**Exhibit
      10.16**




AMENDMENT
      NO. 3 TO


THIRD
      AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT





Amendment
      No. 3 to Third Amended and Restated Loan and Security Agreement, dated as of
      September 25, 2008 (this “Amendment”), by and among Wachovia Bank, National
      Association, successor by merger to Congress Financial Corporation, in its
      capacity as agent (in such capacity, “Agent”), acting for and on behalf of
      Lenders (as hereinafter defined), the financial institutions from time to time
      parties to the Loan Agreement (as hereinafter defined) as lenders (“Lenders”),
      Atlantic Express Transportation Corp., a New York corporation (“Parent”), Amboy
      Bus Co., Inc., a New York corporation (“Amboy”), Atlantic Escorts Inc., a New
      York corporation (“Atlantic Escorts”), Atlantic Express Coachways, Inc., a New
      Jersey corporation (“Coachways”), Atlantic Express New England, Inc., a
      Massachusetts corporation (“AE-NE”), Atlantic Express of California, Inc., a
      California corporation (“AE-CA”), Atlantic Express of Illinois, Inc., an
      Illinois corporation (“AE-I”), Atlantic Express of L.A., Inc., a California
      corporation (“AELA”), Atlantic Express of Missouri Inc., a Missouri corporation
      (“AE Missouri”), Atlantic Express of New Jersey, Inc., a New Jersey corporation
      (“AENJ”), Atlantic Express of Pennsylvania, Inc., a Delaware corporation
      (“AEP”), Atlantic Express of Upstate New York, Inc., formerly known as TNT Bus
      Service, Inc., a New York corporation (“AE Upstate”), Atlantic Transit Corp., a
      New York corporation (“ATC”), Atlantic-Hudson, Inc., a New York corporation
      (“AH”), Atlantic Paratrans, Inc., a New York corporation (“AP”), Atlantic
      Paratrans of NYC, Inc., a New York corporation (“APNY”), Atlantic Queens Bus
      Corp., a New York corporation (“AQ”), Block 7932, Inc., a New York corporation
      (“Block”), Brookfield Transit Inc., a New York corporation (“Brookfield”),
      Courtesy Bus Co., Inc., a New York corporation (“Courtesy”), Fiore Bus Service,
      Inc., a Massachusetts corporation (“Fiore”), Groom Transportation, Inc., a
      Massachusetts corporation (“Groom”), G.V.D. Leasing Co., Inc., a New York
      corporation (“GVD”), James McCarthy Limo Service, Inc., a Massachusetts
      corporation (“Limo”), Jersey Business Land Co., Inc., a New Jersey corporation
      (“JBL”), K. Corr, Inc., a New York corporation (“Corr”), Merit Transportation
      Corp., a New York corporation (“Merit”), Metro Affiliates, Inc., a New York
      corporation (“Metro”), Metropolitan Escort Service, Inc., a New York corporation
      (“Metropolitan Escort”), Midway Leasing Inc., a New York corporation (“Midway”),
      180 Jamaica Corp., a New York corporation (“Jamaica”), R. Fiore Bus Service,
      Inc., a Massachusetts corporation (“FBS”), Raybern Bus Service, Inc., a New York
      corporation (“RBS”), Raybern Capital Corp., a New York corporation (“RBC”),
      Raybern Equity Corp., a New York corporation (“REC”), Robert L. McCarthy &
Son, Inc., a Massachusetts corporation (“McCarthy”), Staten Island Bus, Inc., a
      New York corporation (“SI-Bus”), Temporary Transit Service, Inc., a New York
      corporation (“TTS”), Transcomm, Inc., a Massachusetts corporation (“Transcomm”),
      Winsale, Inc., a New Jersey corporation (“Winsale” and together with Parent,
      Amboy, Atlantic Escorts, Coachways, AE-NE, AE-CA, AE-I, AELA, AE Missouri,
      AENJ,
      AEP, AE Upstate, ATC, AH, AP, APNY, AQ, Block, Brookfield, Courtesy, Fiore,
      Groom, GVD, Limo, JBL, Corr, Merit, Metro, Metropolitan Escort, Midway, Jamaica,
      FBS, RBS, RBC, REC, McCarthy, SI-Bus, TTS and Transcomm, each individually
      a
“Borrower” and collectively, “Borrowers”) and the parties hereto from time to
      time as guarantors (each individually a “Guarantor” and collectively,
“Guarantors”, as defined in the Loan Agreement).







