Document:

Exhibit 10.1

 

Atlantic Express Transportation
Group Inc.

Atlantic Express Transportation
Corp.

7 North Street

Staten Island, NY  10302

 

As of April 1, 2006

 

Domenic Gatto

136 Monmouth Road

Monroe Township, NJ 08831

 

Dear Domenic:

 

Reference is made to your Fourth Amended and
Restated Employment Agreement dated as of November 25, 2003, as amended by
the letter dated April 20, 2004, by the letter dated January 13, 2005
and by the letter dated March 2, 2005 (as amended, the “Agreement”).

 

By this letter agreement, in consideration of
the mutual agreements and covenants contained herein, we hereby agree to amend
the Agreement as follows:

 

1.                                       Section 1
of the Agreement is hereby amended and restated in its entirety to read as
follows:

 

1. EMPLOYMENT AND DUTIES

 

1.1. General.
The Company hereby employs the Executive, and the Executive agrees to serve, as
President and Chief Executive Officer of the Company and upon the Board of
Directors of the Company (the “Board”) as Vice Chairman of the Board, upon the
terms and conditions herein contained during the Employment Term provided that (i) commencing
December 31, 2007, the Company in its sole discretion may limit the
Executive’s services to the position of President;  and (ii) commencing December 31,
2007, the Executive shall continue his employment in the position of an officer
of the Company, which position shall be designated by the Board. In such
capacities the Executive agrees to serve the Company faithfully and to the best
of his ability under the direction of the Board. The Executive also shall serve
as a member of the Board of Directors of Group during the Employment Term. During
the Employment Term, the Executive also agrees to serve, if elected, at no
compensation in addition to that provided for in this Agreement, in the
position of officer of Group and of any subsidiary of Group or the Company. As
long as the Executive remains either President or Chief Executive Officer, the
Executive shall continue to occupy the same corner office which he has occupied
during the Term of the Prior Agreement.

 

1.2. Exclusive
Services. From the Commencement Date through December 31, 2007, the
Executive shall devote his full-time working hours to his duties hereunder and
shall not, directly or indirectly, render services to any other person or
organization for which he receives compensation without the unanimous consent
of the

 

 

Board or otherwise engage in activities which
would interfere significantly with his faithful performance of his duties
hereunder. Notwithstanding the foregoing, the Executive may serve as a
managing member of G Entertainment, LLC. and a managing member of Eagle Oaks
Golf Club, LLC, provided that such services shall not interfere with the
performance of Executive’s duties hereunder. For the period commencing January 1,
2008, the Executive shall be required to devote so much of his time to his
duties hereunder as shall be proportionate to the reduction in his compensation
for such period.

 

1.3. Term
of Employment. The Executive’s employment under this Agreement shall
commence as of the date hereof (the “Commencement Date”) and shall terminate on
the earliest of (i) December 31, 2008, (ii) the death of the
Executive or (iii) the termination of the Executive’s employment pursuant
to this Agreement (the “Employment Term”).

 

2.                                       Section 2.1
of the Agreement is hereby amended and restated in its entirety to read as
follows:

 

2.1. Base
Salary. From the Commencement Date, the Executive shall be entitled to
receive a base salary (“Base Salary”) at a rate of $574,914.48 per annum,
payable in arrears in equal installments in accordance with the Company’s
payroll practices, with such increases as may be provided in accordance
with the terms hereof. Once increased, such higher amount shall constitute the
Executive’s annual Base Salary. Notwithstanding the foregoing, for the period
commencing January 1, 2008, the Base Salary shall be reduced to 50% of the
Base Salary payable to the Executive as of December 31, 2007.

 

3.                                       Section 2.2
of the Agreement is hereby amended and restated in its entirety to read as
follows:

 

2.2. Increase
in Base Salary. On November 1, 2006, on November 1, 2007 and on November 1,
2008, the Executive’s Base Salary shall be increased by a percentage which
shall equal the greater of 3% or the percentage increase in the consumer price
index for the New York-Northern New Jersey-Long Island, NY-NJ-CT metropolitan
area, as reported by the United States Department of Labor, for the 12-month
period ended the immediately preceding October 31.

