Exhibit 4.4


 




 





 


EQUITY REGISTRATION RIGHTS
AGREEMENT


 


DATED AS OF APRIL 22, 2004


 


BY AND AMONG


 


ATLANTIC EXPRESS
TRANSPORTATION CORP.


 


ATLANTIC EXPRESS
TRANSPORTATION GROUP, INC.


 


AND


 


JEFFERIES & COMPANY,
INC.


 




 





 

















 


This Equity Registration
Rights Agreement (the “Agreement”) is made and entered into as of April
22, 2004, by and among Atlantic Express Transportation Corp., a New York
corporation (the “Company”), Atlantic Express Transportation Group,
Inc., a Delaware corporation (“Parent”) and Jefferies & Company,
Inc. (the “Initial Purchaser”), who has agreed to purchase from the
Company, pursuant to the Purchase Agreement (as defined below) (i) 105,000
fixed rate units (the “Fixed Rate Units”), each Fixed Rate Unit
consisting of (A) $1,000 in aggregate principal amount at maturity of a 12%
Senior Secured Note due 2008 (the “Fixed Rate Notes”) of the Company and
(B) one warrant representing the right to initially purchase one common share,
par value $0.01 per share (the “Common Stock”) of the Company (collectively,
the “Warrants”) (the Common Stock issuable on exercise of the Warrants
being referred to collectively herein as the “Warrant Shares”) and (ii)
10,000 floating rate units (the “Floating Rate Units”), each Floating
Rate Unit consisting of (A) $1,000 in aggregate principal amount of Senior
Secured Floating Rate Notes due 2008 (the “Floating Rate Notes” and,
together with the Fixed Rate Notes, the “Notes”) of the Company and (B)
one Warrant.


 


This Agreement is made
pursuant to the Purchase Agreement (the “Purchase Agreement”), dated as
of April 16, 2004, by and among the Company, the Guarantors named therein and
the Initial Purchaser.  To induce the
Initial Purchaser to purchase the Units, the Company has agreed to provide the
registration rights set forth in this Agreement.  The execution and delivery of this Agreement is a condition to
the obligations of the Initial Purchaser set forth in Section 3 of the Purchase
Agreement.  Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to them in
the Purchase Agreement.


 


The parties hereby agree as
follows:


 


Section 1.  Definitions.


 


As used in this Agreement,
the following capitalized terms shall have the following meanings:


 


“Affiliate”:  As defined in Rule 144 of the Securities
Act.


 


“Closing Date”:  The date hereof.


 


“Common Stock”:  The common stock, par value $0.01 per share,
of the Company.


 


“Effectiveness Date”:
The 180th day after the Closing Date.


 


“Exchange Act”:  The Securities Exchange Act of 1934, as
amended.


 


“Filing Date”: The 90th
day after the Closing Date.


 


“Holder”:  As defined in Section 2 hereof.


 


“NASD”: means the
National Association of Securities Dealers, Inc.


 

















 


“Person”:  Any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.


 


“Piggy-Back Registration”:  As defined in Section 6 hereof.


 


“Prospectus:  The prospectus included in a Registration
Statement at the time such Registration Statement is declared effective, as
supplemented by any prospectus supplement, and all material incorporated by
reference into such prospectus.


 


“Public Equity Offering”:  means an underwritten offering of Common
Stock or common stock of the Parent pursuant to a registration statement that
has been declared effective by the SEC pursuant to the Securities Act (other
than a registration statement on Form S-8 or otherwise relating to equity
securities issuable under any employee benefit plan of the Company or the
Parent).


 


“Registrable Securities”:  At any time, any of (i) the Warrant Shares
(whether or not the related Warrants have been exercised) and (ii) any other
securities issued or issuable with respect to any Warrant Shares by way of
stock dividends or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or
otherwise.  As to any particular
Registrable Securities, such securities shall cease to be Registrable
Securities when (a) a Registration Statement with respect to the offering of
such securities by the Holder thereof shall have been declared effective under
the Securities Act and such securities shall have been disposed of by such
Holder pursuant to such Registration Statement, (b) such securities have been
sold to the public pursuant to Rule 144(k) (or any similar provisions then in
force, but not Rule 144A) promulgated under the Securities Act, (c) such
securities shall have been otherwise transferred by the Holder thereof and new
certificates for such securities not bearing a legend restricting further
transfer shall have been delivered by the Company or its transfer agent and
subsequent disposition of such securities shall not require registration or qualification
under the Securities Act or any similar state law then in force or (d) such
securities shall have ceased to be outstanding.


 


“Registrants”:  means, collectively, the Company and the
Parent in the case of a Registration Statement filed or to be filed registering
a Public Equity Offering of the Parent, upon which Registration Statement a
Holder is entitled pursuant to this Agreement to request inclusion of its
Registrable Securities for offer and sale thereunder.


 


“Registration Statement”:  Any registration statement of the Company
and/or the Parent relating to, or entitling a Holder to request, the
registration for resale of Registrable Securities, including the Prospectus
included therein, all amendments thereto (including post-effective amendments)
and all exhibits and all material incorporated by reference therein.


 


“Restricted Securities”:
As defined in Rule 144 of the Securities Act.


 


 “SEC”:  The
Securities and Exchange Commission.