W I T N E S S E T H :





WHEREAS,
      Agent, Lenders, Borrowers and Guarantors have entered into financing
      arrangements pursuant to which Agent and Lenders may make loans and advances
      and
      provide other financial accommodations to Borrowers as set forth in the Third
      Amended and Restated Loan and Security Agreement, dated as of May 15, 2007,
      as
      amended by Amendment No. 1 to Third Amended and Restated Loan and Security
      Agreement, dated as of January 1, 2008, and Amendment No. 2 to Third Amended
      and
      Restated Loan and Security Agreement, dated as of August 28, 2008, by and among
      Agent, Borrowers, Guarantors and Lenders (as amended, modified, supplemented,
      extended, renewed, restated or replaced the “Loan Agreement”, and together with
      all agreements, documents and instruments at any time executed and/or delivered
      in connection therewith or related thereto, as from time to time amended,
      modified, supplemented, extended, renewed, restated or replaced, collectively,
      the “Financing Agreements”). All capitalized terms used herein shall have the
      meanings assigned thereto in the Loan Agreement and the other Financing
      Agreements, unless otherwise defined herein;





WHEREAS,
      Borrowers and Guarantors have requested that Agent and Lenders make certain
      amendments to the Loan Agreement, and Agent and Lenders are willing to agree
      to
      such request, and make certain other amendments to the Loan Agreement, subject
      to the terms and conditions set forth herein; and





WHEREAS,
      by this Amendment, Agent, Lenders, Borrowers and Guarantors wish and intend
      to
      evidence such amendments.





NOW,
      THEREFORE, in consideration of the foregoing and the mutual agreements and
      covenants contained herein, the parties hereto agree as follows:





1.  Definitions .
      For
      purposes of this Amendment, unless otherwise defined herein, all terms used
      herein shall have the respective meanings assigned to such terms in the Loan
      Agreement and the other Financing Agreements.





2.  Minimum
      EBITDA .
      Section
      9.17 of the Loan Agreement is hereby amended by deleting such Section in its
      entirety and replacing it with the following:





“9.17 Minimum
      EBITDA .
      At the
      end of each calendar month (commencing with the month ending August 31, 2007),
      Parent and its Subsidiaries shall have EBITDA of not less than $26,000,000
      for
      the twelve (12) consecutive month period then ended; provided , that ,
      (a) Parent and its Subsidiaries shall not be required to comply with this
      Section for any calendar month if Excess Availability is equal to or greater
      than: (i) $5,000,000 at all times during the period from July 1, 2008 to
      September 15, 2008, (ii) $8,000,000 at all times during the period from
      September 16, 2008 to September 30, 2008, (iii) $4,500,000 at all
      times during the period from October 1, 2008 to July 31, 2009, (iv) $4,000,000
      at all times during the period from August 1, 2009 to September 15, 2009, (v)
      $4,500,000 at all times during the period from September 16, 2009 to November
      1,
      2009, (vi) $8,000,000 at all times during the period from November 2,
      2009 to June 30, 2010, (vii) $5,000,000 at all times during the period from
      July 1 to September 15 of any year (commencing in 2010), and
      (viii) $8,000,000 at all times during the period from September 16 of any
      year (commending in 2010) through June 30 of the immediately following year;
      (b) solely for purposes of this Section 9.17: (i) the calculation of
      EBITDA shall not include the effects of any non cash accounting adjustments
      for
      FASB 133, and (ii) for the period from January 1, 2008 through and including
      February 15, 2009, the calculation of the Borrowing Base for purposes of the
      calculation of Excess Availability shall not include Reserves established to
      reflect obligations, liabilities or indebtedness (contingent or otherwise)
      of
      Borrowers or Guarantors to Agent or any Bank Product Provider arising under
      or
      in connection with any Hedge Agreement in an amount of up to $5,000,000; and
      (c)
      to the extent Parent and its Subsidiaries have failed to maintain the minimum
      EBITDA required by this Section 9.17 as of the end of any such calendar month,
      to the extent that Parent receives a cash capital contribution from any of
      its
      Permitted Holders or AETG no later than the EBITDA Capital Contribution Deadline
      that would if it had been received prior to the end of such month meant that
      Parent was in compliance with this Section 9.17, then Parent and its
      Subsidiaries shall be deemed to have complied with this Section 9.17 for
      such month.”.







3.  Amendment
      Fee .
      In
      addition to all other fees, charges, interest and expenses payable by Borrowers
      and Guarantors to Agent and Lenders under the Loan Agreement and the other
      Financing Agreements, Borrowers shall pay to Agent, for the benefit of Lenders ,
      an
      amendment fee in the amount of $15,000, which fee shall be fully earned as
      of
      and payable on the date hereof and may be charged to any loan account of
      Borrowers maintained by Agent.




4.  Additional
      Representations, Warranties and Covenants .
      Each
      Borrower and Guarantor, jointly and severally, represents, warrants and
      covenants with and to Agent and Lenders as follows, which representations,
      warranties and covenants are continuing and shall survive the execution and
      delivery hereof, and the truth and accuracy of, or compliance with each,
      together with the representations, warranties and covenants in the other
      Financing Agreements, being a continuing condition of the making of Loans by
      Agent or any Lender to Borrowers:





(a)  This
      Amendment has been duly authorized, executed and delivered by all necessary
      action on the part of each Borrower and Guarantor which is a party hereto and,
      if necessary, their respective members or stockholders, as the case may be,
      and
      are in full force and effect as of the date hereof, as the case may be, and
      the
      agreements and obligations of Borrowers and Guarantors contained herein
      constitute legal, valid and binding obligations of Borrowers and Guarantors
      enforceable against them in accordance with their terms.





