Document:

Exhibit 10.41

                 THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT

      THIS AMENDMENT is entered into as of February 26, 2002, by and among
CONGRESS FINANCIAL CORPORATION, a Delaware corporation ("Lender"), Atlantic
Express Transportation Corp., a New York corporation, Amboy Bus Co., Inc., a New
York corporation, Atlantic-Chittenango Real Property Corp., a New York
corporation, Atlantic-Conn Transit, Inc., a Connecticut corporation, Atlantic
Express Coachways, Inc., a New Jersey corporation, Atlantic-Hudson, Inc., a New
York corporation, Atlantic Medford, Inc., a New York corporation, Atlantic
Paratrans, Inc., a New York corporation, Atlantic Paratrans of Kentucky, a
Kentucky corporation, Block 7932, Inc., a New York corporation, Atlantic Express
of Missouri, a Missouri corporation, Atlantic Express of Pennsylvania, a
Delaware corporation, Brookfield Transit, Inc., a New York corporation, Courtesy
Bus Co., Inc., a New York corporation, GVD Leasing, Inc., a New York
corporation, 180 Jamaica Corp., a New York corporation, K. Corr, Inc., a New
York corporation, Jersey Business Land Co., Inc., a New Jersey corporation,
Merit Transportation, Inc., a New York corporation, Metropolitan Escort Service,
Inc., a New York corporation, Midway Leasing, Inc., a New York corporation,
Raybern Bus Service, Inc., a New York corporation, Raybern Capital Corp., a New
York corporation, Raybern Equity Corp., a New York corporation, Staten Island
Bus, Inc., a New York corporation, Atlantic Express of L.A., Inc., a New York
corporation, Central New York Coach Sales and Service, Inc., a New York
corporation, Jersey Bus Sales, Inc., a New Jersey corporation, Atlantic
Paratrans of Colorado, Inc., a Colorado corporation, Atlantic Paratrans of
Pennsylvania, Inc., a Pennsylvania corporation, Atlantic Express of New Jersey,
a New Jersey corporation, Atlantic Paratrans of Arizona, an Arizona corporation,
Temporary Transit Service, Inc., a New York corporation, 201 West Sotello
Realty, Inc., a California corporation, Atlantic Transit, Corp., a New York
corporation, Airport Service, Inc., a Massachusetts corporation, Atlantic
Express New England, Inc., a Massachusetts corporation, Atlantic Express of
California, Inc., a California corporation, Atlantic Express of Illinois, an
Illinois corporation, Atlantic Express of South Carolina, Inc., a South Carolina
corporation, Fiore Bus Service, Inc., a Massachusetts corporation, Groom
Transportation, Inc., a Massachusetts corporation, James McCarty Limo Service,
Inc., a Massachusetts corporation, McIntire Transportation, Inc., a
Massachusetts corporation, Mountain Transit, Inc., a Vermont corporation, R.
Fiore Bus Service, Inc., a Massachusetts corporation, Robert L. McCarthy & Son,
Inc., a Massachusetts corporation, T-NT Bus Service, Inc., a New York
corporation, Transcomm, Inc., a Massachusetts corporation, Winsale, Inc., a New
Jersey corporation, Wrightholm Bus Line, Inc., a Vermont corporation (each
individually, an "Existing Borrower" and any two or more collectively, "Existing
Borrowers"), and Atlantic Paratrans of NYC, Inc., a New York corporation
("Paratrans of NYC", and together with the Existing Borrowers, hereinafter
collectively referred to as "Borrowers"). Capitalized terms not defined herein
shall have the meanings given to such term in the Loan Agreement (as defined
below).

                                       1
<PAGE>

                                R E C I T A L S:

      WHEREAS, (i) Existing Borrowers, Atlantic Express Transportation Corp., a
New York corporation (the "Parent"), and Lender are parties to that certain Loan
and Security Agreement, dated December 22, 2000, as amended to date (the "Loan
Agreement"), pursuant to which Lender has made and may continue to make loans
and other financial accommodations to Borrowers, and (ii) each Existing Borrower
is a party to the Guarantee dated December 22, 2000 (the "Borrower Guarantee"),
to guarantee to Lender the payment and performance of each other Borrower's
obligations to Lender;

      WHEREAS, Paratrans of NYC is a wholly owned subsidiary of Parent acquired
by Parent since the date of the Loan Agreement;

