Exhibit 4.2


 


$115,000,000


 


ATLANTIC
EXPRESS TRANSPORTATION CORP.


 


$105,000,000 12% Senior Secured Notes due
2008

$10,000,000 Senior Secured Floating Rate Notes due 2008


 


REGISTRATION
RIGHTS AGREEMENT


 


April 22, 2004


 


c/o Jefferies
& Company, Inc.

11100 Santa Monica Boulevard

10th Floor

Los Angeles, California  90025


 


Ladies and
Gentlemen:


 


Atlantic Express
Transportation Corp., a New York corporation (the “Company”) is issuing
and selling to Jefferies & Company, Inc. (the “Initial Purchaser”),
upon the terms set forth in the Purchase Agreement dated April 16, 2004, by and
among the Company, the Initial Purchaser and the subsidiary guarantors named
therein (the “Purchase Agreement”), 115,000 units (the “Units”),
consisting of 105,000 senior secured units, each senior secured unit consisting
of: (i) $1,000 principal amount at maturity of 12% senior secured notes due
2008 of the Company (the “Senior Secured Notes”) and (ii) one warrant (a
“Warrant”) to purchase one share of common stock of the Company, no par
value per share (the “Common Stock”), and 10,000 senior secured floating
rate units, each senior secured floating rate unit consisting of: (i) $1,000
principal amount at maturity of senior secured floating rate notes due 2008 of
the Company (the “Senior Secured Floating Rate Notes”) (each Senior
Secured Note and Senior Secured Floating Rate Note being collectively referred
to as a “Note” and the Senior Secured Notes and Senior Secured Floating
Rate Notes being collectively referred to as the “Notes”) and (ii) one
Warrant.  As an inducement to the Initial Purchaser to
enter into the Purchase Agreement, the Company and the subsidiary guarantors
listed in the signature pages hereto agree with the Initial Purchaser, for the
benefit of the Holders (as defined below) of the Notes (including, without
limitation, the Initial Purchaser), as follows:


 


1.                                       Definitions


 


Capitalized terms
that are used herein without definition and are defined in the Purchase
Agreement shall have the respective meanings ascribed to them in the Purchase
Agreement.  As used in this Agreement,
the following terms shall have the following meanings:


 


Additional Interest: 
See Section 4(a).


 

















 


Advice: 
See Section 6(w).


 


Agreement: 
This Registration Rights Agreement, dated as of the Closing Date,
between the Company and the Initial Purchaser.


 


Applicable
Period:  See Section 2(e).


 


Business
Day:  A day that is not a Saturday, a Sunday or a
day on which banking institutions in the City of New York are authorized or
required by law or executive order to be closed.


 


Closing
Date:  April 22, 2004.


 


Company: 
See the introductory paragraph to this Agreement.


 


Day:  Unless otherwise
expressly provided, a calendar day.


 


Effectiveness Date:  The  180th  day after the Issue Date, or if the Effectiveness Date
is not a Business Day, the next succeeding Business Day; provided that if delivery of the Shelf
Notice pursuant to Section 2(j) herein occurs after the 60th day
following the Closing Date, the applicable Effectiveness Date for the Initial
Shelf Registration shall be the 90th day following the applicable
Filing Date for the Initial Shelf Registration.


 


Effectiveness Period: 
See Section 3(a).


 


Event Date: 
See Section 4(b).


 


Exchange Act: 
The Securities Exchange Act of 1934, as amended, and the rules and regulations
of the SEC promulgated thereunder.


 


Exchange
Notes:  The $105,000,000 aggregate principal amount
of 12 % senior secured notes of the Company due 2008 (the “Senior Secured
Exchange Notes”) and the $10,000,000 aggregate principal amount of senior secured
floating rate notes of the Company due 2008 (the “Senior Secured Floating
Rate Exchange Notes”), identical in all material respects to the Senior
Secured Notes and the Senior Secured Floating Rate Notes, respectively,
including the guarantees endorsed thereon, except for references to series and
restrictive legends. Each Senior Secured Exchange Note and Senior Secured
Floating Rate Exchange Note is collectively referred to as an “Exchange Note”
and the Senior Secured Exchange Notes and Senior Secured Floating Rate Exchange
Notes are collectively referred to as the “Exchange Notes”).


 


Exchange Offer: 
See Section 2(a).


 


Exchange Registration Statement: 
See Section 2(a).


 


Filing Date:  The  90th  day after the Issue Date, or if such Filing Date is
not a Business Day, the next succeeding Business Day; provided that if a delivery of the Shelf
Notice pursuant to Section 2(j) herein occurs after the 60th day
following the Closing Date, the applicable Filing


 


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Date for the Initial Shelf Registration shall be the 30th
day following the date of delivery of such Shelf Notice.


 


Holder:  Any registered holder of
Registrable Notes.


 


Indemnified Party: 
See Section 8(c).


 


Indemnifying Party: 
See Section 8(c).


 


Indenture: 
The Indenture, dated as of the Closing Date, among the Company, the
Subsidiary Guarantors and  The Bank
of New York, as trustee, pursuant to which the Notes are being issued, as
amended or supplemented from time to time in accordance with the terms hereof.


 


Initial Purchaser: 
See the introductory paragraph to this Agreement.


 


Initial Shelf Registration: 
See Section 3(a).


 


Inspectors: 
See Section 6(o).


 


Issue Date:  April 22, 2004.


 


Lien:
Shall have
the meaning set forth in the Indenture.


 


Losses:  See Section 8(a).


 


NASD:  National Association of
Securities Dealers, Inc.


 


Notes: 
See the introductory paragraph to this Agreement.


 


Participating Broker-Dealer: 
See Section 2(e).


 


Person:  An individual, trustee,
corporation, partnership, limited liability company, joint stock company,
trust, unincorporated association, union, business association, firm,
government or agency or political subdivision thereof, or other legal entity.


 


Private Exchange: 
See Section 2(f).


 


Private Exchange Notes: 
See Section 2(f).


 


Prospectus: 
The prospectus included in any Registration Statement (including,
without limitation, a prospectus that discloses information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Notes covered by such Registration
Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.


 


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Purchase Agreement: 
See the introductory paragraph to this Agreement.


 


Records:  See Section 6(o).


 


Registrable Notes: 
(i) Notes, (ii) Private Exchange Notes and (iii) Exchange Notes received
in the Exchange Offer, in each case, that may not be sold without restriction
under federal or state securities laws.


 


Registration Statement: 
Any registration statement of the Company and the Subsidiary Guarantors
filed with the SEC under the Securities Act (including, but not limited to, the
Exchange Registration Statement, the Shelf Registration and any subsequent
Shelf Registration) that covers any of the Registrable Notes pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
all exhibits and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.


 


Rule 144:  Rule 144 promulgated
under the Securities Act, as such Rule may be amended from time to time, or any
similar rule (other than Rule 144A) or regulation hereafter adopted by the SEC
providing for offers and sales of securities made in compliance therewith
resulting in offers and sales by subsequent holders that are not affiliates of
an issuer or such securities being free of the registration and prospectus
delivery requirements of the Securities Act.


 


Rule 144A: 
Rule 144A promulgated under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.


 


Rule 415:  Rule 415 promulgated
under the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.


 


Rule 430A: 
Rule 430A promulgated under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.


 


SEC:  The Securities and
Exchange Commission.


 


Securities: 
The Notes, the Exchange Notes and the Private Exchange Notes.


 


Securities Act: 
The Securities Act of 1933, as amended, and the rules and regulations of
the SEC promulgated thereunder.


 


Security Documents: 
Shall have the meaning set forth in the Indenture.


 


Senior
Secured Exchange Notes: See definition of Exchange Notes


 


Senior
Secured Floating Rate Exchange Notes: See definition of Exchange Notes


 


Senior
Secured Floating Rate Private Exchange Notes: See Section 2(f).


 


Senior
Secured Floating Rate Notes: See the introductory paragraph to this Agreement.


 


 


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Senior
Secured Notes:
See the introductory paragraph to this Agreement.


 


Senior
Secured Private Exchange Notes: See Section 2(f).


 


Shelf Notice: 
See Section 2(j).


 


Shelf Registration: 
See Section 3(b).


 


Subsequent Shelf Registration: 
See Section 3(b).


 


Subsidiary Guarantor: 
Each subsidiary of the Company that guarantees the obligations of the
Company under the Notes and Indenture.


 


TIA:  The Trust Indenture Act
of 1939, as amended.


 


Trustee:  The trustee under the
Indenture and, if existent, the trustee under any indenture governing the
Exchange Notes and Private Exchange Notes (if any).


 


Underwritten Registration or Underwritten
Offering:  A registration in which securities of the
Company are sold to an underwriter for reoffering to the public.


