Document:

Exhibit
10.1

 

AMENDMENT NO. 4 TO SECOND
AMENDED

AND RESTATED LOAN AND SECURITY AGREEMENT

 

Amendment No. 4, dated as of January 5, 2005, by and among Congress
Financial Corporation, in its capacity as agent (in such capacity, “Agent”)
acting for and on behalf of Lenders (as hereinafter defined), Atlantic Express
Transportation Corp. a New York corporation (“AETC”), Amboy Bus Co., Inc., a
New York corporation (“Amboy”), Atlantic Express Coachways, Inc., a New Jersey
corporation (“Coachways”), Atlantic Express of L.A., Inc. a California
corporation (“AELA”), Atlantic Express of Missouri Inc,. a Missouri corporation
(“AE Missouri”), Atlantic Express of New Jersey, Inc., a New Jersey corporation
(“AENJ”), Atlantic Express of Pennsylvania, Inc., a Delaware corporation (“AEP”),
Atlantic-Hudson, Inc. a New York corporation (“AH”), Atlantic Paratrans, Inc. a
New York corporation (“AP”), Atlantic Paratrans of NYC, Inc. a New York
corporation (“APNY”), Atlantic Queens Bus Corp. a New York corporation (“AQ”),
Block 7932, Inc. a New York corporation (“Block”), Brookfield Transit Inc., a
New York corporation (“Brookfield”), Courtesy Bus Co., Inc., a New York
corporation (“Courtesy”), G.V.D. Leasing Co., Inc. a New York corporation (“GVD”),
180 Jamaica Corp. a New York corporation (“Jamaica”), Merit Transportation
Corp. a New York corporation (“Merit”), Metro Affiliates, Inc., a New York
corporation (“Metro”), Metropolitan Escort Service, Inc. a New York corporation
(“Escort”), Midway Leasing Inc. a New York corporation (“Midway”), Staten
Island Bus, Inc. a New York corporation (“SI-Bus”), Temporary Transit Service,
Inc. a New York corporation (“TTS”), 201 West Sotello Realty, Inc. a California
corporation (“Sotello”), Wrightholm Bus Line, Inc. a Vermont corporation (“Wrightholm”),
Jersey Business Land Co., Inc., a New Jersey corporation (“JBL”), Atlantic
Transit Corp. a New York corporation (“ATC”), Airport Services, Inc. a
Massachusetts corporation (“Airport”), Atlantic Express New England, Inc. a
Massachusetts corporation (“AE-NE”), Atlantic Express of California, Inc. a
California corporation (“AE-CA”), Atlantic Express of Illinois, Inc. an
Illinois corporation (“AE-I”), Atlantic Paratrans of Arizona, Inc. an Arizona
corporation (“AP-AZ”), Fiore Bus Service, Inc. a Massachusetts corporation (“Fiore”),
Groom Transportation, Inc. a Massachusetts corporation (“Groom”), James
McCarthy Limo Service, Inc. a Massachusetts corporation (“Limo”), K. Corr, Inc.
a New York corporation (“Corr”), McIntire Transportation, Inc. a Massachusetts
corporation (“McIntire”), Mountain Transit, Inc. a Vermont corporation (“Mountain”),
Jersey Business Land Co., Inc. a New Jersey corporation (JBL”), R. Fiore Bus
Service, Inc. a Massachusetts corporation (“FBS”), Raybern Bus Service, Inc. a
New York corporation (“RBS”), Raybern Capital Corp. a New York corporation (“RBC”),
Raybern Equity Corp. a New York corporation (“REC”), Robert L. McCarthy &
Son, Inc. a Massachusetts corporation (“McCarthy”), T-NT Bus Service, Inc., a
New York corporation (“TNT”), Transcomm, Inc., a Massachusetts corporation (“Transcomm”)
and Winsale, Inc., a New Jersey corporation (“Winsale”, and together with AETC,
Coachways, Amboy, AELA, AE Missouri, AENJ, AEP, AP, APNY, AQ, Block,
Brookfield, Courtesy, GVD, Jamaica, Merit, Metro, Escort, Midway, SI-Bus, TTS,
Sotello, Wrightholm, ATC, Airport, AE-NE, AE-CA, AE-I, AP-AZ, Fiore, Groom,
Limo, Corr, McIntire, Mountain, JBL, FBS, RBS, RBC, REC, McCarthy, TNT, and
Transcomm, each individually a “Borrower” and collectively, “Borrowers”), and
Central New York Reorganization Corp. (f/k/a Central New York Coach Sales &
Service, Inc.), a New York corporation (“Central”), Jersey Bus Sales, Inc., a
New Jersey corporation (“Jersey”

 

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and together with Central, each individually a “Guarantor” and
collectively, “Guarantors”).