 

4.                                       Paragraphs (b) through
(e) of Section 3.1 of the Agreement is hereby amended and restated in
their entirety to read as follows:

 

(b) a
disability insurance policy providing $15,000 in monthly benefits commencing
six months after a disability which prevents the Executive from performing the
ordinary and necessary functions and duties of his employment; provided that
the premium therefor shall not exceed the usual and customary rates charged by
underwriters for such a policy for a person of the Executive’s age in good
health. The amount of such policy shall be reduced to $7,500 commencing December 31,
2007. At the option of the Executive and in the place of the disability policy,
the Company shall

 

2

 

pay the cash equivalent of the premium for
such policy to the Executive to be used by the Executive to pay such premium;

 

(c) an
automobile allowance of $2,150 per month, which shall be reduced to $1,075 per
month commencing December 31, 2007;

 

(d)  an
annual life insurance premium allowance of $35,000, which shall be reduced to
$17,500 commencing December 31, 2007, payable in two installments in June and
February of each year of the Employment Term hereof;

 

(e) through
December 31, 2007, continued use of the same Company car and driver which
the Executive is using as of the date of this Agreement; and

 

5.                                       Clause (ii) of
the first sentence of the second paragraph of Section 5 is hereby amended
and restated in their entirety to read as follows:

 

(ii) six
months of his Base Salary as severance, payable in equal installments on the
same terms as in effect as at the end of the Employment Term, followed by an
additional six months of his Base Salary less $15,000 per month (less
$7,500 per month in the period commencing December 31, 2007) as severance,
payable in equal installments on the same terms as in effect as at the end of
the Employment Term

 

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

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  Atlantic Express Transportation Group Inc.

  
	
   

  	
  Atlantic Express Transportation Corp.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s Peter Frank

  	
   

  
	
   

  	
   

  	
  Peter Frank

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed and accepted:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Domenic Gatto

  	
   

  	
   

  
	
  Domenic Gatto

  	
   

  
					

 

3Exhibit 10.2

 

FOURTH AMENDED AND RESTATED

EMPLOYMENT
AGREEMENT

 

FOURTH AMENDED AND RESTATED EMPLOYMENT
AGREEMENT dated as of October 25, 2004 (the “Agreement”) among
Atlantic Express Transportation Group Inc., a New York corporation (“Group”),
Atlantic Express Transportation Corp., a New York corporation (the “Company”),
and Nathan Schlenker (the “Executive”).

 

WHEREAS, the Executive is presently employed
by the Company, a wholly owned subsidiary of Group, under the Third Amended and
Restated Employment Agreement dated as of March 31, 2003, as amended by
the letter agreement dated March 2, 2004 (as amended, the “Prior
Agreement”);

 

WHEREAS, the Company desires to secure the
continued services of the Executive, and the Executive desires to continue in
the employment of the Company and, in connection therewith, the Company, Group
and the Executive desire to amend and restate the terms and provisions of the
Prior Agreement to, among other things, set forth the terms of such continued
employment.

 

NOW, THEREFORE, in consideration of the
foregoing and the respective covenants and agreements hereinafter set forth and
for other good and valuable consideration, the Company, Group and the Executive
hereby agree to amend and restate the Prior Agreement in its entirety, as
follows:

 

1. EMPLOYMENT AND DUTIES

 

1.1. General. Commencing on November 1,
2004 (the “Effective Date”), the Company shall employ the Executive, and
the Executive agrees to serve, as Director of Finance of the Company, upon the
terms and conditions herein contained during the Initial Term (as defined
below), and in such capacity the Executive agrees to serve the Company
faithfully and to the best of his ability under the direction of the Board of
Directors (the “Board”).

 

1.2. Exclusive Services. During the
Initial Term, the Executive shall devote his full-time working hours, four (4) days
a week, to his duties hereunder and shall not, directly or indirectly, render
services to any other person or organization or otherwise engage in activities
which would interfere significantly with his faithful performance of his duties
hereunder without the consent of the Board.

