Document:

Exhibit
4.4

 

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 SECURITIES ISSUED HEREUNDER OR THEREUNDER MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT AND APPLICABLE LAWS.

 

No. W-1

 

WARRANT TO PURCHASE
COMMON STOCK OF 

ATLANTIC EXPRESS TRANSPORTATION CORP.

 

Atlantic Express
Transportation Corp., a New York corporation (the “Company”), hereby certifies
that, for value received, AIRLIE OPPORTUNITY CAPITAL MANAGEMENT, L.P., a
Delaware limited partnership (the “Purchaser”), or
its registered transferees, successors or assigns (each, a “holder”),
is the registered holder of warrants (the ”Warrants”, the
term “Warrant” shall include any warrant
issued upon transfer or partial exercise of this Warrant, unless the context
clearly requires otherwise) to subscribe for and purchase 40,725 shares of the fully
paid and nonassessable Common Stock (as adjusted pursuant to Section 6
hereof, the ”Warrant Shares”) of the Company
(representing five percent (5%) of the total number of issued and outstanding
shares of Common Stock, on a fully diluted basis, as of the date hereof), at a
purchase price per share equal to one cent ($0.01) (such price, as adjusted
pursuant to Section 6 hereof, the “Exercise
Price”), subject to the provisions and upon the terms and conditions
hereinafter set forth.

 

1.                                       Certain Definitions. 
As used in this Warrant, the following terms shall have the following
respective meanings:

 

“Affiliate”
of any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with such
specified Person.  For purposes of this
definition, “control,” as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting stock of a Person will be
deemed to be control. For purposes of this definition, the terms “controlling,”
“controlled by” and “under common control with” have correlative meanings.

 

“Board of
Directors” means:

 

(1)                                  with
respect to a corporation, the board of directors of the corporation;

 

(2)                                  with
respect to a partnership, the Board of Directors of the general partner of the
partnership; and

 

(3)                                  with
respect to any other Person, the board or committee of such Person serving a
similar function.

 

1

 

“Business Day”
means any day other than a Legal Holiday.

 

“Commission”
means the Securities and Exchange Commission.

 

“Common Stock”
shall mean the Company’s presently authorized common stock, par value $0.01 per
share, and any stock into or for which such Common Stock may hereafter be
converted or exchanged

 

“Equity
Registration Rights Agreement” means the registration rights
agreement, dated as of March 3, 2005, by and among the Company, the Parent
and the Purchaser relating to the Warrant Shares.

 

“Exchange Act”
means the Securities Exchange Act of 1934, as amended.

 

“Exercise Price”
means the amount set forth in the first paragraph hereof.

 

“Legal
Holiday” means a Saturday, a Sunday or a day on which banking
institutions in the City of New York are authorized by law, regulation or
executive order to remain closed.  If a
payment date is a Legal Holiday, payment may be made on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue on such payment for
the intervening period.

 

“Officer”
means, with respect to any Person, the Chairman of the Board, the Chief
Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Vice-President of such Person.

 

“Parent”
means Atlantic Express Transportation Group, Inc., a Delaware corporation.

 

“Person”
means any individual, corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, limited liability
company or government or other entity.

 

“Rule 144”
means Rule 144 promulgated under the Securities Act.

 

“Rule 144A”
means Rule 144A promulgated under the Securities Act.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

2.                                       Term. 
The purchase right represented by this Warrant is exercisable, in whole
or in part, at any time and from time to time from the date hereof through and
including the close of business on the fourth anniversary of the date hereof
(the “Expiration Date”).  Each Warrant not exercised prior to 5:00
p.m., New York City time, on the Expiration Date shall become void and all
rights thereunder and all rights in respect thereof shall cease as of such
time.

 

3.                                       Exercise.

 

(a)                                  Method of Exercise; Payment;
Issuance of New Warrant.  Subject to Section 2
hereof, the purchase right represented by this Warrant may be exercised by the
holder

 

2

 

hereof,
in whole or in part and from time to time, from and after the date hereof by
the surrender of this Warrant (with the notice of exercise form attached hereto
as Exhibit A duly executed) at the principal office of the Company, and,
except as otherwise provided for herein, by the payment to the Company by wire
transfer or by certified or official bank check payable to the order of the
Company of an amount in cash equal to the then applicable Exercise Price
multiplied by the number of Warrant Shares then being purchased.  The person or persons in whose name(s) any
certificate(s) representing shares of Common Stock shall be issuable upon
exercise of this Warrant shall be deemed to have become the holder(s) of record
of, and shall be treated for all purposes as the record holder(s) of, the
shares represented thereby (and such shares shall be deemed to have been
issued) immediately prior to the close of business on the date or dates upon
which this Warrant is exercised if exercised prior to the close of business on
such date;  otherwise, the date of record
shall be the next business day.  In the
event of any exercise of the rights represented by this Warrant, certificates
for the shares of Common Stock so purchased shall be delivered to the holder
hereof as soon as possible and in any event within fifteen (15) days after such
exercise and, unless this Warrant has been fully exercised, a new Warrant
representing the portion of the Warrant Shares, if any, with respect to which
this Warrant shall not then have been exercised shall also be issued to the
holder hereof as soon as possible and in any event within such fifteen (15)-day
period.

 

(b)                                 Net Issue Exercise. 
In addition to and without limiting the rights of the holder under the
terms of this Warrant, the holder may elect to receive shares equal to the
value (as determined below) of this Warrant (or the portion thereof being
cancelled) on a net basis, without the exchange of any funds, by surrender of
this Warrant at the principal office of the Company (with the notice of
exercise form and notice of such election attached hereto as Exhibit A
duly executed) in which event the Company shall issue to the holder a number of
Warrant Shares computed using the following formula:

 

	
   

  	
   

  	
  X = Y (A – B)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Where:

  	
   

  	
  X =

  	
   

  	
  the number of
  shares of Common Stock to be issued to the holder

  
	
   

  	
   

  	
  Y =

  	
   

  	
  the number of
  shares of Common Stock purchasable under the Warrant or, if only a portion of
  the Warrant is being exercised, the portion of the Warrant being cancelled
  (at the date of such calculation)

  
	
   

  	
   

  	
  A =

  	
   

  	
  the Market Value
  of one (1) share of Common Stock

  
	
   

  	
   

  	
  B =

  	
   

  	
  the Exercise
  Price

  
								

 

The “Market Value”
per share of Common Stock as of any date shall equal (i) if Common Stock is
primarily traded on a securities exchange, the last sale price on such
securities exchange on the trading day immediately prior to the date of
determination, or if no sale occurred on such day, the mean between the closing
“bid” and “asked” prices on such day, (ii) if the principal market for Common
Stock is in the over-the-counter market, the closing sale price on the trading
day immediately prior to the date of the determination, as published by the

 

3

 

National
Association of Securities Dealers Automated Quotation System or similar
organization, or if such price is not so published on such day, the mean
between the closing “bid” and “asked” prices, if available, on such day, which
prices may be obtained from any reputable pricing service, broker or dealer,
and (iii) if neither clause (i) nor clause (ii) is applicable, the fair market
value on the date of determination of Common Stock as determined in good faith
by the Board of Directors of the Company.

 

4.                                       Stock Fully Paid; Reservation and
Registration of Shares.

 

(a)                                  All Warrant Shares that may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance pursuant to the terms and conditions herein, be fully paid and
nonassessable, and free from all taxes, liens, charges, and pre-emptive rights
with respect to the issue thereof.  The
Company shall pay all transfer taxes, if any, attributable to the initial
issuance of the Warrant Shares upon the exercise of this Warrant; provided that
the Company shall not be required to pay any tax or taxes which may be payable
in respect of any transfer involved in the issue of any Warrants or any
certificates for Warrant Shares in a name other than that of the registered
holder of a Warrant surrendered upon the exercise of a Warrant, and the Company
shall not be required to issue or deliver such Warrant unless or until the
person or persons requesting the issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the satisfaction of
the Company that such tax has been paid.

 

(b)                                 The Company shall at all times
reserve and keep available, free from preemptive rights, out of the aggregate
of its authorized but unissued Common Stock or the authorized and issued Common
Stock held in its treasury, for the purpose of enabling it to satisfy any
obligation to issue Warrant Shares upon exercise of Warrants, the maximum
number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.

 

(c)                                  The Company or, if appointed, the
transfer agent for the Common Stock (the “Transfer Agent”) and every subsequent
transfer agent for any shares of the Company’s capital stock issuable upon the
exercise of any of the rights of purchase aforesaid will be irrevocably
authorized and directed at all times to reserve such number of authorized
shares as shall be required for such purpose. 
The Company shall keep a copy of this Warrant on file with the Transfer Agent
and with every subsequent transfer agent for any shares of the Company’s
capital stock issuable upon the exercise of the rights of purchase represented
by the Warrants.  The holder hereof is
hereby irrevocably authorized to requisition from time to time from such
Transfer Agent the stock certificates required to honor outstanding Warrants
upon exercise thereof in accordance with the terms of this Agreement.  The Company shall supply such Transfer Agent
with duly executed certificates for such purposes and shall provide or
otherwise make available any cash which may be payable as provided in Section 7
hereof.  The Company shall furnish such
Transfer Agent a copy of all notices of adjustments, and certificates related
thereto, transmitted to each holder pursuant hereto.

 

(d)                                 Before taking any action which would
cause an adjustment pursuant to Section 6 hereof to reduce the Exercise
Price below the then par value (if any) of the Warrant Shares, the Company
shall take any corporate action which may, in the opinion of its counsel (which
may be counsel employed by the Company), be necessary in order that the Company
may

 

4

 

validly
and legally issue fully paid and nonassessable Warrant Shares at the Exercise
Price as so adjusted.

 

(e)                                  The Company covenants that all
Warrant Shares which may be issued upon exercise of Warrants shall, upon issue,
be fully paid, nonassessable, free of preemptive rights and free from all
taxes, liens, charges and security interests with respect to the issuance
thereof.

 

(f)                                    The Company has agreed pursuant to
the Equity Registration Rights Agreement to, within 90 days of the Closing
Date, use reasonable best efforts to file or amend an existing shelf
registration statement on an appropriate form under the Securities Act to cover
the resale of the Warrant Shares.  The
Company will use reasonable best efforts to cause such registration statement
or amendment to become effective within 180 days of the Closing Date. The
Company will use its reasonable best efforts to keep such registration
statement continuously effective under the Securities Act in order to permit
the resale of the Warrant Shares by the holders thereof for the earlier of (i)
two years or (ii) until such time as all registrable securities have been sold
pursuant to such registration statement. In addition, pursuant to the Equity
Registration Rights Agreement, subject to certain limitations, the Company and
the Parent have agreed that if at any time after the Closing Date the Company
or the Parent proposes to file a registration statement under the Securities
Act with respect to an offering by the Company or the Parent, respectively, for
its own account or for the account of any holders of its common stock, then the
Company or the Parent, respectively, shall give written notice of such proposed
filing to the holders of Warrants and Warrant Shares as soon as practicable
(but in no event fewer than 20 days before the anticipated filing date) and
such notice shall offer such holders the opportunity to register such number of
Warrant Shares as each holder may request in writing within 20 days after
receipt of such written notice from the Company or the Parent, respectively
(which request shall specify the Warrant Shares intended to be disposed of by
such selling holder and the intended method of distribution thereof); provided
that any holder of Warrants so requesting shall agree, upon or prior to
effectiveness of such registration statement, to exercise their Warrants at
least to the extent necessary for such holder to acquire the number of Warrant
Shares for which such holder has requested registration. The Company or the
Parent, respectively, shall use its reasonable best efforts to keep such
registration statement continuously effective under the Securities Act until at
least the earlier of (i) an aggregate of 180 days after the effective date
thereof or (ii) the consummation of the distribution by the holders of all of
the Warrant Shares covered thereby.

