
<PAGE>   1
 
      AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 16, 1997
 
                                                 REGISTRATION NO. 333-
================================================================================
 
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ---------------------
                                    FORM S-3
 
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                             ---------------------
                             GREYHOUND LINES, INC.
 
             (Exact Name of Registrant as Specified in Its Charter)
 
<TABLE>
<C>                                                 <C>
                     DELAWARE                                           86-0572343
           (State or Other Jurisdiction                              (I.R.S. Employer
         of Incorporation or Organization)                        Identification Number)
        15110 N. DALLAS PARKWAY, SUITE 600                   MARK E. SOUTHERST, VICE PRESIDENT
                DALLAS, TEXAS 75248                                 AND GENERAL COUNSEL
                  (972) 789-7000                           15110 NORTH DALLAS PARKWAY, SUITE 600
                                                                    DALLAS, TEXAS 75248
    (Address, Including Zip Code, and Telephone                       (972) 789-7000
          Number, Including Area Code, of
     Registrant's Principal Executive Offices)            (Name, Address, Including Zip Code, and
                                                         Telephone Number, Including Area Code, of
                                                                    Agent for Service)
</TABLE>
 
                                    Copy to:
 
                            JEREMY W. DICKENS, ESQ.
                           WEIL, GOTSHAL & MANGES LLP
                         100 CRESCENT COURT, SUITE 1300
                              DALLAS, TEXAS 75201
                             ---------------------
     APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
 
    If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.  [ ]
 
    If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.  [X]
 
    If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.  [ ]
 
    If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]
 
    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  [ ]
                             ---------------------
                        CALCULATION OF REGISTRATION FEE
 
<TABLE>
<S>                                       <C>                          <C>              <C>              <C>
============================================================================================================================
                                                                           PROPOSED         PROPOSED
                                                                           MAXIMUM          MAXIMUM
                                                     AMOUNT                OFFERING        AGGREGATE          AMOUNT OF
TITLE OF EACH CLASS OF                               TO BE                PRICE PER         OFFERING        REGISTRATION
SECURITIES TO BE REGISTERED                        REGISTERED              NOTE(1)          PRICE(1)             FEE
----------------------------------------------------------------------------------------------------------------------------
8 1/2% Convertible Exchangeable Preferred
  Stock, par value $0.01 per share.......       2,400,000 shares           $24.8125       $59,550,000        $18,045.45
----------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $0.01 per
  share..................................     12,307,692 shares(2)            --               --              None(3)
----------------------------------------------------------------------------------------------------------------------------
8 1/2% Convertible Subordinated
  Debentures due 2009....................         $60,000,000                 --               --              None(3)
----------------------------------------------------------------------------------------------------------------------------
          Total..........................                                  $24.8125       $59,550,000        $18,045.45
============================================================================================================================
</TABLE>
 
(1) Calculated in accordance with Rule 457(c) under the Securities Act of 1933,
    as amended, based on the average of the bid and asked price as of May 8,
    1997 as reported to Registrant by Bear, Stearns & Co., Inc.
 
(2) The amount to be registered shall also be deemed to include such greater
    number of shares of Common Stock as are issuable as a result of the
    adjustment to the conversion price pursuant to the Certificate of
    Designations for the Preferred Stock or pursuant to the indenture governing
    the Convertible Subordinated Debentures.
 
(3) No separate consideration will be received for the Common Stock or the
    Convertible Subordinated Debentures issuable upon conversion or exchange,
    respectively, of the Convertible Exchangeable Preferred Stock.
                             ---------------------
    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE>   2
 
     INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
     REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
     SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
     MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
     BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
     THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
     SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
     UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
     OF SUCH STATE.
 
                   SUBJECT TO COMPLETION, DATED MAY 16, 1997
PROSPECTUS
 
<TABLE>
<C>                   <C>                                                                                  <C>
  [Greyhound Logo]                                   GREYHOUND LINES, INC.
                                   2,400,000 SHARES OF 8 1/2% CONVERTIBLE EXCHANGEABLE STOCK
</TABLE>
 
                         ------------------------------
 
    This Prospectus relates to the offering (the "Offering") by the Selling
Securityholders (as hereinafter defined) from time to time of (i) up to
2,400,000 shares (the "Shares") of 8 1/2% Convertible Exchangeable Preferred
Stock, liquidation preference $25.00 per share (the "Preferred Stock"), of
Greyhound Lines, Inc. (the "Company"), (ii) up to $60.0 million aggregate
principal amount of 8 1/2% Convertible Subordinated Notes due 2009 (the
"Exchange Debentures") of the Company, issuable upon exchange of the Preferred
Stock (as hereinafter described) and (iii) up to 12,307,692 shares of Common
Stock, par value $.01 per share (the "Common Stock"), of the Company, issuable
upon conversion of the Preferred Stock or the Exchange Debenture, (as
hereinafter described). See "Selling Securityholders." The Preferred Stock,
Exchange Debentures and Common Stock offered hereby are referred to herein as
the "Securities."
 
    Dividends on the Preferred Stock will accrue at a rate per annum equal to
8 1/2% of the liquidation preference per share of Preferred Stock and will be
payable quarterly on February 1, May 1, August 1 and November 1 of each year,
commencing August 1, 1997. The Preferred Stock will be convertible, subject to
prior redemption, at any time on or after July 15, 1997 at the option of the
holder thereof into Common Stock at a conversion price of $4 7/8 per share,
subject to certain adjustments. The Common Stock is listed on the American Stock
Exchange ("AMEX") under the symbol "BUS." On May 15, 1997, the last reported
sale price of the Common Stock on the AMEX was $3 7/8 per share.
 
    The Preferred Stock will be redeemable, in whole or in part, at any time on
or after May 3, 2000, at the redemption prices set forth herein, plus
accumulated and unpaid dividends and Liquidated Damages, if any, thereon to the
redemption date. Upon the occurrence of a Change of Control (as defined herein),
the Company will be required to make an offer to repurchase all outstanding
shares of Preferred Stock at a price equal to 100% of the liquidation preference
thereof, plus accumulated and unpaid dividends and Liquidated Damages, if any,
thereon to the repurchase date. See "Description of Securities -- Preferred
Stock."
 
    Subject to certain conditions, the Company may at its option exchange all,
but not less than all, of the then outstanding shares of Preferred Stock into
its 8 1/2% Convertible Subordinated Debentures due 2009 on any dividend payment
date on or after April 16, 1999. The Exchange Debentures, if issued, will bear
interest at 8 1/2 per annum and will be payable semi-annually in arrears on May
1 and November 1 of each year, commencing with the first such date following the
date on which the Exchange Debentures are issued. The Exchange Debentures will
be subordinated to all existing and future Senior Debt (as defined herein) of
the Company. The Exchange Debentures will be convertible, subject to prior
redemption, at any time after issuance thereof, at the option of the holder
thereof, into Common Stock at a conversion price of $4 7/8 per share, subject to
certain adjustments. The Exchange Debentures will be redeemable, at the option
of the Company, in whole or in part, at any time on or after May 3, 2000, at the
redemption prices set forth herein, plus accrued and unpaid interest thereon to
the redemption date. Upon the occurrence of a Change of Control, the Company
will be required to make an offer to repurchase all or any part of each holder's
Exchange Debentures at a price equal to 100% of the principal amount thereof,
plus accrued and unpaid interest thereon to the repurchase date. See
"Description of Securities -- Exchange Debentures."
 
    The Selling Securityholders may sell the Securities to which this Prospectus
relates in whole or from time to time in part through underwriters or dealers,
through brokers or other agents, or directly to one or more purchasers, at
market prices prevailing at the time of sale or at prices otherwise negotiated.
The Company will not receive any of the proceeds from the sale of the Securities
by the Selling Securityholders. The Company has agreed to pay substantially all
the fees and expenses incurred in connection with the registration of the
Securities, other than any underwriting fees, discounts or commissions
attributable to the sale of the Securities. The Selling Securityholders and any
broker, dealer or underwriter that participates with the Selling Securityholders
in the distribution of the Securities may be deemed to be an "underwriter"
within the meaning of the Securities Act, and any commissions received by them
and any profit on the resale of such Preferred or the other Securities Stock
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. See "Plan of Distribution."
 
    The Preferred Stock currently trades in the Private Offerings, Resales and
Trading through Automated Linkages ("PORTAL") Market. Shares of Preferred Stock
sold pursuant to this Prospectus thereafter will not be eligible for trading in
the PORTAL Market. The Company does not intend to list the Preferred Stock on
any securities exchange or to seek approval for quotation of the Preferred Stock
through any automated quotation system. Although Bear, Stearns & Co. Inc. has
advised the Company that it intends to make a market in the Preferred Stock, it
is not obligated to do so and may suspend any such market-making activities at
any time and without prior notice. Accordingly, there can be no assurance that
an active market for the Preferred Stock will develop or be maintained.
 
     SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS
RELEVANT TO AN INVESTMENT IN THE SECURITIES OFFERED HEREBY.
 
                             ---------------------
 
  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
   AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
                               CRIMINAL OFFENSE.
 
               The date of this Prospectus is            , 1997.
<PAGE>   3
 
                             AVAILABLE INFORMATION
 
     The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder, and in accordance therewith files periodic reports,
proxy and information statements, and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy and information
statements, and other information filed by the Company with the Commission may
be inspected at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of
the Commission located at 7 World Trade Center, 13th Floor, New York, New York
10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such materials may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Commission also maintains a web site (http://www.sec.gov) that contains
reports, proxy and information statements regarding registrants, such as the
Company, that file electronically with the Commission. The Common Stock is
listed on the American Stock Exchange and all reports, proxy and information
statements, and other information filed by the Company with the Commission also
may be inspected at the offices of the American Stock Exchange, 86 Trinity
Place, New York, New York 10006.
 
     The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act, as amended, with respect to the Securities
offered hereby. This prospectus does not include all the information set forth
in the Registration Statement and the exhibits thereto, to which reference is
made for further information with respect to the Company. Copies of the
Registration Statement and the exhibits thereto are on file at the offices of
the Commission and may be obtained from the Commission upon payment of
prescribed rates or may be examined without charge at the public reference
facilities of the Commission as described above.
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
     The following documents filed with the Commission are incorporated into
this Prospectus by reference:
 
          (1) The Company's Annual Report on Form 10-K for the year ended
     December 31, 1996 filed March 19, 1997;
 
          (2) The Company's Current Report on Form 8-K filed March 19, 1997;
 
          (3) The Company's Current Report on Form 8-K filed April 9, 1997;
 
          (4) The Company's Proxy Statement for the year ended December 31, 1996
     filed April 16, 1997;
 
          (5) The Company's Current Report on Form 8-K filed April 28, 1997; and
 
          (6) the Company's Quarterly Report on Form 10-Q filed May 13, 1997.
 
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Offering shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Prospectus.
 
     The Company will provide without charge to each person, including any
beneficial owner of Securities, to whom a copy of this Prospectus has been
delivered, upon the written or oral request of such person, a copy of any and
all of the documents which have been or may be incorporated by reference in this
Prospectus, except that exhibits to such documents will not be provided unless
they are specifically incorporated by reference into such documents. Requests
for copies of any such document should be directed to Greyhound Lines, Inc.,
15110 N. Dallas Parkway, Suite 600, Dallas, Texas 75248, Attention: Investor
Relations, telephone: (972) 789-7577.
 
                                        2
<PAGE>   4
 
                               PROSPECTUS SUMMARY
 
     The following summary information is qualified in its entirety by, and
should be read in conjunction with, the more detailed information and financial
data, contained in this Prospectus, including information and financial data
incorporated herein by reference. The terms "Greyhound" and "Company" refer to
Greyhound Lines, Inc. and its subsidiaries, unless otherwise stated or indicated
by the context.
 
                                  THE COMPANY
 
     The Company is the only nationwide provider of intercity bus transportation
services in the United States. The Company serves the value-oriented customer by
connecting rural and urban markets throughout the United States, offering
scheduled passenger service to more than 2,400 destinations with a fleet of
approximately 2,000 buses and approximately 1,600 sales locations. The Company
also provides package express service and, in many terminals, food service.
 
                                  THE OFFERING
 
THE PREFERRED STOCK
 
Securities Offered.........  Up to 2,400,000 shares of 8 1/2% Cumulative
                             Exchangeable Preferred Stock.
 
Liquidation Preference.....  $25.00 per share.
 
Dividends..................  Cumulative dividends on the Preferred Stock will
                             accrue at a rate per annum equal to 8 1/2% of the
                             liquidation preference per share of Preferred Stock
                             and will be payable quarterly in arrears on
                             February 1, May 1, August 1, and November 1 of each
                             year, commencing August 1, 1997.
 
Conversion.................  The Preferred Stock will be convertible, subject to
                             prior redemption, at any time on or after July 15,
                             1997, at the option of the holder thereof, into
                             Common Stock at a conversion price of $4 7/8 per
                             share, subject to certain adjustments.
 
Redemption.................  The Preferred Stock will be redeemable, at the
                             option of the Company, in whole or in part, at any
                             time on or after May 3, 2000, at the redemption
                             prices set forth herein, plus accumulated and
                             unpaid dividends and Liquidated Damages, if any,
                             thereon to the redemption date.
 
Change of Control..........  Upon the occurrence of a Change of Control, the
                             Company will be required to make an offer to
                             repurchase all or any part of each holder's
                             Preferred Stock at a price equal to 100% of the
                             liquidation preference thereof, plus accumulated
                             and unpaid dividends and Liquidation Damages, if
                             any, thereon to the repurchase date.
 
Exchange...................  Subject to certain conditions, the Company may at
                             its option exchange all, but not less than all, of
                             the then outstanding shares of Preferred Stock into
                             Exchange Debentures on any dividend payment date on
                             or after April 16, 1999.
 
Voting Rights..............  The holders of the Preferred Stock are entitled to
                             vote with the holders of the Common Stock on all
                             matters submitted to a vote of stockholders of the
                             Company, each share of Preferred Stock entitling
                             the holder thereof to one vote. The Company,
                             however, may seek stockholder approval to amend the
                             Restated Certificate of Incorporation of the
                             Company to eliminate the provisions thereof
                             providing such voting rights to holders of
                             Preferred Stock. If such amendment is approved,
                             holders of the Preferred Stock will have no voting
                             rights except as provided by law
                                        3
<PAGE>   5
 
                             or set forth in the Certificate of Designations.
                             See "Description of Securities -- Preferred
                             Stock -- Voting Rights."
 
THE EXCHANGE DEBENTURES
 
Securities Offered.........  8 1/2% Convertible Subordinated Debentures due 2009
                             issuable at the Company's option in exchange for
                             the Preferred Stock in an aggregate principal
                             amount equal to the liquidation preference of the
                             then outstanding shares of Preferred Stock.
 
Maturity...................  May 1, 2009.
 
Interest Payment Dates.....  Interest on the Exchange Debentures will be payable
                             semi-annually in arrears on May 1 and November 1 of
                             each year, commencing with the first such date
                             following the date on which the Exchange Debentures
                             are issued (the "Exchange Date").
 
Ranking....................  The Exchange Debentures will be subordinated to all
                             existing and future Senior Debt (as defined herein)
                             of the Company. As of December 31, 1996, after
                             giving pro forma effect to the Offerings and the
                             use of proceeds therefrom, the principal amount of
                             Senior Debt would have been approximately $207.5
                             million.
 
Conversion.................  The Exchange Debentures will be convertible,
                             subject to prior redemption, at any time after
                             issuance thereof, at the option of the holder
                             thereof, into Common Stock at a conversion price of
                            $4 7/8 per share, subject to certain adjustments.
 
Redemption.................  The Exchange Debentures will be redeemable, at the
                             option of the Company, in whole or in part, at any
                             time on or after May 3, 2000, at the redemption
                             prices set forth herein, plus accrued and unpaid
                             interest and Liquidated Damages, if any, thereon to
                             the redemption date.
 
Change of Control..........  Upon the occurrence of a Change of Control, the
                             Company will be required to make an offer to
                             repurchase all or any part of each holder's
                             Exchange Debentures at a price equal to 100% of the
                             principal amount thereof, plus accrued and unpaid
                             interest and Liquidated Damages, if any, thereon to
                             the repurchase date.
                                        4
<PAGE>   6
 
                                  RISK FACTORS
 
     Prospective purchasers of the Securities offered hereby should carefully
review the information set forth below, in addition to the other information
contained in this Prospectus (including information incorporated by reference
herein), in evaluating an investment in the Securities offered hereby.
 