 


2.                                       Exchange Offer


 


(a)                                  Unless the Exchange Offer would not
be permitted by applicable laws or a policy of the SEC, the Company shall (and
shall cause each Subsidiary Guarantor to) (i) prepare and file with the SEC
promptly after the date hereof, but in no event later than the Filing Date, a
registration statement (the “Exchange Registration Statement”) on an
appropriate form under the Securities Act with respect to an offer (the “Exchange
Offer”) to the Holders of Notes to issue and deliver to such Holders, in
exchange for the Notes, a like principal amount of Exchange Notes, (ii) use
commercially reasonable efforts to cause the Exchange Registration Statement to
become effective as promptly as practicable after the filing thereof, but in no
event later than the Effectiveness Date, (iii) use commercially reasonable
efforts to keep the Exchange Registration Statement effective until the
consummation of the Exchange Offer in accordance with its terms, and (iv)
commence the Exchange Offer and use commercially reasonable efforts to issue on
or prior to 30 days after the date on which the Exchange Registration Statement
is declared effective, Exchange Notes in exchange for all Notes tendered prior
thereto in the Exchange Offer.  The
Exchange Offer shall not be subject to any conditions, other than that the
Exchange Offer does not violate applicable law or any applicable interpretation
of the staff of the SEC.


 


(b)                                 The Exchange Notes shall be issued
under, and entitled to the benefits of, (i) the Indenture or a trust
indenture that is identical to the Indenture (other than such changes as are
necessary to comply with any requirements of the SEC to effect or maintain the
qualifications thereof under the TIA) and (ii) the Security Documents.


 


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(c)                                  Interest on the Exchange Notes and
Private Exchange Notes will accrue (A) from the later of (i) the last interest
payment due date on which interest was paid on the Notes surrendered in
exchange therefore or (ii) if the note is surrendered for exchange on a date in
a period which includes the record date for an interest payment date to occur
on or after the date of such exchange and as to which interest will be paid,
the date of such interest payment date; or (B) if no interest has been paid on
the Notes, from the date of original issue of the Notes.  Each Senior Secured Exchange Note, Senior
Secured Floating Rate Exchange Note, Senior Secured Private Exchange Note and
Senior Secured Floating Rate Private Exchange Note shall bear interest at the
rate set forth thereon; provided,
that interest with respect to the period prior to the issuance thereof shall
accrue at the rate or rates borne by the Senior Secured Notes and the Senior
Secured Floating Rate Notes from time to time during such period.


 


(d)                                 The Company may require each Holder
as a condition to participation in the Exchange Offer to represent (i) that any
Exchange Notes received by it will be acquired in the ordinary course of its
business, (ii) that at the time of the commencement of the Exchange Offer such
Holder has not entered into any arrangement or understanding with any Person to
participate in the distribution (within the meaning of the Securities Act) of
the Exchange Notes in violation of the provisions of the Securities Act, (iii)
that either such Holder is not an “affiliate” of the Company within the meaning
of Rule 405 of the Securities Act, or if such Holder is an “affiliate,” it will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable to it, (iv) if such Holder is not a
broker-dealer, that it is not engaged in, and does not intend to engage in, the
distribution of the Notes and (v) if such Holder is a Participating
Broker-Dealer, that it will deliver a Prospectus in connection with any resale
of the Exchange Notes.


 


(e)                                  The Company shall (and shall cause
each Subsidiary Guarantor to) include within the Prospectus contained in the
Exchange Registration Statement a section entitled “Plan of Distribution”
reasonably acceptable to the Initial Purchaser which shall contain a summary
statement of the positions taken or policies made by the staff of the SEC with
respect to the potential “underwriter” status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Notes received by such broker-dealer in the Exchange Offer for its own account
in exchange for Notes that were acquired by it as a result of market-making or
other trading activity (a “Participating Broker-Dealer”), whether such
positions or policies have been publicly disseminated by the staff of the SEC
or such positions or policies, in the judgment of the Initial Purchaser,
represent the prevailing views of the staff of the SEC.  Such “Plan of Distribution” section shall
also allow, to the extent permitted by applicable policies and regulations of
the SEC, the use of the Prospectus by all Persons subject to the prospectus
delivery requirements of the Securities Act, including, to the extent so
permitted, all Participating Broker-Dealers, and include a statement describing
the manner in which Participating Broker-Dealers may resell the Exchange
Notes.  The Company shall use
commercially reasonable efforts to keep


 


6

















 


the Exchange Registration Statement effective and to amend and
supplement the Prospectus contained therein, in order to permit such Prospectus
to be lawfully delivered by all Persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such Persons must
comply with such requirements in order to resell the Exchange Notes (the “Applicable Period”).


 


(f)                                    If, upon consummation of the
Exchange Offer, the Initial Purchaser holds any Senior Secured Notes or Senior
Secured Floating Rate Notes acquired by it and having the status of an unsold
allotment in the initial distribution, the Company (upon the written request
from the Initial Purchaser) shall, simultaneously with the delivery of the
Exchange Notes in the Exchange Offer, issue and deliver to the Initial
Purchaser, in exchange (the “Private Exchange”) for the Senior Secured
Notes or Senior Secured Floating Rate Notes, as the case may be, held by the
Initial Purchaser, a like principal amount of senior secured notes or senior
secured floating rate notes that are identical to the Senior Secured Exchange
Notes or the Senior Secured Floating Rate Exchange Notes except for the
existence of restrictions on transfer thereof under the Securities Act and securities
laws of the several states of the United States (such notes being referred to
separately as the “Senior Secured Private Exchange Notes” and the “Senior
Secured Floating Rate Private Exchange Notes”, and collectively as the “Private
Exchange Notes”) (and which are issued pursuant to the same indenture as
the Exchange Notes).  The Senior Secured
Private Exchange Notes shall bear the same CUSIP number as the Senior Secured
Exchange Notes and the Senior Secured Floating Rate Private Exchange Notes shall
bear the same CUSIP number as the Senior Secured Floating Rate Exchange Notes.


 


(g)                                 In connection with the Exchange
Offer, the Company shall (and shall cause each Subsidiary Guarantor to):


 


(i)                                     mail to each Holder a copy of the
Prospectus forming part of the Exchange Registration Statement, together with
an appropriate letter of transmittal that is an exhibit to the Exchange Offer
Registration Statement, and any related documents;


 


(ii)                                  keep the Exchange Offer open for
not less than 30 days after the date notice thereof is mailed to the Holders
(or longer if required by applicable law)


 


(iii)                               utilize the services of a
depository for the Exchange Offer with an address in the Borough of Manhattan,
the City of New York, which may be the Trustee or an affiliate thereof;


 


(iv)                              permit Holders to withdraw tendered
Registrable Notes at any time prior to the close of business, New York time, on
the last Business Day on which the Exchange Offer shall remain open; and


 


(v)                                 otherwise comply in all material
respects with all applicable laws.


 


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(h)                                 As soon as practicable after the
close of the Exchange Offer or the Private Exchange, as the case may be, the
Company shall (and shall cause each Subsidiary Guarantor to):


 


(i)                                     accept for exchange all Registrable
Notes validly tendered pursuant to the Exchange Offer or the Private Exchange,
as the case may be, and not validly withdrawn;


 


(ii)                                  deliver to the Trustee for
cancellation all Registrable Notes so accepted for exchange; and


 


(iii)                               cause the Trustee to authenticate
and deliver promptly to each Holder tendering such Registrable Notes, Exchange
Notes or Private Exchange Notes, as the case may be, equal in principal amount
to the Notes of such Holder so accepted for exchange.


 


(i)                                     The Exchange Notes and the Private
Exchange Notes may be issued under (i) the Indenture or (ii) an indenture
identical to the Indenture (other than such changes as are necessary to comply
with any requirements of the SEC to effect or maintain the qualification
thereof under the TIA), which in either event will provide that the Exchange
Notes will not be subject to the transfer restrictions set forth in the
Indenture, that the Private Exchange Notes will be subject to the transfer
restrictions set forth in the Indenture, and that the Exchange Notes, the
Private Exchange Notes and the Notes, if any, will be deemed one class of
security (subject to the provisions of the Indenture) and entitled to
participate in all the security granted by the Company pursuant to the Security
Documents and in any Subsidiary Guarantee (as such terms are defined in the
Indenture) on an equal and ratable basis.


 


(j)                                     If:  (i) prior to the consummation of the
Exchange Offer, the Holders of a majority in aggregate principal amount of
Registrable Notes determines in its or their reasonable judgment that the
Exchange Notes would not, upon receipt, be tradeable by the Holders thereof
without restriction under the Securities Act and the Exchange Act and without
material restrictions under applicable Blue Sky or state securities laws; (ii)
because of any change in law or applicable interpretations of the staff of the
SEC, the Company is not permitted to effect the Exchange Offer (after the
Company and the Subsidiary Guarantors have complied with the procedures set
forth herein); (iii) subsequent to the consummation of the Private Exchange,
any Holder of Private Exchange Notes so requests; (iv) the Exchange Offer is
not consummated within 30 days from the date the Exchange Offer Registration
Statement was declared effective; or (v) in the case of (A) any Holder not
permitted to participate in the Exchange Offer, (B) any Holder participating in
the Exchange Offer that receives Exchange Notes that may not be sold without
restriction under state and federal securities laws (other than due solely to
the status of such Holder as an affiliate of the Company within the meaning of
the Securities Act) or (C) any broker-dealer that holds Notes acquired directly
from the Company or any of its affiliates and, in each such case


 


8

















 


contemplated by
this clause (v), such Holder notifies the Company within six months of
consummation of the Exchange Offer, then the Company shall promptly (and in any
event within five Business Days) deliver to the Holders (or in the case of an
occurrence of any event described in clause (v) of this Section 2(j), to any
such Holder) and the Trustee notice thereof (the “Shelf Notice”) and
shall as promptly as possible thereafter (but in no event later than the
applicable Filing Date) file an Initial Shelf Registration pursuant to Section
3.