 

5.                                       Obtaining Stock Exchange Listings.

 

The Company shall from
time to time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed
on a principal securities exchange, automated quotation system or other market
within the United States of America, if any, on which other shares of Common
Stock are then listed.

 

6.                                       Adjustment of Exercise Price and
Number of Warrant Shares Issuable.

 

The Exercise Price and
the number of Warrant Shares issuable upon the exercise of each Warrant shall
be subject to adjustment from time to time upon the occurrence of the events

 

5

 

enumerated in this
Section 6.  For purposes of this Section 6,
“Common Stock” means shares now or
hereafter authorized of any class of common shares of the Company and any other
stock of the Company, however designated, that has the right (subject to any
prior rights of any class or series of preferred stock) to participate in any
distribution of the assets or earnings of the Company without limit as to per
share amount.

 

In addition to the
adjustments required under this Section 6, the Company may, at any time
reduce the Exercise Price for any period of time (but not less than 20 Business
Days) deemed appropriate by the Board of Directors of the Company.

 

(a)                                  Adjustment for Change in Capital
Stock.  If the Company (i) pays a dividend or makes a
distribution on its Common Stock payable in shares of its Common Stock, (ii)
subdivides its outstanding shares of Common Stock into a greater number of
shares, (iii) combines its outstanding shares of Common Stock into a smaller
number of shares, (iv) makes a distribution on its Common Stock in shares of
its capital stock other than Common Stock or (v) issues by reclassification of
its Common Stock any shares of its capital stock, then the Exercise Price in
effect immediately prior to such action shall be proportionately adjusted so
that the holder of any Warrant thereafter exercised may receive the aggregate number
and kind of shares of capital stock of the Company which such holder would have
owned immediately following such action assuming the exercise of such Warrant
immediately prior to such action.

 

The adjustment shall
become effective immediately after the record date in the case of a dividend or
distribution and immediately after the effective date in the case of a
subdivision, combination or reclassification.

 

If, after an adjustment,
a holder of a Warrant upon exercise of it may receive shares of two or more
classes of capital stock of the Company, the Company shall determine, in good
faith, the allocation of the adjusted Exercise Price between the classes of
capital stock.  After such allocation,
the exercise privilege and the Exercise Price of each class of capital stock
shall thereafter be subject to adjustment on terms comparable to those
applicable to Common Stock in this Section 6.  Such adjustment shall be made successively
whenever any event listed above shall occur.

 

(b)                                 Adjustment for Rights Issue. 
If the Company distributes any rights, options or warrants to all
holders of its Common Stock entitling them for a period expiring within 45 days
after the record date set forth below to subscribe for shares of Common Stock
or securities convertible into, or exchangeable or exercisable for, shares of
Common Stock, in either case, at a price per share less than the Fair Market
Value (as defined in subsection (g) of this Section 6) per share on
that record date, the Exercise Price shall be adjusted in accordance with the
formula:

 

6

 

	
   

  	
   

  	
   

  	
   

  	
  O

  	
  +

  	
  N x P

  	
   

  
	
  E’

  	
  =

  	
  E

  	
  x

  	
   

  	
   

  	
  M

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  O+N

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  where:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  E’

  	
  =

  	
  the adjusted
  Exercise Price.

  
	
   

  	
   

  	
  E

  	
  =

  	
  the current
  Exercise Price.

  
	
   

  	
   

  	
  O

  	
  =

  	
  the number of
  shares of Common Stock outstanding on the record date.

  
	
   

  	
   

  	
  N

  	
  =

  	
  the number of
  additional shares of Common Stock issued pursuant to such rights, options or
  warrants.

  
	
   

  	
   

  	
  P

  	
  =

  	
  the aggregate
  price per share of the additional shares.

  
	
   

  	
   

  	
  M

  	
  =

  	
  the Fair Market
  Value per share of Common Stock on the record date.

  
									

 

The adjustment shall be
made successively whenever any such rights, options or warrants are issued and
shall become effective immediately after the record date for the determination
of stockholders entitled to receive the rights, options or warrants.  If at the end of the period during which such
rights, options or warrants are exercisable, not all rights, options or
warrants shall have been exercised, the Exercise Price shall be immediately readjusted
to what it would have been if “N” in the above formula had been the number of
shares actually issued.

 

(c)                                  Adjustment for Other Distributions. 
If the Company distributes to all holders of its Common Stock any of its
assets (including cash), debt securities, preferred stock or any rights or
warrants to purchase assets (including cash), debt securities, preferred stock
or other securities of the Company, the Exercise Price shall be adjusted in
accordance with the formula:

 

	
  E’

  	
  =

  	
  E

  	
  x

  	
  M

  	
  -

  	
  F

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  M

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  where:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  E’

  	
  =

  	
  the adjusted
  Exercise Price.

  
	
   

  	
   

  	
  E

  	
  =

  	
  the current
  Exercise Price.

  
	
   

  	
   

  	
  M

  	
  =

  	
  the Fair Market
  Value per share of Common Stock on the record date mentioned below.

  
	
   

  	
   

  	
  F

  	
  =

  	
  the fair market
  value on the record date of the debt securities, preferred stock, assets,
  securities, rights or warrants to be distributed in respect of one share of
  Common Stock as determined in good faith by the Board of Directors of the
  Company.

  
									

 

7

 

The adjustment shall be
made successively whenever any such distribution is made and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive the distribution.

 

This Section 6(c)
shall not apply to cash dividends or other cash distributions paid out of consolidated
current or retained earnings as shown on the books of the Company prepared in
accordance with generally accepted accounting principles.  In addition, this Section 6(c) shall not
apply to rights, options or warrants referred to in Section 6(b) hereof.

 

(d)                                 Adjustment for Common Stock Issue. 
If the Company issues shares of Common Stock for a consideration per
share less than the Fair Market Value per share on the date the Company fixes
the offering price of such additional shares, the Exercise Price shall be
adjusted in accordance with the formula:

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  P 

  	
   

  
	
  E’

  	
  =

  	
  E

  	
  x

  	
  O

  	
  +

  	
  M

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  A

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  where:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  E’

  	
  =

  	
  the adjusted
  Exercise Price.

  
	
   

  	
   

  	
  E

  	
  =

  	
  the current
  Exercise Price.

  
	
   

  	
   

  	
  O

  	
  =

  	
  the number of
  shares outstanding immediately prior to the issuance of such additional
  shares.

  
	
   

  	
   

  	
  P

  	
  =

  	
  the aggregate
  consideration received for the issuance of such additional shares.

  
	
   

  	
   

  	
  M

  	
  =

  	
  the Fair Market
  Value per share on the date of issuance of such additional shares.

  
	
   

  	
   

  	
  A

  	
  =

  	
  the number of
  shares outstanding immediately after the issuance of such additional shares.

  

 

The adjustment shall be
made successively whenever any such issuance is made, and shall become
effective immediately after such issuance.

 

This subsection (d)
shall not apply to:

 

(1)                                  any
of the transactions described in subsections (a), (b) and (c) of this Section 6,

 

(2)                                  the
exercise of Warrants, or the conversion, exchange or exercise of other
securities convertible into or exchangeable or exercisable for Common Stock the
issuance of which requires an adjustment to be made under Section 6(e),

 

(3)                                  the
issuance of Common Stock (and options exercisable therefore) to employees,
officers or directors of the Company or its subsidiaries under bona fide
employee benefit plans adopted by the Board of Directors and approved by the
holders of Common Stock when required by law, if such Common Stock would
otherwise be

 

8

 

covered by this subsection (d)
(but only to the extent that the aggregate number of shares excluded hereby and
issued after the date of this Warrant shall not exceed 5% of the Common Stock
outstanding at the time of the adoption of each such plan, exclusive of
anti-dilution adjustments thereunder),

 

(4)                                  the
issuance of Common Stock to shareholders of any Person which merges into the
Company, or with a subsidiary of the Company, in proportion to their stock
holdings of such person immediately prior to such merger, upon such merger,
provided that if such Person is an Affiliate of the Company, the Board of Directors
shall have obtained a fairness opinion from a nationally recognized investment
banking, appraisal or valuation firm, which is not an Affiliate of the Company,
stating that the consideration received in such merger is fair to the Company
from a financial point of view,

 

(5)                                  the
issuance of securities upon the conversion, exchange or exercise of other
securities, warrants, options or similar rights if the conversion, exchange or
exercise price is not less than the Fair Market Value per share of Common Stock
at the time the security, warrant, option or right so converted, exchanged or
exercised was issued or granted, or

 

(6)                                  the
issuance of shares of Common Stock pursuant to rights, options or warrants
which were originally issued in a Non-Affiliate Sale (as defined below)
together with one or more other securities as part of a unit at a price per
unit.

 

(e)                                  Adjustment for Convertible
Securities Issue.  If the Company issues any securities
convertible into or exchangeable or exercisable for Common Stock (other than
securities issued in transactions described in subsections (a), (b) and (c) of
this Section 6) for a consideration per share of Common Stock initially
deliverable upon conversion, exchange or exercise of such securities less than
the Fair Market Value per share on the date of issuance of such securities, the
Exercise Price shall be adjusted in accordance with the formula:

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  P

  	
   

  
	
  E’

  	
  =

  	
  E

  	
  x

  	
  O

  	
  +

  	
   

  	
  M

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  O

  	
  +

  	
   

  	
  D

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  where:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  E’

  	
  =

  	
  the adjusted
  Exercise Price.

  
	
   

  	
   

  	
  E

  	
  =

  	
  the then current
  Exercise Price.

  
	
   

  	
   

  	
  O

  	
  =

  	
  the number of
  shares outstanding immediately prior to the issuance of such securities.

  
	
   

  	
   

  	
  P

  	
  =

  	
  the aggregate
  consideration received for the issuance of such securities.

  
	
   

  	
   

  	
  M

  	
  =

  	
  the Fair Market
  Value per share on the date of issuance of such securities.

  

 

9

 

	
   

  	
   

  	
  D

  	
  =

  	
  the maximum
  number of shares deliverable upon conversion or in exchange for such
  securities at the initial conversion, exchange or exercise rate.

  

 

 

The adjustment shall be
made successively whenever any such issuance is made, and shall become
effective immediately after such issuance.

