requiring  any consent or  establishing  any other
            condition  for,  an  assignment   thereof  by  the  Company  or  any
            Restricted Subsidiary. The Secured Party acknowledges that any sale,
            transfer or Assignment  of any such  contract or agreement  upon the
            enforcement of the Secured Party's  security  interest therein would
            be  subject to the terms of such  contract  or  agreement  governing
            Assignment,  except as  otherwise  provided in Section  9-318 of the
            UCC.  The Securing  Party's  security  interest in each  contract or
            agreement of the Company or any Restricted  Subsidiary  shall attach
            from the date hereof to all of the  following,  whether now existing
            or hereafter arising or acquired:  (i) all of the Company's and each
            Restricted  Subsidiary's  Accounts and general intangibles for money
            due or to become due arising under such contract or agreement;  (ii)
            all  proceeds  paid or  payable  to the  Company  or any  Restricted
            Subsidiary from any sale, transfer or assignment of such contract or
            agreement  and all rights to receive  such  proceeds;  and (iii) all
            other  rights  and  interests  of the  Company  and  any  Restricted
            Subsidiary  in, to and  under  such  contract  or  agreement  to the
            fullest extent that  attachment  thereto would not be a violation of
            such contract or agreement directly or indirectly  entitling a party
            thereto  (other than the  Company or any  Restricted  Subsidiary  or
            Affiliate thereof) to a legally  enforceable right to terminate such
            contract or agreement.

      4.  Subsection  (b) of Section  3.1 of the  Security  Agreement  is hereby
amended and restated in its entirety, as follows:

            (b) The security  interests in the Collateral granted to the Secured
            Party  hereunder  will  constitute   perfected   security  interests
            therein, to the extent that such security interests may be perfected
            by the actions  described in subsections (i), (ii),  (iii), (iv) and
            (v) hereof,  superior and prior to all Liens and rights or claims of
            all  other   Persons,   subject   only  to  the  terms  of  (x)  the
            Intercreditor Agreement and (y) the $2.2 million aggregate principal
            amount  notes and  mortgages  (the  "Central  Notes and  Mortgages")
            relating  to  certain  Real  Property  ("Central  Real  Properties")
            acquired  in the  acquisition  of  Central  New York  Coach  Sales &
            Service, Inc., a New York corporation, and Jersey Bus Sales, Inc., a
            New Jersey corporation,  upon (i) the filing of financing statements
            naming the Company or any Restricted  Subsidiary as "debtor" and the
            Secured Party as "secured party" and describing the Non-Security

<PAGE>

            Collateral  in the filing  offices  set forth on Schedule II hereto,
            (ii)  to  the  extent  not  subject  to  Article  9 of  the  Uniform
            Commercial Code in any applicable  jurisdiction,  the recordation of
            the security interests granted hereunder in patents,  trademarks and
            copyrights  in  the  applicable  patent,   trademark  and  copyright
            registries  and  the  registration  of  all  copyrights,  (iii)  the
            delivery  of  certificates  and  instruments  evidencing  all of the
            Securities  identified  on Schedule I hereto to the  Secured  Party,
            indorsed  in blank or  accompanied  by  undated  Stock  Powers  duly
            executed in blank,  as the case may be, with  respect  thereto  (iv)
            naming the Secured Party as a "lienholder"  on any  Certificates  of
            Titles  issued by the  appropriate  state agency on a motor  vehicle
            constituting  Equipment  which  is  less  than  eight  years  old (a
            "Qualified  Vehicle"),  and (v)  recordation of a mortgage,  deed or
            trust for any Real  Property,  other than Central  Real  Properties,
            with the real  estate  records of the  jurisdiction  where such Real
            Property is located, as the case may be, with respect thereto.

