EMPLOYMENT AGREEMENT

         EMPLOYMENT AGREEMENT dated as of July 19, 2000, (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 an amended and restated  employment  agreement
dated as of November 4, 1998, (the "Prior Agreement");

         WHEREAS,  the Executive has had a prominent role in the  development of
the business and goodwill of Group and the Company and has established relations
and contacts with principal customers and suppliers of Group and the Company;

         WHEREAS,  the Executive  possesses  valuable  knowledge and skills that
will contribute to the successful  operation of the Company's business following
the Transaction; and

         WHEREAS,  the Company  desires to secure the continued  services of the
Executive,  and the  Executive  desires to  continue  in the  employment  of the
Company  following  the  expiration  of the  employment  term  under  the  Prior
Agreement  and, in connection  therewith,  the Company,  Group and the Executive
desire to enter into an employment  agreement to, among other things,  set forth
the terms of such 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, 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, and in such
capacities the Executive agrees to serve the Company  faithfully and to the best
of his ability  under the direction of the Board.  The Executive  also agrees to
serve,  if elected,  at no compensation in addition to that provided for in this
Agreement,  in the position of director of the Company or officer or director of
Group and of any subsidiary of Group or the Company during the Employment Term.

         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 without the unanimous
consent of the Board of Directors of the Company (the "Board") or otherwise

<PAGE>

engage in  activities  which would  interfere  significantly  with his  faithful
performance of his duties hereunder.

         1.3 Term of Employment. The Executive's employment under this Agreement
shall commence on November 4, 2000 (the "Effective Date") and shall terminate on
the earliest of (i) the first  anniversary of the Effective Date, (ii) the death
of the Executive or (iii) the termination of the Executive's employment pursuant
to  this  Agreement;  provided,  however,  that  the  term  of  the  Executive's
employment under this Agreement may be extended on the terms hereof for a period
of up to one year by notice of approval from the Board to the Executive at least
60 days  prior to the  expiration  of the then  effective  Employment  Term (the
period  during  which the  Executive  is employed  pursuant  to this  Agreement,
including any extension  thereof in accordance  with this Section 1.3,  shall be
referred to as the "Employment Term").

         2.  SALARY

         2.1 Base  Salary.  From the  Effective  Date,  the  Executive  shall be
entitled to receive a base  salary  ("Base  Salary")  at a rate of $240,000  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 Annual Increases.  Commencing one year from the Effective Date, and
annually on each  anniversary  thereafter,  the Executive's base salary shall be
increased by the same  percentage by which the regional  consumer price index as
of the June  immediately  preceding such  anniversary  date shall have increased
over such consumer price index as of June of the prior year; provided,  however,
that in no event shall such annual  increase be more than five  percent (5%) nor
less than three percent (3%) of such base salary.  Regional consumer price index
shall mean the index as determined by the United States  Department of Labor for
the New York, New York -  Northeastern  New Jersey area based upon the index for
all urban consumers.

         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 to other senior
executives of the Company;

         (b) an  automobile  allowance  of $250 per month plus a company car (as
approved by the Board);

         (c) a life insurance  premium  allowance of $2,500 payable  annually in
February of each year of the term hereof,


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         (d) a travel allowance not to exceed $15,000 annually; and

         (e) bonus at an annual rate not less than $2,500 as  determined  by the
Board.

         3.2 Vacation. The Executive shall be entitled to 20 days' paid vacation
each year 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 upon  presentation  by the Executive of an
itemized  account of such  expenditures,  in accordance  with Company  practices
consistently applied.

         3.4  Non-Renewal of Agreement.  Subject to Section 4.1.1,  in the event
this  Agreement is not renewed by the Company  following  the  expiration of the
initial  term as provided in Section  1.3,  the  Executive  shall be entitled to
twelve months of his Base Salary as severance,  payable in equal installments on
the same terms as at the end of the Employment Term (such severance, "NonRenewal
Severance Pay").

         4.   TERMINATION OF EMPLOYMENT

         4.1  Termination for Causes: Termination Without Cause:
              Termination Permanent-Disability- Resignation

         4.1.1 General.  (a) If, prior to the expiration of the Employment Term,
the Executive's employment is terminated by the Company for Cause, the Executive
shall be entitled  only to (i) his  accrued  but unpaid Base Salary  through and
including the date of termination  ("Accrued Base Salary"),  and (ii) six months
of his Base Salary as severance, payable in equal installments on the same terms
as at  the  end  of  the  Employment  Term,  unless  such  termination  is for a
Disloyalty Termination Event, in which case the Executive shall be entitled only
to payment of his Accrued Base Salary.

         (b) If, prior to the expiration of the  Employment  Term, the Executive
is terminated by the Company Without Cause, the Executive shall be entitled only
to (i) his Accrued Base  Salary,  and (ii)(1) his Base Salary from the day after
the termination  date through the normal  expiration date of the Employment Term
(but  in  no  event  for  less  than  a  six-month  period),  payable  in  equal
installments  on the  same  terms as at the end of the  Employment  Term and the
benefits set forth under Section 3.1 of this  Agreement  during such period,  as
severance,  and (2) in the event of a termination  by the Company  Without Cause
prior to the first anniversary of the Effective Date, the Non-Renewal  Severance
Pay as severance,  payable in equal installments on the same terms as at the end
of the Employment Term, any severance  payable pursuant to clause (ii) (2) to be
paid, in  installments,  commencing  immediately  after the payment of severance
pursuant to clause (ii) (1).

         (c) If, prior to the expiration of the Employment Tenn, the Executive's
employment is terminated by the Company for Permanent  Disability (as defined in
Section 5), the Executive shall


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<PAGE>

be entitled only to the payments and benefits provided for in Section 5 hereof.