 


“Securities Act”:  The Securities Act of 1933, as amended.


 


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“Shelf Registration
Statement”:  As defined in Section
4 hereof.


 


“Warrant Agreement”:  The Warrant Agreement dated the Closing Date
by and between the Company and The Bank of New York, as Warrant Agent.


 


“Warrant Shares”:  The Common Stock or other securities that
any Holder may acquire upon exercise of a Warrant, together with any other
securities which such Holder may acquire on account of any such securities,
including, without limitation, as the result of any dividend or other
distribution on Common Stock or any split or combination of such Common Stock
as provided for in the Warrant Agreement.


 


“Warrants”:  The warrants of the Company issued and sold
pursuant to the Purchase Agreement and the Warrant Agreement, together with any
warrants issued in substitution or replacement therefor.


 


Section 2.  Holders of Registrable Securities.


 


A Person is deemed to be a
Holder of Registrable Securities (a “Holder”) whenever such Person owns
Registrable Securities or has the right to acquire such Registrable Securities
by exercising Warrants held by such Person, whether or not such acquisition has
actually been effected.


 


Section 3.  Registration Procedures.


 


In connection with any
Registration Statement filed by the Company, the Company shall, and in
connection with any Registration Statement filed by the Parent, the
Registrants, shall:


 


(a)                                  (i) furnish to the Holders, prior to the
filing thereof with the Commission, a copy of the Registration Statement
(including all such documents incorporated therein by reference) and each
amendment thereof and each supplement, if any, to the Prospectus, which
documents will be subject to the review and comment of such Holders in
connection with such sale, if any, for a period of at least five business days,
and the Company or the Registrants (as the case may be) will not file any such
Registration Statement or related Prospectus or any amendment or supplement to
any such Registration Statement or Prospectus (including all documents
incorporated therein by reference) to which such selling Holders shall
reasonably object within five business days after the receipt thereof; and (ii)
include the names of the Holders who propose to sell Registrable Securities
pursuant to the Registration Statement as selling securityholders.  A selling Holder shall be deemed to have
reasonably objected to such filing if such Registration Statement, amendment,
related Prospectus or supplement, as applicable, as proposed to be filed,
contains an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading or fails to comply
with the applicable requirements of the Securities Act;


 


(b)                                 give written notice to the Initial Purchaser
and the Holders:


 


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(i)                                     when the Registration Statement or any
amendment thereto has been filed with the SEC and when the Registration
Statement or any post-effective amendment thereto has become effective;


 


(ii)                                  of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus or for additional
information;


 


(iii)                               of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose;


 


(iv)                              of the receipt by the Company or the
Registrants (as the case may be) or its or their legal counsel of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and


 


(v)                                 of the happening of any event that requires
the Company or the Registrants (as the case may be) to make changes in the
Registration Statement or the Prospectus in order that the Registration
Statement or the Prospectus does not contain an untrue statement of a material
fact nor omit to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not misleading.;


 


(c)                                  make every reasonable effort to obtain the
withdrawal at the earliest possible time, of any order suspending the
effectiveness of the Registration Statement;


 


(d)                                 furnish to each Holder, without charge, at
least one copy of the Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and, if the Holder so
requests in writing, all exhibits thereto (including those, if any,
incorporated by reference);


 


(e)                                  during the period which the Registration
Statement is effective, deliver to each Holder, without charge, as many copies
of the Prospectus (including each preliminary Prospectus) included in the
Registration Statement as such Holder may reasonably request.  The Company or the Registrants (as the case
may be) consent, subject to the provisions of this Agreement, to the use of the
Prospectus by each of the Holders in connection with the offering and sale of
Registrable Securities;


 


(f)                                    prior to any public offering of the
Registrable Securities pursuant to any Registration Statement, register or
qualify or cooperate with the Holders and their respective counsel in
connection with the registration or qualification of the Registrable Securities
for offer and sale under the securities or “blue sky” laws of such states of
the United States as any Holder reasonably requests in writing and do any and
all other acts or things necessary or advisable to enable the offer and sale in
such jurisdictions of the Registrable Securities; provided, however,
that the Company or the Registrants (as the case may be) shall not be required
to (i) qualify generally to do business in any jurisdiction where it is not
then so qualified or (ii) take any action which would subject it


 


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to
general service of process or to taxation in any jurisdiction where it is not
then so subject;


 


(g)                                 cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing the Registrable
Securities to be sold pursuant to any Registration Statement free of any
restrictive legends and in such denominations and registered in such names as
the Holders may request a reasonable period of time prior to sales of the
Registrable Securities pursuant to such Registration Statement;


 


(h)                                 upon the occurrence of any event contemplated
by paragraphs (ii) through (v) of Section 3(b) above
during the period for which the Company or the Registrants (as the case may be)
are required to maintain an effective Registration Statement, promptly prepare
and file a post-effective amendment to the Registration Statement or a
supplement to the related Prospectus and any other required document so that,
as thereafter delivered to Holders or purchasers of Securities, the Prospectus
will not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;


 


(i)                                     not later than the effective date of the
Registration Statement, provide a CUSIP number for the Registrable Securities
and provide the Warrant Agent with printed certificates for the Registrable
Securities, in a form eligible for deposit with The Depository Trust Company;


