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Exhibit 10.27  

 
 

Edwards Lifesciences Corporation    
    

Officer
Perquisite Program Guidelines

(as of March 2005) 

        Edwards
Lifesciences provides its corporate officers with a comprehensive perquisites program. The program is reviewed periodically by the Compensation and Governance Committee of the
Board of Directors (the "Compensation Committee") to ensure that the program components and reimbursement levels remain competitive. The various program components are described below including the
manner of payment or reimbursement. 

        Participation
in the Officer Perquisite Program is effective from the date an individual becomes a corporate vice president (or higher position) to the date an individual ceases to be a
corporate vice president (or higher position). Throughout this document, the term "officer" shall mean such individual. 

        Note
that information and guidance contained in these Guidelines are subject to all applicable laws and regulations. 

Tax Consequences  

        Several elements of the Officer Perquisite Program may constitute taxable income to the officer. For each benefit described, we have indicated whether the receipt
of the benefit is taxable income to the
officer. It is important that the officer maintain a detailed record of the business use portion and the personal use portion of all expenses to ensure that Edwards can determine whether an expense
should be taxable income. 

        An
officer will not be grossed-up for any taxes due upon the receipt of a taxable benefit. 

Flexible Allowance  

        An important feature of the perquisites program is a flexible allowance established to recognize our diverse officer group. Subject to such changes as may be made
from time to time by the Compensation Committee, each officer (except for the Chief Executive Officer) is entitled to a $15,000 annual flexible allowance, and the Chief Executive Officer is entitled
to a $40,000 annual flexible allowance. The annual flexible allowance is stated in the officer's Total Compensation Statement. 

        Expenses
that are to be reimbursed under the flexible allowance are identified under each of the different program elements. 

        Unless
stated otherwise, payments or reimbursements processed under the flexible allowance feature are considered business expenses and will not be treated as taxable income. However,
any reimbursements that do not meet general IRS standards for business deductions will be considered additional taxable income and will be reported on the individual officer's W-2 (or any
other such similar form). 

I. CAR ALLOWANCE  

        Officers will receive a monthly stipend to reimburse them for car-related expenses. This allowance is intended to cover expenses related to the lease
or purchase, insurance, and maintenance of a vehicle, and will be reported as taxable income. Please note that the car allowance covers mileage for business use. Consequently, business mileage cannot
be claimed for reimbursement. The car allowance is included in the officer's regular paycheck. 

 

II.    COMPANY AIRPLANE  

        To provide for the safety and convenience of Edwards' officers, the Company maintains fractional ownership in corporate aircraft. Officers' use of the aircraft
for business reasons is not considered taxable income. 

        Flexible Allowance:    If an officer takes a spouse on the corporate aircraft to a business function
where spousal attendance is required, the cost of travel will not fall under the flexible allowance. However, this cost will be treated as taxable
income to the employee and will be reported in the officer's W-2. 

        If
an officer takes a spouse on the corporate aircraft to a business function where spousal attendence is optional, the cost of travel
falls under the flexible allowance. This cost will be treated as taxable income to the employee and will be reported on the officer's W-2. 

        The
cost of any personal use of the corporate aircraft by an officer falls under the flexible allowance. This cost will be treated as taxable income to the employee and will be reported
on the officer's W-2. 

        The
cost of travel (or the amount of imputed income per round trip) will be determined annually. The cost for any other authorized use of the corporate aircraft by an officer or others
will be charged to, or imputed as taxable income to, the officer in accordance with applicable law. 

III.  AIRLINE CLUBS/ FIRST CLASS AIR  

        First Class Air Travel.    Officers are eligible to use first class air travel for business reasons. 

        Airline First Class Upgrades.    Airlines often permit individuals to purchase upgrade tickets for a nominal fee that allow a
passenger to fly first class if seats are available on the flight. Officers will be reimbursed for any business-related airline upgrades. 

        Airline Clubs.    Officers can maintain membership in airline clubs that provide airport meeting facilities that are useful for
conducting job-related business. 

        Flexible Allowance:    Airline club dues are covered under the flexible allowance. Please submit
receipts for reimbursement to Executive Assistant, Human Resources (Irvine, GO 23). 

        Reimbursement
for first class air travel and first class upgrades for business travel and for other business expenses related to the business use of airline club facilities should be
submitted on an expense report to Accounts Payable. The expense report for reimbursement of business-related expenses for the use of airline club facilities must clearly state: 

	•
	Full
names and titles of attendees

	•
	Date
of meeting

	•
	Specific
business purpose of meeting

	•
	Place
of meeting 

        Consistent
with company policy, corporate airline partners should be used for all business-related travel. 

IV.    CELLULAR PHONE  

        The Company provides an allowance for expenses resulting from the purchase, installation and business use of a cellular telephone. It is the Company's policy that
cellular telephones can be used for business use only. 

