Unassociated Document


    


    Exhibit
10.2

     

    SIXTH
AMENDED AND RESTATED

    EMPLOYMENT
AGREEMENT

    


    SIXTH
AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of December 16, 2008 (the
“Agreement”)
among Atlantic Express Transportation Group Inc., a New York corporation (“Group”), Atlantic
Express Transportation Corp., a New York corporation (the “Company”), and Nathan
Schlenker (the “Executive”).

    


    WHEREAS,
the Executive is presently employed by the Company, a wholly owned subsidiary of
Group, under the Fifth Amended and Restated Employment Agreement dated as of
April 18, 2007, as amended (the “Prior
Agreement”);

    


    WHEREAS,
in order to comply with Section 409A of the Internal Revenue Code of 1986, as
amended, and the Department of Treasury Regulations and other interpretive
guidance promulgated thereunder (collectively, “Section 409A”), the
Company, Group and the Executive desire to amend and restate the terms and
provisions of the Prior Agreement to, among other things, set forth the terms of
the Executive’s continued employment.

    


    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 to amend and restate the Prior
Agreement in its entirety, as follows:

    


    1. EMPLOYMENT AND
DUTIES

    


    1.1.
General. The
Company hereby employs the Executive, and the Executive agrees to serve, as
Chief Financial Officer of the Company, upon the terms and conditions herein
contained during the Employment Term (as defined below), and in such capacity
the Executive agrees to serve the Company faithfully and to the best of his
ability under the direction of the Board of Directors (the “Board”).

    


    1.2.
Exclusive
Services. During the Employment Term, the Executive shall devote his
full-time working hours to his duties hereunder and shall not, directly or
indirectly, render services to any other person or organization or otherwise
engage in activities which would interfere significantly with his faithful
performance of his duties hereunder without the consent of the Board, provided,
however, the Executive may work one day a week from his home office in Palaline
Bridge, New York.

    


    1.3.
Term of
Employment. The “Employment Term” of
Executive’s employment under this Agreement shall commence as of the date hereof
(the “Commencement
Date”) and shall terminate on December 31, 2008, subject to renewal in
accordance with Section 1.4.

    


    1.4.  Renewal of Employment
Term.  Unless the Company has provided the Executive with a
written notice at least sixty days prior to December 31, 2008 of its intent not
to extend the Employment Term (the “Termination Notice”), the Employment Term
shall be renewed and extended automatically for a further period of one year on
January 1, 2009, and such extended term shall thereafter be further extended for
successive one year periods unless a Termination Notice is given to the
Executive at least sixty days prior to the next successive December
31.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    1.5  Consulting
Services.  Upon expiration and non-renewal of the Employment
Term, the Company shall retain the Executive for a period of six months (the
“Consulting
Term”) as a consultant.  During the Consulting Term, the
Executive shall provide such consulting services, at such times as may be
reasonably be requested by the Company; provided, that the Executive may do so
primarily through telephone contact with the Company and shall not be required
to travel from his residence to perform such services or to provide services in
excess of 10 hours per month.  During the Consulting Term, the
Executive shall be entitled to six months of his Base Salary (the “Consulting
Compensation”), payable monthly on or about the 15th day of each month in
equal installments in accordance with the Company’s payroll practices as in
effect at the end of the Employment Term.  The Company shall not have
any obligation to retain the Executive as a consultant if the Executive’s
employment is terminated (i) by the Company for Cause, or (ii) by the Executive
without Good Reason.  In the event of termination of the Executive’s
employment or of the Consulting Term due to death of the Executive, the
Executive’s estate shall be entitled to receive any unpaid portion of the
Consulting Compensation payable in a lump sum upon such
termination.

    


    2.    SALARY

    


    2.1.
Base Salary.
From the Commencement Date, the Executive shall be entitled to receive a base
salary (“Base
Salary”) at a rate of $345,909 per annum, payable monthly on or about the
15th day of each month 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.

    


    2.2  Increase in Base
Salary.  On November 1 of each year during the Employment Term,
the Executive’s Base Salary shall be increased by a percentage which shall equal
the greater of 3% or 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 12-month period ended
the immediately preceding October 31.