 

W
I  T  N  E  S  S  E  T  H
:

 

WHEREAS, Agent, Lenders, Borrowers and
Guarantors have entered into financing arrangements pursuant to which Agent and
Lenders may make loans and advances and provide other financial accommodations
to Borrowers as set forth in the Second Amended and Restated Loan and Security
Agreement, dated as of April 22, 2004, by and among Agent, Borrowers,
Guarantors and the financial institutions from time to time parties thereto as
lenders (“Lenders”), whether by execution thereof or of an Assignment and
Acceptance, as amended by Amendment No. 1 to Second Amended and Restated Loan
and Security Agreement, dated as of June 14, 2004, by and among Borrowers,
Guarantors, Agent and Lenders, as amended by Amendment No. 2 to Second Amended
and Restated Loan and Security Agreement, dated as of September 15, 2004,
by and among Borrowers, Guarantors, Agent and Lenders, as amended by Amendment
No. 3 to Second Amended and Restated Loan and Security Agreement, dated as of October 14,
2004, by and among Borrowers, Guarantors, Agent and Lenders (as amended hereby
and as the same may hereafter be further amended, modified, supplemented,
extended, renewed, restated or replaced the “Loan Agreement”, and together with
all agreements, documents and instruments at any time executed and/or delivered
in connection therewith or related thereto, as from time to time amended,
modified, supplemented, extended, renewed, restated or replaced, collectively,
the “Financing Agreements”).  All
capitalized terms used herein shall have the meanings assigned thereto in the
Loan Agreement and the other Financing Agreements, unless otherwise defined
herein;

 

WHEREAS, Borrowers have requested that Agent
and Lenders make certain amendments to the Loan Agreement and Agent and Lenders
are willing to agree to such requests, subject to the terms and conditions
contained herein; and

 

WHEREAS, by this Amendment No. 4, Agent,
Lenders, Borrowers and Guarantors wish and intend to evidence such amendments.

 

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

 

1.                                       Additional
Definitions.  As used herein, the
following terms shall have the respective meanings given to them below:

 

(a)                                  “Amendment No. 4”
shall mean this Amendment No. 4 to Second Amended and Restated Loan and
Security Agreement, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.

 

2.                                       Interpretation.  For purposes of this Amendment No. 4, unless
otherwise defined herein, all terms used herein, including, but not limited to,
those terms used and/or defined in the recitals above, shall have the
respective meanings assigned to such terms in the Loan Agreement.

 

3.                                       Administrative
Expense Reserve.

 

Section 1.5 of the Loan Agreement is
deleted and the following is substituted in

 

2

 

place thereof:

 

“1.5  ‘Administrative
Expense Reserve’ shall mean a Reserve in the amount of $1,500,000, which shall
be in effect at all times except during such periods of time when the Special
Reserve is in effect.”.

 

4.                                       Conditions
Precedent.  The effectiveness of
Amendment No. 4 is further conditioned upon the satisfaction of the following
conditions precedent in a manner satisfactory to Agent and Lenders:

 

(a)                                  Agent shall have
received an original of this Amendment No. 4 duly authorized, executed and
delivered by the parties hereto.

 

5.                                       Additional
Representations, Warranties and Covenants.  
Borrowers represent, warrants and covenant with and to Agent and Lenders
as follows, which representations, warranties and covenants are continuing and
shall survive the execution and delivery hereof, and the truth and accuracy of,
or compliance with each, together with the representations, warranties and
covenants in the other Financing Agreements, being a continuing condition of
the making of Loans by Agent to Borrowers:

 

(i)                                     This Amendment No.
4 has been duly executed and delivered by Borrowers and is in full force and
effect as of the date hereof and the agreements and obligations of Borrowers
contained herein constitute legal, valid and binding obligations of such
Borrowers enforceable against such Borrowers in accordance with their
respective terms.

 

6.                                       Miscellaneous.

 

(a)                                  Entire Agreement;
Ratification and Confirmation of the Financing Agreements.  This Amendment No. 4 contains the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior or contemporaneous term sheets, proposals, discussions,
negotiations, correspondence, commitments and communications between or among
the parties concerning the subject matter hereof.  This Amendment No. 4 may not be modified or
any provision waived, except in writing signed by the party against whom such
modification or waiver is sought to be enforced.  Except for those provisions specifically
modified or waived pursuant hereto, the Financing Agreements are hereby
ratified, restated and confirmed by the parties hereto as of the effective date
hereof.  To the extent of conflict
between the terms of this Amendment No. 4 and the Financing Agreements, the
terms of this Amendment No. 4 shall control.