      5. Section 3.2 of the Security Agreement is hereby amended and restated in
its entirety, as follows:

            3.2 No Liens;  Other  Financing  Statements.  (a) Except for (i) the
            Lien granted to the Secured Party  hereunder,  (ii) the Lien granted
            to the Lender  under the Loan  Agreement  and (iii) the Lien granted
            under  the  Central  Notes  and  Mortgages,  the  Company  and  each
            Restricted  Subsidiary  owns and, as to all  Collateral  whether now
            existing or hereafter  acquired  will  continue to own, each item of
            the Collateral free and clear of all Liens,  rights and claims,  and
            the  Company  and  each  Restricted   Subsidiary  shall  defend  the
            Collateral against all claims and demands of all Persons at any time
            claiming  the same or any  interest  therein  adverse to the Secured
            Party  on  the  Collateral   entitled  to  priority   therein  under
            applicable law.

            (b) No  financing  statement or other  evidence of Lien  covering or
            purporting  to  cover  any  of  the  Collateral  is on  file  and is
            effective in any public office other than (i)  financing  statements
            filed or to be  filed in  connection  with  the  security  interests
            granted to the Secured Party  hereunder,  (ii) financing  statements
            filed  in  connection  with  the  Loan  Agreement,  (iii)  financing
            statements and mortgages  filed in connection with the Central Notes
            and Mortgages,  and (iv) financing  statements or liens on vehicles,
            in each case, for which proper, executed termination statements have
            been delivered to the Secured Party for filing.

      6. Section 3.4 of the Security Agreement is hereby amended and restated in
its entirety, as follows:

            3.4 Location of Inventory and Equipment,  Legal  Description of Real
            Property.  The  Inventory and Equipment is kept only at (or shall be
            in transit to) the locations listed on Schedule III hereto.  None of
            such  Inventory or Equipment is in the  possession of an issuer of a
            negotiable  document  (as  defined  in  Section  7-104  of the  UCC)
            therefor or otherwise in the possession of a bailee or other Person.
            The legal  description of all Real Property is set forth on Schedule
            III hereto.

<PAGE>

      7. Section 4.1 of the Security Agreement is hereby amended and restated by
adding the following Subsections (iii) and (iv), as follows:

            (iii) submitting  certificates of title on Qualified Vehicles to the
            appropriate  state  authority for notation  thereon of the liens and
            security interests granted hereby; and

            (iv) recording mortgages,  deeds or trusts for Real Property, except
            the Central  Real  Properties,  with the real estate  records of the
            jurisdiction where such Real Property is located with respect to the
            liens and security interests granted hereby.

      8. Section 4.6 of the Security Agreement is hereby amended and restated in
its entirety, as follows:

            4.6 Negative  Pledge.  None of AETG,  the Company nor any Restricted
            Subsidiary will create,  incur or permit to exist,  and each of them
            will defend the Collateral against,  and will take such other action
            as is  necessary  to  remove,  any  Lien  or  claim  on  or  to  the
            Collateral,  other than the Liens created hereby,  Liens in favor of
            the Lender under the Loan Agreement, Permitted Liens and the Central
            Notes and Mortgages.

      9.  Schedules  I, II and III  shall  hereby  be  amended  to  include  the
information  set forth on such  corresponding  Schedules  I, II and III attached
hereto.

      10. Except as herein amended, all terms,  provisions and conditions of the
Security Agreement, all Annexes and Schedules 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.

      11. This Amendment may be executed in any number of counterparts,  each of
which shall for all purposes be deemed an original and all of which  constitute,
collectively, one agreement.

      12. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN  ACCORDANCE  WITH AND BE GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK (WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS).

      13. In the event of a conflict  between  the terms and  conditions  of the
Security  Agreement  and the terms and  conditions of this  Amendment,  then the
terms and conditions of this Amendment shall prevail.

      14. The  recitals  contained  herein shall be taken as the  statements  of
AETG, the Company and the Guarantors,  and the Trustee assumes no responsibility
for the correctness.  The Trustee makes no  representation as to the validity or
sufficiency of this Fourth Amendment to the Security and Pledge Agreement.