 


3.                                       Shelf Registration


 


If a Shelf Notice
is delivered pursuant to Section 2(j), then this Section 3 shall apply to all
Registrable Notes.  Otherwise, upon
consummation of the Exchange Offer in accordance with Section 2, the provisions
of Section 3 shall apply solely with respect to (i) Notes held by any Holder
thereof not permitted to participate in the Exchange Offer, (ii) Notes held by
any broker-dealer that acquired such Notes directly from the Company or any of
its affiliates and (iii) Exchange Notes that are not freely tradeable as
contemplated by Section 2(j)(v) hereof, provided in each case that the relevant
Holder has duly notified the Company within six months of the Exchange Offer as
required by Section 2(j)(v).


 


(a)                                  Initial Shelf Registration. 
The Company shall (and shall cause each Subsidiary Guarantor to), as
promptly as practicable, file with the SEC a Registration Statement for an
offering to be made on a continuous basis pursuant to Rule 415 covering all of
the Registrable Notes (the “Initial Shelf Registration”).  If the Company (and any Subsidiary
Guarantor) has not yet filed an Exchange Registration Statement, the Company
shall (and shall cause each Subsidiary Guarantor to) file with the SEC the
Initial Shelf Registration on or prior to the Filing Date and shall use
commercially reasonable efforts to cause such Initial Shelf Registration to be
declared effective under the Securities Act on or prior to the Effectiveness
Date.  Otherwise, the Company shall (and
shall cause each Subsidiary Guarantor to) use commercially reasonable efforts
to file with the SEC the Initial Shelf Registration within 30 days of the
delivery of the Shelf Notice and shall use commercially reasonable efforts to
cause such Shelf Registration to be declared effective under the Securities Act
as promptly as practicable thereafter (but in no event more than 90 days after
delivery of the Shelf Notice).  The Initial
Shelf Registration shall be on Form S-1 or another appropriate form permitting
registration of such Registrable Notes for resale by Holders in the manner or
manners reasonably designated by them (including, without limitation, one or
more underwritten offerings).  The
Company and Subsidiary Guarantors shall not permit any securities other than
the Registrable Notes to be included in any Shelf Registration.  The Company shall (and shall cause each
Subsidiary Guarantor to) use commercially reasonable efforts to keep the
Initial Shelf Registration continuously effective under the Securities Act
until the date which is 24 months from the Closing Date (subject to extension
pursuant to the last paragraph of Section 6(w) (the “Effectiveness Period”),
or such shorter period ending when (i) all Registrable Notes covered by the
Initial Shelf Registration have been sold in the manner set forth and as
contemplated in the Initial Shelf Registration (ii) a Subsequent Shelf
Registration covering all of the Registrable


 


9

















 


Notes covered by and not sold under the Initial Shelf Registration
or an earlier Subsequent Shelf Registration has been declared effective under
the Securities Act or (iii) there cease to be any outstanding Registrable
Notes.


 


(b)                                 Subsequent Shelf Registrations. 
If the Initial Shelf Registration or any Subsequent Shelf Registration
(as defined below) ceases to be effective for any reason at any time during the
Effectiveness Period (other than because of the sale of all of the securities
registered thereunder or because the Securities registered thereunder cease to
be outstanding), the Company shall (and shall cause each Subsidiary Guarantor
to) use its reasonable best efforts to obtain the prompt withdrawal of any
order suspending the effectiveness thereof, and in any event shall within 30
days of such cessation of effectiveness amend such Shelf Registration in a
manner to obtain the withdrawal of the order suspending the effectiveness
thereof, or file (and cause each Subsidiary Guarantor to file) an additional
“shelf” Registration Statement pursuant to Rule 415 covering all of the
Registrable Notes (a “Subsequent Shelf Registration”).  If a Subsequent Shelf Registration is filed,
the Company shall (and shall cause each Subsidiary Guarantor to) use
commercially reasonable efforts to cause the Subsequent Shelf Registration to
be declared effective as soon as practicable after such filing and to keep such
Subsequent Shelf Registration continuously effective for a period equal to the
number of days in the Effectiveness Period less the aggregate number of days
during which the Initial Shelf Registration or any Subsequent Shelf
Registration was previously continuously effective.  As used herein the term “Shelf Registration” means the Initial
Shelf Registration and any Subsequent Shelf Registrations


 


(c)                                  Supplements and Amendments. 
The Company shall promptly supplement and amend any Shelf Registration
if required by the rules, regulations or instructions applicable to the
registration form used for such Shelf Registration, if required by the
Securities Act, or if reasonably requested in writing by the Holders of a
majority in aggregate principal amount of the Registrable Notes covered by such
Shelf Registration or by any underwriter of such Registrable Notes.


 


(d)                                 Provision of Information.   
No Holder of Registrable Notes shall be entitled to include any of its
Registrable Notes in any Shelf Registration pursuant to this Agreement unless
such Holder furnishes to the Company and the Trustee in writing, within 20 days
after receipt of a written request therefor, such information as the Company
and the Trustee after conferring with counsel with regard to information
relating to Holders that would be required by the SEC to be included in such
Shelf Registration or Prospectus included therein, may reasonably request for
inclusion in any Shelf Registration or Prospectus included therein, and no such
Holder shall be entitled to Additional Interest pursuant to Section 4 hereof
unless and until such Holder shall have provided such information.


 


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4.                                       Additional
Interest


 


(a)                                  The Company and each Subsidiary
Guarantor acknowledges and agrees that the Holders of Registrable Notes will
suffer damages if the Company or any Subsidiary Guarantor fails to fulfill its
material obligations under Section 2 or Section 3 hereof and that it would not
be feasible to ascertain the extent of such damages with precision.
Accordingly, the Company and the Subsidiary Guarantors agree to pay additional
cash interest on the Notes (“Additional Interest”) under the
circumstances and to the extent set forth below (each of which shall be given
independent effect):


 


(i)                                     if neither the Exchange
Registration Statement nor the Initial Shelf Registration has been filed on or
prior to the applicable Filing Date, Additional Interest shall accrue on the
Notes over and above any stated interest at a rate of 0.25% per annum of the
principal amount of such Notes for the first 90 days immediately following the
applicable Filing Date, such Additional Interest rate increasing by an
additional 0.25% per annum at the beginning of each subsequent 90-day period;


 


(ii)                                  if neither the Exchange
Registration Statement nor the Initial Shelf Registration is declared effective
by the SEC on or prior to the applicable Effectiveness Date, Additional
Interest shall accrue on the Notes over and above any stated interest at a rate
of 0.25% per annum of the principal amount of such Notes for the first 90 days
immediately following the Effectiveness Date, such Additional Interest rate
increasing by an additional 0.25% per annum at the beginning of each subsequent
90-day period;


 


(iii)                               if (A) the Company (and any
Subsidiary Guarantor) has not exchanged Exchange Notes for all Notes validly
tendered in accordance with the terms of the Exchange Offer on or prior to the
30 Business Days after the applicable Effectiveness Date, (B) the Exchange
Registration Statement ceases to be effective at any time prior to the time
that the Exchange Offer is consummated, (C) if applicable, a Shelf Registration
has been declared effective and such Shelf Registration ceases to be effective
at any time prior to the second anniversary of its effective date (other than
such time as all Notes have been disposed of thereunder), or (D) pending the
announcement of a material corporate transaction, the Company issues a written
notice pursuant to Section 6(e)(v) or (vi) that a Shelf Registration Statement
or Exchange Registration Statement is unusable and the aggregate number of days
in any 365-day period for which all such notices issued or required to be
issued, have been, or were required to be, in effect exceeds 120 days in the
aggregate or 30 days consecutively, in the case of a Shelf Registration
statement, or 15 days in the aggregate in the case of an Exchange Registration
Statement, then Additional Interest shall accrue on the Notes, over and above
any stated interest, at a rate of 0.25% per annum of the principal amount of
such Notes commencing on (w) the 30th


 


11

















 


Business Day after the Effectiveness Date, in the case of (A)
above, or (x) the date the Exchange Registration Statement ceases to be
effective without being declared effective again within 30 days, in the case of
clause (B) above, or (y) the day such Shelf Registration ceases to be effective
in the case of (C) above, or (z) the day the Exchange Registration Statement or
Shelf Registration ceases to be usable in case of clause (D) above, such
Additional Interest rate increasing by an additional 0.25% per annum at the
beginning of each such subsequent 90-day period;


 


provided, however, that the maximum Additional
Interest rate on the Notes may not exceed at any one time in the aggregate
1.00% per annum; and provided further,
that (1) upon the filing of the Exchange Registration Statement or Initial
Shelf Registration (in the case of (i) above), (2) upon the effectiveness of
the Exchange Registration Statement or Initial Shelf Registration (in the case
of (ii) above), or (3) upon the exchange of Exchange Notes for all Notes
tendered (in the case of (iii)(A) above), or upon the effectiveness of the
Exchange Registration Statement that had ceased to remain effective (in the
case of clause (iii)(B) above), or upon the effectiveness of a Shelf
Registration which had ceased to remain effective (in the case of (iii)(C)
above), Additional Interest on the Notes as a result of such clause (or the
relevant subclause thereof) or upon the effectiveness of such Registration
Statement or Exchange Registration Statement (in the case of clause (iii)(D)
above), as the case may be, shall cease to accrue.


