Document:

Exhibit
10.3

 

Atlantic Express Transportation
Group Inc.

Atlantic Express Transportation Corp.

7 North Street

Staten Island, NY  10302

 

 

January 13, 2005

 

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 (as amended, the “Agreement”) and more
specifically to Section 2.6 of the Agreement concerning your Performance
Bonus.

 

As you know, we are in the process of
negotiating an extension of the school bus transportation contracts with the
Department of Education of the City of New York.  In consideration for your continued efforts
in connection with the extension and your continued employment with the
Company, we agree to amend and restate Section 2.6 of the Agreement in its
entirety to read as follows:

 

Performance Bonus.  The Company will pay the Executive a
performance bonus (“Performance Bonus”) subject to the acceptance by the
Company of an agreement (the “NYC Agreement”) with the Department of Education
of the City of New York (the “Company Acceptance”) to provide school bus
transportation services for the period commencing July 1, 2005.  The Performance Bonus shall be in the amount
equal to the sum of (a) $250,000; plus (b) $250,000 in the event (i) the
projected increase in the pro forma EBITDA for the NYC Agreement for fiscal
year 2006 (i.e., for the 12 months ended June 30, 2006) as compared to
fiscal year 2005 is greater than $17,000,000 and (ii) the projected
non-reimbursable vehicle capital expenditure for the first school year pursuant
to such NYC Agreement does not exceed $10,000,000; plus (c) an
additional $25,000 for each $1,000,000 (or part thereof) of the projected
EBITDA of the Company for fiscal 2006 in excess of $50,000,000, provided the
aggregate Performance Bonus shall not exceed $750,000.

 

The Performance Bonus shall be payable in the
following manner (a) for the first $250,000 on the latter of (i) the Company
Acceptance; or (ii) March 15, 2005; and (b) for the remainder, if any, the
later of (i) the 6th month anniversary date of the payment of the first
$250,000 of the Performance Bonus or (ii) as soon as the Company has sufficient
availability to meet its obligations as they come due;

 

 

provided, however,
in the event the Executive is no longer the Chief Executive Officer of the
Company or is terminated for any reason prior to the full payment of the
Performance Bonus, any unpaid Performance Bonus shall be paid to the Executive
immediately.

 

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

  	
   

  
				

 

2Exhibit
10.4

 

Atlantic Express Transportation Group Inc.

Atlantic Express Transportation Corp.

7 North Street

Staten Island, NY  10302

 

 

March 2, 2005

 

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 and by the letter dated January 13, 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, 2004, the
Company in its sole discretion may limit the Executive’s services to the
position of President;  and (ii)
commencing December 31, 2006, 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,
2006, 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, 2007, 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, 2007, (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
$530,527 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,
2007, the Base Salary shall be reduced to 50% of the Base Salary payable to the
Executive as of December 31, 2006.

 

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 4, 2004, on November 4, 2005 and on November 4,
2006, 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

 

2

 

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, 2006. 
At the option of the Executive and in the place of the disability
policy, the Company shall 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, 2006;

 

(d)  an annual life insurance
premium allowance of $35,000, which shall be reduced to $17,500 commencing December 31,
2006, payable in two installments in June and February of each year
of the Employment Term hereof;

 

(e) through December 31, 2006, 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, 2006) 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

  	
   

  
				

 

3

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