 


(j)                                     use its reasonable best efforts to comply
with all rules and regulations of the Commission to the extent and so long as
they are applicable to the Registration Statement and will make generally
available to its security holders (or otherwise provide in accordance with
Section 11(a) of the Securities Act) an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act, no later than 45 days after
the end of a 12-month period (or 90 days, if such period is a fiscal year)
beginning with the first month of the Company’s first fiscal quarter commencing
after the effective date of the Registration Statement, which statement shall
cover such 12-month period;


 


(k)                                  require, at its option, each Holder of
Registrable Securities to be sold pursuant to a Registration Statement to
furnish to the Company or the Registrants (as the case may be) such information
as may be required under applicable requirements of the SEC and to obtain any
acceleration of the effective date of a Registration Statement, and the Company
may exclude from such registration the Registrable Securities of any Holder
that unreasonably fails to furnish such information within 20 days after
receiving such request;


 


(l)                                     enter into such customary agreements and take
all such other action, if any, in order to facilitate the disposition of the
Registrable Securities pursuant to any Registration Statement;


 


(m)                               (i) make reasonably available for inspection
by the Holders of the Registrable Securities and any attorney, accountant or
other agent retained by the Holders


 


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of the Registrable
Securities all relevant financial and other records, pertinent corporate
documents and properties of the Company or the Registrants (as the case may be)
and (ii) cause the officers, directors, employees, accountants and auditors of
the Company or the Registrants (as the case may be) to supply all relevant
information reasonably requested by the Holders of the Registrable Securities
or any such attorney, accountant or agent in connection with the Registration
Statement, in each case, as shall be reasonably necessary to enable such
Persons, to conduct a reasonable investigation within the meaning of Section 11
of the Securities Act; provided, however, that the foregoing
inspection and information gathering shall be coordinated by the Initial
Purchaser and on behalf of the other parties, by one counsel selected by of
such other parties; provided  further, however, that any
such records, documents, properties and such information that is designated in
writing by the Company or the Registrants (as the case may be), in good faith,
as confidential at the time of delivery of such records, documents, properties
or information shall be kept confidential by any such Persons and shall be used
only in connection with such Registration Statement, unless disclosure thereto
is made in connection with a court proceeding or required by law (it being
understood that such Persons (and any employee, representative or other agent
of such Person) may disclose to any and all Persons, without limitation of any
kind, the tax treatment and tax structure of the transactions contemplated in
the Registration Statement and all materials of any kind (including such
records, documents, properties or information and opinions or other tax
analyses) that are provided to it relating to such tax treatment and tax
structure), or such information has become available (not in violation of this
Agreement) to the public generally or through a third party without an
accompanying obligation of confidentiality; and


 


(n)                                 if requested by any Holder of Registrable
Securities, cause (i) its counsel to deliver an opinion and updates thereof relating
to the Registrable Securities in customary form addressed to such Holders
thereof and dated, in the case of the initial opinion, the effective date of
such Registration Statement (it being agreed that the matters to be covered by
such opinion shall include, without limitation, the due incorporation and good
standing of the Company or the Registrants (as the case may be) and its or
their subsidiaries; the qualification of the Company or the Registrants (as the
case may be) and its or their subsidiaries to transact business as foreign
corporations; the due authorization, execution and delivery of the relevant
agreement of the type referred to in Section 3(a) hereof; the due
authorization, execution, authentication and issuance, and the validity and
enforceability, of the applicable Securities; the absence of material legal or
governmental proceedings involving the Company or the Registrants (as the case
may be) and its or their subsidiaries; the absence of governmental approvals
required to be obtained in connection with the Registration Statement, the
offering and sale of the applicable Registrable Securities, or any agreement of
the type referred to in Section 3(a) hereof; the compliance as to form
of such Registration Statement and any documents incorporated by reference
therein; and, as of the date of the opinion and as of the effective date of the
Registration Statement or most recent post-effective amendment thereto, as the
case may be, the absence from such Registration Statement and the prospectus included
therein, as then amended or supplemented, and from any documents incorporated
by reference therein of an untrue statement of a material fact or the omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein (in the case of the prospectus, in light of the
circumstances under which they were made) not


 


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misleading (in the case of
any such documents, in the light of the circumstances existing at the time that
such documents were filed with the SEC under the Exchange Act); (ii) its
independent public accountants to provide to the Holders a comfort letter in
customary form and covering matters of the type customarily covered in comfort
letters in connection with primary underwritten offerings, subject to receipt
of appropriate documentation as contemplated, and only if permitted, by
Statement of Auditing Standards No. 72; and (iii) use its best efforts to cause
the disposition of the Registrable Securities covered by the Registration
Statement to be registered with or approved by such other governmental agencies
or authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Registrable Securities.


 


If any such Registration
Statement refers to any Holder by name or otherwise as the holder or any
securities of the Company, then such Holder shall have the right to require (i)
the insertion therein of language, in form and substance reasonably satisfactory
to such Holder, to the effect that the holding by such Holder of such
securities is not to be construed as a recommendation by such Holder of the
investment quality of the Company’s securities covered thereby and that such
holding does not imply that such Holder will assist in meeting any future
financial requirements of the Company, or (ii) in the event that such reference
to such Holder by name or otherwise is not required by the Securities Act or
any similar Federal statute then in force, the deletion of the reference to
such Holder in any amendment or supplement to the Registration Statement filed
or prepared subsequent to the time that such reference ceases to be required.