 

If all of the Common
Stock deliverable upon conversion, exchange or exercise of such securities have
not been issued when such securities are no longer outstanding, then the
Exercise Price shall promptly be readjusted to the Exercise Price which would
then be in effect had the adjustment upon the issuance of such securities been
made on the basis of the actual number of shares of Common Stock issued upon
conversion, exchange or exercise of such securities.

 

This subsection (e)
shall not apply to convertible securities issued to shareholders of any Person
which merges into the Company, or with a subsidiary of the Company, in
proportion to their stock holdings of such person immediately prior to such
merger, upon such merger, provided that if such Person is an Affiliate of the
Company, the Board of Directors shall have obtained a fairness opinion from a
nationally recognized investment banking, appraisal or valuation firm, which is
not an Affiliate of the Company, stating that the consideration received in
such merger is fair to the Company from a financial point of view.

 

(f)                                    Consideration Received. 
For purposes of any computation respecting consideration received
pursuant to subsections (d) and (e) of this Section 6, the following shall
apply:

 

(1)                                  in
the case of the issuance of shares of Common Stock for cash, the consideration
shall be the amount of such cash, provided that in no case shall any deduction
be made for any commissions, discounts or other expenses incurred by the
Company for any underwriting of the issue or otherwise in connection therewith;

 

(2)                                  in
the case of the issuance of shares of Common Stock for a consideration in whole
or in part other than cash, the consideration other than cash shall be deemed
to be the fair market value thereof as determined in good faith by the Board of
Directors (irrespective of the accounting treatment thereof), whose
determination shall be conclusive, and described in a Board resolution which
shall be delivered to the holder hereof;

 

(3)                                  in
the case of the issuance of securities convertible into or exchangeable or
exercisable for shares, the aggregate consideration received therefor shall be
deemed to be the consideration received by the Company for the issuance of such
securities plus the additional minimum consideration, if any, to be received by
the Company upon the conversion, exchange or exercise thereof (the
consideration in each case to be determined in the same manner as provided in
clauses (1) and (2) of this subsection (f)); and

 

(4)                                  in
the case of the issuance of shares of Common Stock pursuant to rights, options
or warrants which rights, options or warrants were originally issued together
with one or more other securities as part of a unit at a price per unit, the
consideration shall be

 

10

 

deemed to be the fair
value of such rights, options or warrants at the time of issuance thereof as
determined in good faith by the Board of Directors whose determination shall be
conclusive and described in a Board resolution which shall be delivered to the
holder hereof plus the additional minimum consideration, if any, to be received
by the Company upon the exercise, conversion or exchange thereof (as determined
in the same manner as provided in clauses (1) and (2) of this subsection (f)).

 

(g)                                 Fair Market Value. 
For purposes of Sections 6(b), (c), (d) and (e) hereof, the “Fair Market Value” per share of Common Stock at any date of
determination shall be (1) in connection with a sale by the Company to a party
that is not an Affiliate of the Company in an arm’s-length transaction (a “Non-Affiliate Sale”), the price per security at which such
security is sold and (2) in connection with any sale by the Company to an
Affiliate of the Company, (a) the last price per security at which such
security was sold in a Non-Affiliate Sale within the three-month period
preceding such date of determination and (b), if clause (a) is not applicable,
the fair market value of such security determined in good faith by (i) a
majority of the Board of Directors of the Company, including a majority of the
Disinterested Directors, and approved in a Board resolution delivered to the
holder hereof or (ii) a nationally recognized investment banking, appraisal or
valuation firm, which is not an Affiliate of the Company, in each case, taking
into account, among all other factors deemed relevant by the Board of Directors
or such investment banking, appraisal or valuation firm, the trading price and
volume of such security on any national securities exchange or automated
quotation system on which such security is traded.

 

For purposes of this Section 6(g),
“Disinterested Director” means, in
connection with any issuance of securities that gives rise to a determination
of the Fair Market Value thereof, each member of the Board of Directors who is
not an officer, employee, director or other Affiliate of the party to whom the
Company is proposing to issue the securities giving rise to such determination.

 

For purposes of this Section 6(g),
“Affiliate” of any specified Person
means (A) any other Person directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified Person and (B)
any director, officer or employee of such specified Person.  For purposes of this definition “Control” (including, with correlative meanings, the terms “Controlling,” “Controlled By”
and “Under Common Control With”) as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by agreement
or otherwise.

 

(h)                                 When De Minimis Adjustment May Be
Deferred.  No adjustment in the Exercise Price need be
made unless the adjustment would require an increase or decrease of at least 1%
in the Exercise Price.  Any adjustments
that are not made shall be carried forward and taken into account in any
subsequent adjustment.  All calculations
under this Section 6 shall be made to the nearest cent or to the nearest
1/100th of a share, as the case may be, it being understood that no such
rounding shall be made under subsection (o).

 

(i)                                     When No Adjustment Required. 
With respect to Warrants of any holder, no adjustment need be made for a
transaction referred to Section 6(a), (b), (c), (d), (e) or (f) hereof, if
such holder is to participate (without being required to exercise its Warrants)
in the

 

11

 

transaction
on a basis and with notice that the Board of Directors determines to be fair
and appropriate in light of the basis and notice on which holders of Common
Stock participate in the transaction.  No
adjustment need be made for (i) rights to purchase Common Stock pursuant to a
Company plan for reinvestment of dividends or interest or (ii) a change in the
par value or no par value of the Common Stock. 
To the extent the Warrants become convertible into cash, no adjustment
need be made thereafter as to the cash. 
Interest will not accrue on the cash.

 

(j)                                     Notice of Adjustment. 
Whenever the Exercise Price is adjusted, the Company shall provide the
notices required by Section 8 hereof.

 

(k)                                  Reorganization of Company. 
At any time after the date hereof, if the Company consolidates or merges
with or into, or transfers or leases all or substantially all its assets to,
any Person, upon consummation of such transaction the Warrants shall
automatically become exercisable for the kind and amount of securities, cash or
other assets which the holder of a Warrant would have owned immediately after
the consolidation, merger, transfer or lease if the holder had exercised the
Warrant immediately before the effective date of the transaction. Concurrently
with the consummation of such transaction, the corporation formed by or
surviving any such consolidation or merger if other than the Company, or the
Person to which such sale or conveyance shall have been made, shall execute (i)
a supplemental Warrant so providing and further providing for adjustments which
shall be as nearly equivalent as may be practical to the adjustments provided
for in this Section 6(k) and (ii) a supplement to the Equity Registration
Rights Agreement providing for the assumption of the Company’s obligations
thereunder.  The successor Company shall
mail to Warrant holders a notice describing the supplemental Warrant and Equity
Registration Rights Agreement.  If the
issuer of securities deliverable upon exercise of Warrants under the
supplemental Warrant is an Affiliate of the formed, surviving, transferee or
lessee corporation, such issuer shall join in the supplemental Warrant and
Equity Registration Rights Agreement.  If
this Section 6(k) shall be applicable, Sections 6(a), (b), (c), (d), (e)
and (f) hereof shall not be applicable.

 

(l)                                     Company Determination Final. 
Any determination that the Company or the Board of Directors must make
pursuant to Section 6(a), (c), (d), (e), (f), (g), (h) or (i) hereof is
conclusive.

 

(m)                               When Issuance or Payment May Be
Deferred.  In any case in which this Section 6
shall require that an adjustment in the Exercise Price be made effective as of
a record date for a specified event, the Company may elect to defer until the
occurrence of such event (i) issuing to the holder of any Warrant exercised
after such record date the Warrant Shares and other capital stock of the
Company, if any, issuable upon such exercise over and above the Warrant Shares
and other capital stock of the Company, if any, issuable upon such exercise on
the basis of the Exercise Price and (ii) paying to such holder any amount in
cash in lieu of a fractional share pursuant to Section 7 hereof; provided
that the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder’s right to receive such additional Warrant
Shares, other capital stock and cash upon the occurrence of the event requiring
such adjustment.

 

(n)                                 Adjustment in Number of Shares. 
Upon each adjustment of the Exercise Price pursuant to this Section 6,
each Warrant outstanding prior to the making of the adjustment

 

12

 

in the
Exercise Price shall thereafter evidence the right to receive upon payment of
the adjusted Exercise Price that number of shares of Common Stock (calculated
to the nearest hundredth) obtained from the following formula:

 

	
  N’

  	
  =

  	
  N

  	
  x

  	
  E

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  E’

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  where:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  N’

  	
  =

  	
  the adjusted
  number of Warrant Shares issuable upon exercise of a Warrant by payment of
  the adjusted Exercise Price.

  
	
   

  	
   

  	
  N

  	
  =

  	
  the number of
  Warrant Shares previously issuable upon exercise of a Warrant by payment of
  the Exercise Price prior to adjustment.

  
	
   

  	
   

  	
  E’

  	
  =

  	
  the adjusted
  Exercise Price

  
	
   

  	
   

  	
  E

  	
  =

  	
  the Exercise
  Price prior to adjustment.

  

 

(o)                                 Form of Warrants. 
Irrespective of any adjustments in the Exercise Price or the number or
kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.

 

7.                                       Fractional Interests.

 

The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants.  If more than one Warrant shall be presented
for exercise in full at the same time by the same holder, the number of full
Warrant Shares which shall be issuable upon the exercise thereof shall be
computed on the basis of the aggregate number of Warrant Shares purchasable on
exercise of the Warrants so presented. 
If any fraction of a Warrant Share would, except for the provisions of
this Section 7, be issuable on the exercise of any Warrants (or specified
portion thereof), the Company shall pay an amount in cash equal to the Fair
Market Value per Warrant Share, as determined on the day immediately preceding
the date the Warrant is presented for exercise, multiplied by such fraction,
computed to the nearest whole U.S. cent.

 

8.                                       Notices to Warrant Holders.

 

(a)                                  Upon any adjustment of the Exercise
Price pursuant to Section 6 hereof, the Company shall promptly thereafter
(i) cause to be delivered to the holder hereof a certificate of a firm of
independent public accountants of recognized standing selected by the Board of
Directors of the Company (who may be the regular auditors of the Company)
setting forth the Exercise Price after such adjustment and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculations are based and setting forth the number of Warrant Shares (or
portion thereof) issuable after such adjustment in the Exercise Price, upon
exercise of a Warrant and payment of the adjusted Exercise Price, which
certificate shall be conclusive evidence of the correctness of the matters set
forth therein, and (ii) cause to be given to the holder hereof written notice
of such adjustments by first-class mail, postage prepaid.

 

13

 

Where
appropriate, such notice may be given in advance and included as a part of the
notice required to be mailed under the other provisions of this Section 8.