 

7.                                       Governing Law.  This Amendment No. 4 and the rights and
obligations hereunder of each of the parties hereto shall be governed by and
interpreted and determined in accordance with the internal laws of the State of
New York, without regard to principles of conflicts of law.

 

8.                                       Binding
Effect.  This Amendment No. 4 shall
be binding upon and inure to the benefit of each of the parties hereto and
their respective successors and assigns.

 

9.                                       Counterparts.  This Amendment No. 4 may be executed in any
number of counterparts, but all of such counterparts shall together constitute
but one and the same

 

3

 

agreement.  In making proof of
this Amendment No. 4 it shall not be necessary to produce or account for more
than one counterpart thereof signed by each of the parties hereto.

 

10.                                 Headings.  The headings listed herein are for
convenience only and do not constitute matters to be construed in interpreting
this Amendment No. 4.

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 

4

 

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

 

	
   

  	
  BORROWERS

  
	
   

  	
   

  
	
   

  	
  Atlantic Express Transportation Corp.

  
	
   

  	
  Amboy Bus Co., Inc.

  
	
   

  	
  Atlantic Express Coachways, Inc.

  
	
   

  	
  Atlantic Express of L.A. Inc.

  
	
   

  	
  Atlantic Express of Missouri Inc.

  
	
   

  	
  Atlantic Express of New Jersey, Inc.

  
	
   

  	
  Atlantic Express of Pennsylvania, Inc.

  
	
   

  	
  Atlantic-Hudson, Inc.

  
	
   

  	
  Atlantic Paratrans, Inc.

  
	
   

  	
  Atlantic Paratrans of NYC, Inc.

  
	
   

  	
  Atlantic Queens Bus Corp.

  
	
   

  	
  Block 7932, Inc.

  
	
   

  	
  Brookfield Transit Inc.

  
	
   

  	
  Courtesy Bus Co., Inc.

  
	
   

  	
  Jersey Business Land Co., Inc.

  
	
   

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

  
	
   

  	
  180 Jamaica Corp.

  
	
   

  	
  Merit Transportation Corp.

  
	
   

  	
  Metro Affiliates, Inc.

  
	
   

  	
  Metropolitan Escort Service, Inc.

  
	
   

  	
  Midway Leasing Inc.

  
	
   

  	
  Staten Island Bus, Inc.

  
	
   

  	
  Temporary Transit Service, Inc.

  
	
   

  	
  201 West Sotello Realty, Inc.

  
	
   

  	
  Wrightholm Bus Line, Inc.

  
	
   

  	
  Atlantic Transit Corp.

  
	
   

  	
  Airport Services, Inc.

  
	
   

  	
  Atlantic Express New England, Inc.

  
	
   

  	
  Atlantic Express of California, Inc.

  
	
   

  	
  Atlantic Express of Illinois, Inc.

  
	
   

  	
  Atlantic Paratrans of Arizona, Inc.

  
	
   

  	
  Fiore Bus Service, Inc.

  
	
   

  	
  Groom Transportation, Inc.

  
	
   

  	
  James McCarty Limo Service, Inc.

  
	
   

  	
  K. Corr, Inc.

  
	
   

  	
  McIntire Transportation, Inc.

  
	
   

  	
  Mountain Transit, Inc.

  
	
   

  	
  R. Fiore Bus Service, Inc.

  
	
   

  	
  Raybern Bus Service, Inc.

  

 

[SIGNATURES CONTINUED ON
FOLLOWING PAGE]

 

 

[SIGNATURES CONTINUED FROM
PREVIOUS PAGE]

 

	
   

  	
  Raybern Capital Corp.

  
	
   

  	
  Raybern Equity Corp.

  
	
   

  	
  Robert L. McCarthy & Son, Inc.

  
	
   

  	
  T-NT Bus Service, Inc.

  
	
   

  	
  Transcomm, Inc.

