
<PAGE>   1

                           OFFER TO PURCHASE FOR CASH

                     ALL OUTSTANDING SHARES OF COMMON STOCK
                                       OF

                                COACH USA, INC.
                                       AT

                              $42.00 NET PER SHARE
                                       BY

                               SCH HOLDINGS CORP.
                          A WHOLLY OWNED SUBSIDIARY OF

                            STAGECOACH HOLDINGS PLC

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 10:00 A.M., NEW YORK
CITY TIME, ON MONDAY, JULY 26, 1999, UNLESS THE OFFER IS EXTENDED.

    THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) AT THE EXPIRATION OF
THE OFFER THERE BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE
EXPIRATION OF THE OFFER A NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $0.01 PER
SHARE (THE "COMMON STOCK"), OF COACH USA, INC. (THE "COMPANY"), WHICH
CONSTITUTES MORE THAN 50% OF THE VOTING POWER (DETERMINED ON A FULLY-DILUTED
BASIS) ON THE DATE OF PURCHASE OF ALL THE COMMON STOCK ENTITLED TO VOTE
GENERALLY IN THE ELECTION OF DIRECTORS OR IN A MERGER, (2) THE EXPIRATION OR
TERMINATION OF ANY AND ALL APPLICABLE WAITING PERIODS UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR
ACT"), (3) (A) RECEIPT BY STAGECOACH HOLDINGS PLC ("STAGECOACH") OF A FAVORABLE
INFORMAL ADVISORY OPINION FROM THE STAFF OF THE UNITED STATES SURFACE
TRANSPORTATION BOARD (THE "STB") TO THE EFFECT THAT THE PROPOSED USE OF THE
VOTING TRUST (AS DEFINED HEREIN) WILL EFFECTIVELY INSULATE STAGECOACH FROM
ACQUIRING UNLAWFUL CONTROL OF THE COMPANY AND SUCH ADVISORY OPINION NOT HAVING
BEEN WITHDRAWN OR (B) THE STB HAVING APPROVED STAGECOACH'S AND SCH HOLDINGS
CORP.'S ACQUISITION OF THE FEDERALLY REGULATED CARRIERS CONTROLLED BY THE
COMPANY AND (4) A MAJORITY OF THE ORDINARY SHARES OF STAGECOACH PRESENT AND
VOTING AT AN EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS HAVING DULY ADOPTED
RESOLUTIONS APPROVING THE ACQUISITION BY STAGECOACH OF THE COMPANY PURSUANT TO
THE OFFER AND THE MERGER (AS DEFINED HEREIN) AND CERTAIN RELATED MATTERS. THE
OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE THE INTRODUCTION AND
SECTIONS 1, 11, AND 15.
                               ------------------

    THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE ADVISABLE AND FAIR TO,
AND IN THE BEST INTERESTS OF, THE HOLDERS OF SHARES OF COMMON STOCK OF THE
COMPANY AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY TENDER THEIR SHARES TO
PURCHASER PURSUANT TO THE OFFER.
                               ------------------

                                   IMPORTANT

    Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) should either (1) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal, mail or deliver the Letter of Transmittal (or such
facsimile) and any other required documents to the Depositary (as defined
herein), and either deliver the certificates representing the tendered Shares
and any other required documents to the Depositary or tender such Shares
pursuant to the procedure for book-entry transfer set forth in Section 3 or (2)
request such stockholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such stockholder. Stockholders
having Shares registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact such broker, dealer, commercial bank,
trust company or other nominee if they desire to tender Shares so registered.

    A stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot deliver
the certificates for Shares and all other required documents to reach the
Depositary on or prior to the Expiration Date (as defined herein), or who cannot
comply with the procedure for book-entry transfer on a timely basis may tender
such Shares by following the procedures for guaranteed delivery set forth in
Section 3.

    Questions and requests for assistance may be directed to J.P. Morgan
Securities Inc. (the "Dealer Manager") or to MacKenzie Partners, Inc. (the
"Information Agent") at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may also be obtained from the Information Agent or the Dealer Manager,
or from brokers, dealers, commercial banks or trust companies.