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        Flexible Allowance:    Reimbursement of expenses related to the purchase and installation of a cellular
phone should be submitted to Executive Assistant, Human Resources, as part of the flexible allowance. 

        Reimbursement
for business-related calls should be requested through expense reports submitted to Accounts Payable. Any incidental personal use of the cellular phone should be excluded
from the expense report and highlighted in the original phone company statement. 

V. CLUB MEMBERSHIPS  

        In order to maintain customer relations and properly reflect the Company's image, the Company's policy is to maintain memberships in various and diverse business,
dining, country, and social clubs. Since most such clubs do not provide for corporate memberships, the Company's policy is to enable officers to represent the Company's interests by becoming members
in such organizations. 

        Business and Dining Clubs.    The Company will reimburse the cost of maintaining membership in organizations that provide
substantial visibility within the business community and are useful for conducting job-related business. 

        Country, Golf and Social Clubs.    The Company will reimburse the cost of maintaining membership in organizations that provide
substantial visibility within the business community and are useful for conducting job-related business. Because the primary goal of membership in these clubs is to conduct business with
customers who are visiting an Edwards facility, these clubs should be local to the office of the individual officer. 

        Flexible Allowance:    Initiation fees and membership dues are covered under the flexible allowance.
Please submit receipts for reimbursement to Executive Assistant, Human Resources. 

        Reimbursement
for other expenses related to the business use of club facilities should be submitted on an expense report to Accounts Payable. The expense report for reimbursement of
business-related expenses must clearly state: 

	•
	Full
names and titles of attendees

	•
	Date
of meeting

	•
	Specific
business purpose of meeting

	•
	Place
of meeting 

VI.   FINANCIAL PLANNING  

        This allowance covers expenses resulting from financial planning, tax return preparation, and related matters. These expenses are treated as taxable income to the
officer. For certain key officers, reimbursement for financial planning expenses may impose additional disclosure obligations. 

        Flexible Allowance:    Please submit receipts for reimbursement under the flexible allowance to
Executive Assistant, Human Resources. 

VII. HOME OFFICE EQUIPMENT  

        Flexible Allowance:    Expenses related to set up and maintenance of a home business office are covered
under the flexible allowance. These expenses include: 

	•
	Purchase
of home office furniture

	•
	Purchase
of a personal computer 

3

 

	•
	Additional
phone lines which may be necessary to operate office equipment

	•
	Home
fax line

	•
	DSL/Cable
connection for home office PC 

        Sample
list of excluded expenses: Construction costs to remodel home to accommodate a home office, and installation and maintenance of a
home security system. 

        The
Company has a "no personal use" policy for home business equipment issued to its employees. Documentation may be required to substantiate the business use of home office equipment or
installation fees associated with set up. All receipts for such business purpose should be itemized and submitted for reimbursement to Executive Assistant, Human Resources. 

VIII. SPOUSAL TRAVEL  

        Flexible Allowance:    If an officer takes a spouse to a business function where spousal attendance is  optional, the Company will reimburse the cost of spousal travel under the flexible allowance. This is
treated as taxable income to the officer. Please submit receipts to Executive Assistant, Human Resources, for reimbursement. 

        The
Company recognizes that there are occasions when a spouse's attendance is required at a function or event. The Company will reimburse
the cost of spousal attendance at approved events or functions. This is also treated as taxable income to the officer. Please submit an expense report to Accounts Payable for reimbursement. 

IX.   PHYSICAL EXAMINATION  

        This program is designed to provide annual physical examinations for Edwards officers in an effort to assist them in maintaining good health. This does not cover
treatment or medical procedures for diagnosed illnesses or injuries. Results of annual physicals are not disclosed to the company and are strictly confidential between the officer and the physician.
Participation is voluntary. 

        The
officer should schedule examinations directly with a health center or physician. Officers may want to have their physical examination performed by their primary care physician who is
familiar with their health history. As an alternative, Edwards has made special arrangements with the two facilities listed below: 

Saddleback
Memorial Medical Center

24451 Health Center Drive, Suite 202

Laguna Hills, CA 92653

(949) 452-7851 

UCI
Medical Center

2100 Medical Plaza

Irvine, CA 92697

(949) 824-8033 

        If
availing services from the above facilities, mention that you are a Corporate Officer of Edwards Lifesciences when calling to schedule an appointment. 

        Saddleback
Memorial Center and UCI Medical Center will bill Edwards Lifesciences directly. 

        For
reimbursement for services rendered by other providers, please submit your receipts to Executive Assistant, Human Resources. 

        There
is no maximum benefit although expected norms are $1,500 to $3,500, depending on the specific exam elements required. 

        Please
refer to the Corporate Officer Physical Examination Program policy for additional details. 

*
* * 

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Edwards Lifesciences CorporationExhibit 4.1

 

FIRST
SUPPLEMENTAL INDENTURE

 

FIRST SUPPLEMENTAL INDENTURE, dated as of March 3,
2005, among Atlantic Express Transportation Corp., a New York corporation (the “Company”),
the Guarantors named herein, as guarantors, and The Bank of New York, as Trustee
and Collateral Agent (the “Trustee”).

