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Exhibit 10.1 SIXTH AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
SIXTH AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of
December 16, 2008 (the “Agreement”) among Atlantic
Express Transportation Group Inc., a New York corporation
(“Group”), Atlantic Express Transportation Corp., a New
York corporation (the “Company”), and Domenic Gatto
(the “Executive”). WHEREAS, the Executive is
presently employed by the Company, a wholly owned subsidiary of
Group, under a Fifth Amended and Restated Employment Agreement
dated as of April 18, 2007, as amended (the “Prior
Agreement”); WHEREAS, in order to comply with Section
409A of the Internal Revenue Code of 1986, as amended, and the
Department of Treasury Regulations and other interpretive guidance
promulgated thereunder (collectively, “Section 409A”),
the Company, Group and the Executive desire to amend and restate
the terms and provisions of the Prior Agreement to, among other
things, set forth the terms of the Executive’s continued
employment. NOW, THEREFORE, in consideration of the
foregoing and the respective covenants and agreements hereinafter
set forth and for other good and valuable consideration, the
Company, Group and the Executive hereby agree to amend and restate
the Prior Agreement in its entirety, as follows: 1.
EMPLOYMENT AND DUTIES 1.1. General. 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. 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. During the Employment
Term, 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 Birdie Holding Company LLC and affiliates which
own and operate the Eagle Oaks Golf Club, provided that such
services shall not interfere with the performance of
Executive’s duties hereunder.
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, 2009, subject to renewal in
accordance with Section 1.4, (ii) the death of the Executive or
(iii) the termination of the Executive’s employment pursuant
to this Agreement (the “Employment Term”).
1.4. Renewal of Employment Term. Unless the
Company has provided the Executive with a written notice at least
seventy-five days prior to December 31, 2009 of its intent not to
extend the Employment Term (the “Termination Notice”),
the Employment Term shall be renewed and extended automatically for
a further period of one year on January 1, 2010, and such extended
term shall thereafter be further extended for successive one year
periods unless a Termination Notice is given to the Executive at
least seventy-five days prior to the next successive December 31.
2. SALARY 2.1. Base Salary.
From the Commencement Date, the Executive shall be entitled to
receive a base salary (“Base Salary”) at a rate of
$592,162 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.
2.2. Increase in Base Salary. On November 1 of each year
during the Employment Term, 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.
2.3. Exit Bonus. (a) Upon the occurrence of a
Change of Control at any time during or after the termination of
the Executive’s employment, the Company shall pay to the
Executive a bonus (“Exit Bonus”) which shall be equal
to the Fair Market Value (as of the date of such Change of Control)
of 1.5% of all of the Company’s outstanding common stock (on
a fully diluted basis) immediately preceding such Change of Control
(such percentage being referred to herein as the “Base
Amount”), provided the Base Amount shall be increased to 2.5%
in the event that the transaction resulting in the Change of
Control is based upon an aggregate Fair Market Value of all of the
Company’s outstanding common stock (on a fully diluted basis)
equal to or in excess of $50,000,000 and 3.0% in the event such
Fair Market Value is equal to or exceeds $70,000,000; further,
provided, the Exit Bonus to be paid to the Executive upon a Change
of Control shall be reduced by an amount equal to (i) the Fair
Market Value of all of the Company’s outstanding common stock
as of the date of such Change of Control, multiplied by (ii) a
fraction, the numerator of which shall be the aggregate number of
Group Common Shares (as defined below) sold, transferred or
otherwise disposed of by GSC Group (as defined below) prior to such
Change of Control and the denominator of which shall be 107,593,
multiplied by (iii) the applicable Base Amount as determined in
accordance with this Section 2.3(a) as of the date of such Change
of Control. Except as provided in Section 2.3(b), the
Exit Bonus shall be payable in the same form of consideration and
at the same time as received by the shareholders of either Group or
the Company upon such Change of Control. 2
(b) In the event the Company or Group during the
Employment Term and prior to a Change of Control, shall adopt a
stock option or restricted stock purchase or similar plan, the
Executive within thirty (30) days following written notice of the
adoption of such a plan, shall have the right, by delivery of
written notice to the Company, to participate in such plan and to
receive such number of shares or options, in substitution and in
place of the Exit Bonus, as would be equivalent to the Base Amount
as of the date of such participation in such plan by the Executive,
provided that any such plan shall require that the timing of
payments under such plan shall match the timing of the Exit Bonus
payments that otherwise would have occurred, or shall contain such
other or additional provisions as shall cause payments under the
plan and this Section 2.3 to satisfy Section 409A.