                      THE DEALER MANAGER FOR THE OFFER IS:
                               J.P. MORGAN & CO.

                                 June 18, 1999
<PAGE>   2

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                              PAGE
<S>                                                           <C>
INTRODUCTION................................................    1
THE TENDER OFFER............................................    3
 1. Terms of the Offer; Expiration Date.....................    3
 2. Acceptance for Payment and Payment for Shares...........    4
 3. Procedure for Tendering Shares..........................    5
 4. Withdrawal Rights.......................................    8
 5. Certain Federal Income Tax Consequences.................    8
 6. Price Range of Shares; No Cash Dividends................    9
 7. Certain Information Concerning the Company..............   10
 8. Certain Information Concerning Parent and Purchaser.....   15
 9. Source and Amount of Funds..............................   17
10. Background of the Offer; Contacts with the Company......   18
11. The Merger Agreement and Other Agreements...............   19
12. Purpose of the Offer; the Merger; Plans for the
  Company...................................................   37
13. Dividends and Distributions.............................   38
14. Effect of the Offer on the Market for the Shares, New
    York Stock Exchange Listing and Exchange Act
    Registration............................................   39
15. Certain Conditions of the Offer.........................   39
16. Certain Legal Matters and Regulatory Approvals..........   41
17. Fees and Expenses.......................................   44
18. Miscellaneous...........................................   45
SCHEDULE I -- DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND
              PURCHASER
</TABLE>

                                        i
<PAGE>   3

To the Stockholders of
  COACH USA, INC.

                                  INTRODUCTION

     SCH Holdings Corp., a Delaware corporation ("Purchaser"), which is a
subsidiary of Stagecoach Holdings plc, a public limited company organized under
the laws of Scotland ("Parent"), hereby offers to purchase all of the
outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of
Coach USA, Inc., a Delaware corporation (the "Company"), at a purchase price of
$42.00 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in this Offer to Purchase and in
the related Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer").

     Promptly upon the purchase by Parent, Purchaser or their affiliates of
Shares, such Shares will be deposited in one of several independent voting
trusts (collectively, the "Voting Trust") in accordance with the terms of one of
the Voting Trust Agreements (the "Voting Trust Agreements") among Parent,
Purchaser and various voting trustees (the "Voting Trustees"), pending approval
by the Surface Transportation Board (the "STB") of the acquisition of control by
Parent of the Company. The Offer is not conditioned upon such STB approval. The
Merger (as defined below) is also not conditioned on such STB approval.

     All the directors of the Company have entered into a Tender Agreement with
Parent and Purchaser pursuant to which such persons have agreed, among other
things, to tender an aggregate of 1,499,921 Shares, or approximately 5.9% of the
Shares outstanding on the date hereof, and any Shares acquired after the date of
the Tender Agreement, pursuant to the Offer.

     Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the transfer and sale of Shares pursuant to the Offer.
Purchaser will pay all fees and expenses of J.P. Morgan Securities Inc. ("JP
Morgan"), which is acting as Dealer Manager for the Offer, IBJ Whitehall Bank &
Trust Company, which is acting as the Depositary (in such capacity, the
"Depositary"), and MacKenzie Partners, Inc., which is acting as the Information
Agent, incurred in connection with the Offer. See Section 17.

     THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS APPROVED
THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER AND THE MERGER (AS DEFINED BELOW), AND DETERMINED THAT THE TERMS OF THE
OFFER AND THE MERGER ARE ADVISABLE AND FAIR TO, AND IN THE BEST INTERESTS OF,
THE HOLDERS OF THE SHARES AND RECOMMENDS THAT THE HOLDERS OF THE SHARES TENDER
THEIR SHARES TO PURCHASER PURSUANT TO THE OFFER.