         (d) If  the  Executive  resigns  from  his  employment  hereunder,  the
Executive shall be entitled only to payment of his Accrued Base Salary.

         (e) 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.

         (f)  Notwithstanding  anything to the contrary herein,  the Company may
elect, in its sole discretion, to pay any remaining installments of severance or
other payments hereunder in a lump sum rather than in installments over time.

         4.1.2 Date of  Termination/Resignation.  The date of termination  for a
termination  by the Company for Cause shall be the date of the written notice of
termination  provided  for in  Section  4.1.3.  The  date of  termination  for a
Termination  Without  Cause shall be as provided in Section  4.1.4.  The date of
termination for a termination for Permanent  Disability  shall be as provided in
Section 5. The date of  resignation  shall be the date  specified in the written
notice  of  resignation  from the  Executive  to the  Company,  or if no date is
specified  therein,  10  business  days after  receipt by the Company of written
notice of resignation from the Executive.

         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 no earlier than 10 business  days after the date on which such
notice is given.

         4.2  Termination   for  Cause.   Termination  for  "Cause"  shall  mean
termination by the Company of the Executive's  employment  because the Executive
(a) has  engaged  in  fraudulent  or  criminal  conduct in  connection  with the
performance  of his duties  hereunder,  which conduct  materially  and adversely
affects  Group,  the Company or any of their  respective  affiliates (a "Conduct
Termination  Event"), (b) 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 (a "Felony Termination  Event"),  (c) has failed to perform in all material
respects (following a written warning specifying such deficiency) the normal and
customary  duties  required  of  his  position  of  employment  (a  "Performance
Termination Event"), (d) has been disloyal to Group, the Company or any of their
respective  affiliates by assisting  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  competitors to the disadvantage of Group, the Company or any of their
respective affiliates (a "Disloyalty Termination Event"), or (g) has been


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<PAGE>

identified  by the  Board of  Education  of the City of New York in a notice  to
Group, the Company or any of their  respective  affiliates (a "BOE notice") that
the  Board  of  Education   has  elected   either  not  to  extend  an  existing
transportation  contract or that it will not accept bids from Group, the Company
or any of their respective  affiliates for a new transportation  contract unless
the employment of the Executive is terminated  together with  divestiture of the
Executive's stock ownership in Group (a "BOE Termination Event").

         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  Permanent
Disability.

         5.  PERMANENT DISABILITY

         If, prior to the expiration of the Employment Term, the Executive shall
fail 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 twelve-month  period,  to render the services  provided for by
this  Agreement,  then the Company may, by written notice to the Executive after
the last day of the six consecutive months of disability or the day on which the
shorter  periods of disability  equal an aggregate of six months,  terminate the
Executive's employment for "Permanent Disability", specifying a termination date
no earlier  than 10 business  days after the date on which such notice is given.
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.

         In the event of a  termination  of the  Executive's  employment  by the
Company for Permanent  Disability,  the Executive  shall be entitled only to (i)
his  Accrued  Base  Salary,  (1i) six  months of his Base  Salary as  severance,
payable in equal  installments on the same terms as at the end of the Employment
Term and  (iii)  receive  the  benefits  set  forth  under  Section  3.1 of this
Agreement during the six-month severance period. Except as otherwise provided in
this Section 5,  following  the effective  date of a  termination  for Permanent
Disability,  the Company shall have no further obligation to the Executive under
this Agreement.

         6.   NONCOMPETITION/NONSOLICITATION 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


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<PAGE>

has made a bid within 24 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 24-month period,  employed by or associated with Group, the
Company or any of their  respective  subsidiaries;  or 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 24-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 24 months 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.

         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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<PAGE>

         7.   MISCELLANEOUS

         7.1  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 each of:

GSCP II Holdings (AE), LLC
c/o Greenwich Street Capital Partners, Inc.
12 East 49th Street, Suite 3200
New York, NY  10017
Fax: (212) 884-6184
Attention: Thomas V. Inglesby

and

Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Fax: (212) 909-6836
Attention: Andrew L. Sommer

To the Executive:

Nathan Schlenker
357 Horning Road
Palatine Bridge, NY 13428
Fax: (518) 673-5071

with a copy to:

Silverman, Collura & Chernis
381 Park Avenue South
Suite 1601
New York, NY  10016
Fax: (212) 779-8858
Attention: Peter R. Silverman


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<PAGE>

         Any such notice or communication  shall be sent certified or registered
mail, return receipt  requested,  or by telefax,  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.

         7.2 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.

         7.3 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.

         7.4 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,  regarding  the subject  matter
hereof.  The Agreement may be amended at any time by mutual written agreement of
the parties hereto.

         7.5 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.

         7.6 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.

         7.7 Survival.  Sections 3.4 (relating to non-renewal),  4.1.1 (relating
to early  termination),  5 (relating  to Permanent  Disability),  6 (relating to
noncompetition,  nonsolicitation  and  confidentiality)  and  7.6  (relating  to
governing law) shall survive the termination  hereof,  whether such  termination
shall be by expiration of the Employment Term or an early  termination  pursuant
to Sections 4 or 5 hereof.

         7.8  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.

         7.9 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.


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<PAGE>

         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: Domenic Gatto

                                             ATLANTIC EXPRESS
                                             TRANSPORTATION CORP.

                                             By:   /s/ Domenic Gatto
                                                -------------------------------
                                                      Name:  Domenic Gatto
                                                      Title: Domenic Gatto

                                             EXECUTIVE:

                                             /s/ Natahan Schlenker
                                                -------------------------------
                                                 Nathan Schlenker


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