 


Section 4.  Shelf Registration.


 


(a)                                  The Company shall use its reasonable best efforts
to (i) on or before the Filing Date, prepare and cause to be filed with the SEC
pursuant to Rule 415 under the Securities Act a shelf registration statement on
the appropriate form relating to resales of all Registrable Securities (the “Shelf
Registration Statement”, (ii) cause the Shelf Registration Statement to be
declared effective under the Securities Act on or prior to the Effectiveness
Date and (iii) keep any Shelf Registration Statement required by this Section
4(a) continuously effective, supplemented, amended and current as required
by and subject to the provisions of Section 4(a) hereof and in
conformity with the requirements of this Agreement, the Securities Act and the
rules and regulations of the Commission promulgated thereunder from time to
time (including (A) preparing and filing with the SEC such amendments and
post-effective amendments to the Shelf Registration Statement as may be
necessary to keep such Shelf Registration Statement effective; (B) cause the
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Securities Act, and
complying fully with Rules 424, 430A and 462, as applicable, under the
Securities Act in a timely manner; and (C) comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such Shelf Registration Statement), until the second anniversary of the
effective date of such Shelf Registration Statement; provided that such
obligation shall expire before such date if all the Registrable Securities
covered by the Shelf Registration Statement (i) have been sold pursuant thereto
or (ii) are no longer Restricted Securities.


 


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(b)                                 No Holder may include any of its Registrable
Securities in any Shelf Registration Statement pursuant to this Agreement
unless and until such Holder furnishes to the Company in writing, within 20
days after receipt of a request therefor, the information specified in Item 507
or 508 of Regulation S-K, as applicable, of the Securities Act for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein.  Each
selling Holder agrees to promptly furnish additional information required to be
disclosed in order to make the information previously furnished to the Company
by such Holder not materially misleading.


 


(c)                                  The Company shall be deemed not to have used
its best efforts to keep the Shelf Registration Statement effective during the
requisite period if it voluntarily takes any action that would result in
Holders of Registrable Securities covered thereby not being able to offer and
sell such Registrable Securities during that period, unless such action is
required by applicable law or this Agreement.


 


Section 5.  Limitations, Conditions and
Qualifications to Obligations under Registration Covenants.


 


(a)                                  The obligations of the Company described in Section
4 and Section 6 of this Agreement are subject to the obligations of
the Holders (i) to furnish all information and materials described in Section
3(k) hereof and (ii) to take any and all actions as may be required under
Federal and state securities laws and regulations to permit the Company to
comply with all applicable requirements of the SEC and to obtain any
acceleration of the effective date of such Registration Statement.


 


(b)                                 Subject to the next sentence of this
paragraph, the Company or the Registrants (as the case may be) shall be
entitled to postpone, for a reasonable period of time, the effectiveness of, or
suspend the rights of any selling Holders Registrable Securities to make sales
pursuant to any Registration Statement otherwise required to be prepared, filed
and kept effective by it under Section 4 or 6 in the event that,
and for a period (a “Suspension Period”) not to exceed an aggregate of
90 days in any 365-day period (1) an event or circumstance occurs and is
continuing as a result of which the Registration Statement, any related
Prospectus or any document incorporated therein by reference as then amended or
supplemented or proposed to be filed would, in the good faith judgment of the
Company’s board of directors, contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and (2) (a) the board of directors of the Company determines in its
good faith judgment that the disclosure of the event or circumstance at that time
would have a material adverse effect on the Company’s business, operations or
prospects or (b) the disclosure otherwise relates to a material business
transaction or development that has not yet been publicly disclosed.  If the Company or the Registrants (as the
case may be) shall so postpone the effectiveness of, or suspend the rights of
any selling Holders of Registrable Securities to make sales pursuant to, a
Registration Statement, it shall, as promptly as possible, notify any selling
Holders of Registrable Securities of such determination, and the selling
Holders of Registrable Securities shall (y) have the right, in the case of a
postponement of the effectiveness of a Registration Statement, upon the
affirmative vote


 


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of
selling Holders of Registrable Securities of not less than a majority of the
Registrable Securities to be included in such Registration Statement, to
withdraw the request for registration by giving written notice to the Company
or the Registrants (as the case may be) within 10 days after receipt of such
notice or (z) in the case of a suspension of the right to make sales, receive
an extension of the registration period referred to in Section 4(a) or Section
6(a) hereof, as applicable, equal to the number of days of the suspension.


 


(c)                                  Each
Holder agrees, if and to the extent requested by the managing underwriter or
underwriters in a Public Equity Offering, not to effect any public sale or
distribution of Resalable Securities, including a sale pursuant to Rule 144A
(except as part of such Public Equity Offering), during the 90 day period
beginning on the closing date of any such Public Equity Offering (which period
may be extended to 180 days in the case of the Company’s initial Public Equity
Offering), to the extent timely notified in writing by the Company or such
managing underwriter or underwriters. 
In the event that the Company is not otherwise in compliance with the
provisions of this Agreement at the time the Company or such managing
underwriter or underwriters send notice pursuant to this Section 5(c),
the Holders shall not be required to comply with this Section 5(c).  In addition, the provisions of this Section
5(c) shall not apply to any Holder of Registrable Securities if such Holder
is prevented by applicable statute or regulation from entering into any such
agreement; provided, that any such Holder shall undertake not to effect any
public sale or distribution of any Registrable Securities commencing on the
closing date of any such Public Equity Offering unless it has provided 45 days’
prior written notice of such sale or distribution to the managing underwriter
or underwriters.