  
	
   

  	
  Winsale, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/
  Neil Abitabilo

  
	
   

  	
   

  
	
   

  	
  Title:

  	
    Chief Financial Officer

  
	
   

  	
   

  
	
  GUARANTORS

  	
   

  
	
   

  	
   

  
	
  JERSEY BUS SALES, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/
  Neil Abitabilo

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
    Chief Financial Officer

  	
   

  	
   

  
	
   

  	
   

  
	
  CENTRAL NEW YORK REORGANIZATION CORP.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/
  Neil Abitabilo

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
    Chief Financial Officer

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGENT

  	
   

  
	
   

  	
   

  
	
  CONGRESS FINANCIAL CORPORATION

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/
  Herb Korn

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
     Vice President

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LENDER

  	
   

  
	
   

  	
   

  
	
  CONGRESS FINANCIAL CORPORATION

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/
  Herb Korn

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
     Vice PresidentExhibit
10.2

 

WAIVER  AGREEMENT

 

WAIVER AGREEMENT (“Agreement”) dated as of January 5, 2005 by and between
Atlantic Express Transportation Corp. a New York corporation (“AETC”), Amboy
Bus Co., Inc., a New York corporation (“Amboy”), Atlantic Express Coachways,
Inc., a New Jersey corporation (“Coachways”), Atlantic Express of L.A., Inc. a
California corporation (“AELA”), Atlantic Express of Missouri Inc,. a Missouri
corporation (“AE Missouri”), Atlantic Express of New Jersey, Inc.,  a New Jersey corporation (“AENJ”), Atlantic
Express of Pennsylvania, Inc.,  a
Delaware corporation (“AEP”), Atlantic-Hudson, Inc. a New York corporation (“AH”),
Atlantic Paratrans, Inc. a New York corporation (“AP”), Atlantic Paratrans of
NYC, Inc. a New York corporation (“APNY”), Atlantic Queens Bus Corp. a New York
corporation (“AQ”), Block 7932, Inc. a New York corporation (“Block”),
Brookfield Transit Inc., a New York corporation (“Brookfield”), Courtesy Bus
Co., Inc., a New York corporation (“Courtesy”), G.V.D. Leasing Co., Inc. a New
York corporation (“GVD”), 180 Jamaica Corp. a New York corporation (“Jamaica”),
Merit Transportation Corp. a New York corporation (“Merit”), Metro Affiliates,
Inc., a New York corporation (“Metro”), Metropolitan Escort Service, Inc. a New
York corporation (“Escort”), Midway Leasing Inc. a New York corporation (“Midway”),
Staten Island Bus, Inc. a New York corporation (“SI-Bus”), Temporary Transit
Service, Inc. a New York corporation (“TTS”), 201 West Sotello Realty, Inc. a
California corporation (“Sotello”), Wrightholm Bus Line, Inc. a Vermont
corporation (“Wrightholm”), Jersey Business Land Co., Inc., a New Jersey
corporation (“JBL”), Atlantic Transit Corp. a New York corporation (“ATC”),
Airport Services, Inc. a Massachusetts corporation (“Airport”), Atlantic
Express New England, Inc. a Massachusetts corporation (“AE-NE”), Atlantic
Express of California, Inc. a California corporation (“AE-CA”), Atlantic
Express of Illinois, Inc. an Illinois corporation (“AE-I”), Atlantic Paratrans
of Arizona, Inc. an Arizona corporation (“AP-AZ”), Fiore Bus Service, Inc. a
Massachusetts corporation (“Fiore”), Groom Transportation, Inc. a Massachusetts
corporation (“Groom”), James McCarthy Limo Service, Inc. a Massachusetts
corporation (“Limo”), K. Corr, Inc. a New York corporation (“Corr”), McIntire
Transportation, Inc. a Massachusetts corporation (“McIntire”), Mountain
Transit, Inc. a Vermont corporation (“Mountain”), Jersey Business Land Co.,
Inc. a New Jersey corporation (JBL”), R. Fiore Bus Service, Inc. a Massachusetts
corporation (“FBS”), Raybern Bus Service, Inc. a New York corporation (“RBS”),
Raybern Capital Corp. a New York corporation (“RBC”), Raybern Equity Corp. a
New York corporation (“REC”), Robert L. McCarthy & Son, Inc. a
Massachusetts corporation (“McCarthy”), T-NT Bus Service, Inc., a New York
corporation (“TNT”), Transcomm, Inc., a Massachusetts corporation (“Transcomm”)
and Winsale, Inc., a New Jersey corporation (“Winsale”, and together with AETC,
Coachways, Amboy, AELA, AE Missouri, 
AENJ, AEP, AP, APNY, AQ, Block, Brookfield, Courtesy, GVD, Jamaica,
Merit,  Metro, Escort, Midway, SI-Bus,
TTS, Sotello, Wrightholm, ATC, Airport, AE-NE, AE-CA, AE-I, AP-AZ, Fiore,
Groom, Limo, Corr, McIntire, Mountain, JBL, FBS,  RBS, RBC, REC,  McCarthy, TNT, and Transcomm, (each individually a “Borrower” and collectively, “Borrowers”),  Central New York Reorganization Corp. (f/k/a
Central New York Coach Sales & Service, Inc.), a New York