 


(b)                                 The Company shall notify the
Trustee within 3 Business Days after each and every date on which an event
occurs in respect of which Additional Interest is required to be paid (an “Event
Date”).  Any accrued amounts of
Additional Interest due pursuant to clause (a)(i), (a)(ii) or (a)(iii) of this
Section 4 will be payable in cash,
on each Interest Payment Date (as defined in the Notes) and in the manner
provided in the Indenture.  The amount
of Additional Interest will be determined by multiplying the applicable
Additional Interest rate by the principal amount of the Notes, multiplied by a
fraction, the numerator of which is the number of days such Additional Interest
rate was applicable during such period (determined on the basis of a 360-day
year comprised of twelve 30-day months and, in the case of a partial month, the
actual number of days elapsed), and the denominator of which is 360.


 


5.                                       Hold-Back
Agreements


 


The Company agrees
that it will not effect any public or private sale or distribution (including a
sale pursuant to Regulation D under the Securities Act) of any securities of
the same class as to those covered by a Registration Statement filed pursuant
to Section 2 or 3 hereof (other than Additional Notes (as defined in the
Indenture) issued under the Indenture), or any securities convertible into or
exchangeable or exercisable for such securities, during the 10 days prior to,
and during the 90-day period beginning on, the effective date of any
Registration Statement filed pursuant to Sections 2 and 3 hereof unless the
Holders of a majority in the aggregate principal amount of the Registrable
Notes included or to be included in such


 


12

















 


Registration Statement consent or, if there is one, if the
managing underwriter thereof so requests in writing.


 


6.                                       Registration
Procedures


 


In connection with
the filing of any Registration Statement pursuant to Sections 2 or 3
hereof, the Company shall (and shall cause each Subsidiary Guarantor to) effect
such registrations to permit the sale of such securities covered thereby in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto and in connection with any Registration Statement filed by the
Company hereunder, the Company shall (and shall cause each Subsidiary Guarantor
to):


 


(a)                                  Prepare and file with the SEC as
soon as practicable after the date hereof but in any event on or prior to the
Filing Date, the Exchange Registration Statement or if the Exchange
Registration Statement is not filed because of the circumstances contemplated
by Section 2(j), a Shelf Registration as prescribed by Section 3, and use
commercially reasonable efforts to cause each such Registration Statement to
become effective and remain effective as provided herein; provided that, if (1) a Shelf Registration
is filed pursuant to Section 3 or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period relating thereto, before filing any
Registration Statement or Prospectus or any amendments or supplements thereto
the Company shall (and shall cause each Subsidiary Guarantor to), if requested,
furnish to and afford the Holders of the Registrable Notes to be registered
pursuant to such Shelf Registration Statement, each Participating
Broker-Dealer, the managing underwriters, if any, and each of their respective
counsel, a reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by reference therein and
all exhibits thereto) proposed to be filed (in each case at least 3 Business
Days prior to such filing).  The Company
and each Subsidiary Guarantor shall not file any such Registration Statement or
Prospectus, or any amendments or supplements thereto in respect of which the
Holders must provide information for the inclusion therein, without the Holders
being afforded an opportunity to review such documentation if the holders of a
majority in aggregate principal amount of the Registrable Notes covered by such
Registration Statement, or any such Participating Broker-Dealer, as the case
may be, the managing underwriters, if any, or any of their respective counsel
shall reasonably object in writing on a timely basis. A Holder shall be deemed
to have reasonably objected to such filing if such Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be filed,
contains an untrue statement of a material fact or omits 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)                                 Provide an indenture trustee for
the Registrable Notes, the Exchange Notes or the Private Exchange Notes, as the
case may be, and cause the Indenture (or other


 


13

















 


indenture relating to the Registrable Notes) to be qualified under
the TIA not later than the effective date of the first Registration Statement;
and in connection therewith, to effect such changes to such indenture as may be
required for such indenture to be so qualified in accordance with the terms of
the TIA; and execute, and use commercially reasonable efforts to cause such
trustee to execute, all documents as may be required to effect such changes,
and all other forms and documents required to be filed with the SEC to enable
such indenture to be so qualified in a timely manner.


 


(c)                                  Prepare and file with the SEC any
amendments to each Shelf Registration or Exchange Registration Statement, as
the case may be, as may be necessary to keep such Registration Statement
continuously effective for the Effectiveness Period or the Applicable Period,
as the case may be; cause the related Prospectus to be supplemented by any
Prospectus supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; and comply with the provisions of the
Securities Act and the Exchange Act applicable to them with respect to the
disposition of all securities covered by such Registration Statement as so
amended or in such Prospectus as so supplemented and with respect to the
subsequent resale of any securities being sold by a Participating Broker-Dealer
covered by any such Prospectus.  The
Company and each Subsidiary Guarantor shall not, during the Applicable Period,
voluntarily take any action that would result in selling Holders of the Registrable
Notes covered by a Registration Statement or Participating Broker-Dealers
seeking to sell Exchange Notes not being able to sell such Registrable Notes or
such Exchange Notes during that period, unless such action is required by
applicable law, rule or regulation or permitted by this Agreement.


 


(d)                                 Furnish to such selling Holders and
Participating Broker-Dealers who so request in writing (i) upon the Company’s
receipt, a copy of the order of the SEC declaring such Registration Statement
and any post effective amendment thereto effective, (ii) such reasonable number
of copies of such Registration Statement and of each amendment and supplement
thereto (in each case including any documents incorporated therein by reference
and all exhibits), (iii) such reasonable number of copies of the Prospectus
included in such Registration Statement (including each preliminary Prospectus)
and each amendment and supplement thereto, and such reasonable number of copies
of the final Prospectus as filed by the Company and each Subsidiary Guarantor
pursuant to Rule 424(b) under the Securities Act, in conformity with the
requirements of the Securities Act and each amendment and supplement thereto,
and (iv) such other documents (including any amendments required to be filed
pursuant to clause (c) of this Section), as any such Person may reasonably
request in writing. The Company and the Subsidiary Guarantors hereby consent to
the use of the Prospectus by each of the selling Holders of Registrable Notes
or each such Participating Broker-Dealer, as the case may be, and the
underwriters or agents, if any, and dealers, if any, in connection with the
offering and sale of the Registrable Notes covered by,


 


14

















 


or the sale by Participating Broker-Dealers of the Exchange Notes
pursuant to, such Prospectus and any amendment or supplement thereto.


 


(e)                                  If (1) a Shelf Registration is
filed pursuant to Section 3, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period relating thereto, the Company shall
notify in writing the selling Holders of Registrable Notes, or each such
Participating Broker-Dealer, as the case may be, the managing underwriters, if
any, and each of their respective counsel promptly (but in any event within 2
Business Days) (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective
(including in such notice a written statement that any Holder may, upon
request, obtain, without charge, one conformed copy of such Registration Statement
or post-effective amendment including financial statements and schedules,
documents incorporated or deemed to be incorporated by reference and exhibits),
(ii) of the issuance by the SEC of any stop order suspending the effectiveness
of a Registration Statement or of any order preventing or suspending the use of
any Prospectus or the initiation of any proceedings for that purpose, (iii) if
at any time when a Prospectus is required by the Securities Act to be delivered
in connection with sales of the Registrable Notes the representations and
warranties of the Company and any Subsidiary Guarantor contained in any
agreement (including any underwriting agreement) contemplated by Section 6(n)
hereof cease to be true and correct, (iv) of the receipt by the Company or any
Subsidiary Guarantor of any notification with respect to the suspension of the
qualification or exemption from qualification of a Registration Statement or
any of the Registrable Notes or the Exchange Notes to be sold by any
Participating Broker-Dealer for offer or sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose, (v) of the
happening of any event, the existence of any condition of any information
becoming known that makes any statement made in such Registration Statement or
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or that requires the making
of any changes in, or amendments or supplements to, such Registration Statement,
Prospectus or documents so that, in the case of the Registration Statement and
the Prospectus, it will not contain any 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, (vi) of any reasonable determination by the Company
or any Subsidiary Guarantor that a post-effective amendment to a Registration
Statement would be appropriate and (vii) of any request by the SEC for
amendments to the Registration Statement or supplements to the Prospectus or
for additional information relating thereto.


 


(f)                                    Use commercially reasonable efforts
to prevent the issuance of any order suspending the effectiveness of a
Registration Statement or of any order


 


15

















 


preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registrable Notes
or the Exchange Notes to be sold by any Participating Broker-Dealer, for sale
in any jurisdiction, and, if any such order is issued, to use commercially
reasonable efforts to obtain the withdrawal of any such order at the earliest
possible date.


 


(g)                                 If (A) a Shelf Registration is
filed pursuant to Section 3, (B) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period or (C) reasonably requested in
writing by the managing underwriters, if any, or the Holders of a majority in
aggregate principal amount of the Registrable Notes being sold in connection
with an underwritten offering, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment such information or revisions to
information therein relating to such underwriters or selling Holders as the
managing underwriters, if any, or such Holders or any of their respective
counsel reasonably request in writing to be included or made therein and (ii)
make all required filings of such Prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received notification of
the matters to be incorporated in such Prospectus supplements or post-effective
amendment.