    


    2.3  Exit
Bonus.  (a) Upon the occurrence of a Change of Control at any
time during or after the termination of the Executive’s employment, the Company
shall pay to the Executive a bonus (“Exit
Bonus”)  which shall be equal to the Fair Market Value (as of
the date of such Change of Control) of 0.5% of all of the Company’s outstanding
common stock (on a fully diluted basis) immediately preceding such Change of
Control (such percentage being referred to herein as the “Base Amount”);
provided, the Base Amount shall be increased to 1.0% in the event that the
transaction resulting in the Change of Control is based upon an aggregate Fair
Market Value of all of the Company’s outstanding common stock (on a fully
diluted basis) equal to or in excess of $50,000,000 and 1.5% in the event such
Fair Market Value is equal to or exceeds $70,000,000; further, provided, the
Exit Bonus to be paid to the Executive upon a Change of Control shall be reduced
by an amount equal to (i) the Fair Market Value of all of the Company’s
outstanding common stock as of the date of such Change of Control, multiplied by
(ii) a fraction, the numerator of which shall be the aggregate number of Group
Common Shares (as defined below) sold, transferred or otherwise disposed of by
GSC Group (as defined below) prior to such Change of Control and the denominator
of which shall be 107,593, multiplied by (iii) the applicable Base Amount as
determined in accordance with this Section 2.3(a) as of the date of such Change
of Control.  Except as provided in Section 2.3(b), the Exit Bonus
shall be payable in the same form of consideration and at the same time as
received by the shareholders of either Group or the Company upon such Change of
Control.

     

    
      
         

      

      
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    (b) In
the event the Company or Group during the Employment Term and prior to a Change
of Control, shall adopt a stock option or restricted stock purchase or similar
plan, the Executive within thirty (30) days following written notice of the
adoption of such a plan, shall have the right, by delivery of written notice to
the Company, to participate in such plan and to receive such number of shares or
options, in substitution and in place of the Exit Bonus, as would be equivalent
to the Base Amount as of the date of such participation in such plan by the
Executive, provided that any such plan shall require that the timing of payments
under such plan shall match the timing of the Exit Bonus payments that otherwise
would have occurred, or shall contain such other or additional provisions as
shall cause payments under the plan and this Section 2.3 to satisfy Section
409A.

    


    (c)  (i)
Subject to paragraph (ii), in the event prior to the occurrence of a Change of
Control, GSCP II Holdings (AE), LLC or any of its affiliates (collectively, the
“GSC Group”)
sells, transfers or otherwise disposes of any of the shares (the “Group Common Shares”)
of common stock of Group it beneficially owns as of the date hereof and
excluding any shares of common stock of Group the GSC Group may acquire after
the date hereof (a “Disposition Event”),
the Executive shall be entitled to a portion of his Exit Bonus equal to (A) the
Fair Market Value of all of the Company’s outstanding common (on a fully diluted
basis) as of the date of such Disposition Event, multiplied by (B) a fraction,
the numerator of which shall be the number of Group Common Shares sold,
transferred or otherwise disposed of in such transaction and the denominator of
which shall be 107,593, multiplied by (C) the applicable Base Amount as
determined in accordance with Section 2.3(a) as of the date of such Disposition
Event. Except as provided in Section 2.3(b) and paragraph (ii), the portion of
the Exit Bonus payable upon a Disposition Event shall be payable in the same
form of consideration and at the same time as received by the GSC Group upon
such Disposition Event.

    


    (ii)
Subject to the Executive’s election to substitute the Exit Bonus as set forth in
Section 2.3(b), the payment described in paragraph (i) shall be made in a lump
sum in the same form of consideration as received, as applicable, by the GSC
Group or by the shareholders of either Group or the Company (A) upon the closing
of the Disposition Event if (x) such closing occurs within ten years of the date
hereof and (y) such payment would be a “short-term” deferral within the meaning
of Treas. Reg. Sec. 1.409A-1(b)(4), or otherwise (B) upon the happening of the
next following Change in Control; provided that if it is not possible to pay
such Exit Bonus in such same form, such Exit Bonus shall be paid in a cash lump
sum.