 


Section
6.  Piggy-Back Registration of
Registrable Securities.


 


(a)                                  If at any
time after the Closing Date the Company or the Parent proposes to file a
registration statement under the Securities Act with respect to a Public Equity
Offering, then the Company or the Registrants (as the case may be) shall give
written notice of such proposed filing to the Holders of Registrable Securities
as soon as practicable (but in no event fewer than 20 days before the
anticipated filing date), and such notice shall offer such Holders the
opportunity to register such number of Registrable Securities as each Holder may
request in writing within 20 days after receipt of such written notice from the
Company or the Registrants (as the case may be) (which request shall specify
the Registrable Securities intended to be disposed of by such selling Holder of
Registrable Securities and the intended method of distribution thereof) (a “Piggy-Back
Registration”); provided that any holder of Warrants so requesting
shall agree, upon or prior to effectiveness of any such Registration Statement
other than a registration statement filed with the SEC pursuant to Rule 415
under the Securities Act (but in no event earlier than the Separation Date (as
defined in the Warrant Agreement)), to exercise their Warrants at least to the
extent necessary for such holder to acquire the number of Registrable
Securities for which such holder has requested registration; provided, further,
that no Holder of Registrable Securities shall have “piggy-back” registration
rights with respect to their Registrable Securities for any registration
statement filed by the Company to register exchange notes for the Notes
pursuant to the Registration Rights Agreement, dated as of April 22, 2004, by
and between the Company and the Initial Purchaser.  The Company or the Registrants (as the case may be) shall use
their reasonable best efforts to keep such Piggy-Back Registration continuously
effective under the Securities Act until at least the earlier of (a) the second
anniversary of the effective date thereof or (b) the consummation of the
distribution by the Holders of all of the Registrable Securities covered
thereby.  The Company or the Registrants
(as the case may be) shall use


 


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their
reasonable best efforts to cause the managing underwriter or underwriters, if
any, of such proposed offering to permit the Registrable Securities requested
to be included in a Piggy-Back Registration to be included on the same terms
and conditions as any similar securities of the Company or the Registrants (as
the case may be) or any other security holder included therein and to permit
the sale or other disposition of such Registrable Securities in accordance with
the intended method of distribution thereof. 
Any selling Holder of Registrable Securities shall have the right to
withdraw its request for inclusion of its Registrable Securities in any Shelf
Registration Statement pursuant to this Section 6 by giving written
notice to the Company or the Registrants (as the case may be) of its request to
withdraw at any time prior to the filing of such Shelf Registration Statement
with the SEC. The Company or the Registrants (as the case may be) will pay all
registration expenses described in Section 7 hereof in connection with
each registration of Registrable Securities requested pursuant to this Section
6, and each Holder of Registrable Securities shall pay all underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of such Holder’s Registrable Warrant Shares pursuant to a
Piggy-Back Registration effected pursuant to this Section 6.


 


No
registration effected under this Section 6, and no failure to effect a
registration under this Section 6, shall relieve the Company or the
Registrants (as the case may be) of its or their obligations to effect a
registration of any Registrable Securities not included in such Piggy-Back
Registration pursuant to Section 4 hereof, and no failure to effect a
registration under this Section 6 and to complete the sale of securities
registered thereunder in connection therewith shall relieve the Company or the
Parent of any other obligation under this Agreement.


 


(b)                                 Priority
in Piggy-Back Registration. 
In a registration pursuant to this Section 6 involving an
underwritten offering, if the managing underwriter or underwriters of such
underwritten offering have informed, in writing, the Company or the Registrants
(as the case may be) and the selling Holders of Registrable Securities
requesting inclusion in such offering that in such underwriter’s or
underwriters’ opinion the total number of securities which the Company or the
Registrants (as the case may be), the selling Holders of Registrable Securities
and any other Persons desiring to participate in such registration intend to
include in such offering is such as to adversely affect the success of such
offering, including the price at which such securities can be sold, then the
Company or the Registrants (as the case may be) will be required to include in
such registration only the amount of securities which it is so advised should
be included in such registration.  In
such event:  (x) in cases initially
involving the registration for sale of securities for the Company or the
Registrants own account (as the case may be), securities shall be registered in
such offering in the following order of priority:  (i) first, the securities which the Company or the Registrants
proposes to register, (ii) second, provided that no securities proposed to be
registered by the Company or the Registrants (as the case may be) have been
excluded from such registration, the securities that have


 