<PAGE>

      IN WITNESS  WHEREOF,  the parties  have caused this  Amendment  to be duly
executed and delivered as of the date first above written.

ATLANTIC EXPRESS TRANSPORTATION             ATLANTIC EXPRESS
GROUP INC.                                  TRANSPORTATION CORP.

By: /s/ Nathan Schlenker                 By: /s/ Domenic Gatto
    ---------------------------              -----------------
Name:   Nathan Schlenker                 Name:   Domenic Gatto
Title:  Chief Financial Officer          Title:  President

                                   GUARANTORS

AMBOY BUS CO., INC.
ATLANTIC-CHITTENANGO REAL                  METRO AFFILIATES, INC.
  PROPERTY CORP.                           METROPOLITAN ESCORT SERVICE, INC.
ATLANTIC-CONN TRANSIT, INC.                MIDWAY LEASING, INC.
ATLANTIC EXPRESS COACHWAYS, INC.           RAYBERN BUS SERVICE, INC.
ATLANTIC EXPRESS OF LA, INC.               RAYBERN CAPITAL CORP.
ATLANTIC EXPRESS OF MISSOURI, INC.         RAYBERN EQUITY CORP.
ATLANTIC EXPRESS OF NEW JERSEY, INC.       STATEN ISLAND BUS, INC.
ATLANTIC EXPRESS OF PENNSYLVANIA, INC.     TEMPORARY TRANSIT SERVICE, INC.
ATLANTIC-HUDSON, INC.                      201 WEST SOTELLO REALTY, INC.
ATLANTIC MEDFORD INC.                      ATLANTIC TRANSIT, CORP.
ATLANTIC PARATRANS, INC.                   AIRPORT SERVICES, INC.
ATLANTIC PARATRANS OF COLORADO, INC.       ATLANTIC EXPRESS NEW ENGLAND, INC.
ATLANTIC PARATRANS OF KENTUCKY, INC.       ATLANTIC EXPRESS OF CALIFORNIA, INC.
ATLANTIC PARATRANS OF                      ATLANTIC EXPRESS OF ILLINOIS, INC.
  PENNSYLVANIA, INC.                       ATLANTIC EXPRESS OF SOUTH
BLOCK 7932, INC.                             CAROLINA, INC.
BROOKFIELD TRANSIT, INC.                   ATLANTIC PARATRANS OF ARIZONA, INC.
CENTRAL NEW YORK COACH SALES               FIORE BUS SERVICE, INC.
  & SERVICE, INC.                          GROOM TRANSPORTATION, INC.
COURTESY BUS CO., INC.                     JAMES MCCARTY LIMO SERVICE, INC.
GVD LEASING, INC.                          MCINTIRE TRANSPORTATION, INC.
180 JAMAICA CORP.                          MOUNTAIN TRANSIT, INC.
JERSEY BUS SALES, INC.                     R. FIORE BUS SERVICE, INC.
JERSEY BUSINESS LAND CO., INC.             ROBERT L. MCCARTHY & SON, INC.
K. CORR, INC.                              T-NT BUS SERVICE, INC.
MERIT TRANSPORTATION CORP.                 TRANSCOMM, INC.
                                           WINSALE, INC.

                                      By: /s/ Nathan Schlenker
                                          -----------------------
                                          Name:  Nathan Schlenker
                                          Title: CFO

<PAGE>

THE BANK OF NEW YORK, as

  Trustee and Secured Party

By: /s/ Julie Salovitch-Miller
    --------------------------
Name:   Julie Salovitch-Miller
Title:  Vice President

<PAGE>

                                   Schedule I

        Pledged Securities Owned By Atlantic Express Transportation Corp.
        -----------------------------------------------------------------

<TABLE>
<CAPTION>

                                                              Stock                                       Percentage of
                 Stock                      Class of       Certificate                       Number        Outstanding
                Issuer                       Stock           Number         Par Value       of Shares        Shares
                -------                      -----           ------         ---------       ---------        ------
<S>                                          <C>                <C>            <C>             <C>            <C>
Atlantic Transit, Corp.                      Common             1              None             10            100%

Airport Services, Inc.                       Common             2              None            100            100%

Atlantic Express New England, Inc.           Common             1              None             10            100%

Atlantic Express of California, Inc.         Common             1              None             10            100%

Atlantic Express of Illinois, Inc.           Common             1              None             10            100%

Atlantic Express of South Carolina,          Common             2              None             10            100%
Inc.