SUBSTANTIAL LEVERAGE
 
     The Company has, and will continue to have, consolidated indebtedness that
is substantial in relation to its stockholders' equity. As of December 31, 1996,
after giving pro forma effect to the offerings of the Preferred Stock and the
Senior Notes (as hereinafter defined), completed April 16, 1997 (the
"Offerings"), and the application of the net proceeds therefrom, the Company
would have had outstanding consolidated long-term indebtedness (including
current portions) of approximately $217.3 million and total stockholders' equity
of approximately $173.7 million. In addition, for the year ended December 31,
1996, after giving pro forma effect to the Offerings and the application of the
net proceeds therefrom, the Company's earnings would have been insufficient to
cover fixed charges and preferred stock dividends by $6.5 million. The degree to
which the Company is leveraged could have important consequences to holders of
the Securities, including: (i) an impairment of the Company's ability to obtain
additional financing in the future; (ii) a reduction of funds available to the
Company for its operations or for capital expenditures as a result of the
dedication of a substantial portion of the Company's cash flow to the payment of
principal of and interest on the Company's indebtedness; (iii) the possibility
of an event of default under financial and operating covenants contained in the
Company's debt instruments, including the indenture in respect of the Senior
Notes (the "Senior Note Indenture"), which, if not cured or waived, could
prevent the Company from paying dividends on the Preferred Stock or interest on
the Exchange Debentures and could have a material adverse effect on the Company;
(iv) a relative competitive disadvantage if the Company is substantially more
leveraged than its competitors; and (v) an inability to adjust to rapidly
changing market conditions and consequent vulnerability in the event of a
downturn in general economic conditions or its business because of the Company's
reduced financial flexibility. The Company's Ratio of Earnings to Fixed Charges
and Ratio of Earnings to Fixed Charges and Preferred Stock Dividends were each
1.4 and 1.3 for the fiscal years ended December 31, 1992 and 1993, respectively.
The coverage deficiency for Earnings to Fixed Charges and Earnings to Fixed
Charges and Preferred Stock Dividends were each $98.9 million, $17.4 million,
$6.5 million and $17.1 million for the fiscal years ended December 31, 1994,
1995 and 1996 and the three-month period ended March 31, 1997, respectively.
 
     In addition to its debt service obligations, the Company's operations
require substantial investments on a continuing basis. The Company's ability to
make scheduled debt payments, to refinance its obligations with respect to its
indebtedness and to fund capital and non-capital expenditures necessary to
maintain the condition of the Company's operating assets, including its bus
fleet, properties and systems software, as well as to provide capacity for the
growth of its business, depends on its financial and operating performance and
obtaining additional sources of financing, which, in turn, is subject to
prevailing economic conditions and financial, business, competitive, legal and
other factors, many of which are beyond the Company's control. Moreover, the
Company is and will be subject to covenants contained in the Senior Note
Indenture, the Revolving Credit Facility and other present and future
indebtedness of the Company. Such covenants include without limitation,
restrictions on certain payments, the granting of liens, the incurrence of
additional indebtedness, dividend restrictions affecting subsidiaries, assets
sales, transactions with affiliates, and mergers and consolidations. There can
be no assurance that the Company's operating results will be sufficient for
payment of the Company's indebtedness or to fund its other expenditures or that
the Company will be able to obtain financing to meet such requirements. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996.
 
HISTORY OF LOSSES
 
     The Company has had a net loss in each of its last three fiscal years.
Although the Company has implemented new strategic and operational initiatives
intended to enhance revenues and operating income, the
 
                                        5
<PAGE>   7
 
Company's operations generally are subject to economic, financial, competitive,
legal and other factors, many of which are beyond its control. Accordingly,
there can be no assurance that the Company will be able to implement these
initiatives without delay or that these initiatives will return the Company to
profitability.
 
ABSENCE OF DIVIDENDS ON COMMON STOCK; RESTRICTIONS ON DIVIDENDS
 
     The Company has not paid any dividends on the Common Stock in the past and
does not anticipate paying dividends on the Common Stock in the foreseeable
future. See "Market Price of Common Stock and Dividend Policy" in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996. Moreover, the
Revolving Credit Facility and the Senior Note Indenture restrict the ability of
the Company to declare or pay cash dividends on any of its capital stock. In
general, the Revolving Credit Facility restricts the payment of dividends on the
Preferred Stock in an amount in excess of $10.0 million per year, and the Senior
Note Indenture limits the aggregate amount of Restricted Payments (as defined in
the Senior Note Indenture), including the payment of dividends on, and the
repurchase, redemption or other retirement of, shares of Preferred Stock and
Common Stock, to an amount equal to the sum of (a) 50% of the Consolidated Net
Income (as defined in the Senior Note Indenture to exclude certain non-recurring
and extraordinary gains) of the Company, plus (b) the net cash proceeds to the
Company from the sale of certain equity securities of the Company, plus (c) the
amount of proceeds to the Company from the sale of certain investments.
Notwithstanding the foregoing, however, the Senior Note Indenture will permit
the Company to pay regularly scheduled dividends on the Preferred Stock if (i)
the Company is not then in default under the Senior Note Indenture and (ii) with
respect to dividend payments on and after April 15, 2000, the Company's
Consolidated Interest Coverage Ratio (as defined in the Senior Note Indenture)
is at least 2.0 to 1. As a result of the foregoing provisions, there can be no
assurance that the Company will at all times be permitted to pay dividends on
the Preferred Stock. In addition, future agreements of the Company may restrict
the Company's ability to pay dividends on the Preferred Stock and Common Stock.
 
REPURCHASE OF PREFERRED STOCK UPON CHANGE OF CONTROL
 
     Upon the occurrence of a Change of Control, the Company will be required to
make an offer to repurchase all outstanding shares of Preferred Stock at a price
equal to 100% of the liquidation preference thereof, plus accumulated dividends
and Liquidated Damages, if any, thereon to the date of repurchase. Certain
events involving a Change of Control may result in an event of default under the
Revolving Credit Facility and may result in an event of default under other
indebtedness of the Company that may be incurred in the future. An event of
default under the Revolving Credit Facility or other indebtedness could result
in an acceleration of such indebtedness. See "Description of Other
Indebtedness." There can be no assurance that the Company would have sufficient
resources to repurchase the Preferred Stock and pay its obligations under such
indebtedness upon the occurrence of a Change of Control. In addition, such
indebtedness may prohibit the Company from repurchasing Preferred Stock
following a Change of Control. These Change of Control provisions may be deemed
to have anti-takeover effects and may delay, defer or prevent a merger, tender
offer or other takeover attempt.
 
COMPETITION
 
     The transportation industry is highly competitive. The Company's primary
sources of competition for passengers are automobile travel, low cost air travel
from both regional and national airlines, and, in certain markets, regional bus
companies and trains. There can be no assurance that the Company will be able to
successfully compete against these sources of competition. See
"Business -- Competition" in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
 
SEASONALITY
 
     The Company's business is seasonal in nature and generally follows the
pattern of the travel industry as a whole, with peaks during the summer months
and the Thanksgiving and Christmas holiday periods. As a result, the Company's
cash flows are seasonal in nature with a disproportionate amount of the
Company's annual cash flows being generated during the peak travel periods.
Therefore, an event that adversely affects
 
                                        6
<PAGE>   8
 
ridership during any of these peak periods in any year could have a material
adverse effect on the Company's financial condition or results of operations for
such year. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Seasonality" in the Company's Annual Report on Form
10-K for the year ended December 31, 1996.
 
IMPORTANCE OF SELF-INSURANCE AUTHORITY AND AVAILABILITY OF INSURANCE
 
     The Surface Transportation Board (the "STB") of the United States
Department of Transportation ("DOT") has granted the Company authority to
self-insure its automobile liability exposure for interstate passenger service
up to a maximum level of $5.0 million per occurrence. To maintain self-insurance
authority, the STB requires the Company to maintain a tangible net worth of
$10.0 million (as of December 31, 1996, the Company's tangible net worth was
$119.9 million) and to maintain a $15.0 million trust fund (currently fully
funded) to provide security for payment of claims. Subsequent to the
self-insurance grant by the STB, 38 states have granted the Company the
authority to self-insure its intrastate automobile liability exposure.
 
     Insurance coverage and risk management expense are key components of the
Company's cost structure. The loss of self-insurance authority from the STB or a
decision by the Company's insurers to modify the Company's program
substantially, by either increasing cost, reducing availability or increasing
collateral, could have a material adverse effect on the Company's financial
condition or results of operations.
 
LITIGATION
 
     The Company is a party to various lawsuits the outcome of which, if adverse
to the Company, could have a material adverse effect on the results of
operations and financial condition of the Company. See "Business -- Legal
Proceedings" in the Company's Annual Report on Form 10-K.
 
PENSION PLAN FUNDING
 
     The Company maintains five defined benefit pension plans, the most
significant of which (the "ATU Plan") covers approximately 16,500 current and
former employees, fewer than 1,300 of which are active employees of the Company.
The ATU Plan was closed to new participants in 1983 and, as a result, over 80%
of its participants are over the age of 50. For financial reporting and
investment planning purposes, the Company currently uses an actuarial table that
closely matches the actual experience related to the existing participant
population. As a result of legislation enacted in 1994 by the United States
Congress, the Company may be required to begin measuring its funding obligation
under the ATU Plan utilizing an actuarial table prescribed by such legislation.
If so required, the Company currently estimates, based on assumed rates of
return on the ATU Plan's investments, that it would be required to begin making
contributions to the ATU Plan beginning no earlier than 1998 in an aggregate
amount over the next five years ranging from approximately $6.0 million to
approximately $30.0 million. If the ATU Plan is unable to attain such assumed
rates of return, such contributions could be higher. Although the Company is
exploring whether it may be able to obtain relief from this requirement, there
is no assurance that the Company will be able to obtain such relief, that the
ATU Plan will be able to obtain the assumed rates of return or that
contributions to the ATU Plan will not be significant.
 
LACK OF PUBLIC MARKET
 
     The Preferred Stock will not be listed on any securities exchange. The
Company has been advised by Bear Stearns & Co. Inc. that Bear Stearns & Co. Inc.
intends to make a market in the Preferred Stock after the consummation of the
Offering, as permitted by applicable laws and regulations; however, Bear Stearns
& Co. Inc. is not obligated to do so, and any such market making activities may
be discontinued at any time without notice. In addition, such market making
activity may be limited during the pendency of the Registration Statement.
Future trading prices may depend on a number of factors including among other
things, the performance of the Company, the market for similar securities,
prevailing interest rates and other factors. Therefore, there can be no
assurance that an active market for the Preferred Stock will develop.
 
                                        7
<PAGE>   9
 
ANTI-TAKEOVER EFFECTS OF CERTAIN INSTRUMENTS AND AGREEMENTS OF THE COMPANY
 
     The Company's certificate of incorporation and bylaws, the Revolving Credit
Facility, the Senior Note Indenture, the Stockholders Rights Plan of the Company
and certain other contracts to which the Company is a party, and the Delaware
General Corporation Law contain provisions that could have the effect of
delaying or preventing a transaction that results in a change of control of the
Company.
 
                                  THE COMPANY
 
     The Company is the only nationwide provider of intercity bus transportation
services in the United States. The Company serves the value-oriented customer by
connecting rural and urban markets throughout the United States, offering
scheduled passenger service to more than 2,400 destinations with a fleet of
approximately 2,000 buses and approximately 1,600 sales locations. The Company
also provides package express service and, in many terminals, food service. The
Company's executive offices are located at 15110 N. Dallas Parkway, Suite 600,
Dallas, Texas 75248, and its telephone number is (972) 789-7000.
 
                                USE OF PROCEEDS
 
     The Company will not receive any portion of the net proceeds from the sale
of the shares of the Securities by the Selling Securityholders. See "Plan of
Distribution."
 
                            SELLING SECURITYHOLDERS
 
     The Registration Statement of which the Prospectus is a part has been filed
pursuant to Rule 415 under the Securities Act to afford the holders of the
Securities the opportunity to sell their Securities in public transactions
rather than pursuant to an exemption from the registration and prospectus
delivery requirements of the Securities Act. In order to avail itself of that
opportunity, a holder must notify the Company in writing of its intention to
sell Securities and request the Company to file a supplement to this Prospectus
or an amendment to the Registration Statement identifying such holder as a
Selling Securityholder and disclosing such other information concerning the
Selling Securityholder and the Securities to be sold as may then be required by
the Securities Act and the rules and regulations thereunder, as applicable. No
offer or sale pursuant to this Prospectus may be made by any holder until such a
request has been made and until any such supplement has been filed or any such
amendment has become effective. The holders of Securities who have made such a
request and as to which any such required supplement or amendment has been filed
or become effective are referred to herein as the "Selling Securityholders."
 
     As of the date of this Prospectus, no holder of Securities has made such a
request and, accordingly, no Selling Securityholders are named herein. The
Company will from time to time supplement or amend this Prospectus to reflect
the required information concerning any Stock Securityholders.
 
                              PLAN OF DISTRIBUTION
 
     The Selling Securityholders may sell the Securities to which this
Prospectus relates in whole or from time to time in part through underwriters or
dealers, through brokers or other agents, or directly to one or more purchasers,
at market prices prevailing at the time of sale or at prices otherwise
negotiated. The Company will not receive any of the proceeds from the sale of
the Securities by the Selling Securityholders. The Company has agreed to pay
substantially all the fees and expenses incurred in connection with the
registration of the Securities, other than any underwriting fees, discounts or
commissions of underwriters, brokers, dealers and agents attributable to the
sale of the Securities.
 
     The Preferred Stock currently trades in the PORTAL Market. However, shares
of Preferred Stock sold pursuant to this Prospectus will not thereafter be
eligible for trading in the PORTAL Market. The Company does not intend to list
the Preferred Stock or the Exchange Debentures on any securities exchange or to
seek approval for quotation of the Preferred Stock through any automated
quotation system. Although Bear,
 
                                        8
<PAGE>   10
 
Stearns & Co. Inc. has advised the Company that they intend to make a market in
the Preferred Stock, they are not obligated to do so and may suspend any such
market-making activities at any time and without prior notice. Accordingly,
there can be no assurance that an active market for the Preferred Stock will
develop or be maintained.
 
     The Company will issue the shares of Common Stock issuable upon conversion
of the Preferred Stock to registered holders of the Preferred Stock upon the
conversion thereof. The Common Stock is listed on the American Stock Exchange
and trades under the symbol "BUS."
 
     In order to comply with the securities laws of certain states, if
applicable, the Securities will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Securities may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
 
     The Selling Securityholders and any broker, dealer or underwriter that
participates with the Selling Securityholders in the distribution of the
Securities may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any commissions received by them and any profit on the
resale of such Securities purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
 
     In addition, any securities covered by this Prospectus which qualify for
sale pursuant to Rule 144 or Rule 144A under the Securities Act may be sold
under Rule 144 or Rule 144A rather than pursuant to this Prospectus. There is no
assurance that any Selling Securityholder will sell any or all of the Preferred
Stock, the Exchange Debentures or Common Stock described herein, and any Selling
Securityholder may transfer, devise or make a gift of such securities by other
means not described herein.
 
     The Company and the Selling Securityholders are obligated to indemnify each
other against certain liabilities arising under the Securities Act.
 
                                        9
<PAGE>   11
 
                           DESCRIPTION OF SECURITIES
 
PREFERRED STOCK
 
     The following summary of certain provisions of the Preferred Stock and the
Certificate of Designations pursuant to which the Preferred Stock is issued does
not purport to be complete. The Certificate of Designations and the Exchange
Debenture Indenture are available from the Company upon request. See "Additional
Information."
 
  Ranking
 
     The Preferred Stock, with respect to dividend distributions and
distributions upon the liquidation, winding-up and dissolution of the Company,
ranks (i) senior to all classes of common stock of the Company and to each other
class of capital stock or series of preferred stock established after the date
of this Offering Memorandum by the Board of Directors the terms of which do not
expressly provide that it ranks senior to or on a parity with the Preferred
Stock as to dividend distributions and distributions upon the liquidation,
winding-up and dissolution of the Company (collectively referred to with the
common stock of the Company as "Junior Securities"); (ii) subject to certain
conditions, on a parity with any class of capital stock or series of preferred
stock issued by the Company established after the date of the issuance of the
Preferred Stock by the Board of Directors, the terms of which expressly provide
that such class or series will rank on a parity with the Preferred Stock as to
dividend distributions and distributions upon the liquidation, winding-up and
dissolution of the Company (collectively referred to as "Parity Securities");
and (iii) subject to certain conditions, junior to each class of capital stock
or series of preferred stock issued by the Company established after the date of
the issuance of the Preferred Stock by the Board of Directors the terms of which
expressly provide that such class or series will rank senior to the Preferred
Stock as to dividend distributions and distributions upon liquidation,
winding-up and dissolution of the Company (collectively referred to as "Senior
Securities"). The Preferred Stock is subject to the issuance of series of Junior
Securities, Parity Securities and Senior Securities, provided that the Company
may not issue any new class of Senior Securities without the approval of the
holders of at least 66 2/3% of the shares of Preferred Stock then outstanding,
voting or consenting, as the case may be, together as one class.
 