10

















 


been
requested to be included in such registration by the selling Holders of
Registrable Securities (pro rata based on the amount of securities sought to be
registered by such Persons), and (iii) third, provided that no securities
sought to be included by the selling Holders of Registrable Securities have
been excluded from such registration, the securities of other Persons entitled
to exercise “piggy-back” registration rights pursuant to contractual
commitments of the Company (pro rata based on the amount of securities sought
to be registered by such Persons); and (y) in cases not initially involving the
registration for sale of securities for the Company or the Registrants own
account (as the case may be), securities shall be registered in such offering
in the following order of priority:  (i)
first, the securities of any Person whose exercise of a “demand” registration right
pursuant to a contractual commitment of the Company is the basis for the
registration, (ii) second, provided that no securities of any Person whose
exercise of a “demand” registration right pursuant to a contractual commitment
of the Company is the basis for such registration have been excluded from such
registration, the securities requested to be included in such registration by
the selling Holders of Registrable Securities pursuant to this Agreement (pro
rata based on the amount of securities sought to be registered by such
Persons), (iii) third, provided that no securities sought to be included by the
selling Holders of Registrable Securities have been excluded from such
registration, securities of other Persons entitled to exercise “piggy-back”
registration rights pursuant to contractual commitments of the Company (pro
rata based on the amount of securities sought to be registered by such Persons)
and (iv) fourth, provided that no securities sought to be included by other
Persons entitled to exercise “piggy-back” registration rights pursuant to such
contractual commitments have been excluded from such registration, any
securities which the Company or the Registrants (as the case may be) propose to
register.


 


(c)                                  Exclusion
of Registrable Warrant Shares. 
The Company or the Registrants (as the case may be) shall not be
required by this Section 6 to include Registrable Securities in a
Piggy-Back Registration if (i) in the written opinion of outside counsel to the
Company or the Registrants, addressed to the Holders of Registrable Securities
and delivered to them, the Holders of such Registrable Securities seeking
registration would be free to sell all such Registrable Securities within the
current calendar quarter without registration under Rule 144, which opinion may
be based in part upon the representation by the Holders of such Registrable
Securities seeking registration, which representation shall not be unreasonably
withheld, that each such Holder is not an affiliate of the Company within the
meaning of the Securities Act, and (ii) all requirements under the Securities
Act for effecting such sales are satisfied at such time.


 


Section
7.  Registration Expenses.


 


(a)                                  All
expenses incident to the Company’s and/or the Parent’s respective performance
of and compliance with this Agreement will be borne by the Company and/or the
Parent, respectively, regardless of whether a Registration Statement is ever
filed or becomes effective, including without limitation:


 


11

















 


(i)                                     all
registration and filing fees and expenses (including all SEC and stock exchange
and NASD fees and expenses);


 


(ii)                                  all fees
and expenses of compliance with federal securities and state “blue sky” or
securities laws (including, without limitation, reasonable fees and
disbursements of counsel for any underwriters in connection with blue sky
qualifications of the Registrable Securities);


 


(iii)                               all
expenses of printing, preparing, filing, duplicating and distributing a
Registration Statement and the related prospectus (including certificates for
the Securities to be issued in the registration and printing of Prospectuses),
messenger and delivery services and telephone usage and costs and charges of
any transfer agent;


 


(iv)                              all fees
and disbursements of counsel for the Company or the Registrants (as the case
may be);


 


(v)                                 all fees
and disbursements of independent certified public accountants of the Company or
the Registrants (as the case may be) (including the expenses of any special
audit required by or incident to such performance);


 


(vi)                              the fees
and disbursements of underwriters customarily paid by issuers or sellers of
securities (but not including any underwriting discounts or commissions or
transfer taxes, if any, attributable to the sale of Registrable Securities by
selling Holders); and


 


(vii)                           reasonable
fees and expenses of one counsel for the selling Holders and other reasonable
out-of-pocket expenses of the selling Holders.


 


(b)                                 The
Company and the Parent will bear each of their internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and
the fees and expenses of any Person, including special experts, retained by the
Company and/or the Parent.


 


(c)                                  The
Holders shall pay the underwriting discounts, commissions, and transfer taxes,
if any, in connection with the Registration Statement requested under Section
4 or 6 which costs shall be allocated pro rata among all Holders on
whose behalf Registrable Securities of the Company are included in such
registration on the basis of the respective amounts of the Registrable
Securities then being registered on their behalf.


 


Section
8.  Indemnification.


 


(a)                                  The
Company or the Registrants (as the case may be) agrees to indemnify and hold
harmless each Holder and each Person, if any, who controls such Holder within
the meaning of the Securities Act or the Exchange Act from and against any
losses, claims, damages or liabilities, joint or several, or any actions in
respect thereof (including, but not limited to, any losses, claims, damages,
liabilities or actions relating to purchases and sales of the Registrable
Securities) to which each Indemnified Party (as defined in Section 8(c)
below) may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, claims,


 