 


(h)                                 Prior to any public offering of
Registrable Notes or any delivery of a Prospectus contained in the Exchange
Registration Statement by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, use commercially reasonable
efforts to register or qualify, and to cooperate with the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the case may be,
the underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Notes or Exchange Notes, as the case may be,
for offer and sale under the securities or Blue Sky laws of such jurisdictions
within the United States as any selling Holder, Participating Broker-Dealer or
any managing underwriter or underwriters, if any, reasonably request in
writing; provided that where
Exchange Notes held by Participating Broker-Dealers or Registrable Notes are
offered other than through an underwritten offering, the Company and each
Subsidiary Guarantor agree to cause its counsel to perform Blue Sky
investigations and file any registrations and qualifications required to be filed
pursuant to this Section 6(h), keep each such registration or qualification (or
exemption therefrom) effective during the period such Registration Statement is
required to be kept effective and do any and all other acts or things
reasonably necessary or advisable to enable the disposition in such
jurisdictions of the Exchange Notes held by Participating Broker-Dealers or the
Registrable Notes covered by the applicable Registration Statement; provided that neither the Company nor any
Subsidiary Guarantor shall be required to (A) qualify generally to do business
in any jurisdiction where it is not then so qualified, (B) take any action that
would subject it to general service of process in


 


16

















 


any such jurisdiction where it is not then so subject or (C)
subject itself to taxation in any such jurisdiction where it is not then so
subject.


 


(i)                                     If (A) a Shelf Registration is
filed pursuant to Section 3 or (B) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 is requested to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, cooperate with the selling Holders
of Registrable Notes and the managing underwriter or underwriters, if any, to
facilitate the timely preparation and delivery of certificates representing
Registrable Notes to be sold, which certificates shall not bear any restrictive
legends and shall be in a form eligible for deposit with The Depository Trust
Company, and enable such Registrable Notes to be in such denominations as
permitted by the Indenture and registered in such names as the managing
underwriter or underwriters, if any, or Holders may reasonably request.


 


(j)                                     Use commercially reasonable efforts
to cause the Registrable Notes covered by any Registration Statement to be
registered with or approved by such governmental agencies or authorities as may
be necessary to enable the seller or sellers thereof or the underwriter, if
any, to consummate the disposition of such Registrable Notes, except as may be
required solely as a consequence of the nature of such selling Holder’s
business, in which case the Company shall (and shall cause each Subsidiary
Guarantor to) cooperate in all reasonable respects with the filing of such
Registration Statement and the granting of such approvals; provided that neither the Company nor any
existing Subsidiary Guarantor shall be required to (A) qualify generally
to do business in any jurisdiction where it is not then so qualified,
(B) take any action that would subject it to general service of process in
any jurisdiction where it is not then so subject or (C) subject itself to
taxation in any such jurisdiction where it is not then so subject.


 


(k)                                  If (1) a Shelf Registration is
filed pursuant to Section 3, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, upon the occurrence of any event
contemplated by paragraph 6(e)(v) or 6(e)(vi) hereof, as promptly as
practicable, prepare and file with the SEC, at the expense of the Company and
the Subsidiary Guarantors , a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Notes being sold thereunder or to the purchasers
of the Exchange Notes to whom such Prospectus will be delivered by a
Participating Broker-Dealer, such Prospectus will not contain an untrue
statement of a material fact or omit to state a 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, and, if SEC review is
required, use commercially reasonable efforts to cause such post-effective
amendment to be declared effective as soon as possible.


 


17

















 


(l)                                     Use its best efforts to cause the
Registrable Notes covered by a Registration Statement, to the extent not already
rated, to be rated with such appropriate rating agencies, if so requested in
writing by the Holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Registration Statement or the managing
underwriter or underwriters, if any.


 


(m)                               Prior to the initial issuance of
the Exchange Notes, (i) provide the Trustee with one or more certificates for
the Registrable Notes in a form eligible for deposit with The Depository Trust
Company and (ii) provide a CUSIP number for each of the Senior Secured Exchange
Notes and the Senior Secured Floating Rate Exchange Notes.


 


(n)                                 If a Shelf Registration is filed
pursuant to Section 3, enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in underwritten
offerings of debt securities similar to the Notes, as may be appropriate in the
circumstances) and take all such other actions in connection therewith
(including those reasonably requested in writing by the managing underwriters,
if any, or the Holders of a majority in aggregate principal amount of the
Registrable Notes being sold) in order to expedite or facilitate the
registration or the disposition of such Registrable Notes, and in such
connection, whether or not an underwriting agreement is entered into and
whether or not the registration is an Underwritten Registration, (i) make such
representations and warranties to the Holders and the underwriters, if any,
with respect to the business of the Company and its subsidiaries as then conducted,
and the Registration Statement, Prospectus and documents, if any, incorporated
or deemed to be incorporated by reference therein, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings of debt securities similar to the Notes, as may be
appropriate in the circumstances, and confirm the same if and when reasonably
required; (ii) obtain an opinion of counsel to the Company and the Subsidiary
Guarantors and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing underwriters, if
any, to counsel, if any, and to the Holders of a majority in aggregate
principal amount of the Registrable Notes being sold), addressed to each selling
Holder and each of the underwriters, if any, covering the matters customarily
covered in opinions of counsel to the Company and the Subsidiary Guarantors
requested in underwritten offerings of debt securities similar to the Notes, as
may be appropriate in the circumstances; (iii) obtain “cold comfort” letters
and updates thereof (which letters and updates (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if any) from the
independent certified public accountants of the Company and the Subsidiary
Guarantors (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by the
Company for which financial statements and financial data are, or are required
to be, included in the Registration Statement), addressed to each of the
underwriters, if any, such letters to be in customary form and covering matters
of the type customarily covered in “cold comfort” letters in connection with
underwritten offerings of debt securities similar to the Notes, as may be
appropriate in the


 


18

















 


circumstances, and such other matters as reasonably requested in
writing by the underwriters; and (iv) deliver such documents and certificates
as may be reasonably requested in writing by the Holders of a majority in
aggregate principal amount of the Registrable Notes being sold and the managing
underwriters, if any, to evidence the continued validity of the representations
and warranties of the Company and its subsidiaries made pursuant to clause (i)
above and to evidence compliance with any conditions contained in the
underwriting agreement or other similar agreement entered into by the Company
or any Subsidiary Guarantor.


 


(o)                                 If (1) a Shelf Registration is
filed pursuant to Section 3, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, make available for inspection by
any selling Holder of such Registrable Notes being sold, or each such
Participating Broker-Dealer, as the case may be, any underwriter participating
in any such disposition of Registrable Notes, if any, and any attorney,
accountant or other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be, or underwriter (collectively,
the “Inspectors”), at the offices where normally kept, during reasonable
business hours, all financial and other records and pertinent corporate
documents of the Company and its subsidiaries (collectively, the “Records”)
as shall be reasonably necessary to enable them to exercise any applicable due
diligence responsibilities, and cause the officers, directors and employees of
the Company and its subsidiaries to supply all information reasonably requested
in writing by any such Inspector in connection with such Registration
Statement; provided that the foregoing inspection and information gathering on
behalf of the Holders shall be coordinated by one counsel designated by and on
behalf of the Holders pursuant to Section 4(c) hereto.  Each Inspector shall agree in writing that
it will keep the Records confidential and not disclose any of the Records
unless (i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such Registration Statement, (ii) the release of
such Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, (iii) the information in such Records is public or has
been made generally available to the public other than as a result of a
disclosure or failure to safeguard by such Inspector or (iv) disclosure of such
information is, in the reasonable written opinion of counsel for any Inspector,
necessary or advisable in connection with any action, claim, suit or
proceeding, directly or indirectly, involving or potentially involving such
Inspector and arising out of, based upon, related to, or involving this
Agreement, or any transaction contemplated hereby or arising hereunder.  Each selling Holder of such Registrable
Notes and each such Participating Broker-Dealer will be required to agree that
information obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company unless and until such is made
generally available to the public.  Each
Inspector, each selling Holder of such Registrable Notes and each such
Participating Broker-Dealer will be required to further agree that it will,
upon


 


19

















 


learning that disclosure of such Records is sought in a court of
competent jurisdiction, give notice to the Company and, to the extent
practicable, use its best efforts to allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of the Records deemed
confidential at its expense.


 


(p)                                 Use commercially reasonable efforts
to comply with all applicable rules and regulations of the SEC and make
generally available to the security holders of the Company with regard to any
Applicable Registration Statement earning statements satisfying the provisions
of section 11(a) of the Securities Act and Rule 158 thereunder (or any similar
rule promulgated under the Securities Act) no later than 45 days after the end
of any 12-month period (or 90 days after the end of any 12-month period if such
period is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Registrable Notes are sold to underwriters in a firm commitment or best
efforts underwritten offering and (ii) if not sold to underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the
Company after the effective date of a Registration Statement, which statements
shall cover said 12-month periods.