 

1.3. Term of Employment. The “Initial
Term” of Executive’s employment under this Agreement shall commence as of
the Effective Date and shall terminate on the earlier of (a) October 31,
2005 or (b) on the last day of the month a written notice of termination
is delivered by either party, which notices shall be delivered not less than 10
business days prior to such termination date.

 

 

Upon the termination of the Initial Term, the
Company shall employ the Executive until October 31, 2005 (the “Second
Term”, and together with the Initial Term, the “Employment Term”) on
a part-time basis. During the Second Term, the Executive shall devote his
full-time working hours, ten (10) day days a month, to his duties. The
Company shall not have any obligation to employ the Executive for the Second
Term (a) if the Executive resigns, (b) if the Executive has been
disloyal to Group, the Company or any of their respective affiliates by
assisting transportation competitors of Group, the Company or any of their
respective affiliates to the disadvantage of Group, the Company or any of their
respective affiliates by a breach of Section 6 or by otherwise actively
assisting such competitors to the disadvantage of Group, the Company or any of
their respective affiliates (a “Disloyalty Event”) or (c) if the
Initial Term is not terminated prior to October 31, 2005.

 

2. SALARY

 

2.1. Base Salary. During the Initial
Term, the Executive shall be entitled to receive a base salary (“Base Salary”)
at a rate equal to eighty percent (80%) of the Executive’s then Base Salary
under the Prior Agreement, payable monthly on or about the 15th day
of each month in equal installments in accordance with the Company’s payroll
practices.

 

2.2. Second Term Compensation. During
the Second Term, the Executive shall be entitled to receive (a) a salary
of $8,333 per month and (b) additional compensation of $800 per day for
each day the Executive is required to work in excess of ten (10) days for
any month.

 

3. EMPLOYEE BENEFITS

 

3.1. General Benefits. The Executive
shall receive the following benefits during the Initial Term:

 

(a)                                  the
Executive will be eligible to participate in benefit programs of the Company
consistent with those benefit programs provided from time to time to other
senior executives of the Company;

 

(b)         an annual life insurance
premium allowance of $2,500 payable annually in February of each year;

 

(c)                                  an automobile
allowance of $250 per month and the exclusive use of a company car;

 

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

 

(e)                                  participation in any
executive incentive plan which might be implemented by the Board during the
Employment Term.

 

3.2. Vacation. During the Initial
Term, the Executive shall be entitled to 20 days paid vacation each year in
accordance with the applicable policies of the Company.

 

 

3.3. Reimbursement of Expenses. The
Company will reimburse the Executive for reasonable, ordinary and necessary business
expenses incurred by him in the fulfillment of his duties hereunder upon
presentation by the Executive of an itemized account of such expenditures in
accordance with the Company practices consistently applied.

 

3.4. Second Term Travel Reimbursement.
During the Second Term, the Executive shall be reimbursed for his travel
expenses between his home and the Company’s offices in Staten Island, New York.

 

3.5. Benefits upon Termination. Upon
the termination of the Executive’s employment, the Company shall provide the
Executive with two (2) years of medical coverage under the same terms as
medical coverage is offered to other executives of the Company.

 

3.6. Non-Renewal Severance Pay. The
Company hereby acknowledges that the Executive is entitled to receive the
Non-Renewal Severance Pay on November 1, 2004 in accordance with the Section 3.4
of Prior Agreement.