 

1

 

corporation (“Central”), Jersey Bus Sales, Inc., a New Jersey
corporation (“Jersey” and together with Central, (each individually a “Guarantor” and collectively, “Guarantors”).and
Congress Financial Corporation, in its capacity as agent (in such capacity, “Agent”) acting for and on behalf of Lenders

 

W
I T N E S S E T H:

 

WHEREAS, Borrowers, Guarantors, Agent and
Lenders, have entered into financing arrangements pursuant to which Agent and
Lenders may make loans and advances and provide other financial accommodations
to Borrowers as set forth in the Second Amended and Restated Loan and Security
Agreement, dated as of April 22, 2004, by and among Agent, Borrowers,
Guarantors and the financial institutions from time to time parties thereto as
lenders (“Lenders”), whether by execution thereof or of an Assignment and
Acceptance, as amended by Amendment No. 1 to Second Amended and Restated Loan
and Security Agreement, dated as of June 14, 2004, by and among Borrowers,
Guarantors, Agent and Lenders, as amended by Amendment No. 2 to Second Amended
and Restated Loan and Security Agreement, dated as of September 15, 2004,
by and among Borrowers, Guarantors, Agent and Lenders and as amended by
Amendment No. 3 to Second Amended and Restated Loan and Security Agreement,
dated as of October 14, 2004, by and among Borrowers, Guarantors, Agent
and Lenders,(as amended hereby and as the same may hereafter be further
amended, modified, supplemented, extended, renewed, restated or replaced the “Loan
Agreement”, and together with all agreements, documents and instruments at any
time executed and/or delivered in connection therewith or related thereto, as
from time to time amended, modified, supplemented, extended, renewed, restated
or replaced, collectively, the “Financing Agreements”);

 

WHEREAS, as of the date hereof, Borrowers are
in default under the Loan Agreement and Financing Agreements as more
particularly described below; and

 

WHEREAS, the circumstances described herein
constitute Events of Default under the Loan Agreement and the other Financing
Agreements; and

 

WHEREAS, Borrowers have requested that Agent
and Lenders waive their rights as a result of such Events of Default, which are
continuing, that Agent and Lenders provide financial accommodations to
Borrowers notwithstanding such Events of Default; and

 

WHEREAS, Agents and Lender are willing to
agree to waive certain of their rights and remedies, to continue to provide
certain financial accommodations to Borrowers for the period and on the terms
and conditions specified herein, and to waive the Existing Defaults on the
terms and conditions specified herein;

 

NOW, THEREFORE, in consideration of the
foregoing, and the respective agreements, warranties and covenants contained
herein, the parties hereto agree, covenant and warrant as follows:

 

1.  Interpretation.  All capitalized terms used herein (including
the recitals hereto) shall

 

2

 

have the respective meanings assigned thereto in the Loan Agreement
unless otherwise defined herein.

 

2. Additional
Definitions.  As used herein,
the following terms shall have the respective meanings given to them below and
the Loan Agreement is hereby amended to include, in addition and not in
limitation, each of the following definitions:

 

(a) “Existing Defaults” shall mean the
following Events of Default:

 

(i)                                     Failure of
Borrowers to comply with the provisions of Section 9.17 of the Loan
Agreement which requires Borrowers to have EBITDA of not less than $23,000,000
at the month ended September 30, 2004 (for the twelve (12) consecutive
month period then ended) and at the end of each month thereafter.

 

(b) “Events of Default” shall include,
without limitation, any default of the Borrowers in respect to the terms and
conditions of this Agreement.

 

3. Acknowledgment
of Obligations.  Borrowers and
Guarantors hereby acknowledge, confirm and agree that as of January 4,
2005, Borrowers are indebted to Agent and Lenders in the principal amount of
approximately $29,945,533, including $10,000,000 of Letter of Credit
Accommodations.  All such Obligations,
together with interest accrued and accruing thereon, and fees, costs, expenses
and other charges now or hereafter payable by Borrowers to Agent and Lenders,
are owing by Borrowers to Agent and Lenders, without offset, defense or counterclaim
of any kind, nature or description whatsoever.

 

4. Acknowledgment
of Security Interests. 
Borrowers hereby acknowledge, confirm and agree that Agent and Lenders
have and shall continue to have valid, enforceable and perfected first-priority
liens upon and security interests in the Collateral, other than the Noteholder
First Priority Real Property Collateral (as such term is defined in the
Intercreditor Agreement), heretofore granted to Agent and Lenders pursuant to
the Financing Agreements or otherwise granted to or held by Agent and Lenders
by Borrowers.