     

    
      
         

      

      
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    2.4  Definitions.   (a)
Change of
Control shall mean (i) the transfer (in one transaction or a series of
transactions) of all or substantially all of the assets of Group or the Company
to any person or group (as such term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)); (ii)
the liquidation or dissolution of Group or the  Company or the
adoption of a plan by the stockholders of Group or the Company relating to the
dissolution or liquidation of either Group or the Company; or (iii) the
acquisition by any person or group (as such term is used in Section 13(d)(3) of
the Exchange Act), except for by the GSCP Group of beneficial ownership,
directly or indirectly, of more than 50% of the aggregate ordinary voting power
of Group or the Company;

    


    (b)  Fair Market Value of
the Company’s common stock shall mean the value of the Company’s common stock as
specified in accordance with any transaction resulting in a Change of Control or
Disposition Event, as the case may be, or if no specific value is specified in
such transaction, the value of the Company’s common stock as reasonably
determined by the Board (provided, in the
event the Executive disagrees with the value determined by the Board, as
determined by a nationally recognized independent investment banking or
accounting firm reasonably acceptable to the Company and the Executive), in
either case without control premiums or minority discounts.

    


    3.  EMPLOYEE
BENEFITS

    


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

    


    (a) the
Executive will be eligible to participate in benefit programs of the Company
consistent with those benefit programs provided from time to time to other
senior executives of the Company;

    


     

    (b)           an
annual life insurance premium allowance of $2,500 payable annually in February
of each year;

     

    


    (c)           an
automobile allowance of $250 per month and the exclusive use of a company
car;

    


    (d)           a
travel allowance not to exceed $15,000 annually, which is paid on or before the
15th
day of the third month of the calendar year following the calendar year to which
such allowance relates; and

    


    (e)           participation
in any executive incentive plan which might be implemented by the Board during
the Employment Term.

    


    3.2.
Vacation.
During the Employment Term, the Executive shall be entitled to 20 days paid
vacation each year in accordance with the applicable policies of the
Company.

     

    
      
         

      

      
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    3.3.
Reimbursement of
Expenses.    The Company, subject to Section 9.2(e),
will reimburse the Executive for reasonable, ordinary and necessary business
expenses incurred by him in the fulfillment of his duties hereunder upon
presentation by the Executive of an itemized account of such expenditures in
accordance with the Company practices consistently applied.

    


    3.4.
Consulting Term
Benefits.  Subject to Section 9.2(b), during the Consulting
Term, the Company shall provide, without charge, the Executive with medical
coverage under the same terms as medical coverage offered to other senior
executives of the Company.

    


    3.5.
Benefits upon
Termination. Subject to Section 9.2(b), upon the termination of the
Executive’s employment and the Consulting Term, the Company shall provide,
without charge, the Executive with eighteen (18) months of medical coverage
under the same terms as medical coverage offered to other senior executives of
the Company.

    


    3.6.
Severance
Pay.  (a) Upon termination of the Executive’s employment for
any reason (including, without limitation, upon non-renewal of the Employment
Term), other than (i) by the Company for Cause, (ii) due to death or Permanent
Disability of the Executive or (iii) by the Executive without Good Reason, the
Executive shall be entitled, subject to Section 9.2(b) and Section 3.6(b), to
receive an amount equal to his six months of his Base Salary (the “Severance Pay”),
payable commencing upon the expiration of the Consulting Term monthly on or
about the 15th day of each month in equal installments in accordance with the
Company’s payroll practices as in effect at the end of the Consulting Term;
provided, the Severance Pay shall be paid to the Executive’s estate in a lump
sum payment in the event of the Executive’s death during the Consulting Term on
or before the 15th day of
the third month of the calendar year following the calendar year in which the
Executive’s death occurs.

    


    (b)  Release by
Executive.  As a condition to receipt of the Severance Pay, on
or prior to the 30th day
following his termination of employment, the Executive shall execute, deliver
and not revoke a release (the “Release”) to the
Company and the Group, in a form reasonably requested by the Company, releasing
and discharging on behalf of the Executive, his heirs, administrators,
executors, agents, or employees, the Company, Group and all other affiliates,
divisions, subsidiaries and each of their predecessors, successors, assigns,
agents, directors, officers, employees, representatives, attorneys, and all
persons acting by, through, under or in concert with any of them (collectively,
the “Releasee”)
from any and all charges, claims, demands, judgments, actions, causes of action,
damages, expenses, costs, attorneys' fees, and liabilities of any kind
whatsoever, whether known or unknown, vested or contingent, in law, equity or
otherwise, which the Executive ever had, then has, or may hereafter have against
a Releasee for or on account of any matter, cause or thing whatsoever which has
occurred at any time up to the date of the Release, but excluding any
liabilities or obligations of a the Company or Group set forth in this Agreement
to the extent such liabilities or obligations survive the termination of the
Executive’s employment, and excluding any liabilities or obligations of a
Releasee arising out of any indemnity agreement in the Executive’s favor whether
contained in such Releasee’s articles of incorporation, bylaws, corporate
resolutions or in any employment agreement or arising by operation of
law.