(b)  As
      of the
      date hereof, all of the representations and warranties set forth in the Loan
      Agreement and the other Financing Agreements are true and correct in all
      material respects on and as of the date hereof as if made on the date hereof,
      except to the extent any such representation or warranty is made as of a
      specified date, in which case such representation or warranty shall have been
      true and correct as of such date.





(c)  Neither
      the execution, delivery and performance of this Amendment, nor the consummation
      of any of the transactions contemplated herein (i) are in contravention of
      law or any indenture, agreement or undertaking to which any Borrower or
      Guarantor is a party or by which any Borrower or Guarantor or its property
      are
      bound (including without limitation the Note Indenture) or (ii) violates
      any provision of the certificate of incorporation, certificate of formation,
      operating agreement, by-laws or other governing documents of any Borrower or
      Guarantor.








(d)  No
      Default or Event of Default exists or has occurred and is continuing as of
      the
      date of this Amendment.





5.  Conditions
      Precedent. The
      effectiveness of the amendments contained herein shall be subject to the
      satisfaction of each of the following, in a manner satisfactory to Agent and
      its
      counsel:





(a)  Agent
      shall have received this Amendment, duly authorized, executed and delivered
      by
      Borrowers and Guarantors; and





(b)  No
      Default or Event of Default shall have occurred and be continuing as of the
      date
      of this Amendment.





6.  Effect
      of this Amendment .
      Except
      as expressly set forth herein, no other amendments, consents, changes or
      modifications to the Financing Agreements are intended or implied, and in all
      other respects the Financing Agreements are hereby specifically ratified,
      restated and confirmed by all parties hereto as of the effective date hereof
      and
      Borrowers shall not be entitled to any other or further amendment or consent
      by
      virtue of the provisions of this Amendment or with respect to the subject matter
      of this Amendment. To the extent of conflict between the terms of this Amendment
      and the other Financing Agreements, the terms of this Amendment shall control.
      The Loan Agreement and this Amendment shall be read and construed as one
      agreement.





7.  Further
      Assurances .
      The
      parties hereto shall execute and deliver such additional documents and take
      such
      additional action as may be necessary or desirable to effectuate the provisions
      and purposes of this Amendment.





8.  Governing
      Law .
      The
      validity, interpretation and enforcement of this Amendment and any dispute
      arising out of the relationship between the parties hereto shall be governed
      by
      the internal laws of the State of New York but excluding any principles of
      conflicts of law or other rule of law that would cause the application of the
      law of any jurisdiction other than the laws of the State of New
      York.





9.  Binding
      Effect. This
      Amendment shall be binding upon and inure to the benefit of each of the parties
      hereto and their respective successors and assigns.





10.  Headings. The
      headings listed herein are for convenience only and do not constitute matters
      to
      be construed in interpreting this Amendment.








11.  Counterparts. This
      Amendment may be executed in any number of counterparts, each of which shall
      be
      an original and all of which shall together constitute but one and the same
      agreement. In making proof of this Amendment, it shall not be necessary to
      produce or account for more than one counterpart thereof signed by each of
      the
      parties hereto. Delivery of an executed counterpart of this Amendment by
      telefacsimile or other means of electronic transmission shall have the same
      force and effect as delivery of an original executed counterpart of this
      Amendment. Any party delivering an executed counterpart of this Amendment by
      telefacsimile or other means of electronic transmission also shall deliver
      an
      original executed counterpart of this Amendment, but the failure to deliver
      an
      original executed counterpart shall not affect the validity, enforceability,
      and
      binding effect of this Amendment as to such party or any other
      party.





[REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]







IN
      WITNESS WHEREOF, Agent, Lenders, Borrowers and Guarantors have caused these
      presents to be duly executed as of the day and year first above
      written.





BORROWERS





ATLANTIC
      EXPRESS TRANSPORTATION CORP.


AMBOY
      BUS
      CO., INC.


ATLANTIC
      ESCORTS 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 UPSTATE NEW YORK, INC.


ATLANTIC
      TRANSIT CORP.


ATLANTIC-HUDSON,
      INC.


ATLANTIC
      PARATRANS, INC.


ATLANTIC
      PARATRANS OF NYC, INC.


ATLANTIC
      QUEENS BUS CORP.


BLOCK
      7932, INC.


BROOKFIELD
      TRANSIT INC.


COURTESY
      BUS CO., INC.


FIORE
      BUS
      SERVICE, INC.


GROOM
      TRANSPORTATION, INC.


G.V.D.
      LEASING CO., INC.


JAMES
      MCCARTHY LIMO SERVICE, INC.


JERSEY
      BUSINESS LAND CO., INC.


K.
      CORR,
      INC.


MERIT
      TRANSPORTATION CORP.


METRO
      AFFILIATES, INC.


METROPOLITAN
      ESCORT SERVICE, INC.


MIDWAY
      LEASING INC.


180
      JAMAICA CORP.


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.


TRANSCOMM,
      INC.


WINSALE,
      INC.





By: /s/
      Domenic Gatto





Title:  CEO





AGENT
      AND LENDERS





WACHOVIA
      BANK, NATIONAL ASSOCIATION,


successor
      by merger to Congress Financial Corporation,


as
      Agent
      and as Lender





By: /s/
      Herb Korn





Title:  Director