 

5. Binding
Effect of Documents. 
Borrowers hereby acknowledge, confirm and agree that: (a) the Loan
Agreement and each of the Financing Agreements to which it is a party has been
duly executed and delivered to Agent and Lenders by Borrowers, and each is in
full force and effect as of the date hereof, (b) the agreements and obligations
of Borrowers contained in such documents and in this Agreement constitute the
legal, valid and binding Obligations of Borrowers, enforceable against it in
accordance with their respective terms, and Borrowers have no valid defense to
the enforcement of such Obligations, and (c) Agent and Lenders are and shall be
entitled to the rights, remedies and benefits provided for in the Loan
Agreement, the Financing Agreements and applicable law.

 

6. Acknowledgment
of Default.  Borrowers hereby
acknowledge and agree that the Existing Defaults have occurred and are
continuing, each of which constitutes an Event of Default and entitles Agent
and Lenders, so long as any such Event of Default shall be continuing, to
exercise their rights and remedies under the Loan Agreement, the Financing
Agreements, applicable law or otherwise. Borrowers hereby acknowledge and agree
that Agent and Lenders have the presently exercisable right to declare the
Obligations to be immediately due and payable under the terms of the Loan
Agreement and the Financing Agreements before the effectiveness of this
Agreement, and under applicable law without notice to the Borrowers or
Guarantors.

 

3

 

7. Additional
Covenants.  In addition to,
and not in limitation of, the representations and covenants set forth in the
Loan Agreement and other Financing Agreements, Borrowers covenant and agree
that no later than thirty (30) days from date of this Agreement,  they shall, at their own cost and expense:

 

(a) Provide Agent and Lenders with financial
projections, in respect of the Borrowers, prepared on a monthly basis, in form
and substance satisfactory and acceptable to Agent and Lenders, for the period
commencing January 1, 2005 and ending December 31, 2005, which
projections shall include without limitation, balance sheets, profit and loss
statements and cash flow statements,  in
addition to such other financial information that Agent and Lenders may
request;

 

(b) Provide Agent and Lenders with a
financial and business plan and forecasts of Borrowers for the period
commencing January 1, 2005 and ending December 31, 2005, which
business and financial plan and forecasts are acceptable and in form and
substance satisfactory to Agent and Lenders and which business plan and
forecasts have been reviewed by and are acceptable to RAS Management (“RAS”).
Borrowers further agree to provide RAS with such financial and other
information that RAS may require in order that RAS may evaluate and determine
the acceptability of any such business plan and forecasts provided by Borrowers
to Agent and Lenders; and

 

(c) Provide Agent and Lenders with financial
projections of EBITDA in respect of Borrowers prepared on a monthly basis, in
form and substance satisfactory and acceptable to Agent and Lenders, for the
month ended December 31, 2004 and as of the end of each month thereafter
through the month ended December 31, 2005.

 

(d) Deliver to Agent and Lenders, an
amendment to Section 9.17 of the Loan Agreement, which amendment shall be
in form and substance satisfactory and acceptable to Agent and Lenders, and
which amendment shall include, without limitation, the minimum EBITDA
requirements in respect to the Borrowers at the end of each calendar month (for
the twelve (12) consecutive month period then ended) commencing December 31,
2004.

 

The breach or failure of the Borrowers to
comply with each or all of the terms and conditions of this Section 7
shall constitute an Event of Default under the Loan Agreement and the Financing
Agreements.

 

8. Waivers.  Provided Borrowers are not in default of the
terms and conditions of this Agreement as of the date of the effectiveness
hereof, Agent and Lenders agree (i) to waive Borrowers Existing Defaults (as
herein defined) and (ii) to waive the requirement of Borrowers’ compliance with
the terms and conditions of Section 9.17 of the Loan Agreement in respect
to the EBITDA requirements, for the months ended September 30, 2004,October 31,
2004 and November 30, 2004, and the Loan Agreement is deemed amended to so
provide.

 

9. Reservation
of Rights.

 

(a) Agent and Lenders have not waived, are
not by this Agreement waiving, and have no intention of waiving, any Events of
Default which may be continuing on the date hereof or any Events of Default
which may occur after the date hereof (whether similar to the Existing

 

4

 

Defaults or otherwise), and Agent and Lenders have not agreed to
forbear with respect to any of its rights or remedies concerning any Events of
Default (other than in respect to the Existing Defaults to the extent expressly
set forth herein), which may have occurred or are continuing as of the date
hereof or which may occur after the date hereof.