Atlantic Paratrans of Arizona, Inc.          Common             1              None             10            100%

Fiore Bus Service, Inc.                      Common            18              None            950            100%

Groom Transportation, Inc.                   Common             3              None            100            100%

James McCarty Limo Service, Inc.             Common             2              None            100            100%

K. Corr, Inc.                                Common             4              None             10            100%

McIntire Transportation, Inc.                Common             8              None            100            100%

Mountain Transit, Inc.                       Common             3              None            100            100%

R. Fiore Bus Service, Inc.                   Common            13              None             70            100%

Raybern Bus Service, Inc.                    Common             3              None             10            100%

Raybern Capital Corp.                        Common             5              None             10            100%

Raybern Equity Corp.                         Common             7              None             20            100%

Robert L. McCarthy & Son, Inc.               Common            22              None            100            100%

T-NT Bus Service, Inc.                       Common             5              None            150            100%

Transcomm, Inc.                              Common             7              None           1000            100%

Winsale, Inc.                                Common             5              None            100            100%
</TABLE>


<PAGE>

                                   Schedule II

                                 Filing Offices

Debtor Name                                   Jurisdictions Where UCC-1s Filed
-----------                                   --------------------------------
Atlantic Transit, Corp.                       New York, SOS
                                              Richmond, County

Airport Services, Inc.                        Massachusetts SOS
                                              Leominster, City
                                              New York SOS
                                              Richmond, County

Atlantic Express New England, Inc.            Massachusetts SOS
                                              Woburn, City
                                              Billerica, Town
                                              New York SOS
                                              Richmond, County

Atlantic Express of California, Inc.          California SOS
                                              New York SOS
                                              Richmond, County

Atlantic Express of Illinois, Inc.            Illinois SOS
                                              New York SOS
                                              Richmond, County

Atlantic Express of South Carolina, Inc.      South Carolina SOS
                                              New York SOS
                                              Richmond, County

Atlantic Paratrans of Arizona, Inc.           Arizona SOS
                                              New York SOS
                                              Richmond, County

Fiore Bus Service, Inc.                       Massachusetts SOS
                                              Woburn, City
                                              Saugus, Town
                                              New York SOS
                                              Richmond, County

Groom Transportation, Inc.                    Massachusetts SOS
                                              Billerica, Town
                                              Woburn, City
                                              New York SOS
                                              Richmond, County

James McCarty Limo Service, Inc.              Massachusetts SOS
                                              Leominster City
                                              Millbury Town
                                              Townsend Town
                                              Gardner City
                                              New York SOS
                                              Richmond, County

<PAGE>

K. Corr, Inc.                                 New York SOS
                                              Suffolk, County
                                              Richmond, County

McIntire Transportation, Inc.                 Massachusetts SOS
                                              Woburn, City
                                              New York SOS
                                              Richmond, County

Mountain Transit, Inc.                        Vermont SOS
                                              New York SOS
                                              Richmond, County

R. Fiore Bus Service, Inc.                    Massachusetts SOS
                                              Woburn, City
                                              New York SOS
                                              Richmond, County

Raybern Bus Service, Inc.                     New York SOS
                                              Suffolk, County
                                              Richmond, County

Raybern Capital Corp.                         New York SOS
                                              Suffolk, County
                                              Richmond, County

Raybern Equity Corp.                          New York SOS
                                              Suffolk, County
                                              Richmond, County