     In addition, the Preferred Stock ranks junior in right of payment to all
indebtedness and other obligations of the Company. As of December 31, 1996,
after giving pro forma effect to the Offerings and the use of proceeds
therefrom, the Preferred Stock would have been junior in right of payment to
approximately $207.5 million of total indebtedness of the Company.
 
  Dividends
 
     Holders of the Preferred Stock are entitled to receive, when, as and if
declared by the Board of Directors, out of funds legally available therefor,
dividends on the Preferred Stock at a rate per annum equal to 8 1/2% of the
liquidation preference per share of Preferred Stock, payable quarterly. All
dividends are cumulative whether or not earned or declared on a daily basis from
the date of issuance of the Preferred Stock and will be payable quarterly in
arrears on February 1, May 1, August 1, and November 1 of each year, commencing
on August 1, 1997. The Revolving Credit Facility and Senior Note Indenture
restrict, and future agreements of the Company may restrict, the payment of cash
dividends on the Preferred Stock.
 
     Dividends are payable to holders of record of the Preferred Stock on the
stock register of the Company on the record date for such purpose fixed by the
Board of Directors of the Company, which shall not be less than 10 nor more than
60 days preceding the dividend payment date. Dividends are computed on the basis
of a 360-day year of twelve 30-day months and the actual number of days elapsed
in any period of less than one month.
 
     No dividends may be declared or paid or funds set apart for the payment of
dividends on any Parity Securities for any period unless full cumulative
dividends shall have been or contemporaneously are declared and paid in cash or
declared and a sum in cash set apart for such payment on the Preferred Stock. If
full dividends in cash are not so paid, the Preferred Stock will share dividends
pro rata with the Parity Securities.
 
                                       10
<PAGE>   12
 
No dividends may be paid or set apart for such payment on Junior Securities
(except dividends on Junior Securities in additional shares of Junior
Securities) and no Junior Securities or Parity Securities may be repurchased,
redeemed or otherwise retired, nor may funds be set apart for payment with
respect thereto, if full cumulative dividends for all past dividend periods have
not been paid in cash on the Preferred Stock.
 
  Optional Redemption
 
     The Preferred Stock is redeemable for cash on or after May 3, 2000, at the
option of the Company, in whole or from time to time in part, at the redemption
prices set forth herein, together with all accumulated and unpaid dividends and
Liquidated Damages, if any, to the redemption date (the "redemption price"). The
redemption prices (expressed as percentages of liquidation preference) are as
follows, plus all accumulated and unpaid dividends and Liquidated Damages, if
any, to the redemption date, for shares of Preferred Stock redeemed during the
twelve-month period beginning on May 3 of the years indicated:
 
<TABLE>
<CAPTION>
YEAR                                                               PERCENTAGE
----                                                               ----------
<S>  <C>                                                           <C>
2000.............................................................      104.86%
2001.............................................................      103.64
2002.............................................................      102.43
2003.............................................................      101.21
2004 and thereafter..............................................      100.00
</TABLE>
 
     No optional redemption may be authorized or made unless, prior to giving
the applicable redemption notice, all accumulated and unpaid dividends for
dividend periods ended prior to the date of such redemption notice shall have
been paid in cash. In the event of partial redemptions of Preferred Stock, the
shares to be redeemed will be determined pro rata or by lot, as determined by
the Company; provided that the Company may redeem all shares held by holders of
fewer than 100 shares of Preferred Stock (or by holders that would hold fewer
than 100 shares of Preferred Stock following such redemption) prior to its
redemption of other shares of Preferred Stock.
 
  Procedure for Redemption
 
     On and after a redemption date, unless the Company defaults in the payment
of the applicable redemption price, dividends will cease to accrue on shares of
Preferred Stock called for redemption and all rights of holders of such shares
will terminate except for the right to receive the redemption price, without
interest; provided, however, that if a notice of redemption has been given and
an amount in cash equal to the full redemption price shall have been segregated
and irrevocably set apart by the Company in trust for the benefit of holders of
the Preferred Stock called for redemption, then at the close of business on the
day on which such funds are so segregated and set apart, the holders of the
shares to be redeemed shall cease to be stockholders of the Company and shall be
entitled, subject to their rights of conversion, to receive only the redemption
price for their shares on the redemption date. The Company will make a public
announcement of the redemption and send a written notice of redemption by first
class mail to each holder of record of shares of Preferred Stock not fewer than
30 days nor more than 60 days prior to the date fixed for such redemption.
Shares of Preferred Stock issued and reacquired will, upon compliance with the
applicable requirements of Delaware law, have the status of authorized but
unissued shares of preferred stock of the Company undesignated as to series and
may with any and all other authorized but unissued shares of preferred stock of
the Company be designated or redesignated and issued or reissued, as the case
may be, as part of any series of preferred stock of the Company, except that any
issuance or reissuance of shares of Preferred Stock must be in compliance with
the Certificate of Designations.
 
  Conversion Rights
 
     Each share of Preferred Stock will be convertible at any time on or after
July 15, 1997 at the option of the holder thereof into Common Stock of the
Company, at a conversion rate equal to $25.00 (the liquidation preference per
share of Preferred Stock) divided by the conversion price then applicable,
except that the right to convert shares of Preferred Stock called for redemption
will terminate at the close of business on the business day preceding the
redemption date and will be lost if not exercised prior to that time, unless the
Company defaults in making the payment due upon redemption.
 
                                       11
<PAGE>   13
 
     The conversion price is $4 7/8 per share. The conversion price is subject
to adjustment in certain events, including: (i) the payment of dividends (and
other distributions) in Common Stock on any class of capital stock of the
Company; (ii) the issuance to all holders of Common Stock of rights, warrants or
options entitling them to subscribe for or purchase Common Stock at less than
the current market price (as defined in the Certificate of Designations); (iii)
subdivisions, combinations and reclassifications of Common Stock; (iv)
distributions to all holders of Common Stock of evidences of indebtedness of the
Company, shares of any class of capital stock, cash or other assets (including
securities, but excluding those dividends, rights, warrants, options and
distributions referred to above and dividends and distributions paid in cash out
of the retained earnings of the Company, unless the sum of all such cash
dividends and distributions made and the amount of cash and the fair market
value of other consideration paid in respect of any repurchases of Common Stock
by the Company or any of its subsidiaries, in each case within the preceding 12
months in respect of which no adjustment has been made, exceeds 20% of the
product of the then current market price of the Common Stock times the aggregate
number of shares of Common Stock outstanding on the record date for such
dividend or distribution).
 
     No adjustment of the conversion price will be required to be made until
cumulative adjustments amount to 1% or more of the conversion price as last
adjusted. Notwithstanding the foregoing, no adjustment to the conversion price
shall reduce the conversion price below the then par value per share of the
Common Stock. In addition to the foregoing adjustments, the Company will be
permitted to make such reductions in the conversion price as it considers to be
advisable in order that any event treated for federal income tax purposes as a
dividend of stock or stock rights will not be taxable to the holders of the
Common Stock.
 
     In the case of certain consolidations or mergers to which the Company is a
party or the transfer of substantially all of the assets of the Company, each
share of Preferred Stock then outstanding will become convertible only into the
kind and amount of securities, cash and other property receivable upon the
consolidation, merger or transfer by a holder of the number of shares of Common
Stock into which such share of Preferred Stock might have been converted
immediately prior to such consolidation, merger or transfer (assuming such
holder of Common Stock failed to exercise any rights of election and received
per share the kind and amount receivable per share by a plurality of
non-electing shares).
 
     No fractional shares of Common Stock will be issued upon conversion; in
lieu thereof, the Company will pay a cash adjustment based upon the closing
price of the Common Stock on the business day prior to the conversion date.
 
     The holder of record of a share of Preferred Stock at the close of business
on a record date with respect to the payment of dividends on the Preferred Stock
is entitled to receive such dividends with respect to such share of Preferred
Stock on the corresponding dividend payment date, notwithstanding the conversion
of such share after such record date and prior to such dividend payment date. A
share of Preferred Stock surrendered for conversion during the period from the
close of business on any record date for the payment of dividends to the opening
of business of the corresponding dividend payment date must be accompanied by a
payment in cash in an amount equal to the dividend payable on such dividend
payment date, unless such share of Preferred Stock has been called for
redemption on a redemption date occurring during the period from the close of
business on any record date for the payment of dividends to the close of
business on the business day immediately following the corresponding dividend
payment date. The dividend payment with respect to a share of Preferred Stock
called for redemption on a date during the period from the close of business on
any record date for the payment of dividends to the close of business on the
business day immediately following the corresponding dividend payment date will
be payable on such dividend payment date to the record holder of such share on
such record date, notwithstanding the conversion of such share after such record
date and prior to such dividend payment date. No payment or adjustment will be
made upon conversion of shares of Preferred Stock for accumulated and unpaid
dividends or for dividends with respect to the Common Stock issued upon such
conversion.
 
                                       12
<PAGE>   14
 
  Change of Control
 
     Upon the occurrence of a Change of Control, the Company will be required to
make an offer (a "Preferred Stock Change of Control Offer") to repurchase all or
any part of each holder's Preferred Stock at an offer price in cash equal to
100% of the aggregate liquidation preference thereof, plus accumulated and
unpaid dividends and Liquidated Damages, if any, thereon to the date of
repurchase. Within 30 days following a Change of Control, the Company will mail
a notice to each holder of Preferred Stock describing the transaction that
constitutes the Change of Control and offering to repurchase the Preferred Stock
pursuant to the procedures required by the Certificate of Designations and
described in such notice; provided that, prior to complying with the provisions
of this covenant, but in any event within 90 days following a Change of Control,
the Company will either repay all outstanding Indebtedness or obtain the
requisite consents, if any, under all agreements governing outstanding
Indebtedness to permit the repurchase of the Preferred Stock required by this
covenant. The Company will comply with the requirements of the Exchange Act and
any other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Preferred
Stock as a result of a Change of Control.
 
     A "Change of Control" will be deemed to have occurred upon the occurrence
of any of the following: (a) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series
of related transactions, of all or substantially all of the assets of the
Company and its subsidiaries, taken as a whole, (b) the adoption of a plan
relating to the liquidation or dissolution of the Company, (c) the consummation
of any transaction (including, without limitation, any merger or consolidation)
the result of which is that any "person" or "group" (as such terms are used in
Section 13(d)(3) of the Exchange Act) becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly through one or more intermediaries, of more than 50% of the voting
power of the outstanding voting stock of the Company, unless (i) the closing
price per share of Common Stock for any five trading days within the period of
ten consecutive trading days ending immediately after the announcement of such
Change of Control equals or exceeds 105% of the conversion price of the
Preferred Stock or the Exchange Debentures, as the case may be, in effect on
each such trading day or (ii) at least 90% of the consideration in the
transaction or transactions constituting a Change of Control pursuant to clause
(c) consists of shares of common stock traded or to be traded immediately
following such Change of Control on a national securities exchange or the Nasdaq
national market and, as a result of such transaction or transactions, the
Preferred Stock or the Exchange Debentures, as the case may be, become
convertible solely into such common stock (and any rights attached thereto), or
(d) the first day on which more than a majority of the Board of Directors are
not Continuing Directors; provided, however, that a transaction in which the
Company becomes a subsidiary of another entity shall not constitute a Change of
Control if (i) the stockholders of the Company immediately prior to such
transaction "beneficially own" (as such term is defined in Rule 13d-3 and Rule
13d-5 under the Exchange Act), directly or indirectly through one or more
intermediaries, at least a majority of the voting power of the outstanding
voting stock of the Company immediately following the consummation of such
transaction and (ii) immediately following the consummation of such transaction,
no "person" or "group" (as such terms are defined above), other than such other
entity (but including holders of equity interests of such other entity),
"beneficially owns" (as such term is defined above), directly or indirectly
through one or more intermediaries, more than 50% of the voting power of the
outstanding voting stock of the Company.
 
     "Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (a) was a member of the Board of
Directors on the date of original issuance of the Preferred Stock or (b) was
nominated for election to the Board of Directors with the approval of, or whose
election to the Board of Directors was ratified by, at least two-thirds of the
Continuing Directors who were members of the Board of Directors at the time of
such nomination or election.
 
     Except as described above with respect to a Change of Control, the
Certificate of Designations does not contain provisions that permit the holders
of the Preferred Stock to require that the Company repurchase or redeem the
Preferred Stock in the event of a takeover, recapitalization or similar
transaction. In addition, the Company could enter into certain transactions,
including acquisitions, refinancings or other recapitalizations,
 
                                       13
<PAGE>   15
 
that could affect the Company's capital structure or the value of the Preferred
Stock or the Common Stock, but that would not constitute a Change of Control.
 
     The occurrence of a Change of Control could result in a default under the
Revolving Credit Facility or other indebtedness of the Company. In addition, the
Revolving Credit Facility or other indebtedness could restrict the Company's
ability to repurchase the Preferred Stock upon a Change of Control. In the event
a Change of Control occurs at a time when the Company is prohibited from
repurchasing the Preferred Stock, the Company could seek the consent of its
lenders to the repurchase of the Preferred Stock or could attempt to refinance
the borrowings that contain such prohibition. If the Company does not obtain
such a consent or repay such borrowings, the Company will remain prohibited from
repurchasing the Preferred Stock. The Company's failure to make a Preferred
Stock Change of Control Offer or to repurchase the Preferred Stock tendered in a
Preferred Stock Change of Control Offer would constitute a Voting Rights
Triggering Event (as defined herein). Finally, the Company's ability to
repurchase the Preferred Stock following a Change of Control may be limited by
the Company's then existing financial resources.
 
     The Company will not be required to make a Preferred Stock Change of
Control Offer following a Change of Control if a third party makes the Preferred
Stock Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in the Certificate of Designations
applicable to a Preferred Stock Change of Control Offer made by the Company and
purchases all of the Preferred Stock validly tendered and not withdrawn under
such Preferred Stock Change of Control Offer.
 
  Exchange
 
     The Company at its option may exchange all, but not less than all, of the
then outstanding shares of Preferred Stock into its 8 1/2% Convertible
Subordinated Debentures due 2009 (the "Exchange Debentures") on any dividend
payment date on or after April 16, 1999, provided that on the date of such
exchange: (a) there are no accumulated and unpaid dividends or Liquidated
Damages on the Preferred Stock (including the dividends payable and Liquidated
Damages on such date) or other contractual impediment to such exchange; (b)
there shall be legally available funds sufficient therefor; (c) a registration
statement relating to the Exchange Debentures shall have been declared effective
under the Securities Act prior to such exchange and shall continue to be in
effect on the date of such exchange or the Company shall have obtained a written
opinion of counsel that an exemption from the registration requirements of the
Securities Act is available for such exchange, and that upon receipt of such
Exchange Debentures pursuant to such exchange made in accordance with such
exemption, the holders (assuming such holder is not an Affiliate of the Company)
thereof will not be subject to any restrictions imposed by the Securities Act
upon the resale thereof, other than any such restriction to which the holder
thereof already is subject on the Exchange Date, and such exemption is relied
upon by the Company for such exchange; (d) the indenture in respect of the
Exchange Debentures (the "Exchange Debenture Indenture") and the trustee
thereunder shall have been qualified under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"); (e) immediately after giving effect to such
exchange, no Default or Event of Default (each as defined in the Exchange
Debenture Indenture) would exist under the Exchange Debenture Indenture; and (f)
the Company shall have delivered to the Trustee under the Exchange Debenture
Indenture a written opinion of counsel, dated the date of exchange, regarding
the satisfaction of the conditions set forth in clauses (a), (b), (c) and (d).
The Company shall send a written notice of exchange by mail to each holder of
record of shares of Preferred Stock, which notice shall state, among other
things, (i) that the Company is exercising its option to exchange the Preferred
Stock for Exchange Debentures pursuant to the Certificate of Designations and
(ii) the date of exchange (the "Exchange Date"), which date shall not be less
than 30 days nor more than 60 days following the date on which such notice is
mailed. On the Exchange Date, the Company shall issue Exchange Debentures in
exchange for the Preferred Stock as provided below.
 
     The holders of outstanding shares of Preferred Stock will be entitled to
receive $1,000 principal amount of Exchange Debentures for each 40 shares of
Preferred Stock (the liquidation preference of which equals $1,000). The
Exchange Debentures will be issued in registered form, without coupons. Exchange
Debentures issued in exchange for Preferred Stock will be issued in principal
amounts of $1,000 and integral multiples thereof. The Company will pay cash in
lieu of issuing an Exchange Debenture in a principal amount less than
 
                                       14
<PAGE>   16
 
$1,000. On and after the Exchange Date, dividends will cease to accrue on the
outstanding shares of Preferred Stock, and all rights of the holders of
Preferred Stock (except the right to receive the Exchange Debentures, an amount
in cash equal to the accrued and unpaid dividends and Liquidated Damages, if
any, to the Exchange Date and, if the Company so elects, cash in lieu of any
Exchange Debenture which is in an amount that is not an integral multiple of
$1,000) will terminate. The person entitled to receive the Exchange Debentures
issuable upon such exchange will be treated for all purposes as the registered
holder of such Exchange Debentures.
 