     

    
      
         

      

      
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    (c)  Definitions.  (i)  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 that one year, (B) has failed to
perform in all material respects the normal and customary duties required of his
position of employment, following a written warning specifying such deficiency
and affording the Executive a reasonable period to cure such failure; or (C) has
been disloyal to Group, the Company or any of their respective affiliates by
assisting transportation competitors of Group, the Company or any of their
respective affiliates to the disadvantage of Group, the Company or any of their
respective affiliates by a breach of Section 6 or by otherwise actively
assisting such competitors to the disadvantage of Group, the Company or any of
their respective affiliates.

    


    (ii)  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
Permanent Disability.

    


    (iii)  Termination
by Executive for “Good
Reason” shall mean termination by the Executive because of (A) a material
reduction in the nature or scope of Executive's position as Chief Financial
Officer or his authorities, powers, duties, or responsibilities in such
capacity; or (B) a material breach by the Company of its affirmative or negative
covenants or undertakings hereunder and such breach shall not be remedied within
fifteen (15) days after notice to Company thereof (which notice shall be signed
by Executive and refer to a specific breach of this Agreement).

    


    (iv)  Termination
due to Permanent
Disability shall mean termination by the Company due to the failure of
the Executive because of illness, physical or mental disability or other
incapacity for a period of six consecutive months, or for shorter periods
aggregating six months during any consecutive twelve-month period, to render the
services provided for by this Agreement.  The determination of the
Executive’s Permanent Disability shall be made by an independent physician who
is reasonably acceptable to the Executive and the Company and shall be final and
binding and shall be based on such competent medical evidence as shall be
presented to it by the Executive or by any physician or group of physicians or
other competent medical experts employed by the Executive and/or the Company to
advise such independent physician.

    


    4.
[intentionally deleted]

    


    5.
[intentionally deleted]

    


    6. NON COMPETITION/NON
SOLICITATION AND CONFIDENTIALITY

    


    6.1.
Noncompetition/Nonsolicitation.
The Executive shall not, directly or indirectly, 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 18 months, or a period of 24 months if, as of termination of the
employment of the Executive, more than a majority of the Common Stock of Group
is then owned by the current shareholders of Group, after termination of
employment of the Executive 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.

     

    
      
         

      

      
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    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 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.

     

    
      
         

      

      
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    7.    GUARANTEES

    


    7.1.
Indemnification.
Group, the Company and each of their subsidiaries, jointly and severally, shall
indemnify the Executive and his spouse, heirs, estate, executors and
administrators (collectively, the “Indemnitees”) and
hold such Indemnitees harmless from and against, and pay and reimburse the
Indemnitees for, any and all demands, payments, claims, actions, losses,
damages, liabilities, obligations, fines, taxes, deficiencies, costs and
expenses (including reasonable attorneys’ fees), whether or not resulting from
third-party claims, including interest and penalties with respect thereto,
asserted against or incurred or sustained by an Indemnitee in connection with or
arising out of any personal guaranty or undertaking by the Executive of any
obligation of Group, the Company or any of their subsidiaries (collectively a
“Guaranty”).

    


    7.2.
Future
Subsidiaries. In the event, Group, the Company or any of their
subsidiaries acquires or forms a subsidiary after the date hereof, Group and the
Company shall cause such newly acquired or formed subsidiary to execute and
deliver a supplement to this Amendment, which supplement shall provide that such
newly acquired or formed subsidiary will indemnify the Indemnitees in accordance
with Section 7.1 hereof.

    


    8.    MISCELLANEOUS

    


    8.1.
Notices. All
notices or communications hereunder shall be in writing, addressed as
follows:

    


    To the
Company or Group, to it at:

    


    Atlantic
Express Transportation Corp.

    7 North
Street

    Staten
Island, NY 10302

    Attention:
Corporate Secretary

    


    with a
copy to:

    


    GSCP III
Holdings (AE), LLC

    c/o
Greenwich Street Capital Partners, Inc.