12

















 


damages,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or Prospectus or in any amendment or supplement thereto or in any
preliminary Prospectus relating to a Registration, or arise out of, or are
based upon, the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein (in
the case of the Prospectus, in light of the circumstances under which they were
made) not misleading, and shall reimburse, as incurred, the Indemnified Parties
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action in
respect thereof; provided, however, that (i) the Company or the
Registrants (as the case may be) shall not be liable in any such case to the
extent that such loss, claim, damage or liability arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement or Prospectus or in any amendment
or supplement thereto or in any preliminary Prospectus relating to a
Registration Statement in reliance upon and in conformity with written
information pertaining to such Holder and furnished to the Company or the
Registrants (as the case may be) by or on behalf of such Holder specifically
for inclusion therein and (ii) with respect to any untrue statement or omission
or alleged untrue statement or omission made in any preliminary Prospectus
relating to the Registration Statement, the indemnity agreement contained in
this subsection (a) shall not inure to the benefit of any Holder from
whom the Person asserting any such losses, claims, damages or liabilities
purchased the Registrable Securities concerned, to the extent that the
Prospectus was required to be delivered by such Holder under the Securities Act
in connection with such purchase and any such loss, claim, damage or liability
of such Holder results from the fact that there was not sent or given to such
Person, at or prior to the written confirmation of the sale of such Registrable
Securities to such Person, a copy of the final Prospectus if the Company or the
Registrants (as the case may be) had previously furnished copies thereof to
such Holder; provided  further, however, that this
indemnity agreement will be in addition to any liability which the Company or
the Registrants (as the case may be) may otherwise have to such Indemnified
Party.


 


(b)                                 Each
Holder of the Registrable Securities, severally and not jointly, will indemnify
and hold harmless the Company or the Registrants (as the case may be) and each
Person, if any, who controls the Company or the Registrants (as the case may
be) within the meaning of the Securities Act or the Exchange Act from and
against any losses, claims, damages or liabilities or any actions in respect
thereof, to which the Company or the Registrants (as the case may be) or any
such controlling Person may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities
or actions arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in a Registration Statement or
Prospectus or in any amendment or supplement thereto or in any preliminary
Prospectus relating to a Registration Statement, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not misleading, but in
each case only to the extent that the untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company or the
Registrants (as the case may be) by or on behalf of such Holder specifically
for inclusion therein; and, subject to the limitation set forth immediately
preceding this clause, shall reimburse, as incurred, the Company or the
Registrants (as the case may be) for any legal or other expenses


 


13

















 


reasonably
incurred by the Company or the Registrants or any such controlling Person in
connection with investigating or defending any loss, claim, damage, liability
or action in respect thereof.  This
indemnity agreement will be in addition to any liability which such Holder may
otherwise have to the Company or the Registrants (as the case may be) or any of
its or their controlling Persons.


 


(c)                                  Promptly
after receipt by any Person in respect of which indemnity may be sought
pursuant to Section 8(a) or (b) (any such Person, an “Indemnified
Party”) under this Section 8 of notice of the commencement of any
action or proceeding (including a governmental investigation), such Indemnified
Party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party
of the commencement thereof; but the omission so to notify the indemnifying
party will not, in any event, relieve the indemnifying party from any
obligations to any Indemnified Party other than the indemnification obligation
provided in paragraph (a) or (b) above.  In case any such action is brought against any Indemnified Party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
Indemnified Party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such Indemnified Party of its election so to assume the
defense thereof the indemnifying party will not be liable to such Indemnified
Party under this Section 8 for any legal or other expenses, other than
reasonable costs of investigation, subsequently incurred by such Indemnified
Party in connection with the defense thereof. 
No indemnifying party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending or threatened action in
respect of which any Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party unless
such settlement includes an unconditional release of such Indemnified Party
from all liability on any claims that are the subject matter of such action,
and does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any Indemnified Party.  The indemnifying party shall not be liable
for the costs and expenses of any settlement of such action effected by such Indemnified
Party without the consent of the indemnifying party, which consent shall not be
unreasonably withheld.


 


(d)                                 If the
indemnification provided for in this Section 8 is unavailable or
insufficient to hold harmless an Indemnified Party under subsections (a)
or (b) above, then each indemnifying party shall contribute to the
amount paid or payable by such Indemnified Party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in subsection
(a) or (b) above (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the one
hand and the Indemnified Party on the other from the sale of the Registrable
Securities by the Holders, or (ii) if the allocation provided by the foregoing clause
(i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the indemnifying party or parties
on the one hand and the Indemnified Party on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations.  The relative
fault of the parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or


 


14

















 


alleged
omission to state a material fact relates to information supplied by the
Company or the Registrants (as the case may be) on the one hand or such Holder
or such other Indemnified Party, as the case may be, on the other, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. 
The amount paid by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this subsection
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such Indemnified Party in connection with investigating or defending any
action or claim which is the subject of this subsection (d).  Notwithstanding any other provision of this Section
8(d), the Holders of the Registrable Securities shall not be required to
contribute any amount in excess of the amount by which the net proceeds
received by such Holders from the sale of the Registrable Securities pursuant
to the Registration Statement exceeds the amount of damages which such Holders
have otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. 
No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.  For purposes of this paragraph (d),
each Person, if any, who controls such Indemnified Party within the meaning of
the Securities Act or the Exchange Act shall have the same rights to contribution
as such Indemnified Party, and each Person, if any, who controls the Company or
the Registrants  within the meaning of
the Securities Act or the Exchange Act shall have the same rights to
contribution as the Company or the Registrants (as the case may be).


 


(e)                                  The
agreements contained in this Section 8 shall survive the sale of the
Registrable Securities pursuant to the Registration Statement and shall remain
in full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any Indemnified Party.