     The Company intends to comply with the provisions of the Exchange Act in
connection with any exchange, to the extent applicable.
 
  Liquidation Preference
 
     Upon any voluntary or involuntary liquidation, dissolution or winding-up of
the Company, holders of Preferred Stock will be entitled to be paid, out of the
assets of the Company available for distribution, $25.00 per share, plus an
amount in cash equal to accumulated and unpaid dividends and Liquidated Damages,
if any, thereon to the date fixed for liquidation, dissolution or winding-up
(including an amount equal to a prorated dividend for the period from the last
dividend payment date to the date fixed for liquidation, dissolution or
winding-up), before any distribution is made on any Junior Securities,
including, without limitation, common stock of the Company. If, upon any
voluntary or involuntary liquidation, dissolution or winding-up of the Company,
the amounts payable with respect to the Preferred Stock and all other Parity
Securities are not paid in full, the holders of the Preferred Stock and the
Parity Securities will share equally and ratably in any distribution of assets
of the Company in proportion to the full liquidation preference and accumulated
and unpaid dividends and Liquidated Damages, if any, to which each is entitled.
After payment of the full amount of the liquidation preferences and accumulated
and unpaid dividends and Liquidated Damages, if any, to which they are entitled,
the holders of shares of Preferred Stock will not be entitled to any further
participation in any distribution of assets of the Company. However, neither the
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Company nor the consolidation or merger of the Company with or into one or
more entities shall be deemed to be a liquidation, dissolution or winding-up of
the Company.
 
     The Certificate of Designations for the Preferred Stock does not contain
any provision requiring funds to be set aside to protect the liquidation
preference of the Preferred Stock, although such liquidation preference will be
substantially in excess of the par value of such shares of Preferred Stock. In
addition, the Company is not aware of any provision of Delaware law or any
controlling decision of the courts of the State of Delaware (the state of
incorporation of the Company) that requires a restriction upon the surplus of
the Company solely because the liquidation preference of the Preferred Stock
will exceed its par value. Consequently, there will be no restriction upon the
surplus of the Company solely because the liquidation preference of the
Preferred Stock will exceed the par value thereof and there will be no remedies
available to holders of the Preferred Stock before or after the payment of any
dividend, other than in connection with the liquidation of the Company, solely
by reason of the fact that such dividend would reduce the surplus of the Company
to an amount less than the difference between the liquidation preference of the
Preferred Stock and its par value.
 
  Voting Rights
 
     Pursuant to the Company's Restated Certificate of Incorporation, holders of
all classes of preferred stock of the Company, including the Preferred Stock,
are entitled to vote with the holders of the Common Stock on all matters
submitted to the stockholders of the Company, with each share of preferred stock
entitling the holder thereof to one vote on such matters. The Company, however,
may seek stockholder approval to amend its Restated Certificate of Incorporation
to eliminate the provisions thereof providing for such preferred stockholder
voting rights. If such amendment is approved by the stockholders of the Company,
holders of the Preferred Stock will have no voting rights except as provided by
law or as set forth in the Certificate of Designations. The Certificate of
Designations will provide, however, that (a) if dividends on the Preferred Stock
are in arrears and unpaid for six quarterly dividend periods (whether or not
consecutive), or (b) the Company fails to make a Preferred Stock Change of
Control Offer or to repurchase all of the Preferred Stock
 
                                       15
<PAGE>   17
 
tendered in a Preferred Stock Change of Control Offer pursuant to the provisions
of the Certificate of Designations described above under "-- Change of Control"
(in each case, a "Voting Rights Triggering Event"), then the number of directors
constituting the Board of Directors of the Company will be adjusted to permit
the holders of the majority of the then outstanding shares of Preferred Stock,
voting separately as a class, to elect two directors. Such voting rights will
continue until such time as all dividends and Liquidated Damages, if any, in
arrears on the Preferred Stock are paid in full or until such failure to make,
and to purchase all shares of Preferred Stock tendered in, a Preferred Stock
Change of Control Offer is cured, as the case may be.
 
     In addition, the Certificate of Designations will provide that the Company
will not authorize any class of Senior Securities without the approval of
holders of at least 66 2/3% of the share of Preferred Stock then outstanding,
voting or consenting, as the case may be, as one class. The Certificate of
Designations also provides that the Company may not amend the Certificate of
Designations so as to affect adversely the specified rights, preferences,
privileges or voting rights of the Preferred Stock, or authorize the issuance of
any additional shares of Preferred Stock, without the approval of the holders of
at least 66 2/3% of the then outstanding shares of Preferred Stock, voting or
consenting, as the case may be, as one class. The Certificate of Designations
also provides that, except as set forth above, (a) the creation, authorization
or issuance of any shares of Junior Securities, Parity Securities or Senior
Securities or (b) the increase or decrease in the amount of authorized capital
stock of any class, including any preferred stock, shall not require the consent
of the holders of Preferred Stock and shall not be deemed to affect adversely
the rights, preferences, privileges or voting rights of the Preferred Stock.
 
  Merger, Consolidation and Sale of Assets
 
     Without the vote or consent of the holders of a majority of the then
outstanding shares of Preferred Stock, the Company may not consolidate or merge
with or into, or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its assets to, any person unless (a) the entity
formed by such consolidation or merger (if other than the Company) or to which
such sale, assignment, transfer, lease, conveyance or other disposition shall
have been made (in any such case, the "resulting entity") is a corporation
organized and existing under the laws of the United States or any State thereof
or the District of Columbia; (b) if the Company is not the resulting entity, the
Preferred Stock is converted into or exchanged for and becomes shares of such
resulting entity, having in respect of such resulting entity the same (or more
favorable) powers, preferences and relative, participating, optional or other
special rights thereof that the Preferred Stock had immediately prior to such
transaction; and (c) immediately after giving effect to such transaction, no
Voting Rights Triggering Event has occurred and is continuing. The resulting
entity of such transaction shall thereafter be deemed to be the "Company" for
all purposes of the Certificate of Designations.
 
  Covenant to Report
 
     Whether or not the Company is required to do so by the rules and
regulations of the Commission, the Company will file with the Commission (unless
the Commission will not accept such a filing) and, within 15 days of filing, or
attempting to file, the same with the Commission, furnish to the holders of the
Preferred Stock (a) all quarterly and annual financial and other information
that would be required to be contained in a filing with the Commission on Forms
10-Q and 10-K if the Company were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by the Company's certified independent accountants, and (b) all current reports
that would be required to be filed with the Commission on Form 8-K if the
Company were required to file such reports. In addition, the Company will
furnish to the holders of the Preferred Stock, prospective purchasers of shares
of Preferred Stock and securities analysts, upon their request, the information,
if any, required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
 
                                       16
<PAGE>   18
 
  Form, Denomination and Registration
 
     Global Shares; Book Entry Form. Shares of Preferred Stock will be evidenced
initially by one or more global certificates (the "Global Certificate") which
will be deposited with or on behalf of The Depository Trust Company ("DTC") and
registered in the name of Cede & Co., as DTC's nominee. Except as set forth
below, record ownership of the Global Certificate may be transferred, in whole
or in part, only to another nominee of DTC or to a successor of DTC or its
nominee.
 
     Owners of beneficial interest in the Global Certificate may hold their
interest in the Global Certificate directly through DTC if such holder is a
participant in DTC or indirectly through organizations that are participants in
DTC (the "Participants"). Persons who are not Participants may beneficially own
interests in the Global Certificate held by DTC only through Participants or
certain banks, brokers, dealers, trust companies and other parties that clear
though or maintain a custodial relationship with a Participant, either directly
or indirectly ("Indirect Participants"). So long as Cede & Co., as the nominee
of DTC, is the registered owner of the Global Certificate, Cede & Co. for all
purposes will be considered the sole holder of the Global Certificate. Owners of
beneficial interest in the Global Certificate will be entitled to have
certificates registered in their names and to receive physical delivery of
certificates in definitive form ("Definitive Securities").
 
     Payment of dividends on and any redemption price with respect to the Global
Certificate will be made to Cede & Co., the nominee for DTC, as registered owner
of the Global Certificate, by wire transfer of immediately available funds on
each dividend payment date or redemption date, as applicable. Neither of the
Company nor the Transfer Agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Certificate or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interest.
 
     The Company has been informed by DTC that, with respect to any payment of
dividends on, or the redemption price with respect to, the Global Certificate,
DTC's practice is to credit Participants' accounts on the payment date therefor,
with payments in amounts proportionate to their respective beneficial interests
in the Preferred Stock represented by the Global Certificate as shown on the
records of DTC, unless DTC has reason to believe that it will not receive
payment on such payment date. Payments by Participants to owners of beneficial
interests in the Preferred Stock represented by the Global Certificate held
through such Participants will be the responsibility of such Participants, as is
now the case with securities held for the accounts of customers registered in
"street name."
 
     Transfers between Participants will be effected in the ordinary way in
accordance with DTC's rules and will be settled in immediately available funds.
The laws of some states require that certain persons take physical delivery of
securities in definitive form. Consequently, the ability to transfer beneficial
interests in the Global Certificate to such persons may be limited. Because DTC
can only act on behalf of Participants, who in turn act on behalf of Indirect
Participants and certain banks, the ability of a person having a beneficial
interest in the Preferred Stock represented by the Global Certificate to pledge
such interest to persons or entities that do not participate in the DTC system,
or otherwise take actions in respect of such interest, may be affected by the
lack of a physical certificate evidencing such interest.
 
     Neither the Company nor the Transfer Agent will have responsibility for the
performance of DTC or its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations. DTC has advised the Company that it will take any action permitted
to be taken by a holder of Preferred Stock (including, without limitation, the
presentation of Preferred Stock for exchange as described below) only at the
direction of one or more Participants to whose account with DTC interests in the
Global Certificate are credited, and only in respect of the Preferred Stock
represented by the Global Certificate as to which such Participant or
Participants has of have given such direction.
 
     DTC has also advised the Company that DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the
 
                                       17
<PAGE>   19
 
clearance and settlement of securities transactions between Participants through
electronic book-entry changes to accounts of its Participants, thereby
eliminating the need for physical movement of certificates. Participants include
securities brokers and dealers, banks, trust companies and clearing corporations
and may include certain other organizations such as the Initial Purchaser.
Certain of such Participants (or their representatives), together with other
entities, own DTC. Indirect access to the DTC system is available to others such
as banks, brokers, dealers and trust companies that clear through, or maintain a
custodial relationship with, a Participant, either directly or indirectly.
 
     Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificate among Participants, it is under
no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Company within 90 days, the Company will cause the Preferred Stock to be
issued in definitive form in exchange for the Global Certificates.
 
     Certificated Preferred Stock. Investors in the Preferred Stock may request
that Definitive Securities be issued in exchange for Preferred Stock represented
by the Global Certificate. Furthermore, Definitive Securities may be issued in
exchange for Preferred Stock represented by the Global Certificate if no
successor depositary is appointed by the Company as set forth above.
 
     Unless determined otherwise by the Company in accordance with applicable
law, Definitive Securities issued upon transfer or exchange of beneficial
interests in Preferred Stock represented by the Global Certificate will bear a
legend setting forth transfer restrictions under the Securities Act as set forth
under "Notice to Investors." Any request for the transfer of Definitive
Securities bearing the legend, or for removal of the legend from Definitive
Securities, must be accompanied by satisfactory evidence, in the form of an
opinion of counsel, that such transfer complies with the Securities Act or that
neither the legend nor the restrictions on transfer set forth therein are
required to ensure compliance with the provisions of the Securities Act, as the
case may be.
 
  The Transfer Agent
 
     Mellon Securities Trust Company is the transfer agent and registrar for the
Preferred Stock.
 
THE EXCHANGE DEBENTURES
 
     The Exchange Debentures, if issued, will be issued pursuant to the Exchange
Debenture Indenture between the Company and U.S. Trust Company of Texas, N.A.
The terms of the Exchange Debentures include those stated in the Exchange
Debenture Indenture and those made part of the Exchange Debenture Indenture by
reference to the Trust Indenture Act. The Exchange Debentures are subject to all
such terms, and prospective investors are referred to the Exchange Debenture
Indenture and the Trust Indenture Act for a statement thereof. The following
summary of certain provisions of the Exchange Debenture Indenture does not
purport to be complete. Copies of the proposed form of Exchange Debenture
Indenture are available upon request from the Company or the Initial Purchaser.
 
  General
 
     The Exchange Debenture Indenture authorizes the issuance of an aggregate
principal amount of Exchange Debentures equal to the aggregate liquidation
preference of the then outstanding shares of Preferred Stock at the time such
shares are exchanged for Exchange Debentures as described under "-- Preferred
Stock -- Exchange." The Exchange Debentures will mature on May 1, 2009. The
Exchange Debentures will bear interest at the rate of 8 1/2% per annum, payable
semi-annually in arrears on May 1 and November 1 of each year, commencing on the
first such date following the date on which the Exchange Debentures are issued
(the "Exchange Date"), to the holders of record at the close of business on the
April 15 and October 15 next preceding such interest payment date. Interest will
initially accrue from the Exchange Date. Interest will be computed on the basis
of a 360-day year of twelve 30-day months. The Exchange Debentures will be
issued in
 
                                       18
<PAGE>   20
 
fully registered form only in denominations of $1,000 and integral multiples
thereof, other than as described under "-- Preferred Stock -- Exchange."
 
     The Exchange Debentures will be general unsecured obligations of the
Company, subordinated in right of payment to all Senior Debt (as defined below).
See "-- Subordination."
 
     Principal, premium, interest and Liquidated Damages, if any, will be
payable, and the Exchange Debentures may be presented for redemption,
repurchase, exchange or transfer, at the office of the paying agent and
registrar and at any other office or agency maintained by the Company for such
purpose. The Trustee will initially act as registrar and paying agent. The
Company may change the registrar or paying agent without prior notice to holders
and the Company or any subsidiary of the Company may act in such capacity.
 
  Optional Redemption
 
     The Exchange Debentures will be redeemable for cash on or after May 3,
2000, at the option of the Company, in whole or from time to time in part, at
the redemption prices set forth herein, together with all accrued and unpaid
interest and Liquidated Damages, if any, to the redemption date. The redemption
prices (expressed as percentages of principal amount) are as follows for
Exchange Debentures redeemed during the twelve-month period beginning on May 3
of the years indicated:
 
<TABLE>
<CAPTION>
                       YEAR                         PERCENTAGE
                       ----                         ----------
<S>                                                 <C>
2000..............................................    104.86%
2001..............................................    103.64
2002..............................................    102.43
2003..............................................    101.21
2004 and thereafter...............................    100.00
</TABLE>
 
  Selection and Notice
 
     If less than all of the Exchange Debentures are to be redeemed at any time,
selection of Exchange Debentures for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Exchange Debentures are listed, or, if the Exchange
Debentures are not so listed, on a pro rata basis, by lot or by such method as
the Trustee shall deem fair and appropriate; provided that no Exchange
Debentures of $1,000 or less shall be redeemed in part. At least 30 but not more
than 60 days before the redemption date, a public notice of the redemption shall
be made and notice of redemption shall be mailed by first class mail to each
holder of Exchange Debentures to be redeemed at its registered address. If any
Exchange Debenture is to be redeemed in part only, the notice of redemption that
relates to such Exchange Debenture shall state the portion of the principal
amount thereof to be redeemed. A new Exchange Debenture in principal amount
equal to the unredeemed portion thereof will be issued in the name of the holder
thereof upon cancellation of the original Exchange Debenture. On and after the
redemption date, interest will cease to accrue on Exchange Debentures or
portions thereof called for redemption.
 
  Mandatory Redemption
 
     Except as set forth under "-- Change of Control," the Company is not
required to make mandatory redemption or sinking fund payments with respect to
the Exchange Debentures.
 
  Subordination
 
     The payment of principal of and premium, interest and Liquidated Damages,
if any, on the Exchange Debentures will be subordinated in right of payment to
the prior payment in full of all Senior Debt, whether outstanding on the
Exchange Date or thereafter incurred.
 
     Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities,
 
                                       19
<PAGE>   21
 
the holders of Senior Debt will be entitled to receive payment in full of all
monetary obligations due in respect of such Senior Debt (including interest
after the commencement of any such proceeding at the rate specified in the
applicable Senior Debt) before the holders of Exchange Debentures will be
entitled to receive any payment with respect to the Exchange Debentures, and
until all monetary obligations with respect to Senior Debt are paid in full, any
distribution to which the holders of Exchange Debentures would be entitled shall
be made to the holders of such Senior Debt (except that holders of Exchange
Debentures may receive securities, including capital stock, that are
subordinated at least to the same extent as the Exchange Debentures to Senior
Debt and any securities issued in exchange for Senior Debt).
 