 

(b)                                 In the event:

 

(i)                                     that the Company shall authorize the
issuance to all holders of shares of Common Stock of rights, options or
warrants to subscribe for or purchase shares of Common Stock or of any other
subscription rights or warrants;

 

(ii)                                  that the Company shall authorize the
distribution to all holders of shares of Common Stock of evidences of its
indebtedness or assets (other than dividends or cash distributions paid out of
consolidated current or retained earnings as shown on the books of the Company
prepared in accordance with generally accepted accounting principles or
dividends payable in shares of Common Stock or distributions referred to in Section 8(a)
hereof);

 

(iii)                               of any consolidation or merger to
which the Company is a party and for which approval of any stockholders of the
Company is required, or of the conveyance or transfer of the properties and
assets of the Company substantially as an entirety, or of any reclassification
or change of Common Stock issuable upon exercise of the Warrants (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), or a tender offer
or exchange offer for shares of Common Stock;

 

(iv)                              of the voluntary or involuntary
dissolution, liquidation or winding up of the Company; or

 

(v)                                 that the Company proposes to take
any action (other than actions of the character described in Section 6(a)
hereof) which would require an adjustment of the Exercise Price pursuant to Section 6
hereof;

 

then the Company
shall cause to be given to the holder hereof at least 20 days (or 10 days in
any case specified in clauses (i) or (ii) above) prior to the applicable record
date hereinafter specified, or promptly in the case of events for which there
is no record date, by first-class mail, postage prepaid, a written notice
stating (x) the date as of which the holders of record of shares of Common
Stock to be entitled to receive any such rights, options, warrants or
distribution are to be determined, (y) the initial expiration date set forth in
any tender offer or exchange offer for shares of Common Stock, or (z) the date
on which any such consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up is expected to become effective or consummated, and
the date as of which it is expected that holders of record of shares of Common
Stock shall be entitled to exchange such shares for securities or other
property, if any, deliverable upon such reclassification, consolidation,
merger, conveyance, transfer, dissolution, liquidation or winding up. The
failure to give the notice required by this Section 8 or any defect
therein shall not affect the legality or validity of any distribution, right,
option, warrant, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.

 

(c)                                  Nothing contained in this Warrant
shall be construed as conferring upon the holder hereof the right to vote or to
consent or to receive notice as a stockholder in respect of

 

14

 

the
meetings of stockholders or the election of directors of the Company or any
other matter, or any rights whatsoever as stockholders of the Company.

 

9.                                       Reports. 
The Company agrees with each holder, for so long as any Warrants or
Warrant Shares remain outstanding and during any period in which the Company
(i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any holder, to such holder or beneficial owner of
Warrants or Warrant Shares in connection with any sale thereof and any
prospective purchaser of such Warrants or Warrant Shares designated by such
holder or beneficial owner, the information required by Rule 144(A)(d)(4) under
the Act in order to permit resales of such Warrants or Warrant Shares pursuant
to Rule 144A, and (ii) is subject to Section 13 or 15(d) of the Exchange
Act, to make all filings required thereby in a timely manner in order to permit
resales of such Warrants or Warrant Shares pursuant to Rule 144A.

 

10.                                 Transfer of Warrant.

 

(a)                                  Warrant Register. 
The Company will maintain a register (the “Warrant
Register”) containing the names and addresses of the holder or
holders of the Warrants.  Any holder of
this Warrant, or any portion thereof may change his or her address as shown on
the Warrant Register by written notice to the Company requesting such
change.  Any notice or written
communication required or permitted to be given to the holder may be delivered
or given by mail to such holder as shown on the Warrant Register and at the
address shown on the Warrant Register. 
Until this Warrant is transferred on the Warrant Register of the
Company, the Company may treat the holder as shown on the Warrant Register as
the absolute owner of this Warrant for all purposes, notwithstanding any notice
to the contrary.

 

(b)                                 Warrant Agent. 
The Company may, by written notice to the holder, appoint an agent for
the purpose of maintaining the Warrant Register referred to in Section 10(a)
above, issuing the Common Stock or other securities then issuable upon the
exercise of this Warrant, exchanging this Warrant, replacing this Warrant, or
any or all of the foregoing.  Thereafter,
any such registration, issuance, exchange, or replacement, as the case may be,
shall be made at the office of such agent.

 

(c)                                  Transferability and
Non-negotiability of Warrant.  This Warrant
may not be transferred or assigned in whole or in part without compliance with
all applicable federal and state securities laws by the transferor and the
transferee (including the delivery of investment representation letters and
legal opinions reasonably satisfactory to the Company, if such are requested by
the Company).  Subject to the provisions
of this Warrant with respect to compliance with federal and state securities
laws, title to this Warrant may be transferred by endorsement (by the holder
executing the Assignment Form attached hereto as Exhibit B) and
delivery in the same manner as a negotiable instrument transferable by
endorsement and delivery.

 

(d)                                 Exchange of Warrant Upon a Transfer. 
On surrender of this Warrant for exchange, properly endorsed on the
Assignment Form and subject to the provisions of this Warrant with respect to
compliance with federal and state securities laws and with the limitations on
assignments and transfers contained in this Section 10, the Company
at its expense shall issue

 

15

 

to or on
the order of the holder a new warrant or warrants of like tenor, in the name of
the holder or as the holder may direct, for the number of shares issuable upon
exercise hereof.

 

(e)                                  Compliance with Securities Laws.

 

(i)                                     The holder of this Warrant, by
acceptance hereof, acknowledges that this Warrant and the shares of Common
Stock to be issued upon exercise hereof or conversion thereof are being
acquired solely for the holder’s own account and not as a nominee for any other
party, and for investment, and that the holder will not offer, sell or
otherwise dispose of this Warrant or any shares of Common Stock to be issued
upon exercise hereof or conversion thereof except under circumstances that will
not result in a violation of the Securities Act or any state securities
laws.  Upon exercise of this Warrant, the
holder shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the shares of Common Stock so purchased are
being acquired solely for the holder’s own account and not as a nominee for any
other party, for investment, and not with a view toward distribution or resale
that would violate the Securities Act.

 

(ii)                                  The holder of this Warrant, by
acceptance hereof, hereby represents and warrants as follows:

 

(A)                              Such
holder is capable of evaluating the merits and risks of its investment in the
Company and has the capacity to protect its own interests. Such holder must
bear the economic risk of this investment indefinitely unless the Warrant
Shares, if issued, are registered pursuant to the Securities Act, or an
exemption from registration is available.

 

(B)                                Such
holder is an “accredited investor” within the meaning of Rule 501(a) of
Regulation D under the Securities Act.

 

(C)                                Such
holder has had an opportunity to discuss the Company’s business, management and
financial affairs with directors, officers and management of the Company and
has had the opportunity to review the Company’s operations and facilities. Such
holder has also had the opportunity to ask questions of and receive answers
from, the Company and its management regarding the terms and conditions of this
investment.

 

(iii)                               This Warrant, the Warrant Shares and
any other securities issued upon exercise hereof or conversion thereof shall be
stamped or imprinted with a legend in substantially the following form (in
addition to any legend required by state securities laws):

 

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 SECURITIES ISSUED
HEREUNDER OR THEREUNDER MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND APPLICABLE LAWS.

 

11.                                 Replacement of Warrants or Stock
Certificates.  The Company covenants to the holder hereof
that, upon receipt of evidence reasonably satisfactory to the Company of the
loss,

 

16

 

theft,
destruction or mutilation of this Warrant or any stock certificate and, in the
case of any loss, theft or destruction, upon receipt of an executed lost
securities bond or indemnity reasonably satisfactory to the Company, or in the
case of any such mutilation upon surrender and cancellation of such mutilated
Warrant or stock certificate, the Company will make and deliver a new Warrant
or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Warrant or stock certificate.

 

12.                                 Amendment. 
Any amendment or supplement to this Warrant shall require the written
consent of the holders of a majority of the then outstanding Warrants
(excluding Warrants held by the Company or any of its Affiliates). The consent
of each holder of Warrants affected shall be required for any amendment
pursuant to which the Exercise Price would be increased or the number of
Warrant Shares purchasable upon exercise of Warrants would be decreased (other
than pursuant to adjustments provided in the Warrant).

 

13.                                 Notices. 
Unless otherwise specifically provided herein, all communications under
this Warrant shall be in writing and shall be deemed to have been duly given
(a) on the date of service if served personally on the party to whom notice is
to be given, (b) on the day of transmission if sent by facsimile transmission
to a number provided to a party specifically for such purposes, and telephonic
confirmation of receipt is obtained promptly after completion of transmission,
(c) on the day after delivery to Federal Express or similar overnight courier,
or (d) on the fifth day after mailing, if mailed to the party to whom notice is
to be given, by first class mail, registered or certified, postage prepaid, and
properly addressed, return receipt requested, to each such holder at its
address as shown on the books of the Company or to the Company or the Purchaser
at the address indicated below.

 

To the Company at:

Atlantic Express
Transportation Corp.

7 North Street

Staten Island, New York
10302-1205

Telecopier No.:  (718) 442-9103

Attention:  Chief Financial Officer

 

With a copy to:

 

Latham & Watkins LLP

885 Third Avenue, Suite
100

New York, New York
10022-4834

Telecopier No.:  (212) 751-4864

Attention:  Robert A. Zuccaro, Esq.

 

To the Purchaser at:

 

Airlie Opportunity Capital Management, L.P.

115 East Putnam Avenue

Greenwich, Connecticut 06830

Telecopier No.: 203-661-0479

Attention: Adam Goodfriend

 

17

 

With a copy to:

 

Satterlee Stephens Burke & Burke LLP

230 Park Avenue, Suite 1130

New York, New York 10169

Telecopier No.: 212-818-9606

Attention: William M. Jackson, Esq.

 

Any party hereto may change its address for purposes of this Section 14
by giving the other party written notice of the new address in the manner set
forth herein.

 

14.                                 Binding Effect on Successors. 
This Warrant shall be binding upon any person or entity succeeding the
Company by merger, consolidation or acquisition of all or substantially all of
the Company’s assets, and all of the obligations of the Company relating to the
Common Stock issuable upon the exercise or conversion of this Warrant shall
survive the exercise, conversion and termination of this Warrant and all of the
covenants and agreements of the Company shall inure to the benefit of the successors
and assigns of the holder hereof.

 

15.                                 Descriptive Headings. 
The descriptive headings of the several sections of this Warrant are
inserted for convenience only and do not constitute a part of this Warrant.

 

16.                                 Governing Law.

 

(i)
THIS WARRANT 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. EACH OF
THE COMPANY AND THE HOLDER HEREOF, BY ACCEPTANCE OF THIS WARRANT,  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 WARRANT.

 

EACH OF THE COMPANY AND THE HOLDER HEREOF 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.

 

17.                                 Waiver of Jury Trial. 
EACH OF THE COMPANY AND THE HOLDER HEREOF 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 WARRANT OR THE
TRANSACTIONS CONTEMPLATED BY THIS WARRANT.

 

18.                                 Benefits of this Warrant. 
Nothing in this Warrant shall be construed to give to any person or
corporation other than the Company and the registered holders of Warrants any
legal or equitable right, remedy or claim under this Warrant; but this Warrant
shall be for the sole and exclusive benefit of the Company and the registered
holders of Warrants.

 

18

 

19.                                 Remedies. 
In case any covenant or agreement contained in this Warrant shall have
been breached, the holders hereof (in the case of a breach by the Company), or
the Company (in the case of a breach by a holder), may proceed to protect and
enforce their or its rights either by suit in equity and/or by action at law,
including, but not limited to, an action for damages as a result of any such
breach and/or an action for specific performance of any such covenant or
agreement contained in this Warrant.