 

4. [intentionally deleted]

 

5. [intentionally deleted]

 

6. NON COMPETITION/NON SOLICITATION AND
CONFIDENTIALITY

 

6.1. Noncompetition/Nonsolicitation.
The Executive shall not, directly or indirectly, as a sole proprietor, member
of a partnership, stockholder or investor, officer or director of a
corporation, or as an employee, associate, consultant or agent of any person,
partnership, corporation or other business organization or entity other than
the Company: (a) engage in, or acquire an interest in any entity or
enterprise which engages in, any business that is in competition with any
business actively conducted by Group, the Company or any of their respective
subsidiaries within (i) the counties then served by Group, the Company or
their respective subsidiaries as well as adjacent counties, and (ii) any
other counties in which Group, the Company or their respective subsidiaries has
made a bid within 36 months prior to the Executive’s termination and any
adjacent counties in which Group, the Company or their respective subsidiaries
conducts business; (b) solicit or endeavor to entice away from Group, the
Company or any of their respective subsidiaries any person who is, or was
during the then most recent 36-month period, employed by or associated with
Group, the Company or any of their respective subsidiaries, or (c) solicit
or endeavor to entice away from Group, the Company or any of their respective subsidiaries,
or otherwise interfere with the business relationship of Group, the Company or
any of their respective subsidiaries with, any person or entity who is, or was
within the then most recent 36-month period, a customer, client or prospect of
Group, the Company or any of their respective subsidiaries. The obligations of
this Section 6.1 shall apply for 18 months, or a period of 24 months if,
as of termination of the employment of the Executive, more than a majority of
the Common Stock of Group is then owned by the current shareholders of Group,
after termination of employment of the Executive as well as during employment
and shall be extended by a period of time equal to any period during which the
Executive shall be in breach of such obligations.

 

 

6.2. Confidentiality. The Executive
covenants and agrees with the Company that he will not at any time, except in
performance of his obligations to the Company hereunder or with the prior
written consent of the Company, directly or indirectly, disclose any secret or
confidential information that he may learn or has learned by reason of his
association with Group, the Company or any of their respective subsidiaries and
affiliates. The term “confidential information” includes information not
previously disclosed to the public or to the trade by the Company’s or Group’s
management, or otherwise in the public domain, with respect to the Company’s or
Group’s or any of their respective affiliates’ or subsidiaries’ products,
services, facilities, applications and methods, trade secrets and other
intellectual property, systems, procedures, manuals, confidential reports,
product or service price lists, customer lists, technical information,
financial information (including the revenues, costs or profits associated with
any of the Company’s or Group’s products), business plans, prospects or
opportunities.

 

6.3. Exclusive Property. The Executive
confirms that all confidential information is and shall remain the exclusive
property of Group and the Company. All business records, papers and documents
kept or made by the Executive relating to the business of Group, the Company or
their respective subsidiaries shall be and remain the property of Group and the
Company.

 

6.4. Injunctive Relief. Without
intending to limit the remedies available to Group and the Company, the
Executive acknowledges that a breach of any of the covenants contained in this Section 6
may result in material and irreparable injury to Group, the Company or
their respective affiliates or subsidiaries for which there is no adequate
remedy at law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of such a breach or threat thereof,
Group and the Company shall be entitled to obtain a temporary restraining order
and/or a preliminary or permanent injunction restraining the Executive from
engaging in activities prohibited by this Section 6 or such other relief
as may be required specifically to enforce any of the covenants in this Section 6.
If for any reason a final decision of any court determines that the
restrictions under this Section 6 are not reasonable or that consideration
therefor is inadequate, such restrictions shall be interpreted, modified or
rewritten by such court to include as much of the duration and scope identified
in this Section 6 as will render such restrictions valid and enforceable.

 

7. GUARANTEES

 

7.1. Indemnification. Group, the
Company and each of their subsidiaries, jointly and severally, shall indemnify
the Executive and his spouse, heirs, estate, executors and administrators
(collectively, the “Indemnitees”) and hold such Indemnitees harmless
from and against, and pay and reimburse the Indemnitees for, any and all
demands, payments, claims, actions, losses, damages, liabilities, obligations,
fines, taxes, deficiencies, costs and expenses (including reasonable attorneys’
fees), whether or not resulting from third-party claims, including interest and
penalties with respect thereto, asserted against or incurred or sustained by an
Indemnitee in connection with or arising out of any personal guaranty or
undertaking by the Executive of any obligation of Group, the Company or any of
their subsidiaries (collectively a “Guaranty”).

