Exhibit
10.5


 


EMPLOYMENT AGREEMENT


 


EMPLOYMENT AGREEMENT
dated as of September 2, 2003 (the “Agreement”) among Atlantic Express
Transportation Group Inc., a New York corporation (“Group”), Atlantic Express
Transportation Corp., a New York corporation (the “Company”), and Neil J.
Abitabilo (the “Executive”).


 


WHEREAS, the Company
desires to employ the Executive as its Director of Finance and in such other
capacities as the Company and the Executive may agree from time to time.


 


NOW, THEREFORE, in
consideration of the foregoing and the respective covenants and agreements
hereinafter set forth and for other good and valuable consideration, the
Company, Group and the Executive hereby agree as follows:


 


1.                                       EMPLOYMENT
AND DUTIES


 


1.1.                              General.
The Company hereby employs the Executive, and the Executive agrees to serve, as
Director of Finance of the Company, upon the terms and conditions herein
contained during the Employment Term, and in such capacity the Executive agrees
to serve the Company faithfully and to the best of his ability.  During the Employment Term, the Executive
also agrees to serve, if requested by the Company, at no compensation in
addition to that provided for in this Agreement, in the position of Director of
Finance of Group and as an officer of the Company or Group and of any
subsidiary of Group or the Company.


 


1.2.                              Exclusive
Services. For so long as the Executive is employed by the Company, he shall
devote his full-time working hours to his duties hereunder. The Executive shall
not, directly or indirectly, render services to any other person or
organization for which he receives compensation or otherwise engage in
activities which would interfere with his faithful performance of his duties
hereunder.  Notwithstanding the
foregoing, the Executive may serve as a member of board of directors of and may
provide consultation services for third parties, provided, that such services
shall not interfere with the performance of Executive’s duties hereunder and further,
provided, that such third parties do not engage in any business in
competition with any business conducted by Group, the Company or their
respective subsidiaries.


 


1.3.                              Term
of Employment. The Executive’s employment under this Agreement shall
commence as of the date hereof (the “Effective Date”) and shall continue at the
will of the Company.  The Company shall
have the right to terminate the employment of the Executive at any time with or
without cause or reason.  Such period of
Executive’s employment under this Agreement shall be referred to herein as the
“Employment Term.”


 


2.                                       SALARY


 


2.1.                              Base
Salary.   (a)        From the Effective Date, the Executive shall be


 

















 


entitled to receive a
base salary (“Base Salary”) at a rate of $225,000 per annum, payable in arrears
in equal installments in accordance with the Company’s payroll practices, with
such increases as may be provided in accordance with the terms hereof. Once
increased, such higher amount shall constitute the Executive’s annual Base
Salary.


 


(b)                                 Commencing
January 1, 2004, the Base Salary shall be increased to $250,000 per annum.


 


(c)                                  Commencing
May 1, 2004, the Base Salary shall be increased to $275,000 per annum.


 


(d)                                 Commencing  September 1, 2004, the Base Salary
shall be increased  to $300,000 per
annum.


 


(e)                                  Notwithstanding
anything set forth in this Section 2.1 which may be to the contrary, in
the event that prior to September 1, 2004, the Executive shall be
appointed as Chief Financial Officer of the Company or Group, the Base Salary
shall be increased as of the date of such appointment to $300,000 per annum,
and in such event Subsections (b), (c) or (d) as the case may be shall be of no
further force or effect.


 


(f)                                    Commencing
November 1, 2005 and each anniversary date thereof during the Employment
Term, the Base Salary shall be increased by a percentage which shall equal the
percentage increase in the consumer price index for the New York-Northern New
Jersey-Long Island, NY-NJ-CT metropolitan area, as reported by the United
States Department of Labor, for the immediately preceding 12-month period, provided,
such annual increase pursuant to this subparagraph (f) shall not be less than
3% and not greater than 5%.


 


2.2                                 Deferred
Compensation Plan.   The Executive
shall be entitled to participate in the Company’s senior executive deferred compensation
plan whereby the Executive will receive deferred compensation after the end of
each calendar year of the Company, providing the Executive remains an employee
of the Company through the end of such calendar year, in an amount equal to
five (5%) percent of the Base Salary paid to the Executive during the prior
calendar year.


 


2.3                                 Bonus.   The Executive shall be entitled participate
in a senior bonus pool established for senior executives of the Company, other
than the Chief Executive Officer of the Company, the amount of which
participation shall be determined and shall be subject to the sole and
exclusive determination of the Company.


