EXHIBIT 10.20
First Amendment to Stockholders' Agreement
dated February 28, 1994
This First Amendment to Stockholders' Agreement (this "Amendment") is
executed effective as of the 30th day of January, 1997 by and between Atlantic
Express Transportation Group, Inc. (the "Company"), Busco Capital, Inc.
("Busco"), Xxxxxxx Xxxxx ("X. Xxxxx"), Xxxxxxx Xxxxx ("X. Xxxxx") and Xxxxxxx
Xxxxx ("X. Xxxxx"), (X. Xxxxx, X. Xxxxx and X. Xxxxx are hereinafter
collectively referred to as the "Xxxxx Group").
RECITALS:
WHEREAS, the Company, Busco and the Xxxxx Group previously entered into a
Stockholders' Agreement dated as of February 28, 1994 (the "Stockholders'
Agreement").
WHEREAS, the parties to the Stockholders' Agreement wish to amend such
Agreement in various respects.
NOW, THEREFORE in consideration of the foregoing and the mutual and
dependant promises set forth herein, the parties agree as follows:
A. SECTION 1.01 is amended:
(i) to insert the following definitions in alphabetical order:
"Subsidiary" shall mean any affiliate under the direct or indirect
control of the Company.
"Transportation" means Atlantic Express Transportation Corp. a New
York corporation wholly owned by the Company.
"Transportation Business" means the provision of bus, van or car
transportation and related services under contract to state or local
government agencies as well as to private sector purchasers of such
transportation services and business ancillary thereto.
"Transportation By-Laws" means the By-Laws of Transportation.
"Transportation CEO" means the officer elected by the Transportation
Board to the post designated in the By-Laws as the chief executive officer
of Transportation. Xxxxxxx Xxxxx will be the initial CEO and chairman of
the Board of Transportation.
"Transportation Certificate of Incorporation" means the Certificate
of Incorporation of Transportation.
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"Transportation Employment Agreement" means the Employment
Agreements dated January 21, 1997 between Transportation and each of
Xxxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxx Xxxxx and Xxxxxx Xxxxxxxxx.
(ii) to amend the definition of "Employment Agreements" to read as
follows:
"Employment Agreements" means the Employment Agreements dated
February 28, 1994 as amended on January 21, 1997 between the Company and
each of Xxxxxxx Xxxxx, Xxxxxxx Xxxxx and Xxxxxxx Xxxxx.
(iii) The definition of the term "Default" shall also include (but not be
limited to) (i) any event involving any subsidiary of the Company
which had it involved the Company alone would be a Default (ii) any
event involving the Company and one or more of its subsidiaries on a
consolidated basis which had it involved the Company alone would be
a Default.
The definition of the "Significant Transaction" shall also include
(but not limited to) (i) any transaction involving any subsidiary of
the Company which had it involved the Company alone would be a
Significant Transaction and (ii) any transaction involving the
Company and one or more of its subsidiaries on a consolidated basis
which had it involved the Company alone would be a "Significant
Transaction".
(iv) Amend subpart (A) of the definition of "Significant Transaction" to
add at the end thereof as follows: "or with respect to
Transportation or any of its subsidiaries, conducting any business
other than the Transportation Business".
(v) Amend subpart (F) of the definition of "Significant Transaction" to
add at the end thereof as follows: "or any amendment to or
modification of any provision of the Certificate of Incorporation or
By-Laws of Transportation".
(vi) Amend subpart (I) of the definition "Significant Transaction" to
read in its entirety as follows: "any amendment or modification of
any Employment Agreement or any Transportation Employment Agreement,
or entry into any other agreement of employment or consulting with
any person now covered by any Employment Agreement or Transportation
Employment Agreement".
B. Section 1.02 is amended to add a new subsection (e) as follows:
(e) The Consenting Shareholders agree to use their best efforts to
cause the composition of the Transportation Board and the Boards of
all other subsidiaries to be comprised at all times as provided
herein and to cause all
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actions required to be taken by Transportation or its Board and each
other subsidiary and its Board under this Agreement to be taken as
promptly as possible.