     The Company Board has received the written opinion dated June 12, 1999 of
Morgan Stanley & Co. Incorporated ("Morgan Stanley"), financial advisor to the
Company, to the effect that, as of such date and based upon and subject to
certain matters stated therein, the $42.00 per Share cash consideration to be
received in the Offer and the Merger by holders of Shares (other than Parent and
its affiliates) was fair to such holders from a financial point of view. A copy
of the written opinion of Morgan Stanley is attached to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, which is being
distributed to the stockholders of the Company and enclosed herewith, and
stockholders are urged to read the opinion carefully in its entirety for the
assumptions made, matters considered and limitations on the review undertaken by
Morgan Stanley.

     THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) AT THE EXPIRATION OF
THE OFFER THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION
DATE (AS DEFINED IN SECTION 1) A NUMBER OF SHARES WHICH CONSTITUTES MORE THAN
50% OF THE VOTING POWER (DETERMINED ON A FULLY-DILUTED BASIS) ON THE DATE OF
PURCHASE OF ALL THE SHARES ENTITLED TO VOTE GENERALLY IN THE ELECTION OF
DIRECTORS OR IN A MERGER (THE "MINIMUM CONDITION"), (2) THE EXPIRATION OR
TERMINATION OF ANY AND ALL APPLICABLE WAITING PERIODS UNDER THE HSR ACT (THE
"HSR ACT CONDITION"), (3) (A) RECEIPT BY PARENT OF A FAVORABLE INFORMAL ADVISORY
OPINION FROM THE STAFF OF THE STB TO THE EFFECT THAT THE PROPOSED USE OF THE
VOTING TRUST WILL EFFECTIVELY INSULATE PARENT FROM ACQUIRING UNLAWFUL CONTROL OF
THE COMPANY AND SUCH ADVISORY OPINION NOT HAVING BEEN WITHDRAWN OR (B) THE STB
HAVING APPROVED PARENT'S AND PURCHASER'S ACQUISITION OF THE FEDERALLY REGULATED
CARRIERS CONTROLLED BY

                                        1
<PAGE>   4

THE COMPANY (THE "STB CONDITION") AND (4) A MAJORITY OF THE ORDINARY SHARES OF
PARENT PRESENT AND VOTING AT AN EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
HAVING DULY ADOPTED RESOLUTIONS APPROVING THE ACQUISITION BY PARENT OF THE
COMPANY PURSUANT TO THE OFFER AND THE MERGER (AS DEFINED BELOW) AND CERTAIN
RELATED MATTERS (THE "PARENT SHAREHOLDER APPROVAL CONDITION"). SEE SECTIONS 1,
11 AND 15. IF PURCHASER PURCHASES NOT LESS THAN THAT NUMBER OF SHARES NEEDED TO
SATISFY THE MINIMUM CONDITION, IT WILL BE ABLE TO EFFECT THE MERGER WITHOUT THE
AFFIRMATIVE VOTE OF ANY OTHER STOCKHOLDER OF THE COMPANY. SEE SECTION 12.

     Each of Brian Souter and Ann Gloag has signed an irrevocable undertaking
dated June 12, 1999, pursuant to which each of them has agreed to vote his or
her shares of voting stock of Parent in favor of the Merger. Mr. Souter and Ms.
Gloag together beneficially own approximately 24% of the shares of Parent.

