This Equity Registration Rights Agreement (this “Agreement”) is made and entered into as of March 3, 2005, by and among Atlantic Express Transportation Corp., a New York corporation (the “Company”), Atlantic Express Transportation Group, Inc., a Delaware corporation (“Parent”), and Airlie Opportunity Capital Management, L.P., a Delaware limited partnership (the “Investor”).

WHEREAS, pursuant to the Note and Warrant Purchase Agreement, dated the date hereof (the “Investment Agreement”), among the Company, Parent and Investor, Investor has agreed to make a loan (the “Loan”) to the Company in the principal amount of $15,000,000, in partial consideration for which the Company has agreed to issue 40,725 warrants, each such warrant representing the right to initially purchase one common share, par value $0.01 per share (the “Common Stock”) of the Company (collectively, the “Warrants”) (the Common Stock issuable on exercise of the Warrants being referred to collectively herein as the “Warrant Shares”); and

WHEREAS, it is a condition precedent to Investor’s obligations to make the Loan and consummate the other transactions contemplated by the Investment Agreement that the Company and Parent enter into this Agreement.

NOW, THEREFORE to induce Investor to make the Loan, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

Section 1.                                             Definitions.

As used in this Agreement, the following capitalized terms shall have the following meanings:

“Affiliate”:  As defined in Rule 144 of the Securities Act.

“Closing Date”:  The date hereof.

“Effectiveness Date”: The 180th day after the Closing Date.

“Exchange Act”:  The Securities Exchange Act of 1934, as amended.

“Existing Equity Registration Rights Agreement”: The Equity Registration Rights Agreement dated as of April 22, 2004 among the Company, Parent and Jeffries & Company, Inc.

“Filing Date”: The 90th day after the Closing Date.

“Holder”:  As defined in Section 2 hereof.

“NASD”: means the National Association of Securities Dealers, Inc.

“Person”:  Any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

“Piggy-Back Registration”:  As defined in Section 6 hereof.

“Prospectus:  The prospectus included in a Registration Statement at the time such Registration Statement is declared effective, as supplemented by any prospectus supplement, and all material incorporated by reference into such prospectus.

“Public Equity Offering”:  An underwritten offering of Common Stock or common stock of the Parent pursuant to a registration statement that has been declared effective by the SEC pursuant to the Securities Act (other than a registration statement on Form S-8 or otherwise relating to equity securities issuable under any employee benefit plan of the Company or the Parent).

“Registrable Securities”:  At any time, any of (i) the Warrant Shares (whether or not the related Warrants have been exercised) and (ii) any other securities issued or issuable with respect to any Warrant Shares by way of stock dividends or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise.  As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (a) a Registration Statement with respect to the offering of such securities by the Holder thereof shall have been declared effective under the Securities Act and such securities shall have been disposed of by such Holder pursuant to such Registration Statement, (b) such securities have been sold to the public pursuant to Rule 144(k) (or any similar provisions then in force, but not Rule 144A) promulgated under the Securities Act, (c) such securities shall have been otherwise transferred by the Holder thereof and new certificates for such securities not bearing a legend restricting further transfer shall have been delivered by the Company or its transfer agent and subsequent disposition of such securities shall not require registration or qualification under the Securities Act or any similar state law then in force or (d) such securities shall have ceased to be outstanding.

“Registrants”:  means, collectively, the Company and the Parent in the case of a Registration Statement filed or to be filed registering a Public Equity Offering of the Parent, upon which Registration Statement a Holder is entitled pursuant to this Agreement to request inclusion of its Registrable Securities for offer and sale thereunder.

“Registration Statement”:  Any registration statement of the Company and/or the Parent relating to, or entitling a Holder to request, the registration for resale of Registrable Securities, including the Prospectus included therein, all amendments thereto (including post-effective amendments) and all exhibits and all material incorporated by reference therein.

“Restricted Securities”: As defined in Rule 144 of the Securities Act.

“SEC”:  The Securities and Exchange Commission.

“Securities Act”:  The Securities Act of 1933, as amended.

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“Shelf Registration Statement”:  As defined in Section 4 hereof.

“Warrant Shares”:  The Common Stock or other securities that any Holder may acquire upon exercise of a Warrant, together with any other securities which such Holder may acquire on account of any such securities, including, without limitation, as the result of any dividend or other distribution on Common Stock or any split or combination of such Common Stock as provided for in the Warrant Agreement.

“Warrants”:  The warrants of the Company issued and sold pursuant to the Investment Agreement, together with any warrants issued in substitution or replacement therefor.

Section 2.                                             Holders of Registrable Securities.

A Person is deemed to be a Holder of Registrable Securities (a “Holder”) whenever such Person owns Registrable Securities or has the right to acquire such Registrable Securities by exercising Warrants held by such Person, whether or not such acquisition has actually been effected.

Section 3.                                             Registration Procedures.