 

(b) Agent and Lenders reserve the right, in
their discretion, to exercise any or all of their rights and remedies under the
Loan Agreement and the other Financing Agreements as a result of any Events of
Default (other than with respect to the Existing Defaults) which may be
continuing on the date hereof or any Event of Default which may occur after the
date hereof, and Agent and Lenders have not waived any of such rights or
remedies, and nothing in this Agreement, and no delay on its part in exercising
any such rights or remedies, should be construed as a waiver of any such rights
or remedies.

 

10. Accommodation
Fee.  In consideration of the
agreement of Agent and Lenders to waive their rights and remedies in respect,
without limitation, to the Borrowers’ default under the Loan Agreement and for
other good and valuable consideration, Borrowers agree to pay Agent and Lenders
an Accommodation Fee (the “Accommodation Fee”) in the amount of $100,000, which
Accommodation Fee is fully earned on date hereof, and shall be payable by
Borrowers to Agent and Lenders on January 31, 2005.  Such Accommodation Fee may be charged to any
account of Borrowers maintained by Agent and Lenders.

 

11. Borrowers hereby represent, warrant and
covenant with and to Agent and Lenders as follows:

 

(a) Representations
in Financing Agreements. Each of the representations and warranties
made by or on behalf of Borrowers to Agent and Lenders in the Loan Agreement or
any of the Financing Agreements was true and correct when made and in all
material respects is, except for the representation and warranty set forth in
the Loan Agreement relating to the non-existence of an Event of Default, true
and correct on and as of the date of this Agreement with the same full force
and effect as if each of such representations and warranties had been made by
Borrower on the date hereof and in this Agreement.

 

(b) This Agreement, the Loan Agreement and
the other Financing Agreements have been duly executed and delivered to the
Agent and Lenders by Borrowers and are in full force and effect, as modified
hereby.

 

(c) The execution and delivery and
performance of this Agreement by Borrowers will not violate any requirement of
law or contractual obligation of Borrowers and will not result in, or require,
the creation or imposition of any lien on any of its properties or revenues.

 

12. Additional
Events of Default.  The
parties hereto acknowledge, confirm and agree that any inaccuracy in a material
respect of any representation by Borrowers, or any failure of Borrowers to
comply with the covenants, conditions and agreements, contained in the Loan
Agreement, any Financing Agreement, in this Agreement, or in any other
agreement, document or instrument at any time executed and/or delivered by
Borrowers with, to or in favor of Agent and Lenders shall constitute an Event
of Default hereunder, under the Loan Agreement and the other Financing
Agreements.

 

13. Conditions
Precedent.  The effectiveness
of the terms and provisions of this Agreement shall be subject to the receipt
by Agent and Lenders of each of the following, in form and substance
satisfactory to Agent and Lenders:

 

5

 

(a) an original of this Agreement, duly
authorized, executed and delivered by Borrowers and the Guarantors; and

 

(b) an original of Amendment No. 4, to the
Second Amended and Restated Loan and Security Agreement, dated as of April 22,
2004, by and among Agent, Lenders Borrowers and Guarantors duly authorized,
executed and delivered by Borrowers and the Guarantors.

 

14. Effect
of this Agreement.  Except as
modified pursuant hereto, no other changes or modifications to the Loan
Agreement or Financing Agreements are intended or implied and in all other
respects the Loan Agreement and Financing Agreements are hereby specifically
ratified, restated and confirmed by all parties hereto as of the effective date
hereof.  To the extent of conflict
between the terms of this Agreement, the Loan Agreement and the other Financing
Agreements, the terms of this Agreement shall control.  The Loan Agreement and this Agreement shall
be read and construed as one agreement.

 

15. Costs
and Expenses.  Borrowers
absolutely and unconditionally agree to pay to the Agent and Lenders, on demand
by the Agent and Lenders at any time and as often as the occasion therefor may
require, whether or not all or any of the transactions contemplated by this
Agreement are consummated: all reasonable fees and disbursements of any counsel
to Agent and Lenders in connection with the preparation, negotiation,
execution, or delivery of this Agreement and any agreements delivered in
connection with the transactions contemplated hereby and expenses which shall
at any time be incurred or sustained by the Agent and Lenders.

 

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

 

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

 

18. Severability.  Any provision of this Agreement held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Agreement.

 

19. Governing
Law:  Except as otherwise
expressly provided in the Loan Agreement or any of the Financing Agreements, in
all respects, including all matters of construction, validity and performance,
this Agreement, the Loan Agreement and the other Financing Agreements and the
obligations arising under the Loan Agreement and the Financing Agreements shall
be governed by, and construed and enforced in accordance with, the laws of the
State of New York applicable to contracts made and performed in such state,
without regard to the principles thereof.