     The Company also may not make any payment upon or in respect of the
Exchange Debentures (except in such capital stock or subordinated securities) if
(a) a default in the payment of the principal of or premium or interest on any
Senior Debt occurs and is continuing beyond any applicable period of grace or
(b) any other default occurs and is continuing with respect to any Designated
Senior Debt that permits holders of such Designated Senior Debt to accelerate
its maturity and the Trustee receives a notice of such default (a "Payment
Blockage Notice") from the Company or the representative of holders of such
Designated Senior Debt. Payments on the Exchange Debentures may and shall be
resumed (i) in the case of a payment default, upon the date on which such
default is cured or waived and (ii) in case of a non-payment default, the
earlier of the date on which such non-payment default is cured or waived or 179
days after the date on which the applicable Payment Blockage Notice is received,
unless the maturity of any Designated Senior Debt has been accelerated and
remains unpaid. No new period of payment blockage may be commenced unless and
until 360 days have elapsed since the effectiveness of the immediately prior
Payment Blockage Notice. No non-payment default that existed or was continuing
on the date of delivery of any Payment Blockage Notice to the Trustee shall be,
or be made, the basis for a subsequent Payment Blockage Notice.
 
     "Senior Debt" means (a) all obligations of the Company under the Revolving
Credit Facility, as it may be amended, modified, restated, supplemented,
deferred, extended, renewed, replaced, refunded or refinanced from time to time,
and (b) any other Indebtedness of the Company, whether outstanding on the date
of issuance of the Exchange Debentures or thereafter incurred, unless the
instrument under which such Indebtedness is incurred expressly provides that it
is subordinated in right of payment to any Senior Debt; provided, however, that
Senior Debt will not include (i) any liability for federal, state, local or
other taxes owed or owing by the Company, (ii) any Indebtedness of the Company
to any of its subsidiaries or (iii) any trade payables.
 
     "Indebtedness" means any indebtedness, whether or not contingent, in
respect of borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof) or banker's acceptances or representing capital lease obligations or
the balance deferred and unpaid of the purchase price of any property or
representing any hedging obligations, except any such balance that constitutes
an accrued expense or trade payable, if and to the extent any of the foregoing
indebtedness (other than letters of credit and hedging obligations) would appear
as a liability upon a balance sheet prepared in accordance with generally
accepted accounting principles.
 
     "Designated Senior Debt" means (i) any Indebtedness outstanding under the
Revolving Credit Facility and (ii) any other Senior Debt permitted under the
Indenture the principal amount of which is $5.0 million or more and that has
been designated by the Company as "Designated Senior Debt."
 
     As a result of the subordination provisions described above, in the event
of a liquidation or insolvency, holders of Exchange Debentures may recover less
ratably than creditors of the Company who are holders of Senior Debt. As of
December 31, 1996, after giving pro forma effect to the Offerings and the use of
proceeds therefrom, the principal amount of outstanding Senior Debt would have
been approximately $207.5 million. In addition, neither the Certificate of
Designations nor the Exchange Debenture Indenture will limit the amount of
Senior Debt that the Company may incur in the future.
 
  Change of Control
 
     Upon the occurrence of a Change of Control, the Company will be required to
make an offer (an "Exchange Debenture Change of Control Offer") to repurchase
all or any part of each holder's Exchange
 
                                       20
<PAGE>   22
 
Debentures at an offer price in cash equal to 100% of the aggregate principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the date of repurchase. Within 30 days following a Change of Control,
the Company will mail a notice to each holder of Exchange Debentures describing
the transaction that constitutes the Change of Control and offering to
repurchase the Exchange Debentures pursuant to the procedures required by the
Exchange Debenture Indenture and described in such notice; provided that, prior
to complying with the provisions of this covenant, but in any event within 90
days following a Change of Control, the Company will either repay all
outstanding Senior Debt or obtain the requisite consents, if any, under all
agreements governing outstanding Senior Debt to permit the repurchase of the
Exchange Debentures required by this covenant. The Company will comply with the
requirements of the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the Exchange Debentures as a result of a Change of
Control.
 
     Except as described above with respect to a Change of Control, the Exchange
Debenture Indenture does not contain provisions that permit the holders of the
Exchange Debentures to require that the Company repurchase or redeem the
Exchange Debentures in the event of a takeover, recapitalization or similar
transaction. In addition, the Company could enter into certain transactions,
including acquisitions, refinancings or other recapitalizations, that could
affect the Company's capital structure or the value of the Exchange Debentures
or the Common Stock, but that would not constitute a Change of Control.
 
     The occurrence of a Change of Control could result in a default under the
Revolving Credit Facility or other Senior Debt. In addition, the Revolving
Credit Facility or other Senior Debt could restrict the Company's ability to
repurchase Exchange Debentures upon a Change of Control. In the event a Change
of Control occurs at a time when the Company is prohibited from repurchasing
Exchange Debentures, the Company could seek the consent of its lenders to the
repurchase of Exchange Debentures or could attempt to refinance the borrowings
that contain such prohibition. If the Company does not obtain such a consent or
repay such borrowings, the Company will remain prohibited from repurchasing
Exchange Debentures. The Company's failure to make an Exchange Debenture Change
of Control Offer or to repurchase Exchange Debentures tendered in an Exchange
Debenture Change of Control Offer would constitute an event of default under the
Exchange Debenture Indenture, which could, in turn, constitute a default under
the Revolving Credit Facility or other Senior Debt. In such circumstances, the
subordination provisions in the Exchange Debenture Indenture would likely
restrict payments to the holders of Exchange Debentures. See "-- Subordination."
Finally, the Company's ability to repurchase Exchange Debentures following a
Change of Control may be limited by the Company's then existing financial
resources.
 
     The Company will not be required to make an Exchange Debenture Change of
Control Offer following a Change of Control if a third party makes the Exchange
Debenture Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in the Exchange Debenture Indenture
applicable to an Exchange Debenture Change of Control Offer made by the Company
and purchases all Exchange Debentures validly tendered and not withdrawn under
such Exchange Debenture Change of Control Offer.
 
  Conversion Rights
 
     Each Exchange Debenture will be convertible at any time at the option of
the holder thereof into Common Stock of the Company, at a conversion rate equal
to the principal amount of such Exchange Debenture divided by the conversion
price then applicable, except that the right to convert Exchange Debentures
called for redemption will terminate at the close of business on the business
day preceding the redemption date and will be lost if not exercised prior to
that time, unless the Company defaults in making the payment due upon
redemption, or if not exercised prior to the maturity of the Exchange
Debentures.
 
     The conversion price initially will be the conversion price with respect to
the Preferred Stock on the Exchange Date and will be subject to adjustment as
set forth under "-- Preferred Stock -- Conversion Rights."
 
                                       21
<PAGE>   23
 
     In the case of certain consolidations or mergers to which the Company is a
party or the transfer of substantially all of the assets of the Company, the
Exchange Debentures then outstanding would become convertible only into the kind
and amount of securities, cash and other property receivable upon the
consolidation, merger or transfer by a holder of the number of shares of Common
Stock into which such Exchange Debentures might have been converted immediately
prior to such consolidation, merger or transfer (assuming such holder of Common
Stock failed to exercise any rights of election and received per share the kind
and amount receivable per share by a plurality of non-electing shares).
 
     No fractional shares of Common Stock will be issued upon conversion; in
lieu thereof, the Company will pay a cash adjustment based upon the closing
price of the Common Stock on the business day prior to the conversion date.
 
     The holder of record of an Exchange Debenture at the close of business on a
record date with respect to the payment of interest on the Exchange Debentures
will be entitled to receive such interest with respect to such Exchange
Debentures on the corresponding interest payment date, notwithstanding the
conversion of such Exchange Debentures after such record date and prior to such
interest payment date. Exchange Debentures surrendered for conversion during the
period from the close of business on any record date for the payment of interest
to the opening of business of the corresponding interest payment date must be
accompanied by a payment in cash in an amount equal to the interest payable on
such interest payment date, unless such Exchange Debentures have been called for
redemption on a redemption date occurring during the period from the close of
business on any record date for the payment of interest to the close of business
on the business day immediately following the corresponding interest payment
date. The interest payment with respect to an Exchange Debenture called for
redemption on a date during the period from the close of business on any record
date for the payment of interest to the close of business on the business day
immediately following the corresponding interest payment date will be payable on
such interest payment date to the record holder of such Exchange Debenture on
such record date, notwithstanding the conversion of such Exchange Debenture
after such record date and prior to such interest payment date. No payment or
adjustment will be made upon conversion of Exchange Debentures for accrued and
unpaid interest or for dividends with respect to the Common Stock issued upon
such conversion.
 
  Events of Default and Remedies
 
     The Exchange Debenture provides that each of the following constitutes an
Event of Default: (a) default for 30 days in the payment when due of interest or
Liquidated Damages on the Exchange Debentures; (b) default in payment when due
of the principal of or premium, if any, on the Exchange Debentures; (c) failure
by the Company to comply with the provisions described under the caption
"-- Change of Control"; (d) failure by the Company for 60 days after notice to
comply with any of its covenants, representations, warranties or other
agreements in the Indenture or the Exchange Debentures; (e) default under any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness for money borrowed by the
Company (or the payment of which is guaranteed by the Company), whether such
Indebtedness or guarantee now exists or is created after the date of the
Indenture, which default (i) is caused by a failure to pay principal of or
premium or interest on such Indebtedness prior to the expiration of any grace
period provided in such Indebtedness (a "Payment Default") or (ii) results in
the acceleration of such Indebtedness prior to its express maturity and, in each
case, the principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $10.0
million or more; (f) failure by the Company or any of its Restricted
Subsidiaries to pay final judgments aggregating in excess of $10.0 million,
which judgments are not paid, discharged or stayed for a period of 60 days; and
(g) certain events of bankruptcy or insolvency with respect to the Company.
 
     If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the then outstanding Exchange
Debentures may declare all the Exchange Debentures to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency with respect to the
Company or, all outstanding Exchange Debentures will become due and payable
without further action or notice. The Holders of a majority in aggregate
principal
 
                                       22
<PAGE>   24
 
amount of the then outstanding Exchange Debentures by written notice to the
Trustee may on behalf of all of the Holders rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal, interest,
premium or Liquidated Damages that has become due solely because of the
acceleration) have been cured or waived. Holders of the Exchange Debentures may
not enforce the Indenture or the Exchange Debentures except as provided in the
Indenture. Subject to certain limitations, holders of a majority in principal
amount of the then outstanding Exchange Debentures may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from holders of the
Exchange Debentures notice of any continuing Default or Event of Default (except
a Default or Event of Default relating to the payment of principal or interest)
if it determines that withholding notice is in their interest.
 
     The holders of a majority in aggregate principal amount of the Exchange
Debentures then outstanding by notice to the Trustee may on behalf of the
holders of all of the Exchange Debentures waive any existing Default or Event of
Default and its consequences under the Exchange Debenture Indenture except a
continuing Default or Event of Default in the payment of the principal of or
interest or Liquidated Damages on the Exchange Debentures.
 
     The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
 
  Amendment, Supplement and Waiver
 
     Except as provided below, the Exchange Debenture Indenture or the Exchange
Debentures may be amended or supplemented with the consent of the holders of at
least a majority in principal amount of the Exchange Debentures then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Exchange Debentures), and any
existing default or compliance with any provision of the Exchange Debenture
Indenture or the Exchange Debentures may be waived with the consent of the
holders of a majority in principal amount of the then outstanding Exchange
Debentures (including consents obtained in connection with a tender offer or
exchange offer for Exchange Debentures).
 
     Without the consent of each holder affected, an amendment or waiver may not
(with respect to any Exchange Debentures held by a non-consenting Holder): (a)
reduce the principal amount of Exchange Debentures whose holders must consent to
an amendment, supplement or waiver, (b) reduce the principal of or change the
fixed maturity of any Exchange Debenture or alter the provisions with respect to
the redemption of the Exchange Debentures (other than provisions relating to the
covenants described above under the caption "-- Change of Control"), (c) reduce
the rate of or change the time for payment of interest on any Exchange
Debenture, (d) waive a Default or Event of Default in the payment of principal
of or premium, interest or Liquidated Damages on the Exchange Debentures (except
a rescission of acceleration of the Exchange Debentures by the holders of at
least a majority in aggregate principal amount of the Exchange Debentures and a
waiver of the payment default that resulted from such acceleration), (e) make
any Exchange Debenture payable in money other than that stated in the Exchange
Debentures, (f) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of holders of Exchange Debentures to
receive payments of principal of or premium, interest or Liquidated Damages on
the Exchange Debentures (except as permitted in clause (g) hereof), (g) waive a
redemption payment with respect to any Note (other than a payment required by
one of the covenants described above under the caption "-- Change of Control")
or (h) make any change in the foregoing amendment and waiver provisions.
 
     Notwithstanding the foregoing, without the consent of any holder of
Exchange Debentures, the Company and the Trustee may amend or supplement the
Exchange Debenture Indenture or the Exchange Debentures to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Exchange Debentures in
addition to or in place of certificated Exchange Debentures, to provide for the
assumption of the Company's obligations to holders of Exchange Debentures in the
case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the holders of Exchange Debentures or that does
not adversely
 
                                       23
<PAGE>   25
 
affect the legal rights under the Exchange Debenture Indenture of any such
holder, or to comply with requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act.
 
  Concerning the Trustee
 
     The Exchange Debenture Indenture contains certain limitations on the rights
of the Trustee, should it become a creditor of the Company, to obtain payment of
claims in certain cases, or to realize on certain property received in respect
of any such claim as security or otherwise. The Trustee will be permitted to
engage in other transactions; however, if it acquires any conflicting interest
it must eliminate such conflict within 90 days, apply to the Commission for
permission to continue or resign.
 
     The holders of a majority in principal amount of the then outstanding
Exchange Debentures will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions. The Indenture provides that in case an Event of
Default shall occur (which shall not be cured), the Trustee will be required, in
the exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any holder of Notes, unless such holder shall have offered to
the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
 
COMMON STOCK
 
     The Company is authorized to issue 100,000,000 shares of Common Stock, par
value $0.01 per share.
 
  Dividends
 
     The holders of Common Stock are entitled to receive dividends, when and as
declared by the Board of Directors of the Company, provided that the Company has
funds legally available for the payment of dividends and is not otherwise
contractually restricted from the payment of dividends, and subject to the prior
rights and preferences, if any, of holders of preferred stock of the Company.
 
  Dissolution, Liquidation or Winding Up
 
     In the event of a dissolution, liquidation or winding up of the Company,
the holders of Common Stock are entitled to receive, after distribution of
preferential amounts, if any, to creditors of the Company and holders of
preferred stock of the Company, if any, all assets of the Company available
under law for distribution to stockholders.
 
  Voting
 
     Each holder of Common Stock of the Company is entitled to one vote, in
person or by proxy, for each share owned. For a discussion of the effect on
holders of Common Stock of the voting rights of holders of the Company's
preferred stock, if issued, see "-- Preferred Stock."
 
  Preemptive Rights
 
     The Common Stock does not carry with it any preemptive or preferential
rights to purchase or subscribe to any additional shares of capital stock of the
Company issued in the future, whether of a presently existing class of stock or
one that may later be authorized by the Company.
 
  Preferred Stock Purchase Rights
 
     Each share of Common Stock also evidences a right to purchase one
one-thousandth (1/1000) of a share of Series A Junior Preferred Stock of the
Company. Those rights will become separately transferable only under certain
circumstances. See "-- Stockholder Rights Plan."
 
                                       24
<PAGE>   26
 
  Listing on the American Stock Exchange
 
     The Common Stock is listed for trading on the American Stock Exchange under
the symbol "BUS".
 
  Transfer Agent
 
     The transfer agent and registrar for the Common Stock is Mellon Securities
Trust Company.
 
STOCKHOLDER RIGHTS PLAN
 
     On March 22, 1994, the Board of Directors of the Company declared a
dividend of one Preferred Stock Purchase Right (each a "Preferred Right") for
each outstanding share of Common Stock. The dividend was payable as of April 4,
1994 to stockholders of record on that date. Each Preferred Right entitles the
registered holder to purchase from the Company one one-thousandth (1/1000) of a
share of a new series of preferred stock of the Company, designated as Series A
Junior Preferred Stock ("Series A Preferred Stock"), at a price of $35.00 per
one one-thousandth (1/1000) of a share (the "Preferred Exercise Price"), subject
to certain adjustments. The description and terms of the Preferred Rights are
set forth in a Rights Agreement (the "Preferred Rights Agreement") between the
Company and Mellon Securities Trust Company, as Rights Agent (the "Preferred
Rights Agent"), dated as of March 22, 1994, as amended as of April 8, 1997. The
following summary of the Rights and the Preferred Rights Agreement is qualified
in its entirety by reference to the Rights Agreement, a copy of which is
available from the Company.
 