In connection with any Registration Statement filed by the Company, the Company shall, and in connection with any Registration Statement filed by the Parent, the Registrants, shall:

(a)                                   (i)                                      furnish to the Holders, prior to the filing thereof with the SEC, a copy of the Registration Statement (including all such documents incorporated therein by reference) and each amendment thereof and each supplement, if any, to the Prospectus, which documents will be subject to the review and comment of such Holders in connection with such sale, if any, for a period of at least five business days, and the Company or the Registrants (as the case may be) will not file any such Registration Statement or related Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all documents incorporated therein by reference) to which such selling Holders shall reasonably object within five business days after the receipt thereof; and (ii) include the names of the Holders who propose to sell Registrable Securities pursuant to the Registration Statement as selling securityholders.  A selling Holder shall be deemed to have reasonably objected to such filing if such Registration Statement, amendment, related Prospectus or supplement, as applicable, as proposed to be filed, contains an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading or fails to comply with the applicable requirements of the Securities Act;

(b)                                  give written notice to the Investor and the Holders:

(i)                                      when the Registration Statement or any amendment thereto has been filed with the SEC and when the Registration Statement or any post-effective amendment thereto has become effective;

(ii)                                   of any request by the SEC for amendments or supplements to the Registration Statement or the Prospectus or for additional information;

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(iii)                                of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose;

(iv)                               of the receipt by the Company or the Registrants (as the case may be) or its or their legal counsel of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

(v)                                  of the happening of any event that requires the Company or the Registrants (as the case may be) to make changes in the Registration Statement or the Prospectus in order that the Registration Statement or the Prospectus does not contain an untrue statement of a material fact nor omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading;

(c)                                   make every reasonable effort to obtain the withdrawal at the earliest possible time, of any order suspending the effectiveness of the Registration Statement;

(d)                                  furnish to each Holder, without charge, at least one copy of the Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference);

(e)                                   during the period which the Registration Statement is effective, deliver to each Holder, without charge, as many copies of the Prospectus (including each preliminary Prospectus) included in the Registration Statement as such Holder may reasonably request.  The Company or the Registrants (as the case may be) consent, subject to the provisions of this Agreement, to the use of the Prospectus by each of the Holders in connection with the offering and sale of Registrable Securities;

(f)                                     prior to any public offering of the Registrable Securities pursuant to any Registration Statement, register or qualify or cooperate with the Holders and their respective counsel in connection with the registration or qualification of the Registrable Securities for offer and sale under the securities or “blue sky” laws of such states of the United States as any Holder reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Registrable Securities; provided, however, that the Company or the Registrants (as the case may be) shall not be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action which would subject it to general service of process or to taxation in any jurisdiction where it is not then so subject;

(g)                                  cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing the Registrable Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and

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registered in such names as the Holders may request a reasonable period of time prior to sales of the Registrable Securities pursuant to such Registration Statement;

(h)                                  upon the occurrence of any event contemplated by paragraphs (ii) through (v) of Section 3(b) above during the period for which the Company or the Registrants (as the case may be) are required to maintain an effective Registration Statement, promptly prepare and file a post-effective amendment to the Registration Statement or a supplement to the related Prospectus and any other required document so that, as thereafter delivered to Holders or purchasers of Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

(i)                                      not later than the effective date of the Registration Statement, provide a CUSIP number for the Registrable Securities and provide each Holder with printed certificates for the Registrable Securities, in a form eligible for deposit with The Depository Trust Company;

(j)                                      use its reasonable best efforts to comply with all rules and regulations of the SEC to the extent and so long as they are applicable to the Registration Statement and will make generally available to its security holders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement satisfying the provisions of Section 11(a) of the Securities Act, no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of the Registration Statement, which statement shall cover such 12-month period;

(k)                                   require, at its option, each Holder of Registrable Securities to be sold pursuant to a Registration Statement to furnish to the Company or the Registrants (as the case may be) such information as may be required under applicable requirements of the SEC and to obtain any acceleration of the effective date of a Registration Statement, and the Company may exclude from such registration the Registrable Securities of any Holder that unreasonably fails to furnish such information within 20 days after receiving such request;

(l)                                      enter into such customary agreements and take all such other action, if any, in order to facilitate the disposition of the Registrable Securities pursuant to any Registration Statement;

(m)                                (i)                                      make reasonably available for inspection by the Holders of the Registrable Securities and any attorney, accountant or other agent retained by the Holders of the Registrable Securities all relevant financial and other records, pertinent corporate documents and properties of the Company or the Registrants (as the case may be) and (ii) cause the officers, directors, employees, accountants and auditors of the Company or the Registrants (as the case may be) to supply all relevant information reasonably requested by the Holders of the Registrable Securities or any such attorney, accountant or agent in connection with the Registration Statement, in each case, as shall be reasonably necessary