      WHEREAS, under the Loan Agreement Parent is permitted to acquire a new
subsidiary only if such subsidiary becomes a "Borrower" under the Loan Agreement
and grants to Lender a first priority security interest in certain of its
property;

      WHEREAS, Existing Borrowers have requested Lender, and Lender is willing
to agree, on the terms and conditions hereof, to amend the Loan Agreement and
the other Financing Agreements to include Paratrans of NYC as a "Borrower"
thereunder and to provide for additional borrowing availability based upon
certain eligible assets of Paratrans of NYC; and

      NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and intending to
be legally bound, the parties hereto do hereby agree as follows:

      1. Additional Borrower.

      Paratrans of NYC hereby joins in and becomes a party to the Loan Agreement
as a Borrower and, as a Borrower, hereby joins in and becomes a party to each
other Financing Agreement to which the Borrowers are parties (including, without
limitation, the Borrower Guarantee), and Paratrans of NYC hereby assumes and
agrees to be bound by and to perform and discharge each of the Obligations and
each other duty, covenant, agreement, liability, and obligation of the Borrowers
under the Loan Agreement and the Financing Agreements, in each case with the
same effect as if Paratrans of NYC had been named as a Borrower in and had
executed and delivered the Loan Agreement and such other Financing Agreements.
All references in any of the Financing Agreements to the terms "Borrowers",
"Debtors", us, we", "our" or any other term referring to the same shall be
deemed and each such reference is hereby amended to mean and include Paratrans
of NYC.

      2. Acknowledgment. Each of the Borrowers (including, without limitation,
Paratrans of NYC) hereby acknowledges, confirms and agrees that Existing
Borrowers are indebted to Lender for Obligations as of the close of business on
January 31, 2001, in respect of the loans and other credit accommodations made
pursuant to the Financing Agreements in the

                                       2
<PAGE>

aggregate principal amount of approximately $124,552,942, together with interest
accrued and accruing thereon, and together with costs, expenses, fees (including
attorneys' fees and legal expenses) and other charges now or hereafter owed by
Existing Borrowers to Lender, all of which are unconditionally owing by Existing
Borrowers to Lender, without offset, defense or counterclaim of any kind, nature
and description whatsoever.

      3. Conditions Precedent. The agreements set forth herein shall not be
effective unless and until each of the following conditions precedent is
satisfied as determined by Lender:

      (a) each of the Borrowers shall have executed and delivered to Lender this
Amendment;

      (b) Lender shall have received evidence that the collateral agent for the
Senior Notes has a valid and perfected security interest in and lien on the
assets of Paratrans of NYC;

      (c) Lender shall have received evidence, including, without limitation,
lien and title searches in form and substance satisfactory to Lender, that after
giving effect to the amendments affected hereby, and the consummation of the
other transactions contemplated hereby, Lender has a valid and perfected first
priority security interest in and lien on the Collateral and any other property
which is intended to be security for the Obligations;

      (d) Borrowers shall have delivered to Lender copies of requisite corporate
action and proceedings in connection with this Amendment, in form and substance
satisfactory to Lender and, where requested by Lender or Lender's counsel,
certified by appropriate corporate officers or governmental authorities;

      (e) Lender shall have received from Paratrans of NYC evidence of insurance
and loss payee endorsements required under the Financing Agreements, in form and
substance acceptable to Lender, and certificates of insurance policies and/or
endorsements naming Lender as loss payee;

      (f) Lender shall have received, in form and substance satisfactory to
Lender, all such consents, acknowledgments, amendments and other agreements from
third parties which Lender may deem necessary or desirable in order to permit,
protect and perfect, and/or to assure the continuing full force and
effectiveness of, after giving effect to amendment and agreements contained in
this Amendment, (i) Lender's security interests in and liens on the Collateral
or any other property which is intended to be security for the Obligations, and
(ii) any consents or agreements with which Lender has been provided, or which
have been made in Lender's favor or for Lender's benefit at any time in
connection with the financing provided by Lender pursuant to the Financing
Agreements;

      (g) Lender shall have received an opinion or opinions of counsel, in form
and substance and from counsel satisfactory to Lender, covering such matters
relating to this

                                       3
<PAGE>

Amendment, the transactions contemplated hereby, and the other Financing
Agreements and such other matters as Lender shall request;

      (h) each of the representations and warranties of Borrowers set forth in
the Loan Agreement and each of the other Financing Agreements is true and
correct in all material respects as of such date; and

      (i) immediately prior to, and immediately after giving effect to, the
amendments and agreements set forth herein, there shall exist no Event of
Default or event or condition which, with the giving of notice or the passage of
time or both, would constitute an Event of Default.