 


3.                                       EMPLOYEE
BENEFITS


 


3.1.                              General
Benefits. The Executive shall receive the following benefits during the
Employment Term:


 


(a)  the Executive, his spouse
and minor children will be eligible to participate in benefit and health
insurance programs of the Company consistent with those benefit programs


 


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provided from time to time to other senior executives of the Company;


 


(b)   an automobile allowance of $500 per month
commencing September 1, 2003, which allowance shall be increased to $750
per month commencing February 1, 2004 and thereafter increased to $1,000
per month commencing February 1, 2005;


 


(c)   a life insurance policy for term life
insurance in the amount of $100,000 provided in accordance with the Company’s
benefit plan for its senior executives and any disability insurance benefits
which the Company may provide in any future plan adopted for its senior
executives.


 


3.2.                              Vacation.  The Executive shall be entitled to (a) 10
days paid vacation for the fiscal year ending June 2004; (b) 15 days paid
vacation for each of the fiscal years ending June 30, 2005 and
June 30, 2006; and (c) thereafter 20 days paid vacation for each fiscal
year thereafter in accordance with the applicable policies of the Company.


 


3.3.                              Reimbursement
of Expenses.    The Company will
reimburse the Executive for reasonable, ordinary and necessary business
expenses incurred by him in the fulfillment of his duties hereunder (including
but not limited to expenses relating to telephone, cellular phone, computer
access during travel, facsimile, parking, hotel accommodations, meals and/or air
fare) upon presentation by the Executive of an itemized account of such
expenditures in accordance with the Company practices consistently applied.


 


4.                                       TERMINATION
OF EMPLOYMENT


 


4.1.1.                     General.
(a)  If the Executive’s employment is
terminated by the Company for Cause, the Executive shall be entitled only to
his accrued but unpaid Base Salary through and including the date of
termination (“Accrued Base Salary”);


 


(b)                                 If
the Executive is terminated by the Company (or any successor in interest to the
Company) Without Cause, the Executive shall be entitled only to (i) his Accrued
Base Salary through and including the date of termination; and (ii) a severance
payment (“Severance Payment”) equal to one month Base Salary, provided if such
termination occurs after January 1, 2004, the Severance Payment shall
equal a total of three months Base Salary, and if such termination occurs after
September 1, 2004 the Severance Payment shall equal a total of six months
Base Salary.  In the event of
termination Without Cause prior to September 1, 2005, which termination
occurs within ninety days following (i) a filing by the Company of a voluntary
petition for bankruptcy protection under the United States Bankruptcy Code; or
(ii) a Change of Control, the Executive shall receive an additional Severance
Payment equal to three months of his Base Salary.  The term “Change of Control” shall mean (A) transfer of all or
substantially all of the assets of the Company to one or more persons, other
than an affiliate of the Company, the majority shareholder of Group (such
majority owners to be determined as of the date immediately following the
effective date of the Company’s plan of reorganization by the United States
Bankruptcy Court) (the “Majority Holder”) or an affiliate of the Majority
Holder; (B) the acquisition by any person or persons, other than an affiliate
of the Company, the Majority Holder or an affiliate of the Majority Holder, of
ownership of


 


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more than 50% of the
aggregate ordinary voting power of the total capital stock of the Company, or
(C) any merger, recapitalization, reorganization or other similar event having
substantially the same result as described in the preceding clauses (A) or (B).


 


(c)                                  If
the Executive resigns from his employment hereunder, or in the event of the
death of the Executive or disability of the Executive which prevents him from
performing the usual and customary duties of his employment hereunder for a
period in excess of 45 days, the Executive (or his estate) shall be entitled
only to payment of his Accrued Base Salary, if any, as of the date of such
resignation, death or disability.


 


(d)                                 Except
as otherwise provided herein, the Executive shall have no further right to
receive any other compensation, or to participate in any other plan,
arrangement, or benefit, after any termination or resignation of employment,
subject to the terms of such plans or arrangements.


 


4.1.2.                     Date of
Termination. The date of termination shall be the date of the written notice
of termination provided by the Company. 
The date of resignation shall be the date specified in the written
notice of resignation from the Executive to the Company, or such earlier date
following such notice as the Company may designate.


 


4.1.3.                     Notice of
Termination for Cause. Termination of the Executive’s employment by the
Company for Cause shall be effected by delivery of a written notice of
termination from the Company to the Executive, which notice shall specify the
event or events set  forth in Section 4.2
giving rise to such termination.