 


(q)                                 Upon consummation of an Exchange
Offer or Private Exchange, obtain an opinion of counsel to the Company and the
Subsidiary Guarantors (in form, scope and substance reasonably satisfactory to
the Initial Purchaser), addressed to the Trustee for the benefit of all Holders
participating in the Exchange Offer or Private Exchange, as the case may be, in
customary form and substance to the effect that, among other things, (i) the
Company and the Subsidiary Guarantors have duly authorized, executed and
delivered the Exchange Notes or the Private Exchange Notes, as the case may be,
and the Indenture and (ii) the Exchange Notes or the Private Exchange Notes, as
the case may be, and the Indenture constitute legal, valid and binding
obligations of the Company and the Subsidiary Guarantors, enforceable against
the Company and the Subsidiary Guarantors in accordance with their respective
terms, except as such enforcement may be subject to customary United States and
foreign exceptions.


 


(r)                                    If the Exchange Offer or a Private
Exchange is to be consummated, upon delivery of the Registrable Notes by the
Holders to the Company and the Subsidiary Guarantors (or to such other Person
as directed by the Company and the Subsidiary Guarantors) in exchange for the
Exchange Notes or the Private Exchange Notes, as the case may be, the Company
and the Subsidiary Guarantors shall mark, or caused to be marked, on such
Registrable Notes that the Exchange Notes or the Private Exchange Notes, as the
case may be, are being issued as substitute evidence of the indebtedness
originally evidenced by the Registrable Notes; provided
that in no event shall such Registrable Notes be marked as paid or otherwise
satisfied.


 


(s)                                  Cooperate with each seller of
Registrable Notes covered by any Registration Statement and each underwriter,
if any, participating in the disposition of such Registrable Notes and their
respective counsel in connection with any filings required to be made with the
NASD.


 


20

















 


(t)                                    Use
commercially reasonable efforts to cause all Securities covered by a
Registration Statement to be listed on each securities exchange, if any, on
which similar debt securities issued by the Company are then listed.


 


(u)                                 Use commercially reasonable efforts to take all other steps
reasonably necessary to effect the registration of the Registrable Notes
covered by a Registration Statement contemplated hereby.


 


(v)                                 The Company may require each seller
of Registrable Notes or Participating Broker-Dealer as to which any
registration is being effected to furnish to the Company such information
regarding such seller or Participating Broker-Dealer and the distribution of
such Registrable Notes as the Company may, from time to time, reasonably
request in writing.  The Company may
exclude from such registration the Registrable Notes of any seller who fails to
furnish such information within a reasonable time (which time in no event shall
exceed 45 days, subject to Section 3(d)) hereof) after receiving such
request.  Each seller of Registrable
Notes or Participating Broker-Dealer as to which any registration is being
effected agrees to furnish promptly to the Company all information required to
be disclosed in order to make the information previously furnished by such
seller not materially misleading.


 


(w)                               Each Holder of Registrable Notes
and each Participating Broker-Dealer agrees by acquisition of such Registrable
Notes or Exchange Notes to be sold by such Participating Broker-Dealer, as the
case may be, that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 6(e)(ii), 6(e)(iv), 6(e)(v), or
6(e)(vi), such Holder will forthwith discontinue disposition of such
Registrable Notes covered by a Registration Statement and such Participating
Broker-Dealer will forthwith discontinue disposition of such Exchange Notes
pursuant to any Prospectus and, in each case, forthwith discontinue
dissemination of such Prospectus until such Holder’s or Participating
Broker-Dealer’s receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(k), or until it is advised in writing (the “Advice”)
by the Company and the Subsidiary Guarantors that the use of the applicable
Prospectus may be resumed, and has received copies of any amendments or
supplements thereto and, if so directed by the Company and the Subsidiary
Guarantors, such Holder or Participating Broker-Dealer, as the case may be,
will deliver to the Company all copies, other than permanent file copies, then
in such Holder’s or Participating Broker-Dealer’s possession, of the Prospectus
covering such Registrable Notes current at the time of the receipt of such
notice.  In the event the Company and
the Subsidiary Guarantors shall give any such notice, the Applicable Period
shall be extended by the number of days during such periods from and including
the date of the giving of such notice to and including the date when each
Participating Broker-Dealer shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 6(k) or (y) the
Advice.


 


21

















 


7.                                       Registration
Expenses


 


(a)                                  All fees and expenses incident to
the performance of or compliance with this Agreement by the Company and the
Subsidiary Guarantors shall be borne by the Company and the Subsidiary
Guarantors, whether or not the Exchange Offer or a Shelf Registration is filed
or becomes effective, including, without limitation, (i) all registration and
filing fees, including, without limitation, (A) fees with respect to filings
required to be made with the NASD in connection with any underwritten offering
and (B) fees and expenses of compliance with state securities or Blue Sky laws
as provided in Section 6(h) hereof (including, without limitation,
reasonable fees and disbursements of counsel in connection with Blue Sky
qualifications of the Registrable Notes or Exchange Notes and determination of
the eligibility of the Registrable Notes or Exchange Notes for investment under
the laws of such jurisdictions (x) where the Holders are located, in the case
of the Exchange Notes, or (y) as provided in Section 6(h), in the case of
Registrable Notes or Exchange Notes to be sold by a Participating Broker-Dealer
during the Applicable Period)),
(ii) printing expenses, including, without limitation, expenses of printing
Prospectuses if the printing of Prospectuses is requested by the managing
underwriter or underwriters, if any, or by the Holders of a majority in
aggregate principal amount of the Registrable Notes included in any
Registration Statement or by any Participating Broker-Dealer during the Applicable
Period, as the case may be, (iii) messenger, telephone and delivery expenses
incurred in connection with the performance of their obligations hereunder,
(iv) fees and disbursements of counsel for the Company, the Subsidiary
Guarantors and, subject to 7(b), the Holders, (v) fees and disbursements of all
independent certified public accountants referred to in Section 6 (including,
without limitation, the expenses of any special audit and “cold comfort”
letters required by or incident to such performance), (vi) rating agency
fees and the fees and expenses incurred in connection with the listing of the
Securities to be registered on any securities exchange, (vii) Securities Act liability insurance, if the Company and the
Subsidiary Guarantors desire such insurance, (viii) fees and expenses of all
other Persons retained by the Company and the Subsidiary Guarantors, (ix)
fees and expenses of any “qualified independent underwriter” or other
independent appraiser participating in an offering pursuant to Section 3 of
Schedule E to the By-laws of the NASD, but only where the need for such a
“qualified independent underwriter” arises due to a relationship with the
Company and the Subsidiary Guarantors, (x) internal expenses of the Company and the Subsidiary Guarantors
(including, without limitation, all salaries and expenses of officers and
employees of the Company or the Subsidiary Guarantors performing legal or
accounting duties), (xi) the expense of any annual audit, (xii) the fees and
expenses of the Trustee and the Exchange Agent and (xiii) the expenses relating
to printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, indentures and any other
documents necessary in order to comply with this Agreement.


 


(b)                                 The Company and the Subsidiary
Guarantors shall reimburse the Holders for the reasonable fees and
disbursements of not more than one counsel chosen by the


 


22

















 


Holders of a majority in aggregate principal amount of the
Registrable Notes to be included in any Registration Statement.  The Company and the Subsidiary Guarantors
shall pay all documentary, stamp, transfer or other transactional taxes
attributable to the issuance or delivery of the Exchange Notes or Private
Exchange Notes in exchange for the Notes; provided
that the Company shall not be required to pay taxes payable in respect of any
transfer involved in the issuance or delivery of any Exchange Note or Private
Exchange Note in a name other than that of the Holder of the Note in respect of
which such Exchange Note or Private Exchange Note is being issued.  The Company and the Subsidiary Guarantors
shall reimburse the Holders for fees and expenses (including reasonable fees
and expenses of counsel to the Holders) relating to any enforcement of any
rights of the Holders under this Agreement.


 


8.                                       Indemnification


 


(a)                                  Indemnification by the Company and
the Subsidiary Guarantors.  The Company and the Subsidiary Guarantors
jointly and severally agree to indemnify and hold harmless each Holder of
Registrable Notes, Exchange Notes or Private Exchange Notes and each
Participating Broker-Dealer selling Exchange Notes during the Applicable
Period, each Person, if any, who controls each such Holder (within the meaning
of Section 15 of the Securities Act or Section 20(a) of the Exchange Act) and
the officers, directors and partners of each such Holder, Participating
Broker-Dealer and controlling person, to the fullest extent lawful, from and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable costs of preparation and reasonable attorneys’
fees as provided in this Section 8) and expenses (including, without
limitation, reasonable costs and expenses incurred in connection with
investigating, preparing, pursuing or defending against any of the foregoing)
(collectively, “Losses”), as incurred, directly or indirectly caused by,
related to, based upon, arising out of or in connection with any untrue or alleged
untrue statement of a material fact contained in any Registration Statement,
Prospectus or form of prospectus, or in any amendment or supplement thereto, or
in any preliminary prospectus, or any omission or alleged omission to state
therein a 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, except insofar as such Losses resulted primarily from
information relating to such Holder or Participating Broker-Dealer and
furnished in writing to the Company and the Subsidiary Guarantors (or reviewed
and approved in writing) by such Holder or Participating Broker-Dealer or their
counsel expressly for use therein; provided,
however, that the Company and the
Subsidiary Guarantors will not be liable to any Indemnified Party (as defined
below) under this Section 8 to the extent Losses were solely caused by an
untrue statement or omission or alleged untrue statement or omission that was
contained or made in any preliminary prospectus and corrected in the Prospectus
or any amendment or supplement thereto if (i) the Prospectus does not contain
any other untrue statement or omission or alleged untrue statement or omission
of a material fact that was the subject matter of the related proceeding, (ii)
any such Losses resulted from an action, claim or suit by any


 


23

















 


Person who purchased Registrable Notes or Exchange Notes which are
the subject thereof from such Indemnified Party and (iii) it is established in
the related proceeding that such Indemnified Party failed to deliver or provide
a copy of the Prospectus (as amended or supplemented) to such Person with or
prior to the confirmation of the sale of such Registrable Notes or Exchange
Notes sold to such Person if required by applicable law, unless such failure to
deliver or provide a copy of the Prospectus (as amended or supplemented) was a
result of noncompliance by the Company with Section 6 of this Agreement.  The Company and the Subsidiary Guarantors
also agree to indemnify underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the distribution,
their officers, directors, agents and employees and each Person who controls
such Persons (within the meaning of Section 5 of the Securities Act or Section
20(a) of the Exchange Act) to the same extent as provided above with respect to
the indemnification of the Holders or the Participating Broker-Dealer.