      4. Expenses. Each of the Borrowers confirms that under the Loan Agreement,
it shall pay Lender's attorneys' fees and reasonable expenses incurred in
connection with this Amendment and the transactions contemplated hereby.

      5. Ratification. Each of the Borrowers hereby ratify, assume, adopt and
agree to be bound by the Financing Agreements and agree to pay all of the
Obligations arising thereunder in accordance with the terms of the Financing
Agreements. Except as expressly set forth herein, the Loan Agreement and the
other Financing Agreements are not modified hereby and each shall remain in full
force and effect in accordance with the respective provisions thereof on the
date hereof, and the Loan Agreement and the other Financing Agreements are each
in all respects ratified and affirmed. Lender's agreements herein shall not be
construed to require Lender to make any amendment to the Loan Agreement or any
other Financing Agreements, on any other occasion, regardless of the similarity
of circumstances. The amendments contained herein shall not be construed to
limit or waive any of Lender's rights and remedies under the Financing
Agreements with respect to any Event of Default occurring hereafter or any
currently existing Event of Default not expressly waived herein.

      6. Representations and Warranties. Without limiting any other provision of
this Amendment, and as an inducement to Lender to enter into this Amendment, (a)
each of the Borrowers hereby: (i) represents, warrants and agrees that the Loan
Agreement, this Amendment and the other Financing Agreements to which it is a
party, after giving effect to all amendments and agreements contained herein,
constitute its valid and binding obligations, enforceable against it in
accordance with their respective terms, without defenses, offsets or
counterclaims; and (ii) represents and warrants that (A) each of the
representations and warranties of such Borrower or Guarantor set forth in the
Loan Agreement and the other Financing Agreements is true and correct in all
material respects, as of the date hereof; and (B) after giving effect to this
Amendment, there exists no Event of Default or event or condition which, with
the giving of notice or the passage of time or both, would constitute an Event
of Default, and (b) Paratrans of NYC represents, warrants and agrees that: (i)
it is a corporation duly organized and in existence and good standing under the
laws of the state of its incorporation, and is duly qualified or registered as a
foreign corporation and in good standing in all other jurisdictions where the
nature and extent of the business transacted by it or its ownership of property
makes such qualification

                                       4
<PAGE>

or registration necessary; and (ii) the execution, delivery and performance of
this Amendment and the other Financing Agreements to which it is a party, and
all borrowings or guarantees contemplated hereby and thereby, after giving
effect to all amendments and agreements contained herein, are within its power,
have been duly authorized by all necessary corporate or other action and are not
in contravention of the terms of any of its articles of incorporation, by- laws
or other organizational documentation or any law, regulation, decree, order,
judgement, indenture, agreement or undertaking to which it is a party or by
which it or any of its property is bound.

      7. Governing Law. This Amendment shall be construed in accordance with and
governed by the laws of State of New York, without giving effect to any
conflicts of laws provisions of such State that would require the application of
the laws of a different jurisdiction.

      8. Headings. The headings indicated herein are inserted for convenience
only and shall not be considered a part this Amendment, nor in any way limit the
construction or interpretation of this Amendment.

      9. Amendments and Waivers. Neither this Amendment nor any provision hereof
shall be amended, modified, waived or discharged orally or by course of conduct,
but only by a written agreement signed by an authorized officer of Lender.
Lender shall not, by any act, delay, omission or otherwise be deemed to have
expressly or impliedly waived any of its rights, powers and/or remedies unless
such waiver shall be in writing and signed by an authorized officer of Lender.
Any such waiver shall be enforceable only to the extent specifically set forth
therein. A waiver by Lender of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Lender would otherwise have on any future occasion, whether
similar in kind or otherwise.

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

                                       5
<PAGE>

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

LENDER                                  BORROWERS

CONGRESS FINANCIAL CORPORATION          ATLANTIC EXPRESS
                                          TRANSPORTATION CORP.
                                        AMBOY BUS CO., INC.
By:    /s/ Herb Korn                      ATLANTIC-CHITTENANGO REAL
       ---------------------------        PROPERTY CORP.
                                        ATLANTIC-CONN. TRANSIT, INC.
Title: Vice President                   ATLANTIC EXPRESS COACHWAYS,
       ---------------------------        INC.
                                        ATLANTIC-HUDSON, INC.
                                        ATLANTIC MEDFORD INC.