 

WHEREAS, the Company has duly issued its 12% Senior
Secured Notes due 2004 (the “Fixed Rate Notes”) and its Senior Secured
Floating Rate Notes (the “Floating Rate Notes” and, together with the
Fixed Rate Notes, the “Notes”), in the aggregate principal amount of
$115,000,000 pursuant to an Indenture dated as of April 22, 2004, among
the Company, the Guarantors named therein and the Trustee (the “Indenture”),
and the Notes in the principal amount of $115,000,000 are outstanding on the
date hereof (the notes evidencing such additional indebtedness and increases in
such additional indebtedness being referred to herein as the “Third Priority
Senior Secured Notes due 2008” and “New PIK Notes”, respectively);
and

 

WHEREAS, the Company proposes to incur additional
indebtedness in a maximum aggregate initial principal amount or initial issue
price of up to $15.0 million plus any
increase in the principal amount of such indebtedness resulting from any
accrual, compounding or payment-in-kind of interest under such indebtedness
which is not paid currently in cash or which is added to the principal amount
of such indebtedness; and

 

WHEREAS, Section 9.02 of the Indenture provides
that the Company and the Trustee may amend any provision of the Indenture
(other than certain provisions enumerated in Section 9.02 of the
Indenture, none of which provisions are implicated hereby) with the written
consent of the Holders (as defined in the Indenture) of at least a majority of
the aggregate principal amount of the then outstanding Notes and execute a
supplemental indenture; and

 

WHEREAS, the Company solicited, and has received,
consents upon the terms and subject to the conditions set forth in the Consent
Solicitation Statement dated February 15, 2005 (the “Statement”)
and the accompanying Consent Letter (the “Consent Letter”), from Holders
representing at least a majority in aggregate principal amount of its
outstanding Securities to certain amendments described therein to the Indenture;
and

 

WHEREAS, it is provided in Section 9.04 of the
Indenture that a supplemental indenture becomes effective in accordance with
its terms and thereafter binds every Holder;

 

NOW, THEREFORE, the parties hereto agree as follows:

 

SECTION 1.                         DEFINITIONS.

 

Capitalized terms not defined herein shall have the
meaning given to such terms in the Indenture.

 

 

SECTION 2.                         AMENDMENTS TO THE INDENTURE.

 

Section 2.1                                   Amendment
to the definition of “Notes.”

 

The definition of “Notes” as set forth in Section 1.01
of the Indenture is hereby amended and restated to read in its entirety as
follows:

 

“Notes” has the meaning set forth
in the preamble to this Indenture and means the Initial Notes, the Additional
Notes, if any, the PIK Notes, if any, and the Exchange Notes treated as a
single class of securities, as amended or supplemented from time to time in
accordance with the terms hereof, that are issued pursuant to this
Indenture.  For purposes of amendments,
modifications, waivers, supplements or other actions by Holders, Holders of the
Third Priority Senior Secured Notes due 2008 and New PIK Notes issued in
connection therewith will be treated as a single class of securities on all
matters with the Holders of the Notes, except matters regarding the
Registration Rights Agreement.

 

Section 2.2                                   Amendment
to the definition of “Permitted Indebtedness.”

 

The definition of “Permitted Indebtedness” as set
forth in Section 1.01 of the Indenture is hereby amended and restated to
read in its entirety as follows:

 

“Permitted Indebtedness” means,
without duplication, each of the following: (1) Indebtedness under the Notes
issued on the Issue Date or in the Exchange Offer with respect to such Notes
issued on the Issue Date in an aggregate outstanding principal amount not to
exceed $115.0 million and the related Guarantees; (2) Indebtedness incurred
pursuant to the Credit Agreement in an aggregate principal amount at any time
outstanding not to exceed $20.0 million; (3) other Indebtedness of the Company
and its Restricted Subsidiaries outstanding on the Issue Date (other than
Indebtedness outstanding under the Credit Agreement); (4) Interest Swap
Obligations of the Company or any of its Restricted Subsidiaries covering
Indebtedness of the Company or any of its Restricted Subsidiaries; provided,
however, that such Interest Swap Obligations are entered into for the
purpose of fixing or hedging interest rates with respect to any fixed or
variable rate Indebtedness that is permitted by this Indenture to be
outstanding to the extent that the notional amount of any such Interest Swap
Obligation does not exceed, at the time of the incurrence thereof, the
principal amount of Indebtedness to which such Interest Swap Obligation
relates; (5) Indebtedness of a Restricted Subsidiary of the Company to the
Company or to another Restricted Subsidiary for so long as such Indebtedness is
held by the Company or a Restricted Subsidiary of the Company, in each case
subject to no Lien by anyone other than the Company; provided  that
(a) any such Indebtedness is subordinated, pursuant to a written agreement, to
such Subsidiary’s Obligations under this Indenture and its Guarantee and (b) if
as of any date any Person other than the Company or a Guarantor owns or holds
any such Indebtedness or holds a Lien in respect of such Indebtedness, such
date shall be deemed the incurrence of Indebtedness not constituting Permitted
Indebtedness by the Issuer of such Indebtedness (unless such Indebtedness may
otherwise be incurred pursuant to the terms of this Indenture); (6) Indebtedness of the
Company to a Restricted Subsidiary of the Company for so long as such
Indebtedness is held by a Restricted Subsidiary of the Company, in each case
subject to no Lien; provided  that (a) any such Indebtedness is
subordinated, pursuant to a written agreement by the holder thereof, to the
Company’s obligations under this Indenture and the Notes and (b) if as of any
date any Person other than a Restricted Subsidiary owns or holds any such
Indebtedness or any Person holds a Lien in respect of such Indebtedness, such
date shall be deemed the incurrence of Indebtedness not constituting Permitted
Indebtedness by the Company (unless such Indebtedness may otherwise be incurred
pursuant to the terms of this Indenture); (7)