Robert L. McCarthy & Son, Inc.                Massachusetts SOS
                                              Brookfied, Town
                                              Hubbardston, Town
                                              Hardwick, Town
                                              Princeton, Town
                                              Paxton, Town
                                              New York SOS
                                              Richmond, County

T-NT Bus Service, Inc.                        New York SOS
                                              Niagara, County
                                              Onondaga, County
                                              Erie, County
                                              Richmond, County

Transcomm, Inc.                               Massachusetts SOS
                                              Brockton, City
                                              Gloucester, City
                                              Lowell, City
                                              Somerville, City
                                              Woburn, City
                                              New York SOS
                                              Richmond, County

Winsale, Inc.                                 New Jersey SOS
                                              New York SOS
                                              Richmond, County

SOS= Secretary of State

<PAGE>

                                  Schedule III

                             Location of Collateral
                             ----------------------

New York
--------------------------------------------------------------------------------
All Companies                                     7 North Street,
                                                  Staten Island
--------------------------------------------------------------------------------
Atlantic Express Coachways, Inc.                  141 E. Service Road
                                                  Staten Island
--------------------------------------------------------------------------------
Amboy Bus Co., Inc.                               2123A Richmond Terrace
                                                  Staten Island
--------------------------------------------------------------------------------
Staten Island Bus, Inc.                           52 Bayview Avenue
                                                  Staten Island
--------------------------------------------------------------------------------
Amboy Bus Co., Inc.                               107-110 180th Street
                                                  Queens, NY
--------------------------------------------------------------------------------
Amboy Bus Co., Inc.                               180th Street
180 Jamica Corp.                                  Queens (Parking Lot)
--------------------------------------------------------------------------------
Amboy Bus Co., Inc.                               46-81 Metropolitan Avenue
Atlantic Paratrans, Inc.                          Queens
Brookfield Transit, Inc.
Merit Transportation, Inc.
Metro Affiliates, Inc.
--------------------------------------------------------------------------------
Amboy Bus Co., Inc.                               Metropolitan Avenue
                                                  Queens (Parking Lot)
--------------------------------------------------------------------------------
Amboy Bus Co., Inc.                               1386 Ralph Avenue
Block 7932, Inc.                                  Brooklyn
--------------------------------------------------------------------------------
Amboy Bus Co., Inc.                               1752 Shore Parkway
Atlantic Paratrans                                Brooklyn
--------------------------------------------------------------------------------
Amboy Bus Co., Inc.                               399 Exterior Street
Atlantic-Hudson, Inc.                             Bronx
Metro Affiliates, Inc.
--------------------------------------------------------------------------------
Amboy Bus Co., Inc.                               335 Major Deegan Blvd.
                                                  Bronx, NY
--------------------------------------------------------------------------------
Courtesy Bus Co., Inc.                            107 Lawson Blvd
Metro Affiliates, Inc.                            Oceanside
--------------------------------------------------------------------------------
Courtesy Bus Co., Inc.                            396 & 460 Brown Court
                                                  Oceanside
--------------------------------------------------------------------------------
Amboy Bus Co., Inc.                               44 North Dunton Avenue
Atlantic Medford, Inc.                            Medford
--------------------------------------------------------------------------------
Amboy Bus Co., Inc.                               220 Old Town Road
Metro Affiliates, Inc.                            Setauket
--------------------------------------------------------------------------------
Amboy Bus Co., Inc.                               48-05 Grand Avenue
                                                  Mespath
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
Amboy Bus Co., Inc.                               31 Werman Court
                                                  Plainview
--------------------------------------------------------------------------------
K. Corr, Inc.                                     1620 New Highway
                                                  Farmingdale
--------------------------------------------------------------------------------
Raybern Bus Service, Inc.                         91 Baiting Place Road
Raybern Capital Corp.                             Farmingdale
Raybern Equity Corp.
--------------------------------------------------------------------------------
Amboy Bus Co., Inc.                               Route 202
                                                  Somers
--------------------------------------------------------------------------------
Atlantic-Chittenango Real Property Corp.          7765 Lakeport Road
Central New York Bus Sales & Service, Inc.        Chittenango
--------------------------------------------------------------------------------
Central New York Bus Sales & Service, Inc.        7730 Wheeler Road
                                                  Chittenango
--------------------------------------------------------------------------------
Central New York Bus Sales & Service, Inc.        2926 Lakeville Road
                                                  Avon
--------------------------------------------------------------------------------
T-NT Bus Service, Inc.                            655 Walck Road
                                                  North Tonawanda
--------------------------------------------------------------------------------
T-NT Bus Service, Inc.                            300 Spencer Street
                                                  Syracuse
--------------------------------------------------------------------------------
T-NT Bus Service, Inc.                            330 Spencer Street
                                                  Syracuse
--------------------------------------------------------------------------------
T-NT Bus Service, Inc.                            721 Clinton Street
                                                  Syracuse
--------------------------------------------------------------------------------
T-NT Bus Service, Inc.                            63 Industrial Drive
                                                  North Tonawanda
--------------------------------------------------------------------------------
T-NT Bus Service, Inc.                            2210 Old Union Road
                                                  Cheektowaga
--------------------------------------------------------------------------------
*  Vehicles  owned  by  Midway  Leasing,  Inc.  are  held in  various  locations
   throughout New York.