Address:                                ATLANTIC PARATRANS, INC.
--------                                ATLANTIC PARATRANS OF
1133 Avenue of the Americas               KENTUCKY, INC.
New York, New York 10036                BLOCK 7932, INC.
                                        ATLANTIC EXPRESS OF MISSOURI
                                          INC.
                                        ATLANTIC EXPRESS OF
                                          PENNSYLVANIA, INC.
                                        BROOKFIELD TRANSIT, INC.
                                        COURTESY BUS CO., INC.
                                        GVD LEASING, INC.
                                        180 JAMAICA CORP.
                                        K. CORR, INC.
                                        JERSEY BUSINESS LAND CO., INC.
                                        MERIT TRANSPORTATION, CORP.
                                        METRO AFFILIATES, INC.
                                        METROPOLITAN ESCORT SERVICE,
                                          INC.
                                        MIDWAY LEASING, INC.
                                        RAYBERN BUS SERVICE, INC.
                                        RAYBERN CAPITAL CORP.
                                        RAYBERN EQUITY CORP.
                                        STATEN ISLAND BUS, INC.
                                        ATLANTIC EXPRESS OF L.A., INC.
                                        CENTRAL NEW YORK COACH SALES
                                          AND SERVICE, INC.
                                        JERSEY BUS SALES, INC.

                                       6
<PAGE>

                                        ATLANTIC PARATRANS OF
                                          COLORADO, INC.
                                        ATLANTIC PARATRANS OF
                                          PENNSYLVANIA, INC.
                                        ATLANTIC EXPRESS OF
                                          NEW JERSEY, INC.
                                        ATLANTIC PARATRANS OF
                                          ARIZONA, INC.
                                        TEMPORARY TRANSIT SERVICE,
                                          INC.
                                        201 WEST SOTELLO REALTY, INC.
                                        ATLANTIC TRANSIT, CORP.
                                        AIRPORT SERVICES, INC.
                                        ATLANTIC EXPRESS NEW ENGLAND,
                                          INC.
                                        ATLANTIC EXPRESS OF
                                          CALIFORNIA, INC.
                                        ATLANTIC EXPRESS OF
                                          ILLINOIS, INC.
                                        ATLANTIC EXPRESS OF
                                          SOUTH CAROLINA, INC.
                                        FIORE BUS SERVICE, INC.
                                        GROOM TRANSPORTATION, INC.
                                        JAMES MCCARTY LIMO SERVICE,
                                          INC.
                                        MCINTIRE TRANSPORTATION, INC.
                                        MOUNTAIN TRANSIT, INC.
                                        R. FIORE BUS SERVICE, INC.
                                        ROBERT L. MCCARTHY & SON, INC.
                                        T-NT BUS SERVICE, INC.
                                        TRANSCOMM, INC.
                                        WINSALE, INC.
                                        WRIGHTHOLM BUS LINE, INC.
                                        ATLANTIC PARATRANS OF NYC, INC.

                                        By:    /s/ Alan Rubinfeld
                                               ---------------------------------
                                        Title: Chief Financial Officer of each
                                               of the Companies Listed above

                                        Chief Executive Office
                                        7 North Street
                                        Staten Island, New York 10302

                                       7Exhibit 10.42

                                                                  EXECUTION COPY

                          EIGHTH SUPPLEMENTAL INDENTURE

      EIGHTH SUPPLEMENTAL INDENTURE, dated as of March 1, 2002, among Atlantic
Express Transportation Corp., a New York corporation (the "Company"), the
Guarantors named herein, as guarantors, and The Bank of New York, a New York
banking corporation, as trustee (the "Trustee").

