Exhibit
4.3


 


THE
SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS.  SUCH SECURITIES
AND ANY INTEREST HEREIN MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND APPLICABLE LAWS.


 


PROMISSORY NOTE


 


	
  $15,000,000.00

  	
   

  	
  New York, NY

  
	
   

  	
   

  	
  March 3, 2005

  



 


FOR VALUE RECEIVED, Atlantic Express Transportation Corp., a New York corporation
(hereinafter the “Company”), promises to pay to the order of Airlie Opportunity Capital Management, L.P.,  a Delaware limited partnership (hereinafter “Holder”),
the principal sum of Fifteen Million Dollars ($ 15,000,000.00), together with
interest as set out herein at its offices in Greenwich, CT or such other place
as Holder may designate in writing, or by wire transfer to Holder’s designated
bank account.


 


1.               Note and
Warrant Purchase Agreement. 
This Promissory Note (together with all other Notes issued in exchange
for this Note, being referred to herein as “this Note”) has been issued under
the terms of a Note and Warrant Purchase Agreement among the Company, the
Persons identified therein as “Guarantors”, and the Holder, dated as of March 3,
2005 (the “Agreement”).  This Note
evidences the obligation of the Company to repay a loan in the aggregate
principal amount of Fifteen Million Dollars ($ 15,000,000.00), made pursuant to
the Agreement.  The Holder is entitled to
the benefits of the Agreement including the Security Documents and other
Transaction Documents referred to therein, and reference is made thereto for a
description of all rights and remedies thereunder.  Neither reference to the Agreement, nor any provision
thereof for security for the obligations evidenced hereby, shall affect or
impair the absolute and unconditional obligation of the Company to pay, when
due, the principal amount hereof, together with all expenses and interest
accrued thereon as set forth herein, subject to the provisions of the
Intercreditor Agreement. Capitalized terms not otherwise defined herein shall
have the meanings set forth for them in the Agreement. 


 


2.               Interest.  From the date hereof and thereafter until
repayment of this Note in full, interest on the outstanding principal amount
hereof shall accrue and be paid at the rates and at the times provided herein.
Interest at the rate of ten percent (10%) per annum (“Base Interest”) shall
accrue on the outstanding principal amount hereof from the date hereof until
the entire principal balance hereof shall have been paid in full, shall be
calculated in accordance with Section 6 below and shall be paid in cash,
semi-annually, in arrears, on April 15 and October 15 of each year
commencing April 15, 2005 until the Maturity Date (each, an “Interest
Payment Date”).  In addition to Base
Interest, additional interest shall accrue on the unpaid principal amount
hereof from the date hereof until the entire principal balance hereof shall
have been paid in full at a rate of one percent (1%) per annum (“PIK Interest”).  In addition, in the event that, at any time
after September 30, 2006, the Company fails to comply with the provisions
of Section 4.24 of the Indenture, then, from and after the first date on
which the Company so fails to


 





















 


comply, (the “Additional PIK Interest Trigger
Date”), and for so long as this Note remains outstanding, additional interest
on this Note shall accrue from the Additional PIK Interest Trigger Date, at a
rate per annum of two percent (2.0%) (the “Additional PIK Interest”), it being
understood that such failure to comply with the provisions of Section 4.24
of the Indenture shall not constitute an Event of Default. PIK Interest and
Additional PIK Interest, if any, accrued hereunder will be due and payable
semi-annually in arrears on each Interest Payment Date and shall be payable by
the Company by issuing additional promissory notes with a principal amount
equal to the PIK Interest or and Additional PIK Interest, as the case may be,
then due and payable in the form attached as Exhibit 2.1(b) to the
Agreement (the “PIK Notes”), except that the accrued and unpaid PIK
Interest and Additional PIK Interest, if any, due on the Maturity Date shall be
paid in cash in accordance with Section 7 hereof. Interest on the
principal amount of the PIK Notes shall accrue and be paid as provided in the
PIK Notes.