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to enable such Persons, to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that the foregoing inspection and information gathering shall be coordinated by the Investor and on behalf of the other parties, by one counsel selected by of such other parties; provided further , however , that any such records, documents, properties and such information that is designated in writing by the Company or the Registrants (as the case may be), in good faith, as confidential at the time of delivery of such records, documents, properties or information shall be kept confidential by any such Persons and shall be used only in connection with such Registration Statement, unless disclosure thereto is made in connection with a court proceeding or required by law (it being understood that such Persons (and any employee, representative or other agent of such Person) may disclose to any and all Persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated in the Registration Statement and all materials of any kind (including such records, documents, properties or information and opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure), or such information has become available (not in violation of this Agreement) to the public generally or through a third party without an accompanying obligation of confidentiality; and

(n)                                  if requested by any Holder of Registrable Securities, cause (i) its counsel to deliver an opinion and updates thereof relating to the Registrable Securities in customary form addressed to such Holders thereof and dated, in the case of the initial opinion, the effective date of such Registration Statement (it being agreed that the matters to be covered by such opinion shall include, without limitation, the due incorporation and good standing of the Company or the Registrants (as the case may be) and its or their subsidiaries; the qualification of the Company or the Registrants (as the case may be) and its or their subsidiaries to transact business as foreign corporations; the due authorization, execution and delivery of the relevant document of the type referred to in Section 3(a) hereof; the due authorization, execution, authentication and issuance, and the validity and enforceability, of the applicable Securities; the absence of material legal or governmental proceedings involving the Company or the Registrants (as the case may be) and its or their subsidiaries; the absence of governmental approvals required to be obtained in connection with the Registration Statement, the offering and sale of the applicable Registrable Securities, or any document of the type referred to in Section 3(a) hereof; the compliance as to form of such Registration Statement and any documents incorporated by reference therein; and, as of the date of the opinion and as of the effective date of the Registration Statement or most recent post-effective amendment thereto, as the case may be, the absence from such Registration Statement and the prospectus included therein, as then amended or supplemented, and from any documents incorporated by reference therein of an untrue statement of a material fact or the omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in light of the circumstances under which they were made) not misleading (in the case of any such documents, in the light of the circumstances existing at the time that such documents were filed with the SEC under the Exchange Act); (ii) its independent public accountants to provide to the Holders a comfort letter in customary form and covering matters of the type customarily covered in comfort letters in connection with primary underwritten offerings, subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing

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Standards No. 72; and (iii) use its best efforts to cause the disposition of the Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Registrable Securities.

If any such Registration Statement refers to any Holder by name or otherwise as the holder or any securities of the Company, then such Holder shall have the right to require (i) the insertion therein of language, in form and substance reasonably satisfactory to such Holder, to the effect that the holding by such Holder of such securities is not to be construed as a recommendation by such Holder of the investment quality of the Company’s securities covered thereby and that such holding does not imply that such Holder will assist in meeting any future financial requirements of the Company, or (ii) in the event that such reference to such Holder by name or otherwise is not required by the Securities Act or any similar Federal statute then in force, the deletion of the reference to such Holder in any amendment or supplement to the Registration Statement filed or prepared subsequent to the time that such reference ceases to be required.

Section 4.                                             Shelf Registration .

(a)                                   The Company shall use its reasonable best efforts to (i) on or before the Filing Date, prepare and cause to be filed with the SEC pursuant to Rule 415 under the Securities Act a shelf registration statement on the appropriate form relating to resales of all Registrable Securities or an amendment to a previously filed shelf registration statement on the appropriate form, amending such registration statement to cover resales of all Registrable Securities (the “Shelf Registration Statement”), (ii) cause the Shelf Registration Statement to be declared effective under the Securities Act on or prior to the Effectiveness Date and (iii) keep any Shelf Registration Statement required by this Section 4(a) continuously effective, supplemented, amended and current as required by and subject to the provisions of Section 4(a) hereof and in conformity with the requirements of this Agreement, the Securities Act and the rules and regulations of the SEC promulgated thereunder from time to time (including (A) preparing and filing with the SEC such amendments and post-effective amendments to the Shelf Registration Statement as may be necessary to keep such Shelf Registration Statement effective; (B) cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and complying fully with Rules 424, 430A and 462, as applicable, under the Securities Act in a timely manner; and (C) comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Shelf Registration Statement), until the second anniversary of the effective date of such Shelf Registration Statement; provided that such obligation shall expire before such date if all the Registrable Securities covered by the Shelf Registration Statement (i) have been sold pursuant thereto or (ii) are no longer Restricted Securities.

(b)                                  No Holder may include any of its Registrable Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 20 days after receipt of a request therefor, the information specified in Item 507 or 508 of Regulation S-K, as applicable, of the

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Securities Act for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein.  Each selling Holder agrees to promptly furnish additional information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading.

(c)                                   The Company shall be deemed not to have used its best eff