 

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Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business; provided, however,
that such Indebtedness is extinguished within three Business Days of
incurrence; (8) Indebtedness of the Company or any of its Restricted
Subsidiaries represented by (i) letters of credit for the account of the
Company or such Restricted Subsidiary, as the case may be, in order to provide
security for performance bonds, bankers’ acceptances, surety or appeal bonds,
workers’ compensation claims, automobile liability loss fund claims, payment
obligations in connection with self-insurance or similar requirements incurred
in the ordinary course of business or (ii) performance bonds, appeal bonds,
surety bonds, insurance obligations or bonds and other similar bonds or
obligations incurred in the ordinary course of business; (9) Indebtedness
represented by Capitalized Lease Obligations and Purchase Money Obligations of
the Company and its Restricted Subsidiaries exiting on the Issue Date, and
Indebtedness represented by Capitalized Lease Obligations and Purchase Money
Obligations of the Company and its Restricted Subsidiaries after the Issue Date
up to, but not exceeding $3.5 million at any time outstanding; (10) Refinancing
Indebtedness; (11) Guarantees by the Company or a Restricted Subsidiary of the
Company of Indebtedness incurred by the Company or a Restricted Subsidiary of
the Company so long as the incurrence of such Indebtedness by the Company or
any such Restricted Subsidiary is otherwise permitted by the terms hereof; (12)
Indebtedness arising from agreements of the Company or a Subsidiary of the
Company providing for indemnification, adjustment of purchase price or similar
obligations, in each case, incurred in connection with the disposition of any
business, assets or Subsidiary, other than guarantees of Indebtedness incurred
by any Person acquiring all or any portion of such business, assets or
Subsidiary for the purpose of financing such acquisition; provided  that
the maximum aggregate liability in respect of all such Indebtedness shall at no
time exceed the gross proceeds actually received by the Company and the
Subsidiary of the Company in connection with such disposition; (13)
Reimbursement obligations for letters of credit issued under the Credit
Agreement in an aggregate principal amount not to exceed $10.0 million at any
time outstanding; (14) additional Indebtedness of the Company and its
Restricted Subsidiaries in an aggregate principal amount not to exceed $5.0
million at any time outstanding (which amount may, but need not be, incurred in
whole or in part under the Credit Agreement); and (15) additional Indebtedness in an
aggregate principal amount not to exceed $15.0 million plus the aggregate
principal amount of New PIK Notes issued in connection therewith at any one
time outstanding of Third Priority Senior Secured Notes due 2008 and any
related Guarantees.

 

Section 2.3                                   Amendment
to the definition of “Permitted Liens.”

 

The definition of “Permitted Liens” as set forth in Section 1.01
of the Indenture is hereby amended and restated to read in its entirety as
follows:

 

“Permitted Liens” means the
following types of Liens: (1)  Liens for
taxes, assessments or governmental charges or claims that are either (a) not
delinquent or (b) being contested in good faith by appropriate proceedings and
as to which the Company or any of its Restricted Subsidiaries shall have set
aside on its books such reserves if any, as shall be required pursuant to GAAP,
and Liens for taxes to be paid pursuant to the Plan of Reorganization;  (2) statutory and common law Liens of
landlords and Liens of carriers, warehousemen, mechanics, suppliers,
materialmen, repairmen and other Liens imposed by law or pursuant to customary 

 