 


Section
9.  Rule 144A and Rule 144.


 


The
Company shall use its best efforts to file the reports required to be filed by
it under the Securities Act and the Exchange Act in a timely manner and, if at
any time the Company is not required to file such reports, it will, upon the
request of any Holder, make publicly available other information so long as
necessary to permit sales of their securities pursuant to Rules 144 and 144A.  The Company covenants that it will take such
further action as any Holder may reasonably request, all to the extent required
from time to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rules 144 and 144A (including the requirements of Rule
144A(d)(4)).  The Company will provide a
copy of this Agreement to prospective purchasers of Registrable Securities
identified to the Company by the Initial Purchaser upon request.  Upon the request of any Holder, the Company
shall deliver to such Holder a written statement as to whether it has complied
with such requirements.  Notwithstanding
the foregoing, nothing in this Section 9 shall be deemed to require the
Company to register any of its securities pursuant to the Exchange Act.


 


Section
10.  Miscellaneous.


 


(a)                                  Remedies.  Each of the Company and the Parent
acknowledges and agrees that any failure by the Company to comply with its
obligations under Section 4 and Section 6 hereof may result in
material irreparable injury to the Holders for which there is no adequate
remedy at


 


15

















 


law,
that it will not be possible to measure damages for such injuries precisely and
that, in the event of any such failure, any Holder may obtain such relief as
may be required to specifically enforce the Company’s and the Parent’s
obligations under Section 4 and Section 6 hereof.  Each of the Company and the Parent further
agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.


 


(b)                                 No
Inconsistent Agreements. 
Neither the Company nor the Parent will on or after the date of this
Agreement enter into any agreement with respect to its securities that is
inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof.  The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders
of the Company’s or the Parent’s securities under any agreement in effect on
the date hereof.


 


(c)                                  Amendments
and Waivers.  The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, except by the
Company, the Parent and the written consent of the Holders of a majority of the
Registrable Securities affected by such amendment, modification, supplement,
waiver or consent.


 


(d)                                 Notices.  All notices and other communications
provided for or permitted hereunder shall be made in writing by hand delivery,
first-class mail, facsimile transmission, or air courier which guarantees
overnight delivery:


 


(1)                                  if to a
Holder of the Securities, at the most current address given by such Holder to
the Company, the Parent or Warrant Agent.


 


(2)                                  if to the
Company or the Parent, at the address as follows:


 


7
North Street

Staten Island, New York 10302-1205

Attention:  Nathen Schlenker

Fax No.:  (718) 442-9103


 


with
a copy to:


 


Latham
& Watkins LLP

885 Third Avenue, Suite 100

New York, New York 10022-4834 

Attention:  Robert Zuccaro, Esq.

Fax No.:  (212) 751-4864


 


(3)                                  if to the
Warrant Agent, at its address as follows:


 


The
Bank of New York


101
Barclay Street, 8th Floor West


New
York, NY  10286

Telecopier No.:  646-835-8469

Attention:  Corporate Trust
Administration


 


16

















 


with
a copy to:


 


Carter
Ledyard & Milburn LLP

2 Wall Street

New York, NY 10005

Telecopier No.:  212-732-3232

Attention:  James Gadsden


 


All
such notices and communications shall be deemed to have been duly given: at the
time delivered by hand, if personally delivered; three business days after
being deposited in the mail, postage prepaid, if mailed; when receipt is
acknowledged by recipient’s facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.


 


(e)                                  Third
Party Beneficiaries. 
It is expressly understood and agreed that each Holder is intended to be
a beneficiary of the Company’s and the Parent’s covenants contained in this
Agreement to the same extent as if those covenants were made directly to such
Holder by the Company and the Parent, and each such Holder shall have the right
to take action against the Company and the Parent to enforce, and obtain
damages for any breach of, those covenants.


 


(f)                                    Successors
and Assigns.  This Agreement shall be
binding upon the Company and the Parent and each of their successors and
assigns.


 


(g)                                 Counterparts.  This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.


 


(h)                                 Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.


 


(i)                                     Governing
Law.  THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.


 


(j)                                     Severability.  If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.


 


(k)                                  Securities
Held by the Company. 
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by
the Company or the Parent or either of their Affiliates (other than subsequent
Holders of Registrable Securities if such subsequent Holders are deemed to be
Affiliates solely by reason of their holdings of such Registrable Securities)
shall not be counted in determining whether such consent or approval was given
by the Holders of such required percentage.


 


[Signature
Page Follows]


 


17

















 


IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.


 


	
   

  	
  ATLANTIC EXPRESS TRANSPORTATION CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOMENIC GATTO

  
	
   

  	
   

  	
  Name: Domenic Gatto

  
	
   

  	
   

  	
  Title:  
  President, CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ATLANTIC EXPRESS TRANSPORTATION GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ NATHAN SCHLENKER

  
	
   

  	
   

  	
  Name: Nathan Schlenker

  
	
   

  	
   

  	
  Title:  
  Chief Financial Officer

  



 

















 


	
  JEFFERIES & COMPANY, INC.

  
	
   

  
	
  By:

  	
  /s/ RICHARD A. GOLDBERG

  	
   

  
	
  Name: Richard A. Goldberg

  
	
  Title:   Managing
  Director