 


4.1.4.                     Notice of
Termination Without Cause. Termination of the Executive’s employment for a
Termination Without Cause shall be effected by written notice of termination
from the Company to the Executive, specifying a termination date.


 


4.2.                              Termination
for Cause. Termination for “Cause” shall mean termination by the Company of
the Executive’s employment because the Executive (a) admits to, has been
convicted of or has entered into a plea of nolo contendere to a crime punishable by
imprisonment for more than one year, (b) has materially failed to perform the
normal and customary duties required of his position of employment, such as
willful insubordination, habitual absence from work or habitual insobriety or
drug addiction, or (c) has engaged in fraudulent or illegal conduct in
connection with his employment.


 


4.3.                              Termination
Without Cause. “Termination Without Cause” shall mean any termination by
the Company of the Executive’s employment at any time during the Employment
Term for any reason other than Cause, death or disability.


 


5.                                       Intentionally
Omitted


 


6.                                       NONCOMPETITION/NONSOLICITATION
AND CONFIDENTIALITY


 


6.1.                              Noncompetition/Nonsolicitation.
The Executive shall not, directly or indirectly,


 


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as a sole proprietor,
member of a partnership, stockholder or investor, officer or director of a
corporation, or as an employee, associate, consultant or agent of any person,
partnership, corporation or other business organization or entity other than
the Company: (a) engage in, or acquire 
an interest in any entity or enterprise which engages in, any business
that is in competition with any business actively conducted by Group, the Company
or any of their respective subsidiaries within (i) the counties then served by
Group, the Company or their respective subsidiaries as well as adjacent
counties, and (ii) any other counties in which Group, the Company or their
respective subsidiaries has made a bid within 36 months prior to the
Executive’s termination and any adjacent counties in which Group, the Company
or their respective subsidiaries conducts business; (b) solicit or endeavor to
entice away from Group, the Company or any of their respective subsidiaries any
person who is, or was during the then most recent 36-month period, employed by
or associated with Group, the Company or any of their respective subsidiaries,
or (c) solicit or endeavor to entice away from Group, the Company or any of
their respective subsidiaries, or otherwise interfere with the business
relationship of Group, the Company or any of their respective subsidiaries
with, any person or entity who is, or was within the then most recent 36-month
period, a customer, client or prospect of Group, the Company or any of their
respective subsidiaries. The obligations of this Section 6.1 shall apply
for a period of 6 months following termination of employment; as well as during
employment and shall be extended by a period of time equal to any period during
which the Executive shall be in breach of such obligations.


 


6.2.                              Confidentiality.
The Executive covenants and agrees with the Company that he will not at any
time, except in performance of his obligations to the Company hereunder or with
the prior written consent of the Company, directly or indirectly, disclose any
secret or confidential information that he may learn or has learned by reason
of his association with Group, the Company or any of their respective
subsidiaries and affiliates. The term “confidential information” includes
information not previously disclosed to the public or to the trade by the
Company’s or Group’s management, or otherwise in the public domain, with
respect to the Company’s or Group’s or any of their respective affiliates’ or
subsidiaries’ products, services, facilities, applications and methods, trade
secrets and other intellectual property, systems, procedures, manuals,
confidential reports, product or service price lists, customer lists, technical
information, financial information (including the revenues, costs or profits
associated with any of the Company’s or Group’s products), business plans,
prospects or opportunities.


 


6.3.                              Exclusive
Property. The Executive confirms that all confidential information is and
shall remain the exclusive property of Group and the Company. All business
records, papers and documents kept or made by the Executive relating to the
business of Group, the Company or their respective subsidiaries shall be and
remain the property of Group and the Company.


 


6.4.                              Injunctive
Relief. Without intending to limit the remedies available to Group and the
Company, the Executive acknowledges that a breach of any of the covenants
contained in this Section 6 may result in material and irreparable injury
to Group, the Company or their respective affiliates or subsidiaries for which
there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of such a breach or
threat thereof, Group and the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining the
Executive from engaging in activities prohibited by this


 


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Section 6 or such
other relief as may be required specifically to enforce any of the covenants in
this Section 6. If for any reason a final decision of any court determines
that the restrictions under this Section 6 are not reasonable or that
consideration therefor is inadequate, such restrictions shall be interpreted,
modified or rewritten by such court to include as much of the duration and
scope identified in this Section 6 as will render such restrictions valid
and enforceable.