C. A new subsection 2.01(h) is added as follows:
(h) Election of Subsidiary Directors. Busco shall be entitled to
designate 40% of the Board of each subsidiary of the Company (other than
Transportation which is dealt with in Section 2.07) for so long as Busco
is entitled to designate two or more directors of the Company.
D. A new Section 2.07 is added as follows:
SECTION 2.07(a). Composition of the Transportation Board of Directors. (a)
General The Transportation Board shall initially consist of seven
directors, of which, (i) Busco shall have the right to designate two
individuals to serve as directors and the Xxxxx Group shall have the right
to designate 4 individuals to serve as directors. The seventh director
shall be a designee of Jefferies & Co., Inc. for an initial term of 1 year
and thereafter an individual agreed upon by both the Xxxxx Group and Busco
that shall not be in the employ of either Busco or any affiliate or the
Xxxxx Group or any affiliate. In no event shall the Transportation Board
be composed of fewer than six directors. Except as otherwise provided in
this Section 2.07, the ratio of directors designated by Busco to those
designated by the Xxxxx Group shall be maintained as set forth in this
Section 2.07(a) should the Transportation Board be increased in number.
(b) Event of Default. From and after a Default the Transportation
Board shall be increased in number so that Busco designated directors
shall be one more in number than the total of all other directors. In the
event that the Default is cured in a way that results in the retirement of
additional Busco directors under ss. 2.01(c), the directors added by Busco
to the Transportation Board as a result of the Default shall be retired
and the Board shall thereafter be composed as provided in ss. 2.07(a).
(c) Transportation Transactions During Default Period. Any loan
transaction, sale of equity or an investment convertible into equity
during the period in which the Busco designees control the Transportation
Board, shall be based upon an independent appraisal conducted by an
appraiser (selected from Schedule A hereto) mutually acceptable to the
Xxxxx Group and Busco. If they are unable to agree, the appraiser shall be
selected by lot. The Xxxxx Group shall have a right of first refusal to
purchase such position or fund such loan or to secure a third party to
purchase such position or fund such loan provided that Busco shall have
the right, superior to any such third party, to purchase the position if
it agrees to abide by the same terms and conditions relating to control of
Transportation as provided in the third party offer.
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In the event the Xxxxx Group shall purchase the position, fund such loan
or arrange third party financing for such loan or position, control of the
Board shall be as provided in such arrangement.
(d) Public Offering. In the event Transportation shall consummate a
Public Offering, Busco and the Xxxxx Group agree that until Busco has
disposed of 75% of its shares of Preferred Stock, representatives on the
Transportation Board (excluding "independent directors") shall continue to
be 33 1/3% Busco designees and 66 1/2% Xxxxx Group designees. After
Default Busco shall be entitled to 66 % of the non-independent directors
and the Xxxxx Group 33 1/3%. Independent directors shall be nominated
jointly by Busco and the Xxxxx Group. There shall be no change in the
directors of Transportation based upon any Public Offering of its shares.
E. A new Section 2.09 shall be added as follows:
SECTION 2.09 Action by the Transportation Board of Directors. The
Transportation Board shall follow the rules and procedures specified in
the Agreement for action by the Company Board (including but not limited
to those specified in Section 2.03) except that as to votes on Significant
Transactions the prior approval of 76% of the Transportation directors
shall be required.