                        WHEREAS, the Company has duly issued its 10 3/4% Senior
Secured Notes due 2004 (the "Securities"), in the aggregate principal amount
of $150,000,000 pursuant to an Indenture dated as of February 4, 1997, among the
Company, the Guarantors named therein and the Trustee, as amended by the First
Supplemental Indenture thereto dated as of August 14, 1997, the Second
Supplemental Indenture thereto dated as of December 12, 1997, the Third
Supplemental Indenture thereto dated as of October 28, 1998, the Fourth
Supplemental Indenture thereto dated as of April 28, 1999, the Fifth
Supplemental Indenture thereto dated as of December 20, 2000, the Sixth
Supplemental Indenture thereto dated as of August 15, 2001 and the Seventh
Supplemental Indenture thereto dated as of February 26, 2002 (as so amended, the
"Indenture"), and the Securities in the principal amount of $120,000,000 are
outstanding on the date hereof; and

      WHEREAS, the Company proposes to amend its existing Revolving Credit
Facility by increasing the maximum principal amount of indebtedness permitted
under the Revolving Credit Facility from $125.0 million to $143.0 million (the
"Amendment"); and

      WHEREAS, in connection with the Amendment, the Company proposes to incur
additional indebtedness in a maximum aggregate initial principal amount or
initial issue price of up to $18.0 million including 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 plus all
other accrued and unpaid interest, fees and other obligations owed under the
Revolving Credit Facility; and

      WHEREAS, Section 9.2 of the Indenture provides that the Company and the
Trustee may amend any provision of the Indenture (other than certain provisions
enumerated in Section 9.2 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 Securities 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, 2002 (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 9.4 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:

<PAGE>

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 "Permitted Affiliate
Transactions."

      The definition of "Permitted Affiliate Transactions" as set forth in
Section 1.1 of the Indenture is hereby amended and restated to read in its
entirety as follows:

      "Permitted Affiliate Transactions" means (i) employment agreements entered
into by the Company or any Restricted Subsidiary in the ordinary course of
business with the approval of a majority of the disinterested members of the
Company's Board of Directors; (ii) transactions between or among the Company and
its 90% Owned Subsidiaries; (iii) reasonable and customary fees and compensation
paid to and indemnity provided on behalf of, officers, directors, employees or
consultants of the Company or any Restricted Subsidiary as determined in good
faith by a majority of the disinterested directors of the Company's Board of
Directors or, if none, unanimously by such Board of Directors; (iv) the "Park &
Ride Lease" between Showplace Bowling Center Inc., as lessor, and Atlantic
Express Coachways Inc., as lessee, and the lease between Dom-Rich Associates,
Inc., as lessor, and Staten Island Bus, Inc., as lessee, in each case in effect
as of the Closing Date; (v) annual premiums paid to Atlantic North Casualty
Company, in the ordinary course of business, for insurance; provided, that such
premiums do not exceed the annual aggregate deductibles on the Company's
insurance policies then in effect; and (vi) the execution, delivery and
performance of any documents, and the incurrence and payment of obligations in
respect of borrowings, interest, expenses, fees, the grant of security interests
in the assets of the Company and its Restricted Subsidiaries and guarantees, in
connection with, and including, the amendment to the Revolving Credit Facility
pursuant to which the maximum principal amount permitted to be borrowed
thereunder is increased from $125.0 million to $143.0 million (including 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), notwithstanding that any Affiliate of the Company may be a
party to the Revolving Credit Facility or to any transaction or payment pursuant
to or in connection with the Revolving Credit Facility, including the amendment
thereof as aforesaid.

      Section 2.2 Amendment to the definition of "Revolving Credit Facility."

      The definition of "Revolving Credit Facility" as set forth in Section 1.1
of the Indenture is hereby amended and restated to read in its entirety as
follows:

      "Revolving Credit Facility" means that certain credit facility dated
December 22, 2000, as amended through and as of March 1, 2002, by and between
Congress Financial Corporation, as lender, the Company and those Subsidiaries of
the Company named therein, as borrowers, and the Restricted Subsidiaries, as
guarantors, in the maximum principal amount of up to $143.0 million including
any increase in the principal amount of such Indebtedness resulting from any
accrual, compounding or payment-in-kind of interest under such Indebtedness

                                       2
<PAGE>

which is not paid currently in cash or which is added to the principal amount of
such Indebtedness, and as the same may be further amended, modified, renewed,
refunded, replaced or refinanced from time to time, including (i) any related
notes, letters of credit, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
modified, renewed, refunded, replaced or refinanced from time to time, and (ii)
any notes, guarantees, collateral documents, instruments and agreements executed
in connection with such amendment, modification, renewal, refunding, replacement
or refinancing.

      Section 2.3 Amendment to the "Limitation on Incurrence of Indebtedness"
Covenant.