 


3.               Maturity
Date.  The entire
principal balance of this Note shall be paid on or before the Maturity Date,
together with all Base Interest, PIK Interest and Additional PIK Interest, if
any, accrued and unpaid through the Maturity Date, and all other amounts owed
hereunder. As used herein, “Maturity Date” shall mean April 15, 2008.


 


4.               Redemption.                             At
any time before the Maturity Date, the Company may, at its option, redeem this
Note, but only if all of the other Notes then outstanding are simultaneously
redeemed by the Company, as provided in the Agreement.


 


5.               Computation
of Interest. 
Base Interest, PIK Interest and Additional PIK Interest, if any,
hereunder shall be computed on the per annum basis of a year of three hundred
sixty (360) days for the actual number of days (including the first day but
excluding the last day) elapsed.


 


6.               Interest
Rate Limit. 
The provisions herein and in all agreements between Company and Holder,
whether now existing or hereafter arising and whether written or oral, are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason of demand or acceleration of the maturity hereof or otherwise, shall
the amount paid or agreed to be paid (“Interest”) to Holder for the use,
forbearance or retention of the money to be loaned hereunder exceed the maximum
amount permissible under applicable law. 
If, from any circumstance whatsoever, performance or fulfillment of any
provision hereof or of any agreement between Company and Holder shall, at the
time such performance or fulfillment shall be due, exceed the limit for
Interest prescribed by law, then ipso facto the
obligation to be performed or fulfilled shall be reduced to such limit and if,
from any circumstance whatsoever, Holder should ever receive as Interest an
amount which would exceed the highest lawful rate, the amount which would be
excessive Interest shall be applied to the reduction of the principal balance owing
hereunder in the inverse order of its maturity (whether or not then due), or at
the option of Holder be paid over to Company, and not to the payment of
Interest.  In determining whether or not
the Interest paid or payable under any specific contingency exceeds the maximum
amount payable under applicable law, Company and Holder shall, to the maximum
extent permitted under applicable law, (i) treat all loans by Holder to Company
as but a single extension of credit, (ii) characterize any nonprincipal
payment as an expense, fee or premium rather than as interest, (iii) exclude
voluntary prepayments and the effects thereof and (iv) “spread” the total
amount of Interest throughout the entire period the Indebtedness was
outstanding (including the period of any renewal or extension hereof) so that
the Interest hereon for such full period will not


 





















 


exceed the maximum amount permitted by
applicable law. This paragraph will control all agreements between Company and
Holder.


 


7.               Other
Payment Provisions. 
The Company shall make each payment hereunder not later than 11:00 A.M.
(Eastern time) on the day when due, without offset, in lawful money of the
United States of America (other than payment of PIK Interest and Additional PIK
Interest to be made hereunder by the issuance of PIK Notes) to the Holder in
same day funds.  All payments will be
applied first to costs and fees owing hereunder, second to the payment of
interest accrued through the date of payment and third to the payment of
principal.  If the date for any payment
or prepayment hereunder falls on a day which is not a Business Day, then for
all purposes of this Note the same shall be deemed to have fallen on the next
following business day, and such extension of time shall in such case be
included in the computation of payments of interest.


 


8.               Default and
Acceleration. 
If an Event of Default (as defined in the Agreement) should occur, then
the Holder may at its option by notice (a “Default Notice”) to the Company
declare the Indebtedness evidenced hereby to be due and payable, without
presentment, demand, protest, or further notice of any kind (all of which are
hereby expressly waived). Upon giving such a Default Notice, the Holder shall
be entitled to be paid in full the balance of any principal amount unpaid
hereunder plus accrued Base Interest, PIK Interest and Additional PIK Interest,
if any, and any costs it may have incurred, including reasonable attorney’s
fees, and subject to the provisions of the Intercreditor Agreement, to any
other remedies which may be available under any applicable law or otherwise.