     The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 12, 1999 (as it may be amended or supplemented from time to time, the
"Merger Agreement"), among Parent, Purchaser SCH Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Purchaser ("Merger Sub"), and the
Company. The Merger Agreement provides, among other things, for the making of
the Offer by Purchaser, and further provides that, following the completion of
the Offer, upon the terms and subject to the conditions of the Merger Agreement,
and in accordance with the Delaware General Corporation Law (the "DGCL"), Merger
Sub will be merged with and into the Company (the "Merger"). Following the
effective time of the Merger (the "Effective Time"), the Company will continue
as the surviving corporation (the "Surviving Corporation") and become a wholly
owned subsidiary of Purchaser and, indirectly, Parent, and the separate
corporate existence of Merger Sub will cease. See Section 11. Following the
Merger, Parent may, at its option, cause the Surviving Corporation to be merged
with and into Purchaser (the "Subsequent Merger"). The Subsequent Merger would
be effected in order to cause the Company's outstanding convertible subordinated
notes, which presently are convertible into Shares, to instead become
convertible pursuant to their terms into the same consideration as would be
received by holders of Shares in the Merger. Alternatively, Parent may elect to
structure the Merger so that the Company is merged with and into Purchaser,
Merger Sub, or another direct or indirect wholly owned subsidiary of Parent, or
another direct or indirect wholly owned subsidiary of Parent is merged with and
into the Company; provided, however, that no such change shall (i) alter or
change the amount or kind of the consideration to be issued to the Company's
stockholders in the Merger or the treatment of the holders of the Company Stock
Options (as hereinafter defined), (ii) materially impede or delay consummation
of the Merger, or (iii) release Parent from any of its obligations under the
Merger Agreement. If more than 80% of the Shares are purchased by Purchaser in
the Offer, Parent currently intends to restructure the Merger as a merger of the
Company with and into Purchaser, which would obviate the need for the Subsequent
Merger.

     At the Effective Time, each Share issued and outstanding immediately prior
to the Effective Time (other than Shares held by the Company or owned by Parent,
Purchaser or any other subsidiary of Parent or the Company, which shall be
canceled, and other than Shares, if any (collectively, "Dissenting Shares"),
held by stockholders who have properly exercised appraisal rights under Section
262 of the DGCL) will, by virtue of the Merger and without any action on the
part of the holders of the Shares be converted into the right to receive in cash
the per Share price paid in the Offer (the "Merger Consideration"), payable to
the holder thereof, without interest, upon surrender of the certificate formerly
representing such Share, less any required withholding taxes.

     The Merger Agreement is more fully described in Section 11. Certain federal
income tax consequences of the sale of the Shares pursuant to the Offer and the
exchange of Shares for the Merger Consideration pursuant to the Merger are
described in Section 5.

     The Company has represented to Parent and Purchaser that as of the close of
business on June 14, 1999, there were 25,420,777 Shares issued and outstanding,
4,034,645 Shares issuable upon the exercise of outstanding stock options,
1,737,845 Shares issuable upon the exercise of convertible subordinated notes,
40,000 Shares issuable upon the exercise of warrants and 63,643 Shares issuable
in respect of certain securities of a subsidiary of the Company. Based upon the
foregoing, Purchaser believes that approximately 15,648,455 Shares constitutes
50% of the outstanding Shares on a fully-diluted basis.

                                        2
<PAGE>   5

     THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.

                                THE TENDER OFFER

     1. TERMS OF THE OFFER; EXPIRATION DATE.  Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of such extension or amendment), Purchaser will accept for
payment and pay for all Shares validly tendered on or prior to the Expiration
Date and not properly withdrawn as permitted by Section 4. The term "Expiration
Date" means 10:00 a.m., New York City time, on July 26, 1999, unless and until
Purchaser, in its sole discretion (but subject to the terms and conditions of
the Merger Agreement), shall have extended the period during which the Offer is
open, in which event the term "Expiration Date" shall mean the latest time and
date at which the Offer, as so extended by Purchaser, shall expire. The initial
Expiration Date is five business days following the expected earliest date of
the Parent's shareholders meeting, in order to provide sufficient time for
notice to be given to the Company's stockholders of the satisfaction of the
Parent Shareholder Approval Condition following the Parent's shareholders
meeting. If the Parent's shareholders meeting takes place on a later date,
Purchaser expects that, subject to the Merger Agreement and the other
considerations set forth below, it would extend the Offer until five business
days following such later date.

     THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SATISFACTION OF THE
MINIMUM CONDITION, THE HSR ACT CONDITION, THE STB CONDITION, THE PARENT
SHAREHOLDER APPROVAL CONDITION AND CERTAIN OTHER CONDITIONS. SEE SECTION 15,
WHICH SETS FORTH IN FULL THE CONDITIONS TO THE OFFER. SUBJECT TO THE PROVISIONS
OF THE MERGER AGREEMENT AND THE APPLICABLE RULES AND REGULATIONS OF THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION" OR THE "SEC"), PURCHASER
RESERVES THE RIGHT, IN ITS SOLE DISCRETION, TO WAIVE ANY OR ALL CONDITIONS TO
THE OFFER (OTHER THAN THE MINIMUM CONDITION, THE HSR ACT CONDITION, THE STB
CONDITION, THE PARENT SHAREHOLDER APPROVAL CONDITION AND THE CONDITION DESCRIBED
IN PARAGRAPH (C) OF SECTION 15 HEREOF) AND TO MODIFY THE TERMS OF THE OFFER
(OTHER THAN AMENDING THE CONDITIONS, REDUCING THE MERGER CONSIDERATION, CHANGING
THE FORM OF THE MERGER CONSIDERATION (OTHER THAN BY ADDING CASH CONSIDERATION),
REDUCING THE MAXIMUM NUMBER OF SHARES TO BE PURCHASED OR AMENDING ANY OTHER TERM
IN A MANNER WHICH IS ADVERSE TO THE HOLDERS OF THE SHARES). SUBJECT TO THE
PROVISIONS OF THE MERGER AGREEMENT, INCLUDING THE PROVISIONS OF THE MERGER
AGREEMENT DESCRIBED IN THE NEXT PARAGRAPH, AND THE APPLICABLE RULES AND
REGULATIONS OF THE COMMISSION, IF BY THE EXPIRATION DATE ANY OR ALL OF SUCH
CONDITIONS TO THE OFFER HAVE NOT BEEN SATISFIED, PURCHASER RESERVES THE RIGHT
(BUT SHALL NOT BE OBLIGATED) TO (I) TERMINATE THE OFFER AND RETURN ALL TENDERED
SHARES TO TENDERING STOCKHOLDERS, (II) WAIVE SUCH UNSATISFIED CONDITIONS AND
PURCHASE ALL SHARES VALIDLY TENDERED OR (III) EXTEND THE OFFER AND, SUBJECT TO
THE TERMS OF THE OFFER (INCLUDING THE RIGHTS OF STOCKHOLDERS TO WITHDRAW THEIR
SHARES), RETAIN THE SHARES WHICH HAVE BEEN TENDERED, UNTIL THE TERMINATION OF
THE OFFER, AS EXTENDED.

     Subject to the applicable rules and regulations of the Commission and the
provisions of the Merger Agreement, Purchaser expressly reserves the right, in
its sole discretion, at any time and from time to time, and regardless of
whether or not any of the events set forth in Section 15 shall have occurred, to
(i) extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and payment for, any Shares, by giving oral or
written notice of such extension to the Depositary or (ii) amend the Offer in
any respect permitted by the Merger Agreement by giving oral or written notice
of such amendment to the Depositary. During any such extension, all Shares
previously tendered and not properly withdrawn will remain subject to the Offer,
subject to the right of a tendering stockholder to withdraw such stockholder's
Shares. Under the terms of the Merger Agreement, Purchaser has agreed with the
Company that it will not, without the prior written consent of the Company,
impose additional conditions to the Offer, decrease the price per Share payable
in the Offer, change the form of consideration payable in the Offer (other than
by adding cash consideration), reduce the number of Shares sought to be
purchased in the Offer, extend the Expiration Date (except as described below in
this paragraph) or otherwise change any term of the Offer in any manner adverse
to any holder of Shares. The Merger Agreement provides that Purchaser may,
without the consent of the Company, (i) extend the Offer (on one or more
occasions) beyond the scheduled expiration date if at any such date any of the
conditions to Purchaser's obligation to purchase Shares has not been satisfied
or waived,