 

[Signature page follows]

 

19

 

IN WITNESS WHEREOF, the
Company has caused this Warrant to be executed on its behalf by one of its
officers thereunto duly authorized as of the date first set forth above.

 

 

	
   

  	
  ATLANTIC EXPRESS
  TRANSPORTATION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Domenic
  Gatto

  	
   

  
	
   

  	
  Name:

  	
  Domenic Gatto

  	
   

  
	
   

  	
  Title:

  	
  President and
  CEO

  	
   

  

 

20

 

EXHIBIT A

NOTICE OF EXERCISE

 

To:                              ATLANTIC
EXPRESS TRANSPORTATION CORP.

 

1.                                       The
undersigned hereby:

 

 ̈                                    Elects
to purchase        shares of Common Stock of                                 ,
pursuant to the terms of Section 3(a) of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full.

 

 ̈                                    Elects
to exercise this Warrant for the purchase of      
shares of Common Stock, pursuant to the terms of Section 3(b) of
the attached Warrant.

 

2.                                       Please
issue a certificate or certificates representing said shares in the name of the
undersigned or in such other name or names as are specified below:

 

	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Address)

  

 

3.                                       The
undersigned represents that the aforesaid shares are being acquired for the
account of the person(s) specified in paragraph 2 of this Notice of Exercise
for investment and not with a view to, or for resale in connection with, the
distribution thereof and that the person(s) specified in paragraph 2 of this
Notice of Exercise have no present intention of distributing or reselling such
shares. The undersigned expressly reaffirms that the representations and
warranties of the undersigned set forth in Section 10(e)(ii) of the
attached Warrant are true and current with respect to each person specified in
paragraphs 2 and 4 of this Notice of Exercise as of the date hereof. The
undersigned acknowledges and agrees that the aforesaid shares shall be issued
subject to and in compliance with the terms and conditions of the attached
Warrant, including the inclusion of the legend prescribed in Section 10(e)(iii)
of the attached Warrant.

 

	
   

  	
  (Signature)

  	
   

  	
  (Date)

  

 

4.                                       Please
issue a new Warrant for the unexercised portion of the attached Warrant in the
name of the undersigned or in such other name as is specified below:

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  By:
  (Warrantholder)

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name: (Print)

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
								

 

21

 

EXHIBIT B

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED, the
undersigned registered owner of this Warrant hereby sells, assigns and
transfers unto the Assignee named below all of the rights of the undersigned
under the within Warrant, with respect to the number of shares of Common Stock
set forth below:

 

	
  Name of Assignee

  	
   

  	
  Address

  	
   

  	
  No. of Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

The undersigned also
represents that, by assignment hereof, the Assignee acknowledges that this
Warrant and the shares of stock to be issued upon exercise hereof or conversion
thereof are being acquired for investment and that the Assignee will not offer,
sell or otherwise dispose of this Warrant or any shares of stock to be issued
upon exercise hereof or conversion thereof except under circumstances which
will not result in a violation of the Securities Act of 1933, as amended, or
any state securities laws.  Further, the
Assignee has acknowledged that upon exercise of this Warrant, the Assignee
shall, if requested by the Company, confirm in writing, in a form satisfactory
to the Company, that the shares of stock so purchased are being acquired for
investment and not with a view toward distribution or resale.

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature of
  holder

  	
   

  	
   

  
							

 

22Exhibit
4.5

 

 

 

EQUITY
REGISTRATION RIGHTS AGREEMENT

 

DATED
AS OF MARCH 3, 2005

 

BY
AND AMONG

 

ATLANTIC
EXPRESS TRANSPORTATION CORP.

 

ATLANTIC
EXPRESS TRANSPORTATION GROUP, INC.

 

AND

 

AIRLIE
OPPORTUNITY CAPITAL MANAGEMENT, L.P.

 

 

 

 

This Equity Registration Rights Agreement
(this “Agreement”) is made and entered into as of March 3, 2005, by and
among Atlantic Express Transportation Corp., a New York corporation (the “Company”),
Atlantic Express Transportation Group, Inc., a Delaware corporation (“Parent”),
and Airlie Opportunity Capital Management, L.P., a Delaware limited partnership
(the “Investor”).

 

WHEREAS, pursuant to the Note and Warrant
Purchase Agreement, dated the date hereof (the “Investment Agreement”), among
the Company, Parent and Investor, Investor has agreed to make a loan (the “Loan”)
to the Company in the principal amount of $15,000,000, in partial consideration
for which the Company has agreed to issue 40,725 warrants, each such warrant
representing the right to initially purchase one common share, par value $0.01
per share (the “Common Stock”) of the Company (collectively, the “Warrants”)
(the Common Stock issuable on exercise of the Warrants being referred to
collectively herein as the “Warrant Shares”); and

 

WHEREAS, it is a condition precedent to
Investor’s obligations to make the Loan and consummate the other transactions
contemplated by the Investment Agreement that the Company and Parent enter into
this Agreement.

 

NOW, THEREFORE to induce Investor to make the
Loan, and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, the parties hereby agree as follows:

 

Section 1.                                            Definitions.

 

As used in this Agreement, the following
capitalized terms shall have the following meanings:

 

“Affiliate”: 
As defined in Rule 144 of the Securities Act.

 

“Closing Date”:  The date hereof.

 

“Effectiveness Date”: The 180th day after the
Closing Date.

 

“Exchange Act”:  The Securities Exchange Act of 1934, as
amended.

 

“Existing Equity Registration Rights
Agreement”: The Equity Registration Rights Agreement dated as of April 22,
2004 among the Company, Parent and Jeffries & Company, Inc.

 

“Filing Date”: The 90th day after the Closing
Date.

 

“Holder”: 
As defined in Section 2 hereof.

 

“NASD”: means the National Association of
Securities Dealers, Inc.

 

 

“Person”: 
Any individual, corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, government or any
agency or political subdivision thereof or any other entity.

 

“Piggy-Back Registration”:  As defined in Section 6 hereof.

 

“Prospectus: 
The prospectus included in a Registration Statement at the time such
Registration Statement is declared effective, as supplemented by any prospectus
supplement, and all material incorporated by reference into such prospectus.

 

“Public Equity Offering”:  An underwritten offering of Common Stock or
common stock of the Parent pursuant to a registration statement that has been
declared effective by the SEC pursuant to the Securities Act (other than a
registration statement on Form S-8 or otherwise relating to equity securities
issuable under any employee benefit plan of the Company or the Parent).

 

“Registrable Securities”:  At any time, any of (i) the Warrant Shares
(whether or not the related Warrants have been exercised) and (ii) any other
securities issued or issuable with respect to any Warrant Shares by way of
stock dividends or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or
otherwise.  As to any particular
Registrable Securities, such securities shall cease to be Registrable
Securities when (a) a Registration Statement with respect to the offering of
such securities by the Holder thereof shall have been declared effective under
the Securities Act and such securities shall have been disposed of by such
Holder pursuant to such Registration Statement, (b) such securities have been
sold to the public pursuant to Rule 144(k) (or any similar provisions then in
force, but not Rule 144A) promulgated under the Securities Act, (c) such
securities shall have been otherwise transferred by the Holder thereof and new
certificates for such securities not bearing a legend restricting further
transfer shall have been delivered by the Company or its transfer agent and
subsequent disposition of such securities shall not require registration or
qualification under the Securities Act or any similar state law then in force
or (d) such securities shall have ceased to be outstanding.

 

“Registrants”:  means, collectively, the Company and the
Parent in the case of a Registration Statement filed or to be filed registering
a Public Equity Offering of the Parent, upon which Registration Statement a
Holder is entitled pursuant to this Agreement to request inclusion of its
Registrable Securities for offer and sale thereunder.

 

“Registration Statement”:  Any registration statement of the Company
and/or the Parent relating to, or entitling a Holder to request, the
registration for resale of Registrable Securities, including the Prospectus
included therein, all amendments thereto (including post-effective amendments)
and all exhibits and all material incorporated by reference therein.

 

“Restricted Securities”: As defined in Rule
144 of the Securities Act.

 

“SEC”: 
The Securities and Exchange Commission.

 

“Securities Act”:  The Securities Act of 1933, as amended.

 

3

 

“Shelf Registration Statement”:  As defined in Section 4 hereof.

 

“Warrant Shares”:  The Common Stock or other securities that any
Holder may acquire upon exercise of a Warrant, together with any other
securities which such Holder may acquire on account of any such securities,
including, without limitation, as the result of any dividend or other
distribution on Common Stock or any split or combination of such Common Stock
as provided for in the Warrant Agreement.

 

“Warrants”: 
The warrants of the Company issued and sold pursuant to the Investment
Agreement, together with any warrants issued in substitution or replacement
therefor.

 

Section 2.                                            Holders
of Registrable Securities.

 

A Person is deemed to be a Holder of
Registrable Securities (a “Holder”) whenever such Person owns Registrable
Securities or has the right to acquire such Registrable Securities by
exercising Warrants held by such Person, whether or not such acquisition has
actually been effected.

 

Section 3.                                            Registration
Procedures.

 

In connection with any Registration Statement
filed by the Company, the Company shall, and in connection with any
Registration Statement filed by the Parent, the Registrants, shall:

 

(a)                                  (i)                                     furnish
to the Holders, prior to the filing thereof with the SEC, a copy of the
Registration Statement (including all such documents incorporated therein by
reference) and each amendment thereof and each supplement, if any, to the
Prospectus, which documents will be subject to the review and comment of such
Holders in connection with such sale, if any, for a period of at least five
business days, and the Company or the Registrants (as the case may be) will not
file any such Registration Statement or related Prospectus or any amendment or
supplement to any such Registration Statement or Prospectus (including all
documents incorporated therein by reference) to which such selling Holders
shall reasonably object within five business days after the receipt thereof;
and (ii) include the names of the Holders who propose to sell Registrable
Securities pursuant to the Registration Statement as selling securityholders.  A selling Holder shall be deemed to have
reasonably objected to such filing if such Registration Statement, amendment,
related Prospectus or supplement, as applicable, as proposed to be filed,
contains an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading or fails to comply
with the applicable requirements of the Securities Act;

 

(b)                                 give
written notice to the Investor and the Holders:

 

(i)                                     when
the Registration Statement or any amendment thereto has been filed with the SEC
and when the Registration Statement or any post-effective amendment thereto has
become effective;

 

(ii)                                  of
any request by the SEC for amendments or supplements to the Registration
Statement or the Prospectus or for additional information;

 

4

 

(iii)                               of
the issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose;

 

(iv)                              of
the receipt by the Company or the Registrants (as the case may be) or its or
their legal counsel of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose; and

 

(v)                                 of
the happening of any event that requires the Company or the Registrants (as the
case may be) to make changes in the Registration Statement or the Prospectus in
order that the Registration Statement or the Prospectus does not contain an
untrue statement of a material fact nor omit to state a material fact required
to be stated therein or necessary to make the statements therein (in the case
of the Prospectus, in light of the circumstances under which they were made)
not misleading;