Missouri
--------------------------------------------------------------------------------
Atlantic Express of Missouri, Inc.                5411 Brown Avenue
                                                  St. Louis
--------------------------------------------------------------------------------
Atlantic Express of Missouri, Inc.                3675 Chouteau Street
                                                  St. Louis
--------------------------------------------------------------------------------
Atlantic Express of Missouri, Inc.                4550 Gustine Street
                                                  St. Louis
--------------------------------------------------------------------------------
Atlantic Express of Missouri, Inc.                200 Sidney Street
                                                  St. Louis
--------------------------------------------------------------------------------
Atlantic Express of Missouri, Inc.                1808 S. 3rd Street
                                                  St. Louis
--------------------------------------------------------------------------------

<PAGE>

Massachusetts
--------------------------------------------------------------------------------
Atlantic Express New England, Inc.                210A New Boston Street
Fiore Bus Service, Inc.                           Woburn
Groom Transportation, Inc.
McIntire Transportation, Inc.
R. Fiore Bus Service, Inc.
Transcomm, Inc.
--------------------------------------------------------------------------------
Airport Services, Inc.                            700 Mechanic Street
James McCarty Limo Service, Inc.                  Leominster
--------------------------------------------------------------------------------
Atlantic Express New England, Inc.                3 Plank Street
Groom Transportation, Inc.                        Billerica
--------------------------------------------------------------------------------
Fiore Bus Service, Inc.                           24R Bennett Highway
                                                  Saugus
--------------------------------------------------------------------------------
James McCarty Limo Service, Inc.                  115 Southwest Cutoff
                                                  Millbury
--------------------------------------------------------------------------------
James McCarty Limo Service, Inc.                  368 Main Street
                                                  Townsend
--------------------------------------------------------------------------------
James McCarty Limo Service, Inc.                  150 Linus Allain Avenue
                                                  Gardner
--------------------------------------------------------------------------------
Robert L. McCarthy & Son, Inc.                    Rte 9 and West Brookfield Road
                                                  Brookfield
--------------------------------------------------------------------------------
Robert L. McCarthy & Son, Inc.                    57 Gardner Road
                                                  Hubbardston
--------------------------------------------------------------------------------
Robert L. McCarthy & Son, Inc.                    Route 32
                                                  Hardwick
--------------------------------------------------------------------------------
Robert L. McCarthy & Son, Inc.                    Route 68
                                                  Hubbardston
--------------------------------------------------------------------------------
Robert L. McCarthy & Son, Inc.                    Meriam Road
                                                  Princeton
--------------------------------------------------------------------------------
Robert L. McCarthy & Son, Inc.                    Route 122
                                                  Paxton
--------------------------------------------------------------------------------
Transcomm, Inc.                                   772 N. Main Street
                                                  Brockton
--------------------------------------------------------------------------------
Transcomm, Inc.                                   2 Pond Street
                                                  Glochester
--------------------------------------------------------------------------------
Transcomm, Inc.                                   3 Pevey Street
                                                  Lowell
--------------------------------------------------------------------------------
Transcomm, Inc.                                   21 South Street
                                                  Somerville
--------------------------------------------------------------------------------

