Exhibit
10.3


 


Atlantic Express Transportation
Group Inc.

Atlantic Express Transportation Corp.

7 North Street

Staten Island, NY  10302


 


 


January 13, 2005


 


Domenic Gatto

136 Monmouth Road

Monroe Township, NJ 08831


 


Dear Domenic:


 


Reference is made to your fourth amended and
restated employment agreement dated as of November 25, 2003, as amended by
the letter dated April 20, 2004 (as amended, the “Agreement”) and more
specifically to Section 2.6 of the Agreement concerning your Performance
Bonus.


 


As you know, we are in the process of
negotiating an extension of the school bus transportation contracts with the
Department of Education of the City of New York.  In consideration for your continued efforts
in connection with the extension and your continued employment with the
Company, we agree to amend and restate Section 2.6 of the Agreement in its
entirety to read as follows:


 


Performance Bonus.  The Company will pay the Executive a
performance bonus (“Performance Bonus”) subject to the acceptance by the
Company of an agreement (the “NYC Agreement”) with the Department of Education
of the City of New York (the “Company Acceptance”) to provide school bus
transportation services for the period commencing July 1, 2005.  The Performance Bonus shall be in the amount
equal to the sum of (a) $250,000; plus (b) $250,000 in the event (i) the
projected increase in the pro forma EBITDA for the NYC Agreement for fiscal
year 2006 (i.e., for the 12 months ended June 30, 2006) as compared to
fiscal year 2005 is greater than $17,000,000 and (ii) the projected
non-reimbursable vehicle capital expenditure for the first school year pursuant
to such NYC Agreement does not exceed $10,000,000; plus (c) an
additional $25,000 for each $1,000,000 (or part thereof) of the projected
EBITDA of the Company for fiscal 2006 in excess of $50,000,000, provided the
aggregate Performance Bonus shall not exceed $750,000.


 


The Performance Bonus shall be payable in the
following manner (a) for the first $250,000 on the latter of (i) the Company
Acceptance; or (ii) March 15, 2005; and (b) for the remainder, if any, the
later of (i) the 6th month anniversary date of the payment of the first
$250,000 of the Performance Bonus or (ii) as soon as the Company has sufficient
availability to meet its obligations as they come due;


 





















 


provided, however,
in the event the Executive is no longer the Chief Executive Officer of the
Company or is terminated for any reason prior to the full payment of the
Performance Bonus, any unpaid Performance Bonus shall be paid to the Executive
immediately.


 


All other terms of your employment contract
remain in full force and effect without any change or modification thereto.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  Atlantic Express Transportation Group Inc.

  Atlantic Express Transportation Corp.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter Frank

  
	
   

  	
   

  	
  Peter Frank

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed and accepted:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Domenic Gatto

  	
   

  	
   

  
	
  Domenic Gatto

  	
   

  
				



 


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