F. SECTION 3.04 is amended so that in its entirety it shall be as follows:
SECTION 3.04. Redemption (a) Busco shall have the right, upon six months'
prior written notice, to require the redemption of any shares of
unconverted Preferred Stock. Such right shall be to put 100% of those
shares at any time after the fifth anniversary of the date of this
Agreement, but not later than the second to occur of (a) the seventh
anniversary of the date of this Agreement and (b) a date which is 12
months after the date on which the Senior Secured Notes issued by
Transportation in 1997 shall be repaid in full. Payment as to the
redemption shall, except to the extent Section 3.04(b) shall be
applicable, be made 50% on the date of the put and 50% on the first
anniversary of the date of the put. Any amount not paid to Busco as set
forth in this Section 3.04 on such put date shall be evidenced by a note
from the Company (such note to be non-interest bearing) evidencing such
indebtedness. The redemption price (valued as of the date of such
redemption) shall be the higher of (i) fair market value of the Company,
appraised as a public company if there is a reasonable basis upon which
the Company by the date of such notice requiring redemption could have
been a public company, otherwise appraised as privately held, in either
case multiplied by a fraction, the numerator of which is the number of
shares of Common Stock of the Company that Busco would have obtained had
there been a conversion of the redeemed unconverted Preferred Stock on the
put date (such numerator being hereinafter referred to as "the Common
Stock Equivalent") and the denominator of
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which is the total number of shares of Common Stock of the Company that
there would have been had there been such conversion; (ii) if the Common
Stock is then publicly traded, valued at market multiplied by the number
of shares constituting the Common Stock Equivalent, or (iii) liquidation
preference value multiplied by the number of shares constituting the
Common Stock Equivalent.
(b) At the option of the Company, the redemption right, if exercised
by Busco shall provide for payment for the redeemed shares in three annual
installments commencing on the date of the put and on the first and second
anniversary of such date, provided that the redemption price shall be
computed as set forth in subsection (a) and then increased at a per annum
rate consistent with an equity return appropriate in these circumstances
as to all funds not received by a date that is one year after the date of
the put ("the One Year Date"), but not to exceed a return of 27.5%
annually for payments after the One Year Date.
(c) Valuation of the Company shall be determined by an appraiser
selected by the Company and Busco from the list of appraisers in Schedule
A attached hereto. In the event the Company and Busco cannot agree upon a
single appraiser they shall each select an appraiser from the annexed list
and the average valuation of such appraisers shall be utilized. The Xxxxx
Group and Busco shall share equally the expense of the appraisal.
(d) In the event the Company is legally precluded from redeeming the
shares of Voting Securities held by Busco as a result of insufficient
surplus:
(i) The Company shall reduce the compensation package of the
Xxxxx Group by $250,000 annually; and
(ii) Busco's shares shall be redeemed at the rate of 60% of
the Company's cash flow, but not to exceed, on a
cumulative basis, the amount payable under subsection
(b).
(e) The Company shall notify Busco in writing within 120 days after
receipt of notice from Busco pursuant to subsection (a) either that it is,
or is not able to complete the redemption in accordance with this
Agreement. If the Company notifies Busco that it is unable to complete the
redemption or fails to respond as required or in a timely fashion, then
the provisions of subsection (g) shall immediately be applicable. If the
Company fails to redeem shares as required by subsection (a) hereunder,
regardless of the reason therefor, Busco shall retain all of its rights as
a shareholder hereunder and no exercise of its rights hereunder after such
failure shall be deemed to waive or diminish any claim that it may have
against the
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Company arising out of such failure. However, no such failure shall
constitute a "Default" within the meaning of this Agreement.
(f) Should the Company issue a note upon a redemption in full of the
Busco shares under this Section 3.04, this Agreement shall terminate and
shall have no future effect except as specifically provided in this
subsection (t). Any such note issued under this Section 3.04 shall provide
that upon any failure to make a payment of interest or principal when due
Busco shall be entitled to appoint such number of directors of both the
Company and Transportation as will permit it to appoint a majority of each
such Board until such time as it has been paid the full amount of the
principal and interest payable under such note. In addition, the Company
and the Shareholders of the Company at the time of the issuance of such
note shall agree with Busco in writing that if there is any failure to
make a payment of principal or interest under such note when due they will
observe subsection (g) of this Agreement as if it continued to be fully
effective (although Busco is no longer a Shareholder) as an agreement
between them.