<PAGE>

New Jersey
--------------------------------------------------------------------------------
Atlantic Express of New Jersey, Inc.              107 How Lane
                                                  New Brunswick
--------------------------------------------------------------------------------
Atlantic Express of New Jersey, Inc.              230 Red Lion Road
Jersey Business Land Co., Inc.                    Southampton
--------------------------------------------------------------------------------
Atlantic Paratrans, Inc.                          80 Milltown Road
                                                  Union
--------------------------------------------------------------------------------
Atlantic Paratrans, Inc.                          605 West California Ave
                                                  Pleasantville
--------------------------------------------------------------------------------
Jersey Bus Sales, Inc.                            2015 Route 206
Jersey Business Land Co., Inc.                    Bordentown
--------------------------------------------------------------------------------
Jersey Bus Sales, Inc.                            Old York Rd & Rising Sun Rd
                                                  Bordentown
--------------------------------------------------------------------------------
Winsale, Inc.                                     62 Woolesly Street
                                                  Irvington
--------------------------------------------------------------------------------
Winsale, Inc.                                     Van Winkle
                                                  Howell
--------------------------------------------------------------------------------
Winsale, Inc.                                     976 Newark Avenue
                                                  Jersey City
--------------------------------------------------------------------------------
Winsale, Inc.                                     972 Newark Avenue
                                                  Jersey City
--------------------------------------------------------------------------------

Pennsylvania
--------------------------------------------------------------------------------
Atlantic Express of Pennsylvania, Inc.            3740 E. Thompson Street
                                                  Philadelphia
--------------------------------------------------------------------------------
Atlantic Express of Pennsylvania, Inc.            6940 Norwitch Drive
                                                  Philadelphia
--------------------------------------------------------------------------------
Atlantic Express of Pennsylvania, Inc.            6971 Norwitch Drive
                                                  Philadelphia
--------------------------------------------------------------------------------
Atlantic Paratrans of Pennsylvania, Inc.          2600 E. Butler Street
                                                  Philadelphia
--------------------------------------------------------------------------------

Illinois
--------------------------------------------------------------------------------
Atlantic Express of Illinois, Inc.                2541 N. Keeler Drive
--------------------------------------------------------------------------------

South Carolina
--------------------------------------------------------------------------------
Atlantic Paratrans of South Carolina, Inc.        1409 Huger Street
--------------------------------------------------------------------------------

<PAGE>

California
--------------------------------------------------------------------------------
Atlantic Express of LA, Inc.                      201 West Sotello Street
                                                  Los Angeles
--------------------------------------------------------------------------------
Atlantic Express of LA, Inc.                      1081 Vignes Street
                                                  Los Angeles
--------------------------------------------------------------------------------
Atlantic Express of California, Inc.              2450 Long Beach Blvd.
                                                  Long Beach
--------------------------------------------------------------------------------
Atlantic Express of California, Inc.              2400 Long Beach Blvd.
                                                  Long Beach
--------------------------------------------------------------------------------

Connecticut
--------------------------------------------------------------------------------
Atlantic-Conn Transit, Inc.                       57 South Street
                                                  Ridgefield
--------------------------------------------------------------------------------

Vermont
--------------------------------------------------------------------------------
Mountain Transit, Inc.                            Blakely Road
                                                  Colchester
--------------------------------------------------------------------------------
Mountain Transit, Inc.                            222 Railroad Street
                                                  Milton
--------------------------------------------------------------------------------
Mountain Transit, Inc.                            Landfill Road
                                                  Milton
--------------------------------------------------------------------------------