3

 

reservations or retentions of title incurred in the
ordinary course of business for sums not yet delinquent or being contested in
good faith, if such reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made in respect thereof;  (3) Liens incurred or deposits made in the
ordinary course of business in connection with automobile insurance policies,
workers’ compensation, unemployment insurance and other types of social
security, including any Lien securing letters of credit issued in the ordinary
course of business consistent with past practice in connection therewith, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the payment
of borrowed money);  (4) Liens arising by
reason of any judgment of any court, but not giving rise to an Event of Default
so long as such Lien is adequately bonded and any appropriate legal proceedings
which may have been duly initiated for the review of such judgment shall not
have been finally terminated or the period within which such proceedings may be
initiated shall not have expired; 
(5)  licenses, sublicenses, leases,
subleases, easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Company and
that of its Restricted Subsidiaries, taken as a whole;  (6) 
any interest or title of a lessor under any Capitalized Lease Obligation
or operating lease permitted pursuant to clause (9) of the definition of
“Permitted Indebtedness;” provided  that such Liens do not extend
to any property or assets which is not leased property subject to such
Capitalized Lease Obligation;  (7)  Liens securing Capitalized Lease Obligations
and Purchase Money Indebtedness permitted pursuant to clause (9) of the
definition of “Permitted Indebtedness”; provided, however, that
in the case of Purchase Money Indebtedness (a) the Indebtedness shall not
exceed the cost of the real property acquired, together with the cost of the
construction thereof and improvements thereto, and shall not be secured by any
property or assets of the Company or any Restricted Subsidiary of the Company other
than such property and improvements thereto so acquired or constructed and
improvements thereon and (b) the Lien securing such Indebtedness shall be
created within 180 days of such acquisition or construction or, in the case of
a refinancing of any Purchase Money Indebtedness, within 180 days of such
refinancing;  (8)  Liens (a) upon specific items of inventory or
other goods and proceeds of any Person securing such Person’s obligations in
respect of bankers’ acceptances or similar credit transactions issued or
created for the account of such Person to facilitate the purchase, shipment or
storage of such inventory or other goods, (b) securing reimbursement
obligations with respect to commercial letters of credit which encumber
documents and other property relating to such letters of credit and products
and proceeds thereof, or (c) encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual, or warranty requirements of
the Company or any of its Restricted Subsidiaries, including rights of offset
and set-off;  (9)  Liens (a) securing Interest Swap Obligations
which Interest Swap Obligations relate to Indebtedness that is otherwise
permitted under this Indenture, or (b) securing Indebtedness under Currency
Agreements and Commodity Agreements that are permitted under this
Indenture;  (10)  Liens securing Acquired Indebtedness incurred
in accordance with Section 4.12 (including, without limitation clause
(9) of the definition of “Permitted Indebtedness”), provided  that:  (a) 
such Liens secured such Acquired Indebtedness at the time of and prior
to the incurrence of such Acquired Indebtedness by the Company or a Restricted
Subsidiary of the Company and were not granted in connection with, or in
anticipation of, the incurrence of such Acquired Indebtedness by the Company or
a Restricted Subsidiary of the Company; and (b) 
such Liens do not extend to or cover any property or assets of the 

 

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Company or of any of its Restricted Subsidiaries other
than the property or assets that secured the Acquired Indebtedness prior to the
time such Indebtedness became Acquired Indebtedness of the Company or a
Restricted Subsidiary of the Company and are no more favorable to the
lienholders than those securing the Acquired Indebtedness prior to the
incurrence of such Acquired Indebtedness by the Company or a Restricted
Subsidiary of the Company;  (11)  Liens existing as of the Issue Date and
securing Indebtedness permitted to be outstanding under clause (3) of
the definition of the term “Permitted Indebtedness” to the extent and in the
manner such Liens are in effect on the Issue Date;  (12) 
Liens securing the Notes, the Additional Notes (if any), the PIK Notes
(if any), this Indenture and the Guarantees; 
(13)  Liens on property or assets
of the Company or any Restricted Subsidiary (and the proceeds thereof), other
than the Motor Vehicles, securing Indebtedness under the Credit Agreement to
the extent such Indebtedness is permitted under clauses (2), (13)
and (14) of the definition of the term “Permitted Indebtedness;”  (14) Liens of the Company or a Guarantor on
stock or assets of any Restricted Subsidiary of the Company;   (15) 
Liens securing Refinancing Indebtedness which is incurred to Refinance
any Indebtedness which has been secured by a Lien permitted hereunder and which
has been incurred in accordance with Section 4.12; provided,
however, that such Liens: (i) are no less favorable to the
Holders and are not more favorable to the lienholders with respect to such
Liens than the Liens in respect of the Indebtedness being Refinanced; and (ii)
do not extend to or cover any property or assets of the Company or any of its
Restricted Subsidiaries not securing the Indebtedness so Refinanced;  (16)  Liens
in the ordinary course of business not exceeding $5.0 million at any one time
outstanding that (a) are not incurred in connection with borrowing money and
(b) do not materially detract from the value of the property or materially
impair its use;  (17)  Liens by reason of judgment or decree not
otherwise resulting in an Event of Default; 
(18)  Liens securing Indebtedness
permitted to be incurred pursuant to clause (14) of the definition of “Permitted
Indebtedness”;  (19)  Liens on insurance financing payables;  (20)  Liens arising out of
conditional sale, title retention, consignment or similar arrangements for the
sale of goods entered into by the Company or any of its Restricted Subsidiaries
in the ordinary course of business; and (21) Liens securing the Third Priority
Senior Secured Notes due 2008 and related New PIK Notes issued in connection
therewith.