 

(c)                                  make
every reasonable effort to obtain the withdrawal at the earliest possible time,
of any order suspending the effectiveness of the Registration Statement;

 

(d)                                 furnish
to each Holder, without charge, at least one copy of the Registration Statement
and any post-effective amendment thereto, including financial statements and
schedules, and, if the Holder so requests in writing, all exhibits thereto
(including those, if any, incorporated by reference);

 

(e)                                  during
the period which the Registration Statement is effective, deliver to each
Holder, without charge, as many copies of the Prospectus (including each
preliminary Prospectus) included in the Registration Statement as such Holder
may reasonably request.  The Company or
the Registrants (as the case may be) consent, subject to the provisions of this
Agreement, to the use of the Prospectus by each of the Holders in connection
with the offering and sale of Registrable Securities;

 

(f)                                    prior
to any public offering of the Registrable Securities pursuant to any
Registration Statement, register or qualify or cooperate with the Holders and
their respective counsel in connection with the registration or qualification
of the Registrable Securities for offer and sale under the securities or “blue
sky” laws of such states of the United States as any Holder reasonably requests
in writing and do any and all other acts or things necessary or advisable to
enable the offer and sale in such jurisdictions of the Registrable Securities;
provided, however, that the Company or the Registrants (as the case may be)
shall not be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified or (ii) take any action which
would subject it to general service of process or to taxation in any
jurisdiction where it is not then so subject;

 

(g)                                 cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing the Registrable Securities to be sold pursuant to any
Registration Statement free of any restrictive legends and in such
denominations and

 

5

 

registered in such names as the Holders may
request a reasonable period of time prior to sales of the Registrable
Securities pursuant to such Registration Statement;

 

(h)                                 upon
the occurrence of any event contemplated by paragraphs (ii) through (v) of Section 3(b)
above during the period for which the Company or the Registrants (as the case
may be) are required to maintain an effective Registration Statement, promptly
prepare and file a post-effective amendment to the Registration Statement or a
supplement to the related Prospectus and any other required document so that,
as thereafter delivered to Holders or purchasers of Securities, the Prospectus
will not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;

 

(i)                                     not
later than the effective date of the Registration Statement, provide a CUSIP
number for the Registrable Securities and provide each Holder with printed
certificates for the Registrable Securities, in a form eligible for deposit
with The Depository Trust Company;

 

(j)                                     use
its reasonable best efforts to comply with all rules and regulations of the SEC
to the extent and so long as they are applicable to the Registration Statement
and will make generally available to its security holders (or otherwise provide
in accordance with Section 11(a) of the Securities Act) an earnings
statement satisfying the provisions of Section 11(a) of the Securities
Act, no later than 45 days after the end of a 12-month period (or 90 days, if
such period is a fiscal year) beginning with the first month of the Company’s
first fiscal quarter commencing after the effective date of the Registration
Statement, which statement shall cover such 12-month period;

 

(k)                                  require,
at its option, each Holder of Registrable Securities to be sold pursuant to a
Registration Statement to furnish to the Company or the Registrants (as the
case may be) such information as may be required under applicable requirements
of the SEC and to obtain any acceleration of the effective date of a
Registration Statement, and the Company may exclude from such registration the
Registrable Securities of any Holder that unreasonably fails to furnish such
information within 20 days after receiving such request;

 

(l)                                     enter
into such customary agreements and take all such other action, if any, in order
to facilitate the disposition of the Registrable Securities pursuant to any
Registration Statement;

 

(m)                               (i)                                     make
reasonably available for inspection by the Holders of the Registrable
Securities and any attorney, accountant or other agent retained by the Holders
of the Registrable Securities all relevant financial and other records,
pertinent corporate documents and properties of the Company or the Registrants
(as the case may be) and (ii) cause the officers, directors, employees,
accountants and auditors of the Company or the Registrants (as the case may be)
to supply all relevant information reasonably requested by the Holders of the
Registrable Securities or any such attorney, accountant or agent in connection
with the Registration Statement, in each case, as shall be reasonably necessary

 

6

 

to enable such Persons, to conduct a
reasonable investigation within the meaning of Section 11 of the
Securities Act; provided, however, that the foregoing inspection and
information gathering shall be coordinated by the Investor and on behalf of the
other parties, by one counsel selected by of such other parties; provided
further, however, that any such records, documents, properties
and such information that is designated in writing by the Company or the
Registrants (as the case may be), in good faith, as confidential at the time of
delivery of such records, documents, properties or information shall be kept
confidential by any such Persons and shall be used only in connection with such
Registration Statement, unless disclosure thereto is made in connection with a
court proceeding or required by law (it being understood that such Persons (and
any employee, representative or other agent of such Person) may disclose to any
and all Persons, without limitation of any kind, the tax treatment and tax
structure of the transactions contemplated in the Registration Statement and
all materials of any kind (including such records, documents, properties or
information and opinions or other tax analyses) that are provided to it
relating to such tax treatment and tax structure), or such information has
become available (not in violation of this Agreement) to the public generally
or through a third party without an accompanying obligation of confidentiality;
and

 

(n)                                 if
requested by any Holder of Registrable Securities, cause (i) its counsel to
deliver an opinion and updates thereof relating to the Registrable Securities
in customary form addressed to such Holders thereof and dated, in the case of
the initial opinion, the effective date of such Registration Statement (it
being agreed that the matters to be covered by such opinion shall include,
without limitation, the due incorporation and good standing of the Company or
the Registrants (as the case may be) and its or their subsidiaries; the
qualification of the Company or the Registrants (as the case may be) and its or
their subsidiaries to transact business as foreign corporations; the due
authorization, execution and delivery of the relevant document of the type
referred to in Section 3(a) hereof; the due authorization,
execution, authentication and issuance, and the validity and enforceability, of
the applicable Securities; the absence of material legal or governmental
proceedings involving the Company or the Registrants (as the case may be) and
its or their subsidiaries; the absence of governmental approvals required to be
obtained in connection with the Registration Statement, the offering and sale
of the applicable Registrable Securities, or any document of the type referred
to in Section 3(a) hereof; the compliance as to form of such
Registration Statement and any documents incorporated by reference therein;
and, as of the date of the opinion and as of the effective date of the
Registration Statement or most recent post-effective amendment thereto, as the
case may be, the absence from such Registration Statement and the prospectus
included therein, as then amended or supplemented, and from any documents
incorporated by reference therein of an untrue statement of a material fact or
the omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of the prospectus, in
light of the circumstances under which they were made) not misleading (in the
case of any such documents, in the light of the circumstances existing at the
time that such documents were filed with the SEC under the Exchange Act); (ii)
its independent public accountants to provide to the Holders a comfort letter
in customary form and covering matters of the type customarily covered in
comfort letters in connection with primary underwritten offerings, subject to
receipt of appropriate documentation as contemplated, and only if permitted, by
Statement of Auditing

 

7

 

Standards No. 72; and (iii) use its best
efforts to cause the disposition of the Registrable Securities covered by the
Registration Statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to enable the seller or sellers
thereof to consummate the disposition of such Registrable Securities.

 

If any such Registration Statement refers to
any Holder by name or otherwise as the holder or any securities of the Company,
then such Holder shall have the right to require (i) the insertion therein of
language, in form and substance reasonably satisfactory to such Holder, to the
effect that the holding by such Holder of such securities is not to be construed
as a recommendation by such Holder of the investment quality of the Company’s
securities covered thereby and that such holding does not imply that such
Holder will assist in meeting any future financial requirements of the Company,
or (ii) in the event that such reference to such Holder by name or otherwise is
not required by the Securities Act or any similar Federal statute then in
force, the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.

 

Section 4.                                            Shelf
Registration.

 

(a)                                  The
Company shall use its reasonable best efforts to (i) on or before the Filing
Date, prepare and cause to be filed with the SEC pursuant to Rule 415 under the
Securities Act a shelf registration statement on the appropriate form relating
to resales of all Registrable Securities or an amendment to a previously filed
shelf registration statement on the appropriate form, amending such registration
statement to cover resales of all Registrable Securities (the “Shelf
Registration Statement”), (ii) cause the Shelf Registration Statement to be
declared effective under the Securities Act on or prior to the Effectiveness
Date and (iii) keep any Shelf Registration Statement required by this Section 4(a)
continuously effective, supplemented, amended and current as required by and
subject to the provisions of Section 4(a) hereof and in conformity
with the requirements of this Agreement, the Securities Act and the rules and
regulations of the SEC promulgated thereunder from time to time (including (A)
preparing and filing with the SEC such amendments and post-effective amendments
to the Shelf Registration Statement as may be necessary to keep such Shelf Registration
Statement effective; (B) cause the Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act, and complying fully with Rules 424, 430A and
462, as applicable, under the Securities Act in a timely manner; and (C) comply
with the provisions of the Securities Act with respect to the disposition of
all securities covered by such Shelf Registration Statement), until the second
anniversary of the effective date of such Shelf Registration Statement;
provided that such obligation shall expire before such date if all the
Registrable Securities covered by the Shelf Registration Statement (i) have
been sold pursuant thereto or (ii) are no longer Restricted Securities.

 

(b)                                 No
Holder may include any of its Registrable Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the

 

8

 

Securities Act for use in connection with any
Shelf Registration Statement or Prospectus or preliminary Prospectus included
therein.  Each selling Holder agrees to
promptly furnish additional information required to be disclosed in order to
make the information previously furnished to the Company by such Holder not
materially misleading.

 

(c)                                  The
Company shall be deemed not to have used its best efforts to keep the Shelf
Registration Statement effective during the requisite period if it voluntarily
takes any action that would result in Holders of Registrable Securities covered
thereby not being able to offer and sell such Registrable Securities during
that period, unless such action is required by applicable law or this
Agreement.

 

Section 5.                                            Limitations,
Conditions and Qualifications to Obligations under Registration Covenants.

 

(a)                                  The
obligations of the Company described in Section 4 and Section 6
of this Agreement are subject to the obligations of the Holders (i) to furnish
all information and materials described in Section 3(k) hereof and
(ii) to take any and all actions as may be required under Federal and state
securities laws and regulations to permit the Company to comply with all
applicable requirements of the SEC and to obtain any acceleration of the
effective date of such Registration Statement.