    500
Campus Drive, Suite 220

    Florham
Park, NJ 07932

    Fax:
(973) 593-5454

    Attention:
Peter Frank

    
 

    and:

     

    


    To the
Executive:

    


    Nathan
Schlenker

    505
County Route 22

    Gloversville,
NY 12078

    Fax:  (518)
752-5798

     

    
      
         

      

      
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    Any such
notice or communication shall be sent certified or registered mail, return
receipt requested, or by facsimile, 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.
Section 2.3 (relating to Exit Bonus), 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.
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.

    


    9.           SECTION
409A.

    9.1 General.  The
parties acknowledge and agree that, to the extent applicable, this Agreement
shall be interpreted in accordance with, and the parties agree to use their best
efforts to achieve timely compliance with Section 409A, including without
limitation any such regulations or other guidance that may be issued after the
date hereof.  Notwithstanding any provision of this Agreement to the
contrary, in the event that the Company determines that any compensation or
benefits payable or provided under this Agreement may be subject to Section
409A, the Company may adopt (without any obligation to do so or to indemnify the
Executive for failure to do so) such limited amendments to this Agreement and
appropriate policies and procedures, including amendments and policies with
retroactive effect, that the Company reasonably determines are necessary or
appropriate to (i) exempt the compensation and benefits payable under this
Agreement from Section 409A and/or preserve the intended tax treatment of the
compensation and benefits provided with respect to this Agreement or (ii) comply
with the requirements of Section 409A.

    


    9.2 Separation from Service
under 409A.  Notwithstanding any provision to the contrary in
this Agreement:

    


    (a)           No
amount shall be payable pursuant to Section 3.5 or Section 3.6 unless the
termination of Executive’s employment constitutes a “separation from service”
within the meaning of Section 1.409A-1(h) of the Department of Treasury
Regulations; and

    


    (b)           If
the Executive is deemed at the time of his separation from service to be a
“specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to
the extent delayed commencement of any portion of the termination benefits to
which the Executive is entitled under this Agreement (after taking into account
all exclusions applicable to such termination benefits under Section 409A),
including, without limitation, any portion of the additional compensation
awarded pursuant to Section 3.5 or Section 3.6, is required in order to avoid a
prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion
of the Executive’s termination benefits shall not be provided to the Executive
prior to the earlier of (A) the expiration of the six-month period measured from
the date of the Executive’s “separation from service” with the Company (as such
term is defined in the Department of Treasury Regulations issued under Section
409A of the Code) or (B) the date of the Executive’s death.  Upon the
earlier of such dates, all payments deferred pursuant to this Section 9.2(b)
shall be paid in a lump sum to the Executive, and any remaining payments due
under the Agreement shall be paid as otherwise provided herein; and

    


    (c)           The
determination of whether the Executive is a “specified employee” for purposes of
Section 409A(a)(2)(B)(i) of the Code as of the time of his separation from
service shall be made by the Company in accordance with the terms of Section
409A of the Code and applicable guidance thereunder (including, without
limitation, Section 1.409A-1(i) of the Department of Treasury Regulations (and
any successor provision thereto); and

    


    (d)           For
purposes of Section 409A, the Executive’s right to receive installment payments
pursuant to Section 3.5 or Section 3.6 shall be treated as a right to receive a
series of separate and distinct payments; and

    


    (e)           The
reimbursement of any expense under Section 3.3 shall be made no later than
December 31 of the year following the year in which the expense was
incurred.  The amount of expenses reimbursed in one year shall not
affect the amount eligible for reimbursement in any subsequent
year.

    


    [signature
page follows]


    
      
         


      

      
        10

        
          

        

      

      
         


      

    


    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/ Peter
      Frank	 
	 	 	Name:  Peter
      Frank	 
	 	 	Title:    Chairman of the Board	 
	 	 	 	 


        

      

       

      
        
          	 	
                  ATLANTIC
      EXPRESS

                  TRANSPORTATION
      CORP.

                	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Peter
      Frank	 
	 	 	Name:  Peter Frank	 
	 	 	Title:    Chairman of the Board	 
	 	 	 	 


        

      

       

      
        
          	 	EXECUTIVE:	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Nathan
      Schlenker	 
	 	 	Nathan
      Schlenker	 
	 	 	 	 
	 	 	 	 


        

      

    

     

    
      
         


      

      
        11