 

Section 2.4                                   Amendment
to the “Limitation on Change of Control” Covenant.

 

Section 4.15(a) of the Indenture is hereby
amended and restated to read in its entirety as follows:

 

(a) Upon the occurrence of a Change of Control, the
Company shall make an offer to purchase all outstanding Notes pursuant to the
requirements described in clause (b) below (the “Change of Control
Offer”) at a purchase price in cash equal to 101% of the principal amount
thereof on the date of purchase plus accrued and unpaid interest and Additional
Interest and Additional PIK Interest (which, for such purpose shall be payable
in cash), if any, to the date of purchase. 
For purposes of this Section 4.15 hereof, the term “Notes” shall
include the Third Priority Senior Secured Notes due 2008 plus the New PIK Notes
issued in connection therewith and the term “Holder” shall include the holders
of the Third Priority Senior Secured Notes due 2008 and the New PIK Notes
issued in connection therewith.

 

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Section 2.5                                   Amendment
to the “Limitation on Asset Sales” Covenant.

 

Section 4.16 of the Indenture is hereby amended
and restated to read in its entirety as follows:

 

The Company will not, and
will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale
unless:

 

(1)                                  the Company or
the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value of the assets sold or otherwise disposed of (as determined in good faith
by senior management or, in the case of an Asset Sale in excess of $5.0
million, the Company’s Board of Directors);

 

(2)                                  at least 75% of
the consideration received by the Company or the Restricted Subsidiary, as the
case may be, from such Asset Sale shall be in the form of cash or Cash
Equivalents and is received at the time of such disposition; provided  that
(a) the amount of any liabilities (as shown on the most recent applicable
balance sheet) of the Company or such Restricted Subsidiary (other than
liabilities that are by their terms subordinated to the Notes) that are assumed
by the transferee of any such assets shall be deemed to be cash for the
purposes of this clause (2) so long as the documents governing such
liabilities provide that there is no further recourse to the Company or any of
its Subsidiaries with respect to such liabilities and (b) any securities, notes
or other obligations received by the Company or any such Restricted Subsidiary
from the transferee that are contemporaneously, subject to ordinary settlement
periods, converted by the Company or such Restricted Subsidiary into cash,
shall be deemed to be cash to the extent of the cash received in that
conversion; and

 

(3)                                  upon the
consummation of an Asset Sale, the Company shall apply, or cause such
Restricted Subsidiary to apply, the Net Cash Proceeds relating to such Asset
Sale within 179 days of receipt thereof:

 

(a)                                  to repay
Indebtedness under the Credit Agreement;

 

(b)                                 to make an
investment in properties and assets that replace the properties and assets that
were the subject of such Asset Sale or in the business of the Company and its
Restricted Subsidiaries as existing on the Issue Date (“Replacement Assets”);
or

 

(c)                                  a combination
of prepayment and investment permitted by the foregoing clauses (3)(a)
and (3)(b).

 

On the 180th day after an
Asset Sale or such earlier date, if any, as the senior management or the Board
of Directors of the Company or of such Restricted Subsidiary determines not to
apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses
(3)(a), 3(b) and 3(c) of the immediately preceding paragraph
(each, a “Net Proceeds Offer Trigger Date”), such aggregate amount of
Net Cash Proceeds which have not been applied on or before such Net Proceeds
Offer Trigger Date as permitted in clauses (3)(a), (3)(b) and (3)(c)
of the immediately preceding paragraph (each a “Net Proceeds Offer Amount”)
shall be applied by the Company or such Restricted Subsidiary to make an offer
to purchase (the “Net Proceeds Offer”) on a date (the “Net Proceeds
Offer Payment Date”) not less than 30 nor more than 60 days following the
applicable Net Proceeds Offer Trigger Date, from all Holders on a pro rata
basis, that amount of Notes equal to the Net Proceeds Offer Amount at a price
equal to 100% of

 

6

 

the principal amount of the
Notes to be purchased, plus accrued and unpaid interest and Additional Interest
and Additional PIK Interest (which, for such purpose, shall be payable in
cash), if any, thereon, to the date of purchase; provided, however,
that if at any time any non-cash consideration received by the Company or any
of its Restricted Subsidiaries, as the case may be, in connection with any
Asset Sale is converted into or sold or otherwise disposed of for cash (other
than interest received with respect to any such non-cash consideration), then
such conversion or disposition shall be deemed to constitute an Asset Sale
hereunder on the date of such conversion or disposition, as the case may be,
and the Net Cash Proceeds thereof shall be applied in accordance with this Section 4.16.