     The Preferred Rights, unless earlier redeemed by the Board of Directors,
become exercisable upon the close of business on the day (the "Distribution
Date") which is the earlier of (i) the tenth day following a public announcement
that a person or group of affiliated or associated persons, with certain
exceptions set forth below, has acquired beneficial ownership of 20% or more of
the outstanding voting stock of the Company (an "Acquiring Person") and (ii) the
tenth business day (or such later date as may be determined by the Board of
Directors prior to such time as any person or group of affiliated or associated
persons becomes an Acquiring Person) after the date of the commencement or
announcement of a person's or group's intention to commence a tender or exchange
offer the consummation of which would result in the ownership of 30% or more of
the Company's outstanding voting stock (even if no shares are actually purchased
pursuant to such offer). Prior to the Distribution Date, the Preferred Rights
are not exercisable, are not represented by a separate certificate, and are not
transferable apart from the Company's Common Stock, and instead are evidenced by
the Common Stock certificates. An Acquiring Person does not include (A) the
Company, (B) any subsidiary of the Company, (C) any employee benefit plan or
employee stock plan of the Company or of any subsidiary of the Company, or any
trust or other entity organized, appointed, established or holding Common Stock
for or pursuant to the terms of any such plan (each of the persons listed in
clauses (A) through (C) above being an "Exempt Person," or (D) any person or
group whose ownership of 20% or more of the shares of voting stock of the
Company then outstanding results solely from (i) any action or transaction or
transactions approved by the Board of Directors before such person or group
became an Acquiring Person or (ii) a reduction in the number of issued and
outstanding shares of Common Stock of the Company pursuant to a transaction or
transactions approved by the Board of Directors (provided that any person or
group that does not become an Acquiring Person by reason of clause (i) or (ii)
above shall become an Acquiring Person upon acquisition of an additional 1% of
the Company's Common Stock unless such acquisition of additional Common Stock
will not result in such person or group becoming an Acquiring Person by reason
of such clause (i) or (ii)).
 
     The Preferred Rights are not exercisable until the Distribution Date. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Preferred Rights ("Preferred Right Certificates") will be mailed
to holders of record of the Company's Common Stock as of the close of business
on the Distribution Date and such separate certificates alone will evidence the
Preferred Rights from and after the Distribution Date. The Preferred Rights will
expire at the close of business on March 22, 2004, unless earlier redeemed by
the Company as described below.
 
                                       25
<PAGE>   27
 
     The Series A Preferred Stock is non-redeemable and, unless otherwise
provided in connection with the creation of a subsequent series of preferred
stock, subordinate to any other series of the Company's preferred stock. The
Series A Preferred Stock may not be issued except upon exercise of Preferred
Rights. Each share of Series A Preferred Stock is entitled to receive when, as
and if declared, a quarterly dividend in an amount equal to the greater of
$100.00 per share and 1,000 times the cash dividends declared on the Company's
Common Stock. In addition, each share of Series A Preferred Stock is entitled to
100 times any non-cash dividends (other than dividends payable in equity
securities) declared on the Common Stock, in like kind. In the event of
liquidation, the holders of Series A Preferred Stock will be entitled to receive
a liquidation payment in an amount equal to the greater of $100.00 per share or
1,000 times the payment made per share of Common Stock. In the event of any
merger, consolidation or other transaction in which Common Stock is exchanged,
each share of Series A Preferred Stock will be entitled to receive 1,000 times
the amount received per share of Common Stock. The rights of Series A Preferred
Stock as to dividends and liquidation are protected by anti-dilution provisions.
 
     Each share of Series A Preferred Stock will have one vote, voting together
with the Common Stock.
 
     The number of shares of Series A Preferred Stock issuable upon exercise of
the Preferred Rights is subject to certain adjustments from time to time in the
event of a stock dividend on, or a subdivision or combination of, the Common
Stock. The Preferred Exercise Price for the Preferred Rights is subject to
adjustment in the event of extraordinary distributions of cash or other property
to holders of Common Stock.
 
     Unless the Preferred Rights are earlier redeemed, in the event that, after
the time that the Preferred Rights become exercisable, the Company were to be
acquired by any Person (other than an Exempt Person) in a merger or other
business combination (in which any shares of the Company's Common Stock are
changed into or exchanged for other securities or assets) or more than 50% of
the assets or earning power of the Company and its subsidiaries (taken as a
whole) were to be sold or transferred to any Person (other than an Exempt
Person) in one or a series of related transactions, the Preferred Rights
Agreement provides that proper provision will be made so that each holder of
record of a Preferred Right will from and after such date have the right to
receive, upon payment of the Preferred Exercise Price, that number of shares of
common stock of the acquiring company having a market value at the time of such
transaction equal to two times the Preferred Exercise Price. In addition, unless
the Preferred Rights are earlier redeemed, if a person or group becomes the
beneficial owner of 20% or more of the Company's voting stock (other than
pursuant to a tender or exchange offer (a "Qualifying Tender Offer") for all
outstanding shares of Common Stock that is approved by the Board of Directors,
after taking into account the long-term value of the Company and all other
factors they consider relevant in the circumstances), the Preferred Rights
Agreement provides that proper provision will be made so that each holder of
record of a Preferred Right, other than the Acquiring Person (whose Preferred
Rights will thereupon become null and void), will thereafter have the right to
receive, upon payment of the Preferred Exercise Price, that number of shares of
the Company's Series A Preferred Stock having a market value at the time of the
transaction equal to two times the Preferred Exercise Price (such market value
to be determined with reference to the market value of the Company's Common
Stock as provided in the Preferred Rights Agreement).
 
     Fractional shares of Series A Preferred Stock (other than fractions that
are integral multiples of one one-thousandth (1/1,000) of a share) may, at the
election of the Company, be evidenced by depositary receipts. The Company may
also issue cash in lieu of fractional shares which are not integral multiples of
one one-thousandth (1/1,000) of a share.
 
     At any time on or prior to the close of business on the tenth day after the
time that a Person or group has become an Acquiring Person (or such later date
as a majority of the Board of Directors may determine), the Company may redeem
the Preferred Rights in whole, but not in part, at a price of $.01 per Preferred
Right ("Redemption Price"). Immediately upon the effective time of the action of
the Board of Directors of the Company authorizing redemption of the Preferred
Rights, the right to exercise the Preferred Rights will terminate and the only
right of the holders of the Preferred Rights will be to receive the Redemption
Price.
 
     For as long as the Preferred Rights are then redeemable, the Company may,
except with respect to the redemption price or date of expiration of the
Preferred Rights, amend the Preferred Rights in any manner,
 
                                       26
<PAGE>   28
 
including an amendment to extend the time period in which the Preferred Rights
may be redeemed. At any time when the Preferred Rights are not then redeemable,
the Company may amend the Preferred Rights in any manner that does not
materially adversely affect the interests of holders of the Preferred Rights as
such. Amendments to the Preferred Rights Agreement from and after the time that
any Person becomes an Acquiring Person requires the approval of a majority of
the Board of Directors.
 
     Until a Preferred Right is exercised, the holder, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
 
     As of April 8, 1997, 1,500,000 shares of Series A Preferred Stock have been
reserved for issuance upon exercise of the Preferred Rights.
 
     The Preferred Rights have certain anti-takeover effects. The Preferred
Rights will cause substantial dilution to a person or group who attempts to
acquire the Company on terms not approved by the Company's Board of Directors.
The Preferred Rights should not interfere with any merger or other business
combination approved by the Board since they may be redeemed by the Company at
$.01 per Preferred Right at any time until the close of business on the tenth
day (or such later date as described above) after a person or group has obtained
beneficial ownership of 20% or more of the Common Stock.
 
POTENTIAL ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS OF THE RESTATED CERTIFICATE
OF INCORPORATION AND
  BYLAWS OF THE COMPANY
 
     The Restated Certificate of Incorporation and Bylaws of the Company contain
provisions that could have an anti-takeover effect. The provisions are intended
to enhance the likelihood of continuity and stability in the composition of the
Board of Directors and in the policies formulated by the Board of Directors.
These provisions of the Restated Certificate of Incorporation and the Bylaws
also are intended to help ensure that the Board of Directors, if confronted by a
unsolicited proposal from a third party which has acquired a block of stock of
the Company, will have sufficient time to review the proposal and appropriate
alternatives to the proposal and to act in what it believes to be the best
interests of the stockholders.
 
     The following is a summary of such provisions included in the Restated
Certificate of Incorporation and Bylaws of the Company.
 
     Classified Board of Directors. The Restated Certificate of Incorporation
provides for a Board of Directors divided into three classes of directors
serving staggered three-year terms.
 
     The classification of directors has the effect of making it more difficult
for stockholders to change the composition of the Board of Directors in a
relatively short period of time. At least two annual meetings of stockholders,
instead of one, generally will be required to effect a change in a majority of
the Board of Directors. Such a delay may help ensure that the Board of Directors
and the stockholders, if confronted by a stockholder attempting to force a stock
repurchase at a premium above market, a proxy contest or an extraordinary
corporate transaction, will have sufficient time to review the proposal and
appropriate alternatives to the proposal and to act in what is believed to be
the best interests of the stockholders.
 
     The classified board provision could have the effect of discouraging a
third party from making a tender offer or otherwise attempting to obtain control
of the Company, even though such an attempt might be beneficial to the Company
and its stockholders. The classified board provision could thus increase the
likelihood that incumbent directors will retain their positions. In addition,
since the classified board provision is designed to discourage accumulations of
large blocks of Common Stock of the Company by purchasers whose objective is to
have such stock repurchased by the Company at a premium, the classified board
provision could tend to reduce the temporary fluctuations in the market price of
the Common Stock that could be caused by accumulations of large blocks of Common
Stock associated with such purchases. Accordingly, stockholders could be
deprived of certain opportunities to sell their Common Stock at a temporarily
higher market price.
 
     The Board of Directors believes that a classified board of directors will
help to assure the continuity and stability of the Board of Directors and the
business strategies and policies of the Company as determined by
 
                                       27
<PAGE>   29
 
the Board of Directors, because a majority of the directors at any given time
will have prior experience as directors of the Company.
 
     Number of Directors; Filling Vacancies; Removal. The Restated Certificate
of Incorporation provides that the Board of Directors will consist of nine
members. The number of directors constituting the entire Board of Directors may
be changed only by an amendment to the Restated Certificate of Incorporation.
The Board of Directors, acting by majority vote of the directors then in office,
may fill any newly created directorships or vacancies on the Board of Directors.
Moreover, under Delaware law, in the case of a corporation having a classified
board, stockholders may remove a director only for cause. This provision, when
coupled with the provision of the Bylaws authorizing the Board of Directors to
fill vacant directorships, will preclude a stockholder from removing incumbent
directors without cause and simultaneously gaining control of the Board of
Directors by filling the vacancies created by such removal with its own
nominees. Moreover, this provision also will make it more difficult for
stockholders to remove a director when the only reason for such removal may be
the performance of such director.
 
     No Stockholder Action by Written Consent; Special Meetings. The Restated
Certificate of Incorporation provides that any action required or permitted to
be taken by the stockholders of the Company may be effected only at an annual or
special meeting of stockholders, and prohibits stockholder action by written
consent in lieu of a meeting. The Bylaws provide that special meetings of
stockholders may be called by a majority of the Board of Directors, the Chairman
of the Board of Directors or by any holder or holders of at least 25% of the
outstanding shares of the capital stock of the Company.
 
     The provisions of the Restated Certificate of Incorporation prohibiting
stockholder action by written consent may have the effect of delaying
consideration of a stockholder proposal until the next annual meeting unless a
special meeting is called as provided in the Bylaws. These provisions would also
prevent the holders of a majority of the outstanding shares of Common Stock from
using the written consent procedure to take stockholder action without giving
all the stockholders of the Company entitled to vote on a proposed action the
opportunity to participate in determining the outcome of such proposed action.
 
     Advance Notice Requirements for Stockholder Proposals and Director
Nominees. The Bylaws establish an advance notice procedure with regard to
business proposed to be submitted by a stockholder at any annual or special
meeting of stockholders of the Company, including the nomination of candidates
for election as directors. The procedure provides that a notice of proposed
stockholder business must be timely given in writing to the Secretary of the
Company prior to the meeting. In all cases, to be timely, notice relating to an
annual meeting must be received at the principal executive office of the Company
not less than 60 days nor more than 90 days before the first anniversary of the
prior year's annual meeting.
 
     Notice to the Company from a stockholder who proposes to nominate a person
at a meeting for election as a director must contain all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Exchange Act, including such person's written consent
to being named in the proxy statement as a nominee and to serving as a director
if elected, and certain information about the stockholder proposing to nominate
that person.
 
     The chairman of a meeting of stockholders may determine that a person is
not nominated in accordance with the nomination procedure, in which case such
person's nomination will be disregarded. If the chairman of a meeting of
stockholders determines that other business was not properly brought before such
meeting in accordance with the Bylaw procedures, such business will not be
conducted at the meeting. Nothing in the nomination procedure or the business
procedure will preclude discussion by any stockholder of any nomination or
business properly made or brought before the annual or any other meeting in
accordance with the above-mentioned procedures.
 
     The purpose of the nomination procedure, by requiring advance notice of
nominations by stockholders, is to afford the Board of Directors a meaningful
opportunity to consider the qualifications of the proposed nominees and, to the
extent deemed necessary or desirable by the Board of Directors, to inform
stockholders about such qualifications. The purpose of the business procedure,
by requiring advance notice of proposed
 
                                       28
<PAGE>   30
 
business, is to provide a more orderly procedure for conducting annual and
special meetings of stockholders and, to the extent deemed necessary or
desirable by the Board of Directors, to provide the Board of Directors with a
meaningful opportunity to inform stockholders, prior to the meeting, of any
business proposed to be conducted at such meeting, together with any
recommendation as to the Board of Directors' position or belief as to action to
be taken with respect to such business, so as to enable stockholders better to
determine whether they desire to attend such meeting or grant a proxy to the
Board of Directors as to the disposition of any such business.
 
     Although the Bylaws do not give the Board of Directors any power to approve
or disapprove stockholder nominations for the election of directors or any other
business desired by stockholders to be conducted at an annual or special
meeting, the Bylaws may have the effect of precluding a nomination for the
election of directors or precluding the conducting of business at a particular
meeting if the proper procedures are not followed, and may discourage or deter a
third party from conducting a solicitation of proxies to elect its own slate of
directors or otherwise attempting to obtain control of the Company, even if the
conduct of such solicitation or such attempt might be beneficial to the Company
and its stockholders.
 
     Amendment of Certain Provisions of the Restated Certificate of
Incorporation and the Bylaws. The Restated Certificate of Incorporation requires
the affirmative vote of the holders of at least two-thirds of the outstanding
shares of capital stock of the Company, voting together as a single class, for
any amendments of the Restated Certificate of Incorporation and provides that
Bylaw provisions may be adopted, altered, amended or repealed only by the
affirmative vote of two-thirds of the members of the Board of Directors or
holders of at least two-thirds of the outstanding shares of capital stock of the
Company, voting together as a single class, entitled to vote thereon. These
provisions will make it more difficult for stockholders to make changes in the
Restated Certificate of Incorporation or Bylaws, including changes designed to
facilitate the exercise of control over the Company. In addition, the
requirement for approval by holders of at least two-thirds of the outstanding
shares of voting capital stock will enable the holders of a minority of the
voting stock of Greyhound to prevent the holders of a majority of such stock
from amending such provisions of the Restated Certificate of Incorporation and
the Bylaws.
 
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
 
     Generally, section 203 of the Delaware General Corporation Law prohibits a
publicly held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless (i)
prior to the date of the business combination, the transaction is approved by
the board of directors of the corporation, (ii) upon consummation of the
transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owns at least 85% of the outstanding
voting stock or (iii) on or after such date the business combination is approved
by the board and by the affirmative vote of at least two-thirds of the
outstanding voting stock which is not owned by the interested stockholder. A
"business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the stockholder. An "interested stockholder"
is a person who, together with affiliates and associates, owns (or within three
years, did own) 5% or more of the corporation's voting stock.
 
                                       29
<PAGE>   31
 
            CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
 
     The following discussion summarizes the material United States Federal
income tax considerations generally applicable to holders acquiring the
Preferred Stock, but does not purport to be a complete analysis of all potential
consequences. The discussion is based upon the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury regulations, Internal Revenue Service ("IRS")
rulings and judicial decisions now in effect, all of which are subject to change
at any time by legislative, judicial or administrative action. Any such changes
may be applied retroactively in a manner that could adversely affect a holder of
the Preferred Stock, the Common Stock and the Exchange Debentures (collectively,
the "Securities").
 
     The discussion assumes that the holders of the Securities will hold them as
"capital assets" within the meaning of Section 1221 of the Code. Although the
matter is not entirely free from doubt, the Company intends to treat the
Preferred Stock as equity and the Exchange Debentures as indebtedness for
federal income tax purposes, and the balance of the discussion is based on the
assumption that such treatment will be respected. The discussion is not binding
on the IRS or the courts. The Company has not sought and will not seek any
rulings from the IRS with respect to the positions of the Company discussed
herein, and there can be no assurance that the IRS will not take a different
position concerning the tax consequences of the purchase, ownership or
disposition of the Securities or that any such position would not be sustained.
 