 


7.                                       Intentionally
Omitted


 


8.                                       MISCELLANEOUS


 


8.1.                              Notices.
All notices or communications hereunder shall be in writing and shall be deemed
to have been duly given when received if personally delivered; the day after it
is sent, if sent for next day delivery by a recognized overnight delivery
service; or upon receipt, if sent by certified or registered mail, return
receipt requested, addressed as follows:


 


To the Company or Group,
to it at:


 


Atlantic Express
Transportation Corp.


7 North Street


Staten Island, NY 10302


Attention: Chief
Executive Officer


 


with a copy to each of:


 


GSCP III Holdings (AE),
LLC


c/o Greenwich Street
Capital Partners, Inc.


388 Greenwich Street, 36th
Floor


New York, NY 10013


Attention: Sanjay Patel


 


and:


 


Silverman Sclar Shin
& Byrne P.C.


381 Park Avenue South,
Suite 1601


New York, NY 10016


Attention: Peter R.
Silverman


 


To the Executive:


 


Neil J. Abitabilo


36 Bradford Road


East Windsor, NJ  08520


 


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with copy to:


 


Genova Burns and Vernoia


354 Eisenhower Parkway


Plaza 2


Suite 2575


Livingston, NJ  07039


Attn:  Frank Vernoia, Esq.


 


Any such notice or
communication shall be sent certified or registered mail, return receipt
requested, addressed as above (or to such other address as such party may
designate in writing from time to time), and the actual date of receipt shall
determine the time at which notice was given.


 


8.2.                              Severability.
If a court of competent jurisdiction determines that any term or provision
hereof is invalid or unenforceable, (a) the remaining terms and provisions
hereof shall be unimpaired and (b) such court shall have the authority to
replace such invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing
the intention of the invalid or unenforceable term or provision.


 


8.3.                              Assignment.
This Agreement shall inure to the benefit of the heirs and representatives of
the Executive and the assigns and successors of the Company, but neither this
Agreement nor any rights hereunder shall be assignable or otherwise subject to
hypothecation by the Executive. Each of Group and the Company may assign this
Agreement without prior written approval of the Executive upon the transfer of
all or substantially all of its business and/or assets (whether by purchase,
merger, consolidation or otherwise), provided that the successor to such
business and/or assets shall expressly assume and agree to perform this
Agreement.


 


8.4.                              Entire
Agreement; Amendment. This Agreement represents the entire agreement of the
parties with respect to the subject matter hereof and shall supersede any and
all previous contracts, arrangements or understandings between or among Group,
the Company and the Executive, including the Prior Agreement. The Agreement may
be amended at any time by mutual written agreement of the parties hereto.


 


8.5.                              Withholding.
The Company shall be entitled to withhold, or cause to be withheld, from
payment any amount of withholding taxes required by law with respect to
payments made to the Executive in connection with his employment hereunder.


 


8.6.                              Governing
Law. This Agreement shall be construed, interpreted, and  governed in accordance with the laws of the
State of New York without reference to principles of conflict of laws.


 


8.7.                              Survival.
Article 4 (relating to early termination), Article 6 (relating to
noncompetition, nonsolicitation and confidentiality) and Section 8.6
(relating to governing law) shall survive the termination hereof.


 


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8.8.                              Headings.
Headings to sections in this Agreement are for the convenience of the parties
only and are not intended to be a part of or to affect the meaning or
interpretation hereof.


 


8.9.                              Binding
effect.   This Agreement shall be
binding upon the parties hereto, their successors in interest, and in the case
of the Executive, upon his heirs, executors or administrators.


 


8.10.                        Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed
an original but all of which together shall constitute one and the same instrument.


 


IN WITNESS WHEREOF, the
Company and Group have caused this Agreement to be duly executed by their
authorized representatives and the Executive has hereunto set his hand, in each
case effective as of the day and year first above written.


 


	
   

  	
  ATLANTIC EXPRESS

  
	
   

  	
  TRANSPORTATION GROUP
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOMENIC GATTO

  	
   

  
	
   

  	
   

  	
  Name: Domenic Gatto

  
	
   

  	
   

  	
  Title:   Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  ATLANTIC EXPRESS

  
	
   

  	
  TRANSPORTATION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOMENIC GATTO

  	
   

  
	
   

  	
   

  	
  Name: Domenic Gatto

  
	
   

  	
   

  	
  Title:   Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
  /s/ NEIL J. ABITABILO

  	
   

  
	
   

  	
  Neil J. Abitabilo

  



 


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