 

(b)                                 Subject
to the next sentence of this paragraph, the Company or the Registrants (as the
case may be) shall be entitled to postpone, for a reasonable period of time,
the effectiveness of, or suspend the rights of any selling Holders Registrable
Securities to make sales pursuant to any Registration Statement otherwise
required to be prepared, filed and kept effective by it under Section 4
or 6 in the event that, and for a period (a “Suspension Period”) not to
exceed an aggregate of 90 days in any 365-day period (1) an event or
circumstance occurs and is continuing as a result of which the Registration
Statement, any related Prospectus or any document incorporated therein by
reference as then amended or supplemented or proposed to be filed would, in the
good faith judgment of the Company’s board of directors, contain an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and (2) (a) the board of directors of the
Company determines in its good faith judgment that the disclosure of the event
or circumstance at that time would have a material adverse effect on the
Company’s business, operations or prospects or (b) the disclosure otherwise
relates to a material business transaction or development that has not yet been
publicly disclosed.  If the Company or
the Registrants (as the case may be) shall so postpone the effectiveness of, or
suspend the rights of any selling Holders of Registrable Securities to make sales
pursuant to, a Registration Statement, it shall, as promptly as possible,
notify any selling Holders of Registrable Securities of such determination, and
the selling Holders of Registrable Securities shall (y) have the right, in the
case of a postponement of the effectiveness of a Registration Statement, upon
the affirmative vote of selling Holders of Registrable Securities of not less
than a majority of the Registrable Securities to be included in such
Registration Statement, to withdraw the request for registration by giving
written notice to the Company or the Registrants (as the case may be) within 10
days after receipt of such notice or (z) in the case of a suspension of the

 

9

 

right to make sales, receive an extension of
the registration period referred to in Section 4(a) or Section 6(a)
hereof, as applicable, equal to the number of days of the suspension.

 

(c)                                  Each
Holder agrees, if and to the extent requested by the managing underwriter or
underwriters in a Public Equity Offering, not to effect any public sale or
distribution of Registrable Securities, including a sale pursuant to Rule 144A
(except as part of such Public Equity Offering), during the 90 day period
beginning on the closing date of any such Public Equity Offering (which period
may be extended to 180 days in the case of the Company’s initial Public Equity
Offering), to the extent timely notified in writing by the Company or such
managing underwriter or underwriters.  In
the event that the Company is not otherwise in compliance with the provisions
of this Agreement at the time the Company or such managing underwriter or
underwriters send notice pursuant to this Section 5(c), the Holders
shall not be required to comply with this Section 5(c).  In addition, the provisions of this Section 5(c)
shall not apply to any Holder of Registrable Securities if such Holder is
prevented by applicable statute or regulation from entering into any such
agreement; provided, that any such Holder shall undertake not to effect any
public sale or distribution of any Registrable Securities commencing on the
closing date of any such Public Equity Offering unless it has provided 45 days’
prior written notice of such sale or distribution to the managing underwriter
or underwriters.

 

Section 6.                                            Piggy-Back
Registration of Registrable Securities.

 

(a)                                  If
at any time after the Closing Date the Company or the Parent proposes to file a
registration statement under the Securities Act with respect to a Public Equity
Offering, then the Company or the Registrants (as the case may be) shall give
written notice of such proposed filing to the Holders of Registrable Securities
as soon as practicable (but in no event fewer than 20 days before the
anticipated filing date), and such notice shall offer such Holders the opportunity
to register such number of Registrable Securities as each Holder may request in
writing within 20 days after receipt of such written notice from the Company or
the Registrants (as the case may be) (which request shall specify the
Registrable Securities intended to be disposed of by such selling Holder of
Registrable Securities and the intended method of distribution thereof) (a “Piggy-Back
Registration”); provided that any holder of Warrants so requesting shall
agree, upon or prior to effectiveness of any such Registration Statement other
than a registration statement filed with the SEC pursuant to Rule 415 under the
Securities Act, to exercise their Warrants at least to the extent necessary for
such holder to acquire the number of Registrable Securities for which such
holder has requested registration; provided, further, that no Holder of
Registrable Securities shall have “piggy-back” registration rights with respect
to their Registrable Securities for any registration statement filed by the
Company to register exchange notes pursuant to the Registration Rights
Agreement, dated as of April 22, 2004, by and between the Company and
Jefferies & Company, Inc. The Company or the Registrants (as the case may
be) shall use their reasonable best efforts to keep such Piggy-Back
Registration continuously effective under the Securities Act until at least the
earlier of (a) the second anniversary of the effective date thereof or (b) the
consummation of the distribution by the Holders of all of the Registrable
Securities covered thereby.  The Company
or the Registrants (as the case may be) shall use their reasonable best efforts
to cause the managing underwriter or

 

10

 

underwriters, if any, of such proposed
offering to permit the Registrable Securities requested to be included in a
Piggy-Back Registration to be included on the same terms and conditions as any
similar securities of the Company or the Registrants (as the case may be) or
any other security holder included therein and to permit the sale or other
disposition of such Registrable Securities in accordance with the intended
method of distribution thereof.  Any
selling Holder of Registrable Securities shall have the right to withdraw its
request for inclusion of its Registrable Securities in any Shelf Registration
Statement pursuant to this Section 6 by giving written notice to
the Company or the Registrants (as the case may be) of its request to withdraw
at any time prior to the filing of such Shelf Registration Statement with the
SEC. The Company or the Registrants (as the case may be) will pay all
registration expenses described in Section 7 hereof in connection
with each registration of Registrable Securities requested pursuant to this Section 6,
and each Holder of Registrable Securities shall pay all underwriting discounts
and commissions and transfer taxes, if any, relating to the sale or disposition
of such Holder’s Registrable Warrant Shares pursuant to a Piggy-Back
Registration effected pursuant to this Section 6.

 

No
registration effected under this Section 6, and no failure to
effect a registration under this Section 6, shall relieve the
Company or the Registrants (as the case may be) of its or their obligations to
effect a registration of any Registrable Securities not included in such
Piggy-Back Registration pursuant to Section 4 hereof, and no
failure to effect a registration under this Section 6 and to
complete the sale of securities registered thereunder in connection therewith
shall relieve the Company or the Parent of any other obligation under this
Agreement.

 

(b)                                 Priority
in Piggy-Back Registration.  In a
registration pursuant to this Section 6 involving an underwritten
offering, if the managing underwriter or underwriters of such underwritten
offering have informed, in writing, the Company or the Registrants (as the case
may be) and the selling Holders of Registrable Securities requesting inclusion
in such offering that in such underwriter’s or underwriters’ opinion the total
number of securities which the Company or the Registrants (as the case may be),
the selling Holders of Registrable Securities and any other Persons desiring to
participate in such registration intend to include in such offering is such as
to adversely affect the success of such offering, including the price at which
such securities can be sold, then the Company or the Registrants (as the case
may be) will be required to include in such registration only the amount of
securities which it is so advised should be included in such registration.  In such event:  (x) in cases initially involving the
registration for sale of securities for the Company or the Registrants’ own
account (as the case may be), securities shall be registered in such offering
in the following order of priority:  (i)
first, the securities which the Company or the Registrants proposes to
register, (ii) second, provided that no securities proposed to be registered by
the Company or the Registrants (as the case may be) have been excluded from
such registration, the securities that have been requested to be included in
such registration pursuant to the Existing Equity Registration Rights
Agreement, (iii) third, provided that no securities sought to be included in
such registration pursuant to the Existing Equity Registration Rights Agreement
have been excluded from such registration, the securities that have been
requested to be included in such registration by the selling Holders of
Registrable

 

11

 

Securities (pro rata based on the amount of
securities sought to be registered by such Persons), and (iv) fourth, provided
that no securities sought to be included by the selling Holders of Registrable
Securities have been excluded from such registration, the securities of other Persons
entitled to exercise “piggy-back” registration rights pursuant to contractual
commitments of the Company (pro rata based on the amount of securities sought
to be registered by such Persons); and (y) in cases not initially involving the
registration for sale of securities for the Company or the Registrants own
account (as the case may be), securities shall be registered in such offering
in the following order of priority:  (i)
first, the securities of any Person whose exercise of a “demand” registration
right pursuant to a contractual commitment of the Company is the basis for the
registration, (ii) second, provided that no securities of any Person whose
exercise of a “demand” registration right pursuant to a contractual commitment
of the Company is the basis for such registration have been excluded from such
registration, the securities that have been requested to be included in such
registration pursuant to the Existing Equity Registration Rights Agreement,
(iii) third, provided that no securities sought to be included pursuant to the
Existing Equity Registration Rights Agreement have been excluded from such
registration, the securities requested to be included in such registration by
the selling Holders of Registrable Securities pursuant to this Agreement (pro
rata based on the amount of securities sought to be registered by such
Persons), (iv) fourth, provided that no securities sought to be included by the
selling Holders of Registrable Securities have been excluded from such
registration, securities of other Persons entitled to exercise “piggy-back”
registration rights pursuant to contractual commitments of the Company (pro
rata based on the amount of securities sought to be registered by such Persons)
and (v) fifth, provided that no securities sought to be included by other
Persons entitled to exercise “piggy-back” registration rights pursuant to such
contractual commitments have been excluded from such registration, any
securities which the Company or the Registrants (as the case may be) propose to
register.

 

(c)                                  Exclusion
of Registrable Warrant Shares.  The
Company or the Registrants (as the case may be) shall not be required by this Section 6
to include Registrable Securities in a Piggy-Back Registration if (i) in the
written opinion of outside counsel to the Company or the Registrants, addressed
to the Holders of Registrable Securities and delivered to them, the Holders of
such Registrable Securities seeking registration would be free to sell all such
Registrable Securities within the current calendar quarter without registration
under Rule 144, which opinion may be based in part upon the representation by
the Holders of such Registrable Securities seeking registration, which
representation shall not be unreasonably withheld, that each such Holder is not
an affiliate of the Company within the meaning of the Securities Act, and (ii)
all requirements under the Securities Act for effecting such sales are
satisfied at such time.

 

Section 7.                                            Registration
Expenses.

 

(a)                                  All
expenses incident to the Company’s and/or the Parent’s respective performance
of and compliance with this Agreement will be borne by the Company and/or the
Parent, respectively, regardless of whether a Registration Statement is ever
filed or becomes effective, including without limitation:

 

12

 

(i)                                     all
registration and filing fees and expenses (including all SEC and stock exchange
and NASD fees and expenses);

 

(ii)                                  all
fees and expenses of compliance with federal securities and state “blue sky” or
securities laws (including, without limitation, reasonable fees and
disbursements of counsel for any underwriters in connection with blue sky
qualifications of the Registrable Securities);

 

(iii)                               all
expenses of printing, preparing, filing, duplicating and distributing a
Registration Statement and the related prospectus (including certificates for
the Securities to be issued in the registration and printing of Prospectuses),
messenger and delivery services and telephone usage and costs and charges of any
transfer agent;

 

(iv)                              all
fees and disbursements of counsel for the Company or the Registrants (as the
case may be);

 

(v)                                 all
fees and disbursements of independent certified public accountants of the
Company or the Registrants (as the case may be) (including the expenses of any
special audit required by or incident to such performance);

 

(vi)                              the
fees and disbursements of underwriters customarily paid by issuers or sellers
of securities (but not including any underwriting discounts or commissions or
transfer taxes, if any, attributable to the sale of Registrable Securities by
selling Holders); and

 

(vii)                           reasonable
fees and expenses of one counsel for the selling Holders and other reasonable
out-of-pocket expenses of the selling Holders.

 

(b)                                 The
Company and the Parent will bear each of their internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and
the fees and expenses of any Person, including special experts, retained by the
Company and/or the Parent.