     The tax treatment of a holder of the Securities may vary depending on such
holder's particular situation or status. Certain holders (including S
corporations, insurance companies, tax-exempt organizations, financial
institutions, broker-dealers, taxpayers subject to alternative minimum tax and
persons holding the Securities as part of a hedging or conversion transaction or
a straddle) may be subject to special rules not discussed below. The following
discussion is limited to the United States Federal income tax consequences
relevant to a holder of the Securities that is a citizen or resident of the
United States, or any state thereof, or a corporation or other entity created or
organized under the laws of the United States, or any political subdivision
thereof, or an estate or trust the income of which is subject to United States
Federal income tax regardless of source or that is otherwise subject to United
States federal income tax on a net income basis in respect of the Securities.
The following discussion does not consider all aspects of United States Federal
income tax that may be relevant to the purchase, ownership and disposition of
the Securities by a holder in light of such holder's personal circumstances. In
addition, the discussion does not consider the effect of any applicable foreign,
state, local or other tax laws, or estate or gift tax considerations.
 
DIVIDENDS ON PREFERRED STOCK AND COMMON STOCK
 
     Dividends paid on the Preferred Stock or on Common Stock will be taxable to
a holder as ordinary dividend income to the extent of the Company's allocable
current or accumulated earnings and profits (as determined for United States
Federal income tax purposes).
 
     To the extent that the amount of any distribution on the Preferred Stock or
on Common Stock exceeds the Company's current or accumulated earnings and
profits allocable to such distribution (as determined for Federal income tax
purposes), such distribution will be treated as a return of capital that will
reduce the holder's adjusted tax basis in the Preferred Stock or Common Stock in
respect of which such distribution is made. Any such excess distribution that is
greater than the holder's adjusted tax basis in such Preferred Stock or Common
Stock will be taxed as a capital gain and will be long-term capital gain if the
holder's holding period for such Preferred Stock or Common Stock is more than
one year. For purposes of the remainder of the discussion, the term "dividend"
refers to a distribution paid out of allocable earnings and profits, unless the
context indicates otherwise. Liquidated Damages should be taxed in the same
manner as dividend distributions, except that it is possible that Liquidated
Damages might be treated as payment of a fee and hence as ordinary income with
respect to which no dividends received deduction is available.
 
     Pursuant to certain amendments to section 305(c) of the Code, the IRS has
the authority to promulgate regulations which may treat unpaid cumulative
dividends on preferred stock as being constructively paid to the holder in
certain circumstances, such as when there is no intention for dividends to be
paid currently at the time of issuance of the preferred stock. The IRS has not
yet proposed any such regulations.
 
                                       30
<PAGE>   32
 
     Dividends received by corporate holders generally will be eligible for the
70% dividends-received deduction under section 243 of the Code. There are,
however, a number of exceptions and restrictions relating to the availability of
such dividends-received deduction, such as restrictions relating to (i) the
holding period of the stock on which the dividends are sought to be deducted,
(ii) debt-financed portfolio stock, (iii) dividends treated as "extraordinary
dividends" for purposes of section 1059 of the Code, and (iv) taxpayers who pay
alternative minimum tax. Corporate stockholders should consult their own tax
advisors regarding the extent, if any, to which such exceptions and restrictions
may apply to their particular factual situations. In addition, tax legislative
proposals recently made by the Clinton Administration would (i) reduce the 70%
dividends-received deductions to 50%, (ii) eliminate the dividends-received
deduction in the case of certain limited term preferred stock which does not
participate in corporate growth (through a conversion privilege or otherwise) to
any significant extent, and (iii) require a corporate holder to satisfy a
separate forty-six day holding period requirement with respect to each dividend
in order to be eligible for such dividends-received deduction. It is not
possible to predict whether such legislative proposals will ultimately be
enacted into law, and if so, the form or effective date of any such legislation.
 
CONVERSION OF PREFERRED STOCK
 
     No gain or loss will generally be recognized for United States Federal
income tax purposes on conversion of the Preferred Stock solely into Common
Stock. However, if the conversion takes place when there is a dividend arrearage
on the Preferred Stock, a portion of the Common Stock received may be treated as
a taxable dividend to the extent of such dividend arrearage. Except for any
Common Stock treated as payment of a dividend, the tax basis for the Common
Stock received upon conversion (including any fractional share deemed received)
will be the tax basis of the Preferred Stock converted, and the holding period
of the Common Stock received upon conversion (including any fractional share
deemed received) will include the holding period of the Preferred Stock
converted into such Common Stock. The receipt of cash in lieu of a fractional
share upon conversion of Preferred Stock to Common Stock will generally be
treated as a sale of such fractional share of Common Stock in which the holder
will recognize taxable gain or loss equal to the difference between the amount
of cash received and the holder's tax basis in the fractional share redeemed.
Such gain or loss will be capital gain or loss and will be long-term or
short-term depending on the holder's holding period for the fractional share
redeemed.
 
ADJUSTMENTS TO CONVERSION PROVISIONS
 
     Treasury regulations issued under section 305 of the Code treat certain
adjustments to conversion provisions of stock such as the Preferred Stock and
securities such as the Exchange Debentures, as constructive distributions of
stock with respect to preferred stock or convertible securities (which are
treated as stock for this purpose). Such constructive distributions of stock
would be taxable to holders of Preferred Stock or Exchange Debentures as
described above under the caption "Dividends on Preferred Stock." In general,
any adjustment increasing the number of shares of Common Stock into which the
Preferred Stock or Exchange Debentures can be converted could constitute a
constructive distribution of stock to holders of Preferred Stock or Exchange
Debentures unless made pursuant to a bona fide, reasonable adjustment formula
that has the effect of preventing dilution of the interest of the holders of
Preferred Stock or Exchange Debentures. Any adjustment in the conversion price
to compensate the holders of Preferred Stock or Exchange Debentures for taxable
distributions of cash or property on any of the outstanding Common Stock of the
Company may be treated as a constructive distribution of stock to holders of
Preferred Stock or Exchange Debentures. The Company is unable to predict whether
any such adjustment will be made.
 
SALE, REDEMPTION OR EXCHANGE OF PREFERRED STOCK AND SALE OR EXCHANGE OF COMMON
STOCK
 
     A redemption of shares of Preferred Stock for cash would be a taxable
event.
 
     A redemption of shares of Preferred Stock for cash will generally be
treated as a sale or exchange if the holder does not own, actually or
constructively within the meaning of Section 318 of the Code, any stock of the
Company other than the Preferred Stock redeemed. Stock is considered to be
constructively owned by a holder pursuant to Section 318 if, among other
circumstances, the holder has an option to acquire such stock
 
                                       31
<PAGE>   33
 
(such as pursuant to the Exchange Debentures). If a holder does own, actually or
constructively, other stock of the Company, a redemption of Preferred Stock may
be treated as a dividend to the extent of the Company's allocable current or
accumulated earnings and profits (as determined for United States Federal income
tax purposes). Such dividend treatment would not be applied if the redemption
(i) results in a "complete termination" of the holder's actual and constructive
stock interest in the Company under section 302(b)(3) of the Code, or (ii) is
"not essentially equivalent to a dividend" with respect to the holder under
section 302(b)(1) of the Code. A distribution to a holder will be "not
essentially equivalent to a dividend" if it results in a "meaningful reduction"
in the holder's stock interest in the Company. For this purpose, a redemption of
Preferred Stock that results in a reduction in the proportionate interest in the
Company (taking into account any actual ownership of common stock of the Company
and any stock constructively owned) of a holder whose relative stock interest in
the Company is minimal and who exercises no control over corporate affairs
should be regarded as a meaningful reduction in the holders's stock interest in
the Company.
 
     If a redemption of the Preferred Stock for cash is treated as a sale or
exchange, the redemption would result in capital gain or loss equal to the
difference between the amount of cash received and the holder's adjusted tax
basis in the Preferred Stock redeemed, except to the extent that the redemption
price includes dividends which have been declared by the Board of Directors of
the Company prior to the redemption. Similarly, upon the sale or exchange of the
Preferred Stock or the Common Stock (other than in a redemption, on conversion
or pursuant to a tax-free exchange), the difference between the sum of the
amount of cash and the fair market value of other property received and the
holder's adjusted basis in the Preferred Stock or the Common Stock would result
in capital gain or loss. This gain or loss would be long-term capital gain or
loss if the holder's holding period for the Preferred Stock or the Common Stock
exceeds one year. Under current law, capital gains recognized by corporations
are taxed at a maximum rate of 35% and the maximum rate on net capital gains in
the case of individuals is 28%.
 
     A redemption of Preferred Stock in exchange for Exchange Debentures will be
subject to the same general rules as a redemption for cash, except that any gain
or loss generally will be determined based upon the "issue price" of the
Exchange Debentures. See the discussion below under "Original Issue Discount."
Additionally, such gain may be eligible for deferral under the installment sale
method as long as neither the Exchange Debentures nor the Preferred Stock is
readily tradable on an established securities market and the redemption
qualifies for sale or exchange treatment.
 
     If a redemption of Preferred Stock is treated as a distribution that is
taxable as a dividend, the amount of the distribution will be measured by the
amount of cash or the issue price of the Exchange Debentures, as the case may
be, received by the holder. It is possible, however, that the fair market value
of the Exchange Debentures (if different from their issue price) may constitute
the amount of the distribution. The holder's adjusted tax basis in the redeemed
Preferred Stock will be transferred to any remaining stock holdings in the
Company, subject to reduction or possible gain recognition under Section 1059 of
the Code with respect to the nontaxed portion of such dividend. If the holder
does not retain any actual stock ownership in the Company (only constructively
having a stock interest by attribution ), the holder may lose the benefit of the
basis in the Preferred Stock.
 
ORIGINAL ISSUE DISCOUNT
 
     In the event that the Preferred Stock is exchanged for Exchange Debentures
and the "stated redemption price at maturity" of the Exchange Debentures exceeds
their "issue price" by more than a de minimis amount, the Exchange Debentures
will be treated as having original issue discount ("OID") equal to the entire
amount of such excess.
 
     If the Exchange Debentures are traded on an established securities market
within the sixty-day period ending thirty days after the exchange date, the
issue price of the Exchange Debentures will be their fair market value as of
their issue date. Subject to certain limitations described in the Treasury
Regulations, the Exchange Debentures will be deemed to be traded on an
established securities market if, among other things, price quotations will be
readily available from dealers, brokers, or traders. If the Preferred Stock, but
not the Exchange Debentures issued and exchanged therefor, is traded on an
established securities market within the
 
                                       32
<PAGE>   34
 
sixty-day period ending thirty days after the exchange, then the issue price of
each Exchange Debenture should be the fair market value of the Preferred Stock
exchanged therefor at the time of the exchange. The Preferred Stock generally
will be deemed to be traded on an established securities market if it appears on
a system of general circulation that provides a reasonable basis to determine
fair market value based either on recent price quotations or recent sales
transactions. In the event that neither the Preferred Stock nor the Exchange
Debentures are traded on an established securities market within the applicable
period, the issue price of the Exchange Debentures will be their stated
principal amount -- namely, their face value -- unless either (i) the Exchange
Debentures do not bear "adequate stated interest" within the meaning of section
1274 of the Code, which is unlikely, or (ii) the Exchange Debentures are issued
in a so-called "potentially abusive situation" as defined in the Treasury
Regulations under section 1274 of the Code (including a situation involving a
recent sales transaction), in either of which cases the issue price of such
Exchange Debentures generally will be the fair market value of the Preferred
Stock surrendered in exchange therefor.
 
     The "stated redemption price at maturity" of the Exchange Debentures should
equal the total of all payments under the Exchange Debentures, other than
payments of "qualified stated interest." "Qualified stated interest" generally
is stated interest that is unconditionally payable in cash or other property at
least annually at a single fixed rate. Stated interest payable under the
Exchange Debentures would appear to qualify as qualified stated interest.
Accordingly, for purposes of this calculation none of such stated interest would
be included in the stated redemption price at maturity of the Exchange
Debentures. For purposes of determining the stated redemption price at maturity
of the Exchange Debentures, Liquidated Damages will be ignored unless and until
Liquidated Damages become payable.
 
TAXATION OF STATED INTEREST AND ORIGINAL ISSUE DISCOUNT ON EXCHANGE DEBENTURES
 
     Stated interest on the Exchange Debentures would be included in income by a
holder in accordance with such holder's usual method of accounting. Liquidated
Damages, if any, generally should be includible in income by a holder as such
Liquidated Damages accrue.
 
     Each holder of an Exchange Debenture with OID will be required to include
in gross income an amount equal to the sum of the "daily portions" of the OID
for all days during the taxable year in which such holder holds the Exchange
Debenture. The daily portions of OID required to be included in a holder's gross
income in a taxable year will be determined under a constant yield method by
allocating to each day during the taxable year in which the holder holds the
Exchange Debenture a pro rata portion of OID thereon which is attributable to
the "accrual period" in which such day is included. The amount of the OID
attributable to each accrual period will be the product of the "adjusted issue
price" of the Exchange Debenture at the beginning of such accrual period
multiplied by the "yield to maturity" of the Exchange Debenture (properly
adjusted for the length of the accrual period). The adjusted issue price of an
Exchange Debenture at the beginning of an accrual period is the original issue
price of the Exchange Debenture plus the aggregate amount of OID that accrued in
all prior accrual periods, and less any cash payments -- other than qualified
stated interest payments (i.e., payments of stated interest) on the Exchange
Debenture. The "yield to maturity" is the discount rate that, when used in
computing the present value of all principal and interest payments to be made
under the Exchange Debenture, produces an amount equal to the issue price of the
Exchange Debenture. An "accrual period" may be of any length and may vary in
length over the term of the debt instrument, provided that each accrual period
is no longer than one year and each scheduled payment of principal or interest
occurs either on the final day or the first day of an accrual period.
 
BOND PREMIUM ON EXCHANGE DEBENTURES
 
     For holders who purchase after original issuance, if the holder's basis in
the Exchange Debentures exceeds the amount payable at the maturity date (or
earlier call date, if appropriate), such excess will be deductible by the holder
of the Exchange Debentures as amortizable bond premium over the term of the
Exchange Debentures (taking into account earlier call dates, as appropriate),
under a yield-to-maturity formula, if an election by the holder under section
171 of the Code is made or is already in effect. An election under section 171
of the Code is available only if the Exchange Debentures are held as capital
assets. This election is revocable only with the consent of the IRS and applies
to all obligations owned or acquired by the
 
                                       33
<PAGE>   35
 
holder on or after the first day of the taxable year to which the election
applies. To the extent the excess is deducted as amortizable bond premium, the
holder's adjusted tax basis in the Exchange Debentures will be reduced. Except
as may otherwise be provided in future Treasury Regulations, the amortizable
bond premium will be treated as an offset to interest income on the Exchange
Debentures rather than as a separate deduction item. Recently proposed Treasury
Regulations, which are not yet effective, would modify the described rules under
Section 171 in order to coordinate such rules with the rules relating to OID.
 
ACQUISITION PREMIUM ON EXCHANGE DEBENTURES
 
     A holder of an Exchange Debenture issued with OID who purchases such
Exchange Debenture for an amount that is greater than its then adjusted issue
price but equal to or less than the sum of all amounts payable on the Exchange
Debenture after the purchase date (other than payments of qualified stated
interest) will be considered to have purchased such Exchange Debenture at an
"acquisition premium." Under the acquisition premium rules, the amount of OID
which such holder must include in income with respect to such Exchange Debenture
for any taxable year will be reduced by the portion of such acquisition premium
properly allocable to such year.
 
MARKET DISCOUNT ON EXCHANGE DEBENTURES
 
     Purchasers of Preferred Stock should be aware that the disposition of
Exchange Debentures may be affected by the market discount provisions of the
Code. The market discount rules generally provide, if a holder of a debt
instrument purchases it as a "market discount" and thereafter realizes gain upon
a disposition or a retirement of the debt instrument, the lesser of such gain or
the portion of the market discount that has accrued on a straight-line basis (or
on a constant interest rate basis, if such alternative rate of accrual has been
elected by the holder under 1276(b) of the Code) while the debt instrument was
held by such holder will be taxed as ordinary income at the time of such
disposition. "Market discount" with respect to the Exchange Debentures will be
the amount, if any, by which the "revised issue price" of an Exchange Debenture
(or its stated redemption price at maturity if the Exchange Debenture has no
OID) exceeds the holder's basis in the Exchange Debenture immediately after such
holder's acquisition, subject to a de minimis exception. The "revised issue
price" of an Exchange Debenture is its issue price increased by the portion of
OID previously includible in the gross income of prior holders for periods prior
to the acquisition of the Exchange Debenture by the holder (without regard to
any acquisition premium exclusion ) and reduced by prior payments other than
payments of qualified stated interest.
 