 

For purposes of this Section 4.16
hereof, the term “Notes” shall include the Third Priority Senior Secured Notes
due 2008 plus the New PIK Notes issued in connection therewith and the term “Holder”
shall include the holders of the Third Priority Senior Secured Notes due 2008
and the New PIK Notes issued in connection therewith.

 

The Company may defer any
Net Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer
Amount equal to or in excess of $5.0 million resulting from one or more Asset
Sales in which case the accumulation of such amount shall constitute a Net
Proceeds Offer Trigger Date (at which time, the entire unutilized Net Proceeds
Offer Amount, and not just the amount in excess of $5.0 million, shall be
applied as required pursuant to the immediately preceding paragraph).

 

In the event of the transfer
of substantially all (but not all) of the property and assets of the Company
and its Restricted Subsidiaries as an entirety to a Person in a transaction
permitted under Section 5.01, which transaction does not constitute
a Change of Control, the successor corporation shall be deemed to have sold the
properties and assets of the Company and its Restricted Subsidiaries not so
transferred for purposes of this covenant, and shall comply with the provisions
of clause (3) of the first paragraph of this Section 4.16
with respect to such deemed sale as if it constituted an Asset Sale. In
addition, the Fair Market Value of such properties and assets of the Company or
its Restricted Subsidiaries deemed to be sold shall be deemed to be Net Cash
Proceeds for purposes of this Section 4.16.

 

Each notice of a Net
Proceeds Offer shall be mailed to the record Holders as shown on the register
of Holders within 25 days following the Net Proceeds Offer Trigger Date, with a
copy to the Trustee, and shall comply with the procedures set forth in this
Indenture. Upon receiving notice of the Net Proceeds Offer, Holders may elect
to tender their Notes in whole or in part in integral multiples of $1,000 in
exchange for cash. To the extent Holders properly tender Notes in an amount
exceeding the Net Proceeds Offer Amount, Notes of tendering Holders will be
purchased on a pro rata basis (based on amounts tendered).  To the extent that the aggregate amount of the
notes tendered pursuant to a Net Proceeds Offer is less than the Net Proceeds
Offer Amount, the Company may use such excess Net Proceeds Offer Amount for
general corporate purposes or for any other purposes not prohibited by this
Indenture.  Upon completion of any such
Net Proceeds Offer, the Net Proceeds Offer Amount shall be reset at zero.  A Net Proceeds Offer shall remain open for a
period of 20 Business Days or such longer period as may be required by law.

 

7

 

Pending the final
application of the Net Cash Proceeds, the Company and any its Restricted
Subsidiaries may temporarily reduce Indebtedness or otherwise use such Net Cash
Proceeds in any manner not prohibited by this Indenture.

 

The Company will comply with
the requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of Notes pursuant to a Net
Proceeds Offer. To the extent that the provisions of any securities laws or
regulations conflict with this Section 4.16, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under Section 4.16 by
virtue thereof.

 

Section 2.7                                   Amendment
to the “Maintenance of Consolidated EBITDA” Covenant.

 

Section 4.25 of the Indenture is hereby amended
and restated to read in its entirety as follows:

 

The Consolidated EBITDA of the Company shall not be less than (1) $23.0 million for the
four consecutive full fiscal quarters of the Company ending March 31,
2006, (2) $27.0 million for the four consecutive full fiscal quarters of the
Company ending June 30, 2006, (3) $31.0 million for the four consecutive
full fiscal quarters of the Company ending September 30, 2006 and (4)
$35.0 million on the last day of each fiscal quarter of the Company (beginning
with the fiscal quarter ending December 31, 2006 and for so long as the
Notes remain outstanding) during the four consecutive full fiscal quarters of
the Company ending as of such date.

 

SECTION 3.                         EFFECTIVE DATE.

 

This First Supplemental Indenture shall become
effective on the date hereof.

 

SECTION 4.                         MISCELLANEOUS.

 

Section 4.1                                   Governing
Law.

 

THIS FIRST SUPPLEMENTAL INDENTURE SHALL BE CONSTRUED,
INTERPRETED AND THE RIGHTS OF THE PARTIES DETERMINED 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 CONFLICTS OF
LAW.  THE COMPANY AND EACH GUARANTOR HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING
IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING ARISING OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.  THE COMPANY AND EACH GUARANTOR IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT IT

 

8

 

MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY
JURY AND ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY
CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. 
THE COMPANY AND EACH GUARANTOR IRREVOCABLY CONSENTS, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS
OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
THE COMPANY AT ITS ADDRESS SET FORTH IN THE INDENTURE, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. 
NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE COMPANY OR ANY GUARANTOR IN ANY OTHER JURISDICTION.

 

Section 4.2                                   Continuing
Agreement.

 

Except as herein amended, all terms, provisions and
conditions of the Indenture, all Exhibits thereto and all documents executed in
connection therewith shall continue in full force and effect and shall remain
enforceable and binding in accordance with their terms.