            Section 4.9(b)(i) of the Indenture is hereby amended and restated to
read in its entirety as follows:

            (b) The limitations of Section 4.9(a) shall not prohibit the
incurrence of:

                  (i) Indebtedness under the Revolving Credit Facility,
            provided, that the aggregate principal amount of Indebtedness so
            incurred on any date, together with all other Indebtedness incurred
            pursuant to this clause (i) and outstanding on such date, shall not
            exceed $143.0 million including 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 plus all other accrued and unpaid interest, fees
            and other obligations owed under the Revolving Credit Facility, less
            any repayments thereunder pursuant to Section 4.10 hereof.

SECTION 3. EFFECTIVE DATE.

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

SECTION 4. MISCELLANEOUS.

      Section 4.1 Governing Law.

            THIS EIGHTH 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 MAY EFFECTIVELY
DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY

                                       3
<PAGE>

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 Eighth Supplemental Indenture,
then the terms and conditions of this Eighth Supplemental Indenture shall
prevail.

      Section 4.4 Counterpart Originals.

            The parties may sign any number of copies of this Eighth
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 Eighth 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 Eighth Supplemental Indenture.

                         [Signatures on following pages]

                                       4
<PAGE>

                                   SIGNATURES

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

                                   ATLANTIC EXPRESS TRANSPORTATION CORP.

                                     By: /s/ Domenic Gatto
                                        ---------------------------------------
                                        Name:  Domenic Gatto
                                        Title: President

Attest:

/s/ Alan Rubinfeld
------------------------------
Name:  Alan Rubinfeld
Title: Chief Financial Officer

<PAGE>

GUARANTORS:

AIRPORT SERVICES, INC.                       BROOKFIELD TRANSIT INC.
AMBOY BUS CO., INC.                          CENTRAL NEW YORK
ATLANTIC-CHITTENANGO REAL                      COACH SALES & SERVICE, INC.
  PROPERTY CORP.                             COURTESY BUS CO., INC.
ATLANTIC-CONN. TRANSIT, INC.                 FIORE BUS SERVICE, INC.
ATLANTIC EXPRESS COACHWAYS, INC.             GROOM TRANSPORTATION, INC.
ATLANTIC EXPRESS NEW                         G.V.D. LEASING CO., INC.
  ENGLAND, INC.                              JAMES MCCARTY LIMO SERVICE, INC.
ATLANTIC EXPRESS OF                          JERSEY BUS SALES, INC.
  CALIFORNIA, INC.                           JERSEY BUSINESS LAND CO. INC.
ATLANTIC EXPRESS OF                          K. CORR, INC.
  ILLINOIS, INC.                             MCINTIRE TRANSPORTATION, INC.
ATLANTIC EXPRESS OF L.A. INC.                METRO AFFILIATES, INC.
ATLANTIC EXPRESS OF                          METROPOLITAN ESCORT SERVICE, INC.
  MISSOURI, INC.                             MERIT TRANSPORTATION CORP.
ATLANTIC EXPRESS OF NEW                      MIDWAY LEASING INC.
  JERSEY, INC.                               MOUNTAIN TRANSIT, INC.
ATLANTIC EXPRESS OF                          RAYBERN BUS SERVICE, INC.
  PENNSYLVANIA,  INC.                        RAYBERN CAPITAL CORP.
ATLANTIC EXPRESS OF SOUTH                    RAYBERN EQUITY CORP.
  CAROLINA, INC.                             R. FIORE BUS SERVICE, INC.
ATLANTIC-HUDSON, INC.                        ROBERT L. MCCARTHY & SON, INC.
ATLANTIC MEDFORD, INC.                       STATEN ISLAND BUS, INC.
ATLANTIC PARATRANS, INC.                     TEMPORARY TRANSIT SERVICE, INC.
ATLANTIC PARATRANS OF                        T-NT BUS SERVICE, INC.
  ARIZONA, INC.                              TRANSCOMM, INC.
ATLANTIC PARATRANS OF                        WINSALE, INC.
  COLORADO, INC.                             WRIGHTHOLM BUS LINE, INC.
ATLANTIC PARATRANS OF                        180 JAMAICA CORP.
  KENTUCKY  INC.                             201 WEST SOTELLO REALTY, INC.
ATLANTIC PARATRANS OF NYC, INC.
ATLANTIC PARATRANS OF
  PENNSYLVANIA, INC.
ATLANTIC TRANSIT, CORP.
BLOCK 7932, 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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