(g) If the Company (i) fails to redeem the shares of Voting
Securities held by Busco in accordance with subsection (a) for any reason
or (ii) fails to respond in a timely fashion to a notice given under
subsection (a) hereof by stating that "the Company is able to complete the
redemption in accordance with this Agreement", then, and in either such
event, each Consenting Shareholder hereby agrees as follows: at all times
thereafter until all such shares are redeemed (or converted as required by
the Company under Section 1.02(d) of this Agreement) (i) to vote all
shares of Voting Securities owned by such Consenting Stockholder in favor
of and (ii) to use its best efforts to cause directors designated by it in
accordance with Article II to vote in favor of:
(I) any proposal by Wafra (except a proposal that is not fair
to the stockholders overall) to issue securities of the
Company or any subsidiary to the public or in a private
placement designed to facilitate the sale or redemption in
whole or part of Voting Securities then held by Busco, and
(II) any proposal by Wafra (except a proposal that is not fair
to the stockholders overall) to reduce, refund or defease the
1997 Transportation Note issue, or to obtain waivers
thereunder to facilitate the sale or redemption in whole or
part of the Voting Securities then held by Busco, and
In addition each member of Xxxxx Group and the Company agrees
to use his or its best efforts to facilitate in all reasonable
respects any such
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proposed securities issue, proposed reduction or refunding of
or waiver under the 1997 Transportation Senior Secured Note
issue.
As used in this Section 3.04 a proposal shall conclusively be
deemed fair to the stockholders overall if one of the
underwriters listed on Schedule A chosen as specified below
shall provide a written opinion to the Company at the request
of Busco that the proposal is fair to the stockholders
overall. Upon written notice from Busco to the Xxxxx Group
each of Busco and the Xxxxx Group by written notice to each
other within 10 days may (but need not) designate two of the
underwriters listed on Schedule A. If the Xxxxx Group so
designates any such underwriters, the underwriter chosen to
provide such opinion shall be determined by lot from among
those designated by the Xxxxx Group and Busco, such choice by
lot to continue until an underwriter so designated agrees to
accept the assignment.
G. SECTION 5.02 shall be amended to insert after the first sentence thereof
the following:
"From and after March 1, 1997 such fee shall be adjusted to
$229,503 to be thereafter adjusted and to be payable as
provided in the prior sentence".
H. SECTION 5.03 shall be amended to insert after the words "Company books and
records" the following words:
"(including the books and records of Transportation and each
other affiliate of the Company)".
I. This Stockholders' Agreement is hereby ratified and confirmed in all
respects except as amended by this First Amendment thereto.
J. Schedule A shall be amended to add Jefferies & Company, Inc. to the
underwriters listed thereon.
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IN WITNESS WHEREOF, the parties hereto have duly executed this First
Amendment to Agreement in their individual capacities or caused it to be duly
executed by their respective authorized signatories thereunto duly authorized as
of the day and year first above written.
ATLANTIC EXPRESS TRANSPORTATION GROUP INC.
/s/ Xxxxxxx Xxxxx
------------------------------------------
Name: Xxxxxxx Xxxxx
Title: President and Chief Executive
Officer
0 Xxxxx Xxxxxx
Xxxxxx Xxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx Xxxxx
Fax: (000) 000-0000
Telephone: (000) 000-0000
BUSCO CAPITAL INC.
/s/ Xxxx X. Xxxx
------------------------------------------
Name: Xxxx X. Xxxx
Title: AGENT
Citco Building
Wickhams Cay
P.O Box 662
Road Town,
Tortola
British Virgin Islands
with a copy to:
Wafra Investment Advisory
Group, Inc.
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
attn: Mr. Xxxx Xxxx
Fax: (000) 000-0000
Telephone: (000) 000-0000
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--------------------------
Xxxxxxx Xxxxx
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
--------------------------
Xxxxxxx Xxxxx
000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
--------------------------
Xxxxxxx Xxxxx
0 Xxxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
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Agreed and Accepted By
WAFRA DIRECT EQUITY GROUP
as to, but only to the extent of,
the terms of Section 5.04 hereof:
/s/ Xxxx X. Xxxx
--------------------------------------
Name: Xxxx X. Xxxx
Title: Senior Vice President