 


9.               Non-Waiver.  No course of dealing between the Holder and
any other party hereto or any failure or delay on the part of the Holder in
exercising any rights or remedies hereunder shall operate as a waiver of any
rights or remedies of the Holder under this or any other applicable
instrument.  No single or partial
exercise of any rights or remedies hereunder shall operate as a waiver or
preclude the exercise of any other rights or remedies hereunder.


 


10.         Choice of
Law. Venue and Jurisdiction. Service of Process.  THIS NOTE AND THE GUARANTEES ANNEXED HERETO
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW
YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. THE COMPANY HEREBY
AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE. THE COMPANY
IRREVOCABLY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF SUPREME COURT OF NEW
YORK, NEW YORK COUNTY AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK, NEW YORK COUNTY IN ANY ACTION OR PROCEEDING WITH RESPECT
TO THIS NOTE.  SERVICE OF ANY SUMMONS AND/OR
COMPLAINT HEREUNDER AND ANY OTHER PROCESS WHICH MAY BE SERVED ON THE COMPANY IN
ANY ACTION IN RESPECT HERETO, MAY BE MADE BY MAILING VIA REGISTERED MAIL OR
DELIVERING A COPY OF SUCH PROCESS, TO THE ADDRESS LAST PROVIDED BY COMPANY TO
HOLDER.


 


11.         WAIVER OF
JURY TRIAL. 
THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY RIGHT TO TRIAL BY


 





















 


JURY IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS NOTE OR THE TRANSACTIONS
CONTEMPLATED BY THIS NOTE.


 


12.         Guarantees.  Payment of principal and interest hereunder
(including PIK interest, Additional PIK Interest, if any, and interest on
overdue principal and overdue interest, if lawful), is unconditionally
guaranteed, jointly and severally, by each of the Guarantors.


 


13.         Intercreditor
Agreement.  Holder, by its acceptance of this Note, agrees to be
bound by the terms of the Intercreditor Agreement and all such replacement
Intercreditor Agreements.


 


14.         Expenses.  The Company shall pay all reasonable expenses
of any nature, whether incurred in or out of court, and whether incurred before
or after this Note shall become due at the Maturity Date or otherwise
(including but not limited to reasonable attorneys fees and costs), which
Holder may deem necessary or proper in connection with the satisfaction of
Indebtedness or the administration, supervision, preservation, protection of
(including, but not limited to, the maintenance of adequate insurance) or the
realization upon any Collateral.  Holder
is authorized to pay at any time and from time to time any or all of such
expenses, add the amount of such payment to the amount of principal outstanding
and charge interest thereon at the rate specified herein.


 





















 


IN WITNESS WHEREOF, the
Company has caused this Note to be executed by its officer thereunto duly
authorized as of the date first above written.


 


	
   

  	
   

  	
  Atlantic Express Transportation
  Corp.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Domenic Gatto

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Domenic Gatto

  	
   

  
	
   

  	
   

  	
   

  	
  Title: 

  	
  President and Chief Executive 

  Officer

  	
   

  



 





















 


	
  STATE OF New York

  	
  )

  
	
   

  	
   

  	
  ) ss:

  
	
  COUNTY OF Nassau

  	
  )

  



 


I, Robert W.
Reichenbach, hereby certify on this 28th day of February, 2005, before me, the
subscriber, a Notary Public of the jurisdiction aforesaid, personally appeared
Domenic Gatto, known to me (or satisfactorily proven) to be the person whose
name is subscribed to the within instrument as the President of ATLANTIC
EXPRESS TRANSPORTATION CORP. and acknowledged that he executed the same on
behalf of ATLANTIC EXPRESS TRANSPORTATION CORP., for the purposes therein contained,
such instrument having been executed in my presence.


 


AS WITNESS my hand and
notarial seal the day and year above written.


 


 


	
   

  	
  /s/ Robert W. Reichenbach

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
   

  	
  My Commission Expires: Sept. 30, 2006