 


(b)                                 Indemnification by Holder. 
In connection with any Registration Statement, Prospectus or form of
prospectus, any amendment or supplement thereto, or any preliminary prospectus
in which a Holder is participating, such Holder shall furnish to the Company
and the Subsidiary Guarantors in writing such information as the Company and
the Subsidiary Guarantors reasonably request for use in connection with any
Registration Statement, Prospectus or form of prospectus, any amendment or
supplement thereto, or any preliminary prospectus and shall indemnify and hold
harmless the Company, the Subsidiary Guarantors, their respective directors and
each Person, if any, who controls the Company and the Subsidiary Guarantors
(within the meaning of Section 15 of the Securities Act and Section 20(a) of
the Exchange Act), and the directors, officers and partners of such controlling
persons, to the fullest extent lawful, from and against all Losses arising out
of or based upon any untrue or alleged untrue statement of a material fact contained
in any Registration Statement, Prospectus or form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading to the extent, but
only to the extent, that such losses are finally judicially determined by a
court of competent jurisdiction in a final, unappealable order to have resulted
primarily from an untrue statement or alleged untrue statement of a material
fact or omission or alleged omission of a material fact contained in or omitted
from any information so furnished in writing by such Holder to the Company and
the Subsidiary Guarantors expressly for use therein.  Notwithstanding the foregoing, in no event shall the liability of
any selling Holder be greater in amount than such Holder’s Maximum Contribution
Amount (as defined below).


 


(c)                                  Conduct of Indemnification
Proceedings.  If any proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the party or parties
from which such indemnity is sought (the “Indemnifying Party” or “Indemnifying


 


24

















 


Parties”, as applicable) in writing; provided,
that the failure to so notify the Indemnifying Parties shall not relieve the
Indemnifying Parties from any obligation or liability except to the extent (but
only to the extent) that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal) that the
Indemnifying Parties have been prejudiced materially by such failure.


 


The Indemnifying
Party shall have the right, exercisable by giving written notice to an
Indemnified Party, within 20 Business Days after receipt of written notice from
such Indemnified Party of such proceeding, to assume, at its expense, the
defense of any such proceeding, provided,
that an Indemnified Party shall have the right to employ separate counsel in
any such proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
parties unless:  (1) the Indemnifying
Party has agreed to pay such fees and expenses; or (2) the Indemnifying Party
shall have failed promptly to assume the defense of such proceeding or shall
have failed to employ counsel reasonably satisfactory to such Indemnified
Party; or (3) the named parties to any such proceeding (including any impleaded
parties) include both such Indemnified Party and the Indemnifying Party or any
of its affiliates or controlling persons, and such Indemnified Party shall have
been advised by counsel that there may be one or more defenses available to
such Indemnified Party that are in addition to, or in conflict with, those
defenses available to the Indemnifying Party or such affiliate or controlling
person (in which case, if such Indemnified Party notifies the Indemnifying
Parties in writing that it elects to employ separate counsel at the expense of
the Indemnifying Parties, the Indemnifying Parties shall not have the right to
assume the defense and the reasonable fees and expenses of such counsel shall
be at the expense of the Indemnifying Party; it being understood, however,
that, the Indemnifying Party shall not, in connection with any one such
proceeding or separate but substantially similar or related proceedings in the
same jurisdiction, arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (together with appropriate local counsel) at any time for
such Indemnified Party).


 


No Indemnifying
Party shall be liable under this Section 8 for any settlement of any
such proceeding effected without its written consent, which shall not be
unreasonably withheld, but if settled with its written consent, or if there be
a final judgment for the plaintiff in any such proceeding, each Indemnifying
Party jointly and severally agrees, subject to the exceptions and limitations
set forth above, to indemnify and hold harmless each Indemnified Party from and
against any and all Losses by reason of such settlement or judgment.  The Indemnifying Party shall not consent to
the entry of any judgment or enter into any settlement that does not include as
an unconditional term thereof the giving by the claimant or plaintiff to each
Indemnified Party of a release, in form and substance reasonably satisfactory
to the Indemnified Party, from all liability in respect of such proceeding for
which such Indemnified Party would be entitled to indemnification hereunder
(whether or not any Indemnified Party is a party thereto).


 


(d)                                 Contribution. 
If the indemnification provided for in this Section 8 is unavailable to
an Indemnified Party or is insufficient to hold such Indemnified Party harmless
for any Losses in respect of which this Section 8 would otherwise apply by its
terms (other than by reason of exceptions provided in this Section 8), then
each applicable Indemnifying Party, in lieu of indemnifying such Indemnified
Party,


 


25

















 


shall have a joint and several obligation to contribute to the
amount paid or payable by such Indemnified Party as a result of such Losses, in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party, on the one hand, and such Indemnified Party, on the other
hand, in connection with the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The
relative fault of such Indemnifying Party, on the one hand, and Indemnified
Party, on the other hand, shall be determined by reference to, among other
things, whether any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by such Indemnifying Party or Indemnified Party, and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent any such statement or omission. 
The amount paid or payable by an Indemnified Party as a result of any
Losses shall be deemed to include any legal or other fees or expenses incurred
by such party in connection with any proceeding, to the extent such party would
have been indemnified for such fees or expenses if the indemnification provided
for in Section 8(a) or 8(b) was available to such party.


 


The parties hereto
agree that it would not be just and equitable if contribution pursuant to this
Section 8(d) were determined by pro rata allocation or by other method of
allocation that does not take account of the equitable considerations referred
to in the immediately preceding paragraph. 
Notwithstanding the provisions of this Section 8(d), a selling Holder
shall not be required to contribute, in the aggregate, any amount in excess of
such Holder’s Maximum Contribution Amount. 
A selling Holder’s “Maximum Contribution Amount” shall equal the
excess of (i) the aggregate proceeds received by such Holder pursuant to the
sale of such Registrable Notes or Exchange Notes over (ii) the aggregate amount
of damages that such Holder has 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. The Holders’ obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective
principal amount of the Registrable Securities held by each Holder hereunder
and not joint.  The Company’s and
Subsidiary Guarantors’ obligations to contribute pursuant to this Section 8(d)
are joint and several.


 


The indemnity and
contribution agreements contained in this Section 8 are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.


 


9.                                       Rules 144 and 144A


 


The Company
covenants that it shall (a) file the reports required to be filed by it (if so
required) 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 written request of any Holder of Registrable Notes, make publicly available
other information necessary to permit sales pursuant to Rule 144 and 144A and
(b) take such further action as any Holder may reasonably request in writing,
all to the extent required from time to time to enable such Holder to sell
Registrable Notes without registration under the Securities Act pursuant to the
exemptions


 


26

















 


provided by Rule 144 and Rule 144A. 
Upon the request of any Holder, the Company shall deliver to such Holder
a written statement as to whether it has complied with such information and
requirements.


 


10.                                 Underwritten
Registrations of Registrable Notes


 


If any of the
Registrable Notes covered by any Shelf Registration is to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will manage the offering will be selected by the Holders of a
majority in aggregate principal amount of such Registrable Notes included in
such offering; provided, however, that such investment banker or
investment bankers and manager or managers must be reasonably acceptable to the
Company.


 


No Holder of
Registrable Notes may participate in any underwritten registration hereunder
unless such Holder (a) agrees to sell such Holder’s Registrable Notes on the
basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents required under the terms of such underwriting arrangements.


 


11.                                 Miscellaneous


 


(a)                                  Remedies.
In the event of a breach by either the Company or any of the Subsidiary
Guarantors of any of their respective obligations under this Agreement, each
Holder, in addition to being entitled to exercise all rights provided herein,
in the Indenture or, in the case of the Initial Purchaser, in the Purchase Agreement,
or granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement.  The Company and the Subsidiary Guarantors agree that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by either the Company or any of the Subsidiary Guarantors of any of the
provisions of this Agreement and hereby further agree that, in the event of any
action for specific performance in respect of such breach, the Company shall (and shall cause each Subsidiary
Guarantor to) waive the defense that a remedy at law would be adequate.