Arizona
--------------------------------------------------------------------------------
Atlantic Paratrans of Arizona, Inc.               45 North Sunway Drive
                                                  Gilbert
--------------------------------------------------------------------------------
Atlantic Paratrans of Arizona, Inc.               303-305 S. Extension Road
                                                  Mesa
--------------------------------------------------------------------------------

<PAGE>

                    ADDENDUM TO SECURITY AND PLEDGE AGREEMENT

      The undersigned:

      (i) agrees to all of the provisions of the Security and Pledge  Agreement,
dated as of  February  4, 1997,  among  AETG,  the  Company  and the  Restricted
Subsidiaries  (each as defined  therein),  in favor of The Bank of New York (the
"Secured  Party"),  as amended by the First Amendment to the Security and Pledge
Agreement, dated as of August 14, 1997, the Second Amendment to the Security and
Pledge  Agreement,  dated as of December  12, 1997,  the Third  Amendment to the
Security  and  Pledge  Agreement,  dated as of  April  28,1999,  and the  Fourth
Amendment  to the Security  and Pledge  Agreement,  dated as of the date hereof,
each among AETG,  the Company and the Restricted  Subsidiaries  (each as defined
therein), in favor of the Secured Party (the "Security Agreement"),  pursuant to
the Indenture,  dated as of February 4, 1997, among the Company,  the Restricted
Subsidiaries  (each as defined therein) and the Secured Party, as amended by the
First  Supplemental  Indenture,   dated  as  of  August  14,  1997,  the  Second
Supplemental  Indenture,  dated as of December 12, 1997, the Third  Supplemental
Indenture dated as of October 28, 1998, the Fourth Supplemental Indenture, dated
as of April 28, 1999, and the Fifth Supplemental Indenture, dated as of December
20,  2000,  each among the  Company,  Restricted  Subsidiaries  (each as defined
therein) and the Secured Party (the "Indenture"), and

      (ii)  effective  on the  date  hereof  becomes  a  party  to the  Security
Agreement,  as  a  Restricted  Subsidiary,  with  the  same  effect  as  if  the
undersigned  were an original  signatory  to the  Security  Agreement  (with the
representations and warranties contained therein) being deemed to be made by the
undersigned Restricted Subsidiary as of the date hereof.

      Terms defined in the Security  Agreement and the Indenture shall have such
defined meanings when used herein.

      By its acceptance hereof,  each undersigned  Restricted  Subsidiary hereby
ratifies  and  confirms  its  respective  obligations  under  the  Guaranty,  as
supplemented hereby.

ATLANTIC TRANSIT, CORP.                 K. CORR, INC.
AIRPORT SERVICES, INC.                  MCINTIRE TRANSPORTATION, INC.
ATLANTIC EXPRESS NEW ENGLAND, INC.      MOUNTAIN TRANSIT, INC.
ATLANTIC EXPRESS OF CALIFORNIA, INC.    R. FIORE BUS SERVICE, INC.
ATLANTIC EXPRESS OF ILLINOIS, INC.      RAYBERN BUS SERVICE, INC.
ATLANTIC EXPRESS OF SOUTH               RAYBERN CAPITAL CORP.
     CAROLINA, INC.                     RAYBERN EQUITY CORP.
ATLANTIC PARATRANS OF ARIZONA, INC.     ROBERT L. MCCARTHY & SON, INC.
FIORE BUS SERVICE, INC.                 T-NT BUS SERVICE, INC.
GROOM TRANSPORTATION, INC.              TRANSCOMM, INC.
JAMES MCCARTY LIMO SERVICE, INC.        WINSALE, INC.


                                      By: /s/ Nathan Schlenker
                                          ------------------------
                                           Name:  Nathan Schlenker
                                           Title: CFO

Dated: December 22, 2000