 

(c)                                  The
Holders shall pay the underwriting discounts, commissions, and transfer taxes,
if any, in connection with the Registration Statement requested under Section 4
or 6 which costs shall be allocated pro rata among all Holders on whose
behalf Registrable Securities of the Company are included in such registration
on the basis of the respective amounts of the Registrable Securities then being
registered on their behalf.

 

Section 8.                                            Indemnification.

 

(a)                                  The
Company or the Registrants (as the case may be) agrees to indemnify and hold
harmless each Holder and each Person, if any, who controls such Holder within
the meaning of the Securities Act or the Exchange Act from and against any
losses, claims, damages or liabilities, joint or several, or any actions in
respect thereof (including, but not limited to, any losses, claims, damages,
liabilities or actions relating to

 

13

 

purchases and sales of the Registrable
Securities) to which each Indemnified Party (as defined in Section 8(c)
below) may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or Prospectus or in
any amendment or supplement thereto or in any preliminary Prospectus relating
to a Registration, or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not misleading, and
shall reimburse, as incurred, the Indemnified Parties for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action in respect thereof;
provided, however, that (i) the Company or the Registrants (as the case may be)
shall not be liable in any such case to the extent that such loss, claim,
damage or liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement or Prospectus or in any amendment or supplement thereto
or in any preliminary Prospectus relating to a Registration Statement in
reliance upon and in conformity with written information pertaining to such
Holder and furnished to the Company or the Registrants (as the case may be) by
or on behalf of such Holder specifically for inclusion therein and (ii) with
respect to any untrue statement or omission or alleged untrue statement or
omission made in any preliminary Prospectus relating to the Registration
Statement, the indemnity agreement contained in this subsection (a) shall
not inure to the benefit of any Holder from whom the Person asserting any such
losses, claims, damages or liabilities purchased the Registrable Securities
concerned, to the extent that the Prospectus was required to be delivered by
such Holder under the Securities Act in connection with such purchase and any
such loss, claim, damage or liability of such Holder results from the fact that
there was not sent or given to such Person, at or prior to the written
confirmation of the sale of such Registrable Securities to such Person, a copy
of the final Prospectus if the Company or the Registrants (as the case may be)
had previously furnished copies thereof to such Holder; provided further,
however, that this indemnity agreement will be in addition to any liability
which the Company or the Registrants (as the case may be) may otherwise have to
such Indemnified Party.

 

(b)                                 Each
Holder of the Registrable Securities, severally and not jointly, will indemnify
and hold harmless the Company or the Registrants (as the case may be) and each
Person, if any, who controls the Company or the Registrants (as the case may
be) within the meaning of the Securities Act or the Exchange Act from and
against any losses, claims, damages or liabilities or any actions in respect
thereof, to which the Company or the Registrants (as the case may be) or any
such controlling Person may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities
or actions arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in a Registration Statement or
Prospectus or in any amendment or supplement thereto or in any preliminary
Prospectus relating to a Registration Statement, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under

 

14

 

which they were made) not misleading, but in
each case only to the extent that the untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company or
the Registrants (as the case may be) by or on behalf of such Holder
specifically for inclusion therein; and, subject to the limitation set forth
immediately preceding this clause, shall reimburse, as incurred, the Company or
the Registrants (as the case may be) for any legal or other expenses reasonably
incurred by the Company or the Registrants or any such controlling Person in
connection with investigating or defending any loss, claim, damage, liability
or action in respect thereof.  This
indemnity agreement will be in addition to any liability which such Holder may
otherwise have to the Company or the Registrants (as the case may be) or any of
its or their controlling Persons.

 

(c)                                  Promptly
after receipt by any Person in respect of which indemnity may be sought
pursuant to Section 8(a) or (b) (any such Person, an “Indemnified
Party”) under this Section 8 of notice of the commencement of any
action or proceeding (including a governmental investigation), such Indemnified
Party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying
party of the commencement thereof; but the omission so to notify the
indemnifying party will not, in any event, relieve the indemnifying party from
any obligations to any Indemnified Party other than the indemnification
obligation provided in paragraph (a) or (b) above.  In case any such action is brought against
any Indemnified Party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
reasonably satisfactory to such Indemnified Party (who shall not, except with
the consent of the indemnified party, be counsel to the indemnifying party),
and after notice from the indemnifying party to such Indemnified Party of its
election so to assume the defense thereof the indemnifying party will not be
liable to such Indemnified Party under this Section 8 for any legal
or other expenses, other than reasonable costs of investigation, subsequently
incurred by such Indemnified Party in connection with the defense thereof.  No indemnifying party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
pending or threatened action in respect of which any Indemnified Party is or
could have been a party and indemnity could have been sought hereunder by such
Indemnified Party unless such settlement includes an unconditional release of
such Indemnified Party from all liability on any claims that are the subject
matter of such action, and does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any Indemnified
Party.  The indemnifying party shall not
be liable for the costs and expenses of any settlement of such action effected
by such Indemnified Party without the consent of the indemnifying party, which
consent shall not be unreasonably withheld.

 

(d)                                 If
the indemnification provided for in this Section 8 is unavailable
or insufficient to hold harmless an Indemnified Party under subsections (a)
or (b) above, then each indemnifying party shall contribute to the
amount paid or payable by such Indemnified Party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in subsection (a)
or (b) above (i) in such proportion as is

 

15

 

appropriate to reflect the relative benefits
received by the indemnifying party or parties on the one hand and the
Indemnified Party on the other from the sale of the Registrable Securities by
the Holders, or (ii) if the allocation provided by the foregoing clause (i) is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the indemnifying party or parties on the one hand and the
Indemnified Party on the other in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities (or actions in
respect thereof) as well as any other relevant equitable considerations.  The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or the
Registrants (as the case may be) on the one hand or such Holder or such other
Indemnified Party, as the case may be, on the other, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.  The amount
paid by an Indemnified Party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any action
or claim which is the subject of this subsection (d).  Notwithstanding any other provision of this Section 8(d),
the Holders of the Registrable Securities shall not be required to contribute
any amount in excess of the amount by which the net proceeds received by such
Holders from the sale of the Registrable Securities pursuant to the Registration
Statement exceeds the amount of damages which such Holders have otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.  No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation.  For purposes of this paragraph (d), each
Person, if any, who controls such Indemnified Party within the meaning of the
Securities Act or the Exchange Act shall have the same rights to contribution
as such Indemnified Party, and each Person, if any, who controls the Company or
the Registrants within the meaning of the Securities Act or the Exchange Act shall
have the same rights to contribution as the Company or the Registrants (as the
case may be).

 

(e)                                  The
agreements contained in this Section 8 shall survive the sale of
the Registrable Securities pursuant to the Registration Statement and shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement or any investigation made by or on behalf of any Indemnified
Party.

 

Section 9.                                            Rule
144A and Rule 144.

 

The Company shall use its best efforts to
file the reports required to be filed by it under the Securities Act and the
Exchange Act in a timely manner and, if at any time the Company is not required
to file such reports, it will, upon the request of any Holder, make publicly
available other information so long as necessary to permit sales of their
securities pursuant to Rules 144 and 144A. 
The Company covenants that it will take such further action as any
Holder may reasonably request, all to the extent required from time to time to
enable such Holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the

 

16

 

exemptions provided by Rules 144 and 144A (including the requirements
of Rule 144A(d)(4)).  The Company will
provide a copy of this Agreement to prospective purchasers of Registrable
Securities identified to the Company by any Holder upon request.  Upon the request of any Holder, the Company
shall deliver to such Holder a written statement as to whether it has complied
with such requirements.  Notwithstanding
the foregoing, nothing in this Section 9 shall be deemed to require
the Company to register any of its securities pursuant to the Exchange Act.

 

Section 10.                                      Miscellaneous.

 

(a)                                  Remedies.  Each of the Company and the Parent
acknowledges and agrees that any failure by the Company to comply with its
obligations under Section 4 and Section 6 hereof may
result in material irreparable injury to the Holders 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 any such failure, any Holder
may obtain such relief as may be required to specifically enforce the Company’s
and the Parent’s obligations under Section 4 and Section 6
hereof.  Each of the Company and the
Parent further agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.

 

(b)                                 No
Inconsistent Agreements.  Neither the
Company nor the Parent will on or after the date of this Agreement enter into
any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof.  The rights granted to
the Holders hereunder do not in any way conflict with and are not inconsistent
with the rights granted to the holders of the Company’s or the Parent’s
securities under any agreement in effect on the date hereof.

 

(c)                                  Amendments
and Waivers.  The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, except by the
Company, the Parent and the written consent of the Holders of a majority of the
Registrable Securities affected by such amendment, modification, supplement,
waiver or consent.

 

(d)                                 Notices.  All notices and other communications provided
for or permitted hereunder shall be made in writing by hand delivery,
first-class mail, facsimile transmission, or air courier which guarantees overnight
delivery:

 

(i)                                     if
to a Holder of the Securities, at the most current address given by such Holder
to the Company or the Parent.

 

(ii)                                  if
to the Company or the Parent, at the address as follows:

 

17

 

7 North Street

Staten Island, New York 10302-1205

Attention:  Nathan Schlenker

Fax No.:  (718) 442-9103

 

with a copy to:

 

Latham & Watkins LLP

885 Third Avenue, Suite 100

New York, New York 10022-4834

Attention:  Robert Zuccaro, Esq.

Fax No.:  (212) 751-4864

 

All such notices and communications shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; three business days after being deposited in the mail, postage
prepaid, if mailed; when receipt is acknowledged by recipient’s facsimile
machine operator, if sent by facsimile transmission; and on the day delivered,
if sent by overnight air courier guaranteeing next day delivery.

 

(e)                                  Third
Party Beneficiaries.  It is expressly
understood and agreed that each Holder is intended to be a beneficiary of the
Company’s and the Parent’s covenants contained in this Agreement to the same
extent as if those covenants were made directly to such Holder by the Company
and the Parent, and each such Holder shall have the right to take action
against the Company and the Parent to enforce, and obtain damages for any
breach of, those covenants.

 

(f)                                    Successors
and Assigns.  This Agreement shall be
binding upon the Company and the Parent and each of their successors and
assigns.

 

(g)                                 Counterparts.  This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

 

(h)                                 Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

 

(i)                                     Governing
Law.  THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

 

(j)                                     Severability.  If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

 

(k)                                  Securities
Held by the Company.  Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder,

 

18

 

Registrable Securities held by the Company or
the Parent or either of their Affiliates (other than subsequent Holders of
Registrable Securities if such subsequent Holders are deemed to be Affiliates
solely by reason of their holdings of such Registrable Securities) shall not be
counted in determining whether such consent or approval was given by the
Holders of such required percentage.

 

[Signature Page Follows]

 

19

 

IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first written above.

 

	
   

  	
  ATLANTIC EXPRESS TRANSPORTATION

  CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Neil J. Abitabilo

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Neil J. Abitabilo

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ATLANTIC EXPRESS TRANSPORTATION

  GROUP, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Neil J. Abitabilo

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Neil J. Abitabilo

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AIRLIE OPPORTUNITY CAPITAL

  MANAGEMENT, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Adam Goodfriend

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Adam Goodfriend

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
					

 

20

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