                                        3
<PAGE>   6

until such time as such conditions are satisfied or waived, and, at the request
of the Company, Purchaser will, subject to Parent's right to terminate the
Merger Agreement, extend the Offer for additional periods up to but not later
than January 31, 2000, but will not be required to so extend if any of the
conditions not satisfied or earlier waived on the then-scheduled expiration date
are one or more of the Minimum Condition or the conditions described in
paragraphs (a), (c) or (d) of Section 15 hereof, provided that (x) if the only
condition not satisfied is the Minimum Condition, the satisfaction or waiver of
all other conditions will have been publicly disclosed at least five business
days before termination of the Offer and (y) if the conditions described in
paragraph (a) or (d) of Section 15 hereof have not been satisfied and the
failure to so satisfy can be remedied, the Offer will not be terminated unless
the failure is not remedied within 10 business days after Parent has furnished
the Company with written notice of such failure, (ii) extend the Offer to the
extent required by any rule or regulation of the Commission or (iii) extend the
Offer (on a one-time basis only) for not more than five business days beyond the
latest expiration date otherwise permitted under clause (i) or (ii) above if all
of the conditions thereto have been satisfied or waived but less than 90% of the
outstanding Shares have been validly tendered and not properly withdrawn
pursuant to the Offer.

     Any extension, delay, termination, waiver or amendment will be followed as
promptly as practicable by public announcement thereof, and such announcement in
the case of an extension will be made in accordance with Rule 14e-1(d) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Without limiting the manner in which Purchaser may
choose to make any public announcement, except as provided by applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that material changes be promptly disseminated to holders of Shares), Purchaser
shall have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to the Dow Jones News
Service.

     If Purchaser makes a material change in the terms of the Offer or if it
waives a material condition of the Offer, Purchaser will disseminate additional
tender offer material and extend the Offer to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during
which an offer must remain open following material changes in the terms of the
Offer, other than a change in price or a change in the percentage of securities
sought, will depend upon the facts and circumstances, including the materiality,
of the changes. With respect to a change in price or, subject to certain
limitations, a change in the percentage of securities sought, a minimum ten
business day period from the day of such change is generally required to allow
for adequate dissemination to stockholders. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday, or a federal holiday
and consists of the time period from 12:01 a.m. through 12:00 Midnight, New York
City time.

     The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal and
other relevant materials will be mailed by Purchaser to record holders of Shares
and furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.

     2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.  Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment), Purchaser
will accept for payment and will pay for all Shares validly tendered and not
properly withdrawn on or prior to the Expiration Date as soon as practicable
after the later to occur of (i) the Expiration Date and (ii) the satisfaction or
waiver of the conditions of the Offer set forth in Section 15, including without
limitation the Minimum Condition, the HSR Act Condition, the STB Condition and
the Parent Shareholder Approval Condition. In addition, subject to applicable
rules of the Commission, Purchaser expressly reserves the right to delay
acceptance for payment of or payment for Shares pending receipt of any other
regulatory approvals specified in Section 16. Any such delays will be effected
in compliance with Rule 14e-1(c) under the Exchange Act (relating to a bidder's
obligation to pay for or return tendered securities promptly after the
termination or withdrawal of such bidder's offer).

     For information with respect to approvals required to be obtained prior to
the consummation of the Offer, including the HSR Act and the STB, see Section
16.

                                        4
<PAGE>   7

     In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
certificates representing Shares (the "Share Certificates"), or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company or the
Philadelphia Depository Trust Company (each a "Book-Entry Transfer Facility"
and, collectively, the "Book-Entry Transfer Facilities") pursuant to the
procedures set forth in Section 3, (ii) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined below) in connection
with a book-entry transfer, and (iii) any other documents required by the Letter
of Transmittal.

     The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to and received by the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against such participant.

     For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to the
Offer. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from Purchaser and
transmitting such payments to stockholders whose Shares have been accepted for
payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES
BE PAID BY PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN
MAKING SUCH PAYMENT. If, for any reason whatsoever, acceptance for payment of or
payment for any Shares tendered pursuant to the Offer is delayed or Purchaser is
unable to accept for payment or pay for Shares tendered pursuant to the Offer,
then without prejudice to Purchaser's rights set forth herein, the Depositary
may nevertheless, on behalf of Purchaser and subject to Rule 14e-1(c) under the
Exchange Act, retain tendered Shares and such Shares may not be withdrawn except
to the extent that the tendering stockholder is entitled to and duly exercises
withdrawal rights as described in Section 4.