     A holder who acquires an Exchange Debenture at a market discount also may
be required to defer a portion of any interest expense that otherwise may be
deductible on any indebtedness incurred or maintained to purchase or carry such
Exchange Debenture until the holder disposes of the Exchange Debenture in a
taxable transaction. Moreover, to the extent of any accrued market discount on
such Exchange Debentures, any partial principal payment with respect to Exchange
Debentures will be includible as ordinary income upon receipt, as will the
Exchange Debenture's fair market value on certain otherwise non-taxable
transfers (such as gifts).
 
     A holder of Exchange Debentures acquired at a market discount may elect for
Federal income tax purposes to include market discount in gross income as the
discount accrues, either on a straight-line basis or on a constant interest rate
basis. This current inclusion election, once made, applies to all market
discount obligations acquired on or after the first day of the first taxable
year to which the election applies, and may not be revoked without the consent
of the IRS. If a holder of Exchange Debentures makes such an election, the
foregoing rules with respect to the recognition of ordinary income on sales and
other dispositions of such debt instruments, and with respect to the deferral of
interest deductions on indebtedness incurred or maintained to purchase or carry
such debt instruments, would not apply.
 
CONVERSION OF EXCHANGE DEBENTURES
 
     A holder of Exchange Debentures that converts such Exchange Debentures into
Common Stock generally will not recognize gain or loss upon such conversion. A
holder's tax basis in such Common Stock will
 
                                       34
<PAGE>   36
 
equal such holder's tax basis in the Exchange Debentures, and such holder's
holding period with respect to such Common Stock will include such holder's
holding period with respect to the Exchange Debentures.
 
REDEMPTION, SALE OR EXCHANGE OF EXCHANGE DEBENTURES
 
     Generally, any redemption, sale or exchange of Exchange Debentures by a
holder would result in taxable gain or loss equal to the difference between the
sum of the amount of cash and the fair market value of other property received
(except to the extent that cash received is attributable to accrued interest,
which portion of the consideration would be taxed as a payment of such accrued
interest) and the holder's adjusted tax basis in the Exchange Debentures. The
adjusted tax basis of a holder who receives an Exchange Debenture in exchange
for Preferred Stock will generally be equal to the issue price of the Exchange
Debenture (or, possibly in certain circumstances described above, the fair
market value of the Exchange Debenture at the time of issuance) increased by any
OID with respect to the Exchange Debenture included in the holder's income prior
to the sale or redemption of the Exchange Debenture, reduced by any amortizable
bond premium applied against the holder's income prior to the sale or redemption
of the Exchange Debenture and by payments other than payments of qualified
stated interest. Except to the extent that an intention to call the Exchange
Debentures prior to their maturity existed at the time of their original issue
as an agreement or understanding between the Company and the original holders of
a substantial amount of the Exchange Debentures (which is unlikely), and subject
to the above discussion of market discount, such gain or loss would be capital
gain or loss, and would be long-term if the holder's holding period for the
Exchange Debentures exceeded one year.
 
CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND TO CORPORATE HOLDERS
 
     Pursuant to section 163 of the Code and in the event that the Exchange
Debentures are "applicable high yield discount obligations" ("AHYDOs"), a
portion of the OID (if any) accruing on the Exchange Debentures may be treated
as a dividend generally eligible for the dividends-received deduction in the
case of corporate holders (and subject to the limitations described above), and
the Company would not be entitled to deduct the "disqualified portion" of the
OID accruing on the Exchange Debentures and would be allowed to deduct the
remainder of the OID only when paid in cash.
 
     The Exchange Debentures will constitute AHYDOs if they (i) have a term of
more than five years, (ii) have a yield to maturity equal to or greater than the
sum of the applicable federal rate at the time of issuance of the Exchange
Debentures (the "AFR") plus five percentage points, and (iii) have "significant"
OID. A debt instrument is treated as having "significant" OID if the aggregate
amount that would be includible in gross income with respect to such debt
instrument for periods before the close of any accrual period ending after the
date five years after the date of issue exceeds the sum of (i) the aggregate
amount of interest to be paid in cash under the debt instrument before the close
of such accrual period and (ii) the product of the initial issue price of such
debt instrument and its yield to maturity. Because the amount of OID, if any,
attributable to the Exchange Debentures will be determined at the time such
Exchange Debentures are issued and the AFR at that point in time is not
predictable, it is impossible currently to determine whether Exchange Debentures
will be treated as AHYDOs.
 
     If an Exchange Debenture is treated as an AHYDO, a corporate holder would
be treated as receiving dividend income to the extent of the lesser of (i) the
Company's current and accumulated earnings and profits, and (ii) the
"disqualified portion" of the OID of such AHYDO. The "disqualified portion" of
the OID is equal to the lesser of (i) the amount of OID or (ii) the portion of
the "total return" (i.e., the excess of all payments to be made with respect to
the Exchange Debenture over its issue price) in excess of the AFR plus six
percentage points.
 
     President Clinton has recently proposed tax legislation that would require
the deferral until payment of interest deductions with respect to certain
indebtedness which is convertible into equity of the issuer. It is not possible
to predict whether such legislative proposals will ultimately be enacted into
law, and if so, the form or effective date of any such legislation.
 
                                       35
<PAGE>   37
 
BACKUP WITHHOLDING AND INFORMATION REPORTING
 
     A holder of Securities may be subject to backup withholding at the rate of
31% with respect to dividends paid on, interest, or the proceeds of a sale or
exchange of, the Securities, unless such holder (a) is a corporation or comes
within certain other exempt categories and, when required, demonstrates its
exemption or (b) provides a correct taxpayer identification number, certifies as
to no loss of exemption from backup withholding and otherwise complies with
applicable requirements of the backup withholding rules. A holder of Securities
who does not provide the Company with the holder's correct taxpayer
identification number may be subject to penalties imposed by the IRS. Any amount
paid as backup withholding would be creditable against the holder's federal
income tax liability.
 
     The Company or its agent will furnish annually to the IRS and to record
holders of the Exchange Debentures (other than with respect to certain exempt
holders) information relating to the stated interest and the OID, if any,
accruing during the calendar year. Such information will be based on the amount
of OID that would have accrued to a holder who acquired the Exchange Debenture
on original issue. Accordingly, other holders will be required to determine for
themselves whether they are eligible to report a reduced amount of OID for
federal income tax purposes.
 
     THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSIDERATIONS DOES
NOT CONSIDER THE FACTS AND CIRCUMSTANCES OF ANY PARTICULAR PROSPECTIVE
PURCHASER'S SITUATION OR STATUS. ACCORDINGLY, EACH PURCHASER OF PREFERRED STOCK
SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES TO IT,
INCLUDING THOSE UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
 
                                 LEGAL MATTERS
 
     Certain legal matters with respect to the Common Stock offered hereby will
be passed upon for the Company by Weil, Gotshal & Manges LLP, Dallas, Texas.
 
                                    EXPERTS
 
     The audited consolidated financial statements and schedules of Greyhound
Lines, Inc., incorporated by reference into this Prospectus and elsewhere in the
Registration Statement, to the extent and for the periods indicated in their
reports, have been audited by Arthur Andersen LLP, independent public
accountants, and are included herein in reliance upon the authority of said firm
as experts in accounting and auditing in giving said reports.
 
                                       36
<PAGE>   38
 
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     NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN, OR INCORPORATED BY
REFERENCE IN, THIS PROSPECTUS, IN CONNECTION WITH THE OFFERING COVERED BY THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
SECURITYHOLDERS OR THE SELLING AGENT. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR INCORPORATED BY
REFERENCE HEREIN OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
 
                             ---------------------
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
Available Information.................
Incorporation of Certain Documents by
  Reference...........................
Risk Factors..........................
The Company...........................
Use of Proceeds.......................
Selling Securityholders...............
Plan of Distribution..................
Description of Securities.............
Certain Federal Income Tax
  Consequences........................
Legal Matters.........................
Experts...............................
</TABLE>
 
                                [GREYHOUND LOGO]
                             GREYHOUND LINES, INC.
                      2,400,000 SHARES 8 1/2% CONVERTIBLE
                          EXCHANGEABLE PREFERRED STOCK
 
                 $69,000,000 OF 8 1/2 CONVERTIBLE SUBORDINATED
                                 NOTES DUE 2009
 
                       12,307,692 SHARES OF COMMON STOCK
                              --------------------
 
                                   PROSPECTUS
                              --------------------
                                                                          , 1997
 
------------------------------------------------------
                          ------------------------------------------------------
------------------------------------------------------
                          ------------------------------------------------------
<PAGE>   39
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
 
     The following table sets forth the expenses payable in connection with the
offering of the Shares to be registered and offered hereby, all of which will be
paid by the Company. All of such expenses are estimates, other than the
registration fee payable to the Securities and Exchange Commission.
 
<TABLE>
<S>                                                           <C>
Securities and Exchange Commission Registration Fee.........  $18,045.45
Legal Fees and Expenses.....................................
Accounting Fees and Expenses................................
Miscellaneous...............................................
                                                              ----------
          TOTAL.............................................  $
                                                              ==========
</TABLE>
 
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
     The Restated Certificate of Incorporation of the Company provides for
mandatory indemnification of directors and officers to the fullest extent
permitted by the General Corporation Law of the State of Delaware. Under Section
145 of the General Corporation Law of the State of Delaware, the Company, as a
Delaware corporation, has the power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding (other than an action by or in the right
of the Company) by reason of the fact that such person is or was a director,
officer, employee, or agent of the Company (an "Indemnitee"), against any and
all expenses, judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit, or proceeding.
The Company's power to indemnify such a person applies only if such person acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests, of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
 
     Pursuant to Section 145, the Company also has the power to indemnify an
Indemnitee with respect to actions or suits brought by or in the right of the
Company, against expenses actually and reasonably incurred by him in connection
with the defense and settlement of suit or action (and not in satisfaction of a
judgment or settlement of the claim itself), if the Indemnitee acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests, of the Company and with the further limitation that in such actions
no indemnification shall be made in the event of any adjudication of negligence
or misconduct unless a Delaware Court of Chancery, in its discretion, believes
that in light of all the circumstances indemnification should apply.
 
     The General Corporation Law of the State of Delaware further specifically
provides that the indemnification authorized thereby shall not be deemed
exclusive of any other rights to which any such officer or director may be
entitled under any bylaws, agreements, vote of stockholders or disinterested
directors, or otherwise.
 
     Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a certificate of incorporation may contain a provision eliminating
or limiting the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that such provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware (relating to
liability for unauthorized acquisitions or redemptions of, or dividends on,
capital stock), or (iv) for any transaction from which the director derived an
improper personal benefit. Article Seventh of the Restated Certificate of
Incorporation of the Company provides that, to the fullest extent permitted by
the General Corporation Law of the State of Delaware, a director of the Company
shall not be liable to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director.
 
                                      II-1
<PAGE>   40
 
     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person thereof in the
successful defense of any action, suit or proceeding) is asserted by a director,
officer or controlling person in connection with the securities being registered
pursuant to this Registration Statement, the Company will, unless in the opinion
of counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
 
ITEM 16. EXHIBITS.
 
     The following is a list of all exhibits filed as a part of this
Registration Statement.
 
<TABLE>
<C>                      <S>
           4.1           -- Certificate of Designations for the 8 1/2% Convertible
                            Exchangeable Preferred Stock+
           4.2           -- Indenture dated April 16, 1997 by and between the Company
                            and U.S. Trust of Texas, N.A., as trustee*
           4.3           -- Registration Rights Agreement dated April 16, 1997 by and
                            between the Company and Bear, Stearns & Co. Inc.*
           5.1           -- Opinion of Weil, Gotshal & Manges.+
          12.1           -- Computation of Ratios of Earnings to Fixed Charges*
          12.2           -- Computation of Ratios of Earnings to Combined Fixed
                            Charges and Preferred Stock*
          23.1           -- Consent of Weil, Gotshal & Manges+
          23.2           -- Consent of Arthur Andersen LLP.*
          24.1           -- Power of Attorney.(Included on the signature page in Part
                            II of this Registration Statement)
          25.1           -- Statement of Eligibility of Trustee under the Indenture
                            filed as Exhibit 4.2+
</TABLE>
 
---------------
 
* Filed herewith.
 
+ To be filed by Amendment.
 
ITEM 17. UNDERTAKINGS.
 
     The Registrant hereby undertakes the following:
 
     (a)(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
 
          (i) to include any prospectus required by Section 10(a)(3) of the
     Securities Act of 1933;
 
          (ii) to reflect in the prospectus any facts or events arising after
     the effective date of the registration statement (or the most recent
     post-effective amendment thereof) which, individually or in the aggregate,
     represent a fundamental change in the information set forth in the
     registration statement.
 
          (iii) To include any material information with respect to the plan of
     distribution not previously disclosed in the registration statement or any
     material change to such information in the registration statement;
 
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those
 
                                      II-2
<PAGE>   41
 
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
 
     (2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
 
     (3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
Offering.
 
     (b) For purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to Section 13(a) or
15(d) of the Exchange Act that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
 
     (c) See Item 15.
 
                                      II-3
<PAGE>   42
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on the 16th day of May, 1997.
 
                                            GREYHOUND LINES, INC.
 
                                            By:      /s/ STEVEN L. KORBY
                                              ----------------------------------
                                                       Steven L. Korby
                                              Executive Vice President and Chief
                                                       Financial Officer
 
     Each person whose signature to this Registration Statement appears below
appoints Craig R. Lentzsch and Steven L. Korby, and each of them, any one of
whom may act without the joinder of the other, as his agent and attorney-in-fact
to sign on his behalf individually and in the capacity stated below and to file
all pre-and post-effective amendments to this Registration Statement (and, in
addition, any registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, for the offering to which this Registration
Statement relates), which amendments may make such changes in and additions to
this Registration Statement as such agent and attorney-in-fact may deem
necessary or appropriate.
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
 
<TABLE>
<CAPTION>
                      SIGNATURE                                      TITLE                        DATE
                      ---------                                      -----                        ----
<C>                                                    <S>                                 <C>
 
               /s/ THOMAS G. PLASKETT                  Chairman of the Board of Directors     May 16, 1997
-----------------------------------------------------
                 Thomas G. Plaskett
 
                /s/ CRAIG R. LENTZSCH                  Director, President and Chief          May 16, 1997
-----------------------------------------------------    Executive Officer (Principal
                  Craig R. Lentzsch                      Executive Officer)
 
                 /s/ STEVEN L. KORBY                   Executive Vice President and Chief     May 16, 1997
-----------------------------------------------------    Financial Officer (Principal
                   Steven L. Korby                       Financial and Accounting
                                                         Officer)
 
                /s/ RICHARD J. CALEY                   Director                               May 16, 1997
-----------------------------------------------------
                  Richard J. Caley
 
                  /s/ LINDA CHAVEZ                     Director                               May 16, 1997
-----------------------------------------------------
                    Linda Chavez
 
                   /s/ A. A. MEITZ                     Director                               May 16, 1997
-----------------------------------------------------
                     A. A. Meitz
 
                /s/ FRANK L. NAGEOTTE                  Director                               May 16, 1997
-----------------------------------------------------
                  Frank L. Nageotte
 
             /s/ ALFRED E. OSBORNE, JR.                Director                               May 16, 1997
-----------------------------------------------------
               Alfred E. Osborne, Jr.
 
                 /s/ STEPHEN M. PECK                   Director                               May 16, 1997
-----------------------------------------------------
                   Stephen M. Peck
 
                /s/ ERNEST P. WERLIN                   Director                               May 16, 1997
-----------------------------------------------------
                  Ernest P. Werlin
</TABLE>
 
                                      II-4
<PAGE>   43
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
                                                                          SEQUENTIALLY
                                                                            NUMBERED
EXHIBIT NO.                          DESCRIPTION                              PAGE
-----------                          -----------                          ------------
<C>          <S>                                                          <C>
 
     4.1     -- Certificate of Designations for the 8 1/2% Convertible
                Exchangeable Preferred Stock+
     4.2     -- Indenture dated April 16, 1997 by and between the Company
                and U.S. Trust of Texas, N.A., as trustee*
     4.3     -- Registration Rights Agreement dated April 16, 1997 by and
                between the Company and Bear, Stearns & Co. Inc.*
     5.1     -- Opinion of Weil, Gotshal & Manges.+
    12.1     -- Computation of Ratios of Earnings to Fixed Charges*
    12.2     -- Computation of Ratios of Earnings to Combined Fixed
                Charges and Preferred Stock*
    23.1     -- Consent of Weil, Gotshal & Manges+
    23.2     -- Consent of Arthur Andersen LLP.*
    24.1     -- Power of Attorney.(Included on the signature page in Part
                II of this Registration Statement)
    25.1     -- Statement of Eligibility of Trustee under the Indenture
                filed as Exhibit 4.2+
</TABLE>
 
---------------
 
* Filed herewith.
 
+ To be filed by Amendment.