 

 

7.2. Future Subsidiaries. In the
event, Group, the Company or any of their subsidiaries acquires or forms a
subsidiary after the date hereof, Group and the Company shall cause such newly
acquired or formed subsidiary to execute and deliver a supplement to this
Amendment, which supplement shall provide that such newly acquired or formed
subsidiary will indemnify the Indemnitees in accordance with Section 7.1
hereof.

 

8. MISCELLANEOUS

 

8.1. Notices. All notices or
communications hereunder shall be in writing, addressed as follows:

 

To the Company or Group, to it at:

 

Atlantic Express Transportation Corp.

7 North Street

Staten Island, NY 10302

Attention: Corporate Secretary

 

with a copy to:

 

GSCP III Holdings (AE), LLC

c/o Greenwich Street Capital Partners, Inc.

12 E. 49th Street

Suite 3200

New York, New York  10017

Fax: (212) 884-6184

Attention: Matthew Kaufman

 

and:

 

To the Executive:

 

Nathan Schlenker

347 Horning Road

Palatine Bridge, NY 13428

Fax: 
(518) 673-5071

 

Any such notice or communication shall be
sent certified or registered mail, return receipt requested, or by facsimile,
addressed as above (or to such other address as such party may designate
in writing from time to time), and the actual date of receipt shall determine
the time at which notice was given.

 

8.2. Severability. If a court of
competent jurisdiction determines that any term or provision hereof is invalid
or unenforceable, (a) the remaining terms and provisions hereof shall be
unimpaired and (b) such court shall have the authority to replace such
invalid or

 

 

unenforceable term or provision with a term or provision that is valid
and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision.

 

8.3. Assignment. This Agreement shall
inure to the benefit of the heirs and representatives of the Executive and the
assigns and successors of the Company, but neither this Agreement nor any
rights hereunder shall be assignable or otherwise subject to hypothecation by
the Executive. Each of Group and the Company may assign this Agreement
without prior written approval of the Executive upon the transfer of all or
substantially all of its business and/or assets (whether by purchase, merger,
consolidation or otherwise), provided that the successor to such business
and/or assets shall expressly assume and agree to perform this Agreement.

 

8.4. Entire Agreement; Amendment. This
Agreement represents the entire agreement of the parties with respect to the
subject matter hereof and shall supersede any and all previous contracts,
arrangements or understandings between or among Group, the Company and the
Executive, including the Prior Agreement. The Agreement may be amended at
any time by mutual written agreement of the parties hereto.

 

8.5. Withholding. The Company shall be
entitled to withhold, or cause to be withheld, from payment any amount of
withholding taxes required by law with respect to payments made to the
Executive in connection with his employment hereunder.

 

8.6. Governing Law. This Agreement
shall be construed, interpreted, and governed in accordance with the laws of
the State of New York without reference to principles of conflict of laws.

 

8.7. Survival. Section 3.4
(relating to benefits upon termination), Article 6 (relating to
noncompetition, nonsolicitation and confidentiality) and 8.6 (relating to
governing law) shall survive the termination hereof.

 

8.8. Headings. Headings to sections in
this Agreement are for the convenience of the parties only and are not intended
to be a part of or to affect the meaning or interpretation hereof.

 

8.9. Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.

 

[signature page follows]

 

 

IN WITNESS WHEREOF, the Company and Group
have caused this Agreement to be duly executed by their authorized
representatives and the Executive has hereunto set his hand, in each case
effective as of the day and year first above written.

 

	
   

  	
  ATLANTIC EXPRESS

  
	
   

  	
  TRANSPORTATION GROUP INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Domenic Gatto

  	
   

  
	
   

  	
   

  	
  Name: Domenic Gatto

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
  ATLANTIC EXPRESS

  
	
   

  	
  TRANSPORTATION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Domenic Gatto

  	
   

  
	
   

  	
   

  	
  Name: Domenic Gatto

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Nathan Schlenker

  	
   

  
	
   

  	
  Nathan Schlenker

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