 


(b)                                 No Inconsistent Agreements. 
The Company and each of the Subsidiary Guarantors have not entered, as
of the date hereof, and the Company and each of the Subsidiary Guarantors shall
not enter, after the date of this Agreement, into any agreement with respect to
any of its securities that is inconsistent with the rights granted to the
Holders of Securities in this Agreement or otherwise conflicts with the
provisions hereof.  The Company and each
of the Subsidiary Guarantors have not entered and will not enter into any
agreement with respect to any of its securities that will grant to any Person
piggy-back rights with respect to a Registration Statement.


 


27

















 


(c)                                  Adjustments Affecting Registrable
Notes.  The Company shall not, directly or
indirectly, take any action with respect to the Registrable Notes as a class
that would adversely affect the ability of the Holders to include such
Registrable Notes in a registration undertaken pursuant to this Agreement.


 


(d)                                 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, otherwise than with the prior written consent of the Holders
of not less than a majority in aggregate principal amount of the then
outstanding Registrable Notes in circumstances that would adversely affect any
Holders of Registrable Notes; provided,
however, that Section 8 and this
Section 11(d) may not be amended, modified or supplemented without the prior
written consent of each Holder. 
Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders of Registrable Notes whose securities are being tendered
pursuant to the Exchange Offer or sold pursuant to a Notes Registration
Statement and that does not directly or indirectly affect, impair, limit or
compromise the rights of other Holders of Registrable Notes may be given by
Holders of at least a majority in aggregate principal amount of the Registrable
Notes being tendered or being sold by such Holders pursuant to such Notes
Registration Statement.


 


(e)                                  Notices. 
All notices and other communications provided for or permitted hereunder
shall be made in writing by hand delivery, registered first-class mail,
next-day air courier or telecopier:


 


(i)                                     if to a Holder of Securities or to
any Participating Broker-Dealer, at the most current address of such Holder or
Participating Broker-Dealer, as the case may be, set forth on the records of
the registrar of the Notes, with a copy in like manner to the Initial Purchaser
as follows:


 


Jefferies & Company, Inc.

11100 Santa Monica Boulevard

10th Floor

Los Angeles, California  90025

Attention:  Jerry M. Gluck, Esq.


 


with a copy to:


 


Mayer, Brown, Rowe & Maw LLP

1675 Broadway

New York, New York  10019

Facsimile No.:  (212) 262-1910

Attention:  Ronald S. Brody, Esq.


 


(ii)                                  if to the Initial Purchaser, at the
address specified in Section 11(e)(1);


 


(iii)                               if to the Company or any Subsidiary
Guarantor, as follows:


 


28

















 


Atlantic Express Transportation Corp.

7 North Street

Staten Island, New York  10451

Attention:  Chief Executive Officer


 


with a copy to:


 


Latham & Watkins LLP

885 Third Avenue

Suite 1000

New York, New York  10022

Attention:  Robert A. Zuccaro, Esq.


 


All such notices
and communications shall be deemed to have been duly given:  when delivered by hand, if personally
delivered; five business days after being deposited in the United States mail,
postage prepaid, if mailed, one business day after being deposited in the
United States mail, postage prepaid, if mailed; one business day after being
timely delivered to a next-day air courier guaranteeing overnight delivery; and
when receipt is acknowledged by the addressee, if telecopied.


 


Copies of all such
notices, demands or other communications shall be concurrently delivered by the
Person giving the same to the Trustee under the Indenture at the address
specified in such Indenture.


 


(f)                                    Successors and Assigns. 
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto, including, without
limitation and without the need for an express assignment, subsequent Holders
of Securities.


 


(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 CONFLICT OF
LAW.  THE COMPANY HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE
BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY
ACCEPTS FOR ITS AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
JURISDICTION OF


 


29

















 


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


 


(j)                                     Severability. 
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties hereto shall
use reasonably best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction.  It
is hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.


 


(k)                                  Securities Held by the Company or
Its Affiliates.  Whenever the consent or approval of Holders
of a specified percentage of Securities is required hereunder, Securities held
by the Company or its affiliates (as such term is defined in Rule 405 under the
Securities Act) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.


 


(l)                                     Third Party Beneficiaries. 
Holders and Participating Broker-Dealers are intended third party
beneficiaries of this Agreement and this Agreement may be enforced by such
Persons.


 


(m)                               Entire Agreement. 
This Agreement, together with the Purchase Agreement, the Indenture and
the Security Documents, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein and therein and any and all prior oral
or written agreements, representations, or warranties, contracts,


 


30

















 


understanding, correspondence, conversations and memoranda between
the Initial Purchaser on the one hand and the Company and the Subsidiary
Guarantors on the other, or between or among any agents, representatives,
parents, subsidiaries, affiliates, predecessors in interest or successors in
interest with respect to the subject matter hereof and thereof are merged
herein and replaced hereby.


 


31

















 


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

  
	
   

  	
   

  	
   

  
	
   

  	
  Each of the
  following entities, as Subsidiary

  
	
   

  	
  Guarantors:

  
	
   

  	
   

  	
   

  
	
   

  	
  180 JAMAICA
  CORP.

  
	
   

  	
  201 WEST SOTELLO
  REALTY, INC.

  
	
   

  	
  AIRPORT
  SERVICES, INC.

  
	
   

  	
  AMBOY BUS
  CO., INC.

  
	
   

  	
  ATLANTIC
  EXPRESS COACHWAYS, INC.

  
	
   

  	
  ATLANTIC
  EXPRESS NEW ENGLAND, INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF CALIFORNIA, INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF ILLINOIS, INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF L.A. INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF MISSOURI INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF NEW JERSEY, INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF PENNSYLVANIA, INC.

  
	
   

  	
  ATLANTIC
  EXPRESS OF SOUTH CAROLINA, INC.

  
	
   

  	
  ATLANTIC
  PARATRANS OF ARIZONA, INC.

  
	
   

  	
  ATLANTIC
  PARATRANS OF NYC, INC.

  
	
   

  	
  ATLANTIC
  PARATRANS OF PENNSYLVANIA, INC.

  
	
   

  	
  ATLANTIC
  PARATRANS, INC.

  
	
   

  	
  ATLANTIC
  QUEENS BUS CORP.

  
	
   

  	
  ATLANTIC
  TRANSIT, CORP.

  



 


32

















 


	
   

  	
  ATLANTIC-CHITTENANGO
  REAL PROPERTY CORP.

  
	
   

  	
  ATLANTIC-CONN.
  TRANSIT, INC.

  
	
   

  	
  ATLANTIC-HUDSON,
  INC.

  
	
   

  	
  BLOCK 7932, INC.

  
	
   

  	
  BROOKFIELD
  TRANSIT INC.

  
	
   

  	
  CENTRAL NEW
  YORK REORGANIZATION CORP.

  
	
   

  	
  COURTESY BUS
  CO., INC.

  
	
   

  	
  FIORE BUS
  SERVICE, INC.

  
	
   

  	
  GROOM
  TRANSPORTATION, INC.

  
	
   

  	
  GVD LEASING
  CO., INC.

  
	
   

  	
  JAMES
  MCCARTY LIMO SERVICE, INC.

  
	
   

  	
  JERSEY BUS
  SALES, INC.

  
	
   

  	
  JERSEY
  BUSINESS LAND CO., INC.

  
	
   

  	
  K. CORR,
  INC.

  
	
   

  	
  MCINTIRE
  TRANSPORTATION, INC.

  
	
   

  	
  MERIT
  TRANSPORTATION CORP.

  
	
   

  	
  METRO
  AFFILIATES, INC.

  
	
   

  	
  METROPOLITAN
  ESCORT SERVICE, INC.

  
	
   

  	
  MIDWAY
  LEASING INC.

  
	
   

  	
  MOUNTAIN
  TRANSIT, INC.

  
	
   

  	
  R. FIORE BUS
  SERVICE, INC.

  
	
   

  	
  RAYBERN BUS
  SERVICE, INC.

  
	
   

  	
  RAYBERN
  CAPITAL CORP.

  
	
   

  	
  RAYBERN
  EQUITY CORP.

  
	
   

  	
  ROBERT L.
  MCCARTHY & SON, INC.

  
	
   

  	
  STATEN
  ISLAND BUS, INC.

  
	
   

  	
  TEMPORARY
  TRANSIT SERVICE, INC.

  
	
   

  	
  T-NT BUS
  SERVICE, INC.

  
	
   

  	
  TRANSCOMM,
  INC.

  
	
   

  	
  WINSALE,
  INC.

  
	
   

  	
  WRIGHTHOLM
  BUS LINE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOMENIC
  GATTO

  	
   

  
	
   

  	
   

  	
  Name:
  Domenic Gatto

  
	
   

  	
   

  	
  Title: Chief
  Officer of each of

  the above named Subsidiary Guarantors

  



 


33

















 


	
   

  	
  ACCEPTED AND
  AGREED TO:

  
	
   

  	
   

  
	
   

  	
  JEFFERIES
  & COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ RICHARD
  A. GOLDBERG

  	
   

  
	
   

  	
  Name:
  Richard A. Goldberg

  
	
   

  	
  Title:   Managing Director

  



 


34