 

20. Mutual
Waiver of Jury Trial.  The
parties hereto waive all rights to trial by jury in any action, suit, or
proceeding brought to resolve any dispute, whether arising in contract, tort,
or otherwise between Agent, Lenders and Borrowers and Guarantors arising out
of, connected with, related or incidental to the relationship established
between them in connection with this Agreement, the Loan Agreement or any of
the other Financing Agreements or the transactions related thereto.

 

21. Counterparts.  This Agreement may be executed in any number
of counterparts, but all of such counterparts shall together constitute but one
and the same agreement.

 

6

 

IN WITNESS WHEREOF, this Agreement is
executed and delivered as of the day and year first above written.

 

	
   

  	
  BORROWERS

  
	
   

  	
   

  
	
   

  	
  Atlantic Express Transportation Corp.

  
	
   

  	
  Amboy Bus Co., Inc.

  
	
   

  	
  Atlantic Express Coachways, Inc.

  
	
   

  	
  Atlantic Express of L.A. Inc.

  
	
   

  	
  Atlantic Express of Missouri Inc.

  
	
   

  	
  Atlantic Express of New Jersey, Inc.

  
	
   

  	
  Atlantic Express of Pennsylvania, Inc.

  
	
   

  	
  Atlantic-Hudson, Inc.

  
	
   

  	
  Atlantic Paratrans, Inc.

  
	
   

  	
  Atlantic Paratrans of NYC, Inc.

  
	
   

  	
  Atlantic Queens Bus Corp.

  
	
   

  	
  Block 7932, Inc.

  
	
   

  	
  Brookfield Transit Inc.

  
	
   

  	
  Courtesy Bus Co., Inc.

  
	
   

  	
  Jersey Business Land Co., Inc.

  
	
   

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

  
	
   

  	
  180 Jamaica Corp.

  
	
   

  	
  Merit Transportation Corp.

  
	
   

  	
  Metro Affiliates, Inc.

  
	
   

  	
  Metropolitan Escort Service, Inc.

  
	
   

  	
  Midway Leasing Inc.

  
	
   

  	
  Staten Island Bus, Inc.

  
	
   

  	
  Temporary Transit Service, Inc.

  
	
   

  	
  201 West Sotello Realty, Inc.

  
	
   

  	
  Wrightholm Bus Line, Inc.

  
	
   

  	
  Atlantic Transit Corp.

  
	
   

  	
  Airport Services, Inc.

  
	
   

  	
  Atlantic Express New England, Inc.

  
	
   

  	
  Atlantic Express of California, Inc.

  
	
   

  	
  Atlantic Express of Illinois, Inc.

  
	
   

  	
  Atlantic Paratrans of Arizona, Inc.

  
	
   

  	
  Fiore Bus Service, Inc.

  
	
   

  	
  Groom Transportation, Inc.

  
	
   

  	
  James McCarty Limo Service, Inc.

  
	
   

  	
  K. Corr, Inc.

  
	
   

  	
  McIntire Transportation, Inc.

  
	
   

  	
  Mountain Transit, Inc.

  
	
   

  	
  R. Fiore Bus Service, Inc.

  
	
   

  	
  Raybern Bus Service, Inc.

  

 

[SIGNATURES CONTINUED ON
FOLLOWING PAGE]

 

7

 

[SIGNATURES CONTINUED FROM
PREVIOUS PAGE]

 

	
   

  	
  Raybern Capital Corp.

  
	
   

  	
  Raybern Equity Corp.

  
	
   

  	
  Robert L. McCarthy & Son, Inc.

  
	
   

  	
  T-NT Bus Service, Inc.

  
	
   

  	
  Transcomm, Inc.

  
	
   

  	
  Winsale, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Neil
  Abitabilo

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   Chief Financial Officer

  
	
   

  	
   

  
	
  GUARANTORS

  	
   

  
	
   

  	
   

  
	
  JERSEY BUS SALES, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Neil
  Abitabilo

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   Chief Financial Officer

  	
   

  	
   

  
	
   

  	
   

  
	
  CENTRAL NEW YORK REORGANIZATION CORP.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Neil
  Abitabilo

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   Chief Financial Officer

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGENT

  	
   

  
	
   

  	
   

  
	
  CONGRESS FINANCIAL CORPORATION

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Herb
  Korn

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
    Vice President

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LENDER

  	
   

  
	
   

  	
   

  
	
  CONGRESS FINANCIAL CORPORATION

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Herb
  Korn

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
    Vice President

  	
   

  	
   

  
							

 

8

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