Exhibit 10.1
EXECUTION
FIFTH AMENDED AND
RESTATED
EMPLOYMENT
AGREEMENT
FIFTH AMENDED AND RESTATED
EMPLOYMENT AGREEMENT dated as of April 18, 2007 (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 Fourth Amended and Restated Employment Agreement dated as of
November 25, 2003, as amended (the “ Prior Agreement
”);
WHEREAS, the Company desires to
secure the continued services of the Executive, and the Executive
desires to continue in the employment of the Company and, in
connection therewith, 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 such
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
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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 sevety-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. Annual Bonus . (a) The
Executive shall be paid a bonus (an “ Annual Bonus
”) equal to 15% of his Base Salary for each fiscal year
during the Employment Term, commencing with the fiscal year ending
June 30, 2008, in which the Company’s actual consolidated
Adjusted EBITDA exceeds by 10% or more the Adjusted EBITDA
projected by management (which projection has been accepted by the
Board) for such fiscal year; provided , in the event the
actual Adjusted EBITDA exceeds the projected Adjusted EBITDA by 15%
or
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more, the Annual Bonus amount shall
equal 25% of the Base Salary. In the event, the Executive’s
employment is terminated for any reason after June 30, 2007, other
than by the Executive without Good Reason or by the Company for
Cause, the Executive shall be entitled to a pro rata portion of the
Annual Bonus, if any, for the fiscal year in which such termination
occurs, in an amount equal to the Annual Bonus which would have
been applicable as determined following the end of such fiscal
year, multiplied by a fraction, the numerator of which shall be the
number of days elapsed during such fiscal year through the date of
such termination and denominator of which shall be 365 days. The
Annual Bonus shall be paid on or before 105 days following the end
of the applicable fiscal year.
(b) “ Adjusted EBITDA
” shall mean operating income, (i) plus depreciation and
amortization, (ii) less the amount by which the actual Capital
Expenditure relating to the projected EBITDA exceeds Capital
Expenditures projected by management (which has been accepted by
the Board) for the applicable fiscal year, and (iii) excluding any
extraordinary or nonrecurring expenses or gains.
(c) “ Capital
Expenditure ” shall mean expenditures for fixed or
capital assets or improvements or replacements thereof, which have
a useful life of more than one year, whether financed by cash,
capital leases, purchase money mortgages or other incurrence of
debt.
2.4. 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%
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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 2.4(a) as of the date of such Change of Control. Except as
provided in Section 2.4(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.
(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.
(c) 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
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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 (i) 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 (ii) 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 (iii) the
applicable Base Amount as determined in accordance with Section
2.4(a) as of the date of such Disposition Event. Except as provided
in Section 2.4(b), 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.
2.5 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
(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
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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
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(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