 

Section 4.3                                   Conflicts.

 

In the event of a conflict between the terms and
conditions of the Indenture and the terms and conditions of this First Supplemental
Indenture, then the terms and conditions of this First Supplemental Indenture
shall prevail.

 

Section 4.4                                   Counterpart
Originals.

 

The parties may sign any number of copies of this First
Supplemental Indenture.  Each signed copy
shall be an original, but all of them together represent the same agreement.

 

Section 4.5                                   Headings,
Etc.

 

The headings of the Sections of this First
Supplemental Indenture have been inserted for convenience of reference only,
are not to be considered a part hereof and shall in no way modify or restrict
any of the terms or provisions hereof.

 

Section 4.6                                   Trustee’s
Disclaimer.

 

The recitals contained herein shall be taken as the
statements of the Company and the Guarantors and the Trustee assumes no
responsibility for their correctness. 
The Trustee makes no representation as to the validity or sufficiency of
this First Supplemental Indenture.

 

[Signatures on following
pages]

 

9

 

SIGNATURES

 

IN WITNESS WHEREOF, the parties hereto have executed
and delivered this First Supplemental Indenture as of the date first written
above.

 

	
   

  	
  ATLANTIC
  EXPRESS TRANSPORTATION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Domenic Gatto

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Domenic Gatto

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Neil J.
  Abitabilo

  	
   

  	
   

  
	
  Name:

  	
  Neil J.
  Abitabilo

  	
   

  
	
  Title:

  	
  Chief Financial
  Officer

  	
   

  
								

 

 

GUARANTORS:

 

	
  180
  Jamaica Corp.

  	
  Courtesy
  Bus Co., Inc.

  
	
  201
  West Sotello Realty, Inc.

  	
  Fiore
  Bus Service, Inc.

  
	
  Airport
  Services, Inc.

  	
  Groom
  Transportation, Inc.

  
	
  Amboy
  Bus Co., Inc.

  	
  G.V.D.
  Leasing Co., Inc.

  
	
  Atlantic
  Express Coachways, Inc.

  	
  James
  McCarty Limo Service, Inc.

  
	
  Atlantic
  Express New England, Inc.

  	
  Jersey
  Bus Sales, Inc.

  
	
  Atlantic
  Express of California, Inc.

  	
  Jersey
  Business Land Co., Inc.

  
	
  Atlantic
  Express of Illinois, Inc.

  	
  K.
  Corr, Inc.

  
	
  Atlantic
  Express of L.A. Inc.

  	
  McIntire
  Transportation, Inc.

  
	
  Atlantic
  Express of Missouri Inc.

  	
  Merit
  Transportation Corp.

  
	
  Atlantic
  Express of New Jersey, Inc.

  	
  Metro
  Affiliates, Inc.

  
	
  Atlantic
  Express of Pennsylvania, Inc.

  	
  Metropolitan
  Escort Service, Inc.

  
	
  Atlantic
  Express of South Carolina, Inc.

  	
  Midway
  Leasing Inc.

  
	
  Atlantic
  Paratrans of Arizona, Inc.

  	
  Mountain
  Transit, Inc.

  
	
  Atlantic
  Paratrans of NYC, Inc.

  	
  R.
  Fiore Bus Service, Inc.

  
	
  Atlantic
  Paratrans of Pennsylvania, Inc.

  	
  Raybern
  Bus Service, Inc.

  
	
  Atlantic
  Paratrans, Inc.

  	
  Raybern
  Capital Corp.

  
	
  Atlantic
  Queens Bus Corp.

  	
  Raybern
  Equity Corp.

  
	
  Atlantic
  Transit, Corp.

  	
  Robert
  L. McCarthy & Son, Inc.

  
	
  Atlantic-Chittenango
  Real Property Corp.

  	
  Staten
  Island Bus, Inc.

  
	
  Atlantic-Conn.
  Transit, Inc.

  	
  Temporary
  Transit Service, Inc.

  
	
  Atlantic-Hudson,
  Inc.

  	
  T-NT
  Bus Service, Inc.

  
	
  Block
  7932, Inc.

  	
  Transcomm,
  Inc.

  
	
  Brookfield
  Transit Inc.

  	
  Winsale,
  Inc.

  
	
  Central
  New York Reorganization Corp.

  	
  Wrightholm
  Bus Line, Inc.

  

 

 

	
   

  	
  By:

  	
  /s/ Domenic Gatto

  	
   

  	 

	
   

  	
   

  	
  Name:

  	
  Domenic Gatto

  
	
   

  	
   

  	
  Title:

  	
  President

  
						

 

 

	
   

  	
  THE
  BANK OF NEW YORK, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Julie
  Salovitch-Miller

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Julie Salovitch-Miller

  
	
   

  	
   

  	
  Title:

  	
  Vice President

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