     If any tendered Shares are not accepted for payment for any reason or if
Share Certificates are submitted for more Shares than are tendered, Share
Certificates evidencing unpurchased or untendered Shares will be returned
without expense to the tendering stockholder (or, in the case of Shares tendered
by book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility pursuant to the procedures set forth in Section 3, such Shares will be
credited to an account maintained at such Book-Entry Transfer Facility), as
promptly as practicable following the expiration, termination or withdrawal of
the Offer.

     Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its affiliates the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such transfer
or assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering stockholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.

     3. PROCEDURE FOR TENDERING SHARES.

     Valid Tenders.  Except as set forth below, in order for Shares to be
validly tendered pursuant to the Offer, the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, or an Agent's Message in connection with a
book-entry delivery of Shares, and any other documents required by the Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase on or prior to the Expiration
Date and either (i) Share Certificates evidencing tendered Shares must be
received by the Depositary at such address or such Shares must be tendered
pursuant to the procedure for book-entry transfer described below and a
Book-Entry Confirmation must be received by the Depositary, in each case on or
prior to the Expiration Date or (ii) the guaranteed delivery procedures
described below must be complied with.

     Book-Entry Transfer.  The Depositary will make a request to establish
accounts with respect to the Shares at the Book-Entry Transfer Facilities for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the system of any
Book-Entry

                                        5
<PAGE>   8

Transfer Facility may make book-entry delivery of Shares by causing such
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at such Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery of
Shares may be effected through book-entry transfer at a Book-Entry Transfer
Facility, the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, together with any required signature guarantees, or an
Agent's Message in connection with a book-entry transfer, and any other
documents required by the Letter of Transmittal, must in any case be received by
the Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase on or prior to the Expiration Date, or the guaranteed delivery
procedures described below must be complied with.

     DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.

     THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND THE DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF
BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.

     Signature Guarantees.  Signatures on Letters of Transmittal must be
guaranteed by a firm which is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the Securities
Transfer Agents Medallion Program (each of the foregoing being referred to as an
"Eligible Institution"), except in cases where Shares are tendered (i) by a
registered holder of Shares who has not completed either the box labeled
"Special Payment Instructions" or the box labeled "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal.

     If the Share Certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or Share
Certificates not accepted for payment or not tendered are to be returned, to a
person other than the registered holder, the Share Certificates must be endorsed
or accompanied by appropriate stock powers, in either case, signed exactly as
the name of the registered holder appears on such certificates, with the
signatures on such certificates or stock powers guaranteed as aforesaid. See
Instructions 1 and 5 of the Letter of Transmittal.

     If Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) must accompany each such delivery.

     Guaranteed Delivery.  If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates are not immediately
available, or such stockholder cannot deliver the Share Certificates and all
other required documents to reach the Depositary on or prior to the Expiration
Date, or such stockholder cannot complete the procedure for delivery by
book-entry transfer on a timely basis, such Shares may nevertheless be tendered,
provided that all of the following conditions are satisfied:

           (i) such tender is made by or through an Eligible Institution;

           (ii) a properly completed and duly executed Notice of Guaranteed
     Delivery substantially in the form made available by Purchaser is received
     by the Depositary as provided below on or prior to the Expiration Date; and

          (iii) the Share Certificates (or a Book-Entry Confirmation),
     representing all tendered Shares in proper form for transfer, together with
     the Letter of Transmittal (or a facsimile thereof) properly completed and
     duly executed, with any required signature guarantees (or, in the case of a
     book-entry transfer, an Agent's Message) and any other documents required
     by the Letter of Transmittal are received by the Depositary within three
     trading days after the date of execution of such Notice of Guaranteed
     Delivery. A trading day is any day on which the New York Stock Exchange is
     open for business.