(c) (i) Subject to paragraph (ii), in the event prior to
the occurrence of a Change of Control, GSCP II Holdings (AE), LLC
or any of its affiliates (collectively, the “GSC
Group”) sells, transfers or otherwise disposes of any of the
shares (the “Group Common Shares”) of common stock of
Group it beneficially owns as of the date hereof and excluding any
shares of common stock of Group the GSC Group may acquire after the
date hereof (a “Disposition Event”), the Executive
shall be entitled to a portion of his Exit Bonus equal to (A) the
Fair Market Value of all of the Company’s outstanding common
(on a fully diluted basis) as of the date of such Disposition
Event, multiplied by (B) a fraction, the numerator of which shall
be the number of Group Common Shares sold, transferred or otherwise
disposed of in such transaction and the denominator of which shall
be 107,593, multiplied by (C) the applicable Base Amount as
determined in accordance with Section 2.3(a) as of the date of such
Disposition Event. Except as provided in Section 2.3(b) and
paragraph (ii), the portion of the Exit Bonus payable upon a
Disposition Event shall be payable in the same form of
consideration and at the same time as received by the GSC Group
upon such Disposition Event. (ii) Subject to the
Executive’s election to substitute the Exit Bonus as set
forth in Section 2.3(b), the payment described in paragraph (i)
shall be made in a lump sum in the same form of consideration as
received, as applicable, by the GSC Group or by the shareholders of
either Group or the Company (A) upon the closing of the Disposition
Event if (x) such closing occurs within ten years of the date
hereof and (y) such payment would be a “short-term”
deferral within the meaning of Treas. Reg. Sec. 1.409A-1(b)(4), or
otherwise (B) upon the happening of the next following Change in
Control; provided that if it is not possible to pay such Exit Bonus
in such same form, such Exit Bonus shall be paid in a cash lump
sum. 2.4 Definitions. (a) Change
of Control shall mean (i) the transfer (in one transaction or a
series of transactions) of all or substantially all of the assets
of Group or the Company to any person or group (as such term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)); (ii) the liquidation or
dissolution of Group or the Company or the adoption of a plan by
the stockholders of Group or the Company relating to the
dissolution or liquidation of either Group or the Company; or (iii)
the acquisition by any person or group (as such term is used in
Section 13(d)(3) of the Exchange Act), except for by the GSC Group
of beneficial ownership, directly or indirectly, of more than 50%
of the aggregate ordinary voting power of Group or the Company; and
3
(b) “Fair
Market Value” of the Company’s common stock shall mean
the value of the Company’s common stock as specified in
accordance with any transaction resulting in a Change of Control or
Disposition Event, as the case may be, or if no specific value is
specified in such transaction, the value of the Company’s
common stock as reasonably determined by the Board (provided, in
the event the Executive disagrees with the value determined by the
Board, as determined by a nationally recognized independent
investment banking or accounting firm reasonably acceptable to the
Company and the Executive), in either case without control premiums
or minority discounts. 3. EMPLOYEE BENEFITS
3.1. General Benefits. The Executive shall receive the
following benefits during the Employment Term:
(a) the Executive will be eligible to participate in
benefit programs of the Company consistent with those benefit
programs provided from time to time to other senior executives of
the Company; (b) a disability insurance policy providing
$15,000 in monthly benefits commencing six months after a
disability which prevents the Executive from performing the
ordinary and necessary functions and duties of his employment;
provided that the premium therefor shall not exceed the usual and
customary rates charged by underwriters for such a policy for a
person of the Executive’s age in good health. 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; (d) an annual life insurance premium allowance of
$35,000, payable in two installments in June and February of each
year of the Employment Term hereof; (e) continued use of the
same Company car and driver which the Executive is using as of the
date of this Agreement; and (f) participation in
any executive incentive plan which might be implemented by the
Board during the Employment Term. 3.2. Vacation. The
Executive shall be entitled to 25 days paid vacation each calendar
year in accordance with the applicable policies of the Company.
4. TERMINATION OF EMPLOYMENT
4.1. Termination
for Cause; Termination Without Cause; Termination for Permanent
Disability; Resignation. 4.1.1. General. (a) If, prior to
the expiration of the Employment Term, the Executive’s
employment is terminated by the Company for Cause, the Executive
shall be entitled, subject to Section 10.2, only to (i) his accrued
but unpaid Base Salary through and including the date of
termination (“Accrued Base Salary”); (ii) the Exit
Bonus payable in accordance with Section 2.3; (iii) twelve months
of medical coverage under the same terms as medical coverage
offered to other senior executives of the Company; and (iv) as
severance, an amount equal to six months of his Base Salary payable
in a lump sum on the date of such termination of employment,
provided that, if such termination is for a Disloyalty Termination
Event, the Executive shall have no right to receive, and the
Company shall have no obligation to pay the payment described in
clause (iv). 4
(b) If the Executive is terminated by
the Company Without Cause, the Executive terminates employment for
Good Reason or upon the expiration of the Employment Term without
renewal in accordance with Section 1.4, the Executive shall be
entitled, subject to Section 4.5 and Section 10.2, only to (i) his
Accrued Base Salary; (ii) his Base Salary from the day after the
termination date through the normal expiration date of the
Employment Term, payable in a lump sum upon termination; (iii) the
benefits set forth under Section 3.1 of this Agreement during such
term; provided, in the case of medical coverage, during such period
or for a period of one year, which ever is longer; (iv) the Exit
Bonus payable in accordance with Section 2.3; and (v) as severance,
an amount equal to his annual Base Salary (the “Severance
Payment”) payable in a lump sum on the 30th day following the
date of such termination of employment. (c) If,
prior to the expiration of the Employment Term, the
Executive’s employment is terminated by the Company for
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