     The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution and a representation that the
stockholder owns the Shares tendered within the meaning of, and that the tender
of the

                                        6
<PAGE>   9

Shares effected thereby complies with, Rule 14e-4 under the Exchange Act, each
in the form set forth in such Notice of Guaranteed Delivery.

     Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share Certificates for, or of Book-Entry
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message), and any other documents required by the Letter of Transmittal.
Accordingly, payment might not be made to all tendering stockholders at the same
time and will depend upon when Share Certificates or Book-Entry Confirmations
with respect to such Shares are received into the Depositary's account at a
Book-Entry Transfer Facility.

     Appointment as Proxy.  By executing the Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of Purchaser and each of them
(including, until receipt of STB approval for the acquisition of control by
Parent of the Company's regulated carriers, the Voting Trustee of the respective
Voting Trust into which the tendering stockholder's Shares are deposited) as
such stockholder's attorneys-in-fact and proxies, with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the full
extent of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by Purchaser (and with respect to any and
all other Shares or other securities issued or issuable in respect of such
Shares on or after the date hereof). All such powers of attorney and proxies
shall be considered irrevocable and coupled with an interest in the tendered
Shares. Such appointment will be effective when, and only to the extent that,
Purchaser accepts such Shares for payment. Upon such acceptance for payment, all
prior powers of attorney and proxies given by such stockholder with respect to
such Shares (and such other Shares and other securities) will be revoked without
further action, and no subsequent powers of attorney and proxies may be given
nor any subsequent written consents executed (and, if given or executed, will
not be deemed effective). The designees of Purchaser will, with respect to the
Shares (and such other Shares and other securities) for which such appointment
is effective, be empowered subject to the terms of the Voting Trust to exercise
all voting and other rights of such stockholder as they in their sole discretion
may deem proper at any annual or special meeting of the Company's stockholders
or any adjournment or postponement thereof, by written consent in lieu of any
such meeting or otherwise. Purchaser reserves the right to require that, in
order for Shares to be deemed validly tendered, immediately upon Purchaser's
payment for such Shares, Purchaser (including through the Voting Trust) must be
able to exercise full voting rights with respect to such Shares, and other
securities, including voting at any meeting of stockholders.

     Determination of Validity.  All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser in its sole discretion, which
determination shall be final and binding. Purchaser reserves the absolute right
to reject any and all tenders determined by it not to be in proper form or the
acceptance for payment of which may in the opinion of its counsel be unlawful.
Purchaser also reserves the absolute right to waive any of the conditions of the
Offer (subject to the provisions of the Merger Agreement) or any defect or
irregularity in any tender of Shares of any particular stockholder whether or
not similar defects or irregularities are waived in the case of other
stockholders. No tender of Shares will be deemed to have been validly made until
all defects and irregularities have been cured or waived. None of Purchaser,
Parent, any of their affiliates or assigns, the Dealer Manager, the Depositary,
the Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding.

     Backup U.S. Federal Income Tax Withholding and Substitute Form W-9.  Under
the "backup withholding" provisions of U.S. federal income tax law, the
Depositary may be required to withhold 31% of the amount of any payments of cash
pursuant to the Offer or the Merger. In order to avoid backup withholding, each
stockholder surrendering Shares in the Offer must, unless an exemption applies,
provide the payor of such cash with such stockholder's correct taxpayer
identification number ("TIN") on a substitute Form W-9 and certify, under
penalties of perjury, that such TIN is correct and that such stockholder is not
subject to backup withholding. If a stockholder does not provide its correct TIN
or fails to provide the certifications described above, the Internal Revenue
Service ("IRS") may impose a penalty on such

                                        7
<PAGE>   10

stockholder and payment of cash to such stockholder pursuant to the Offer may be
subject to backup withholding of 31%. All stockholders surrendering Shares
pursuant to the Offer should complete and sign the substitute Form W-9 included
in the Letter of Transmittal to provide the information and certification
necessary to avoid backup withholding (unless an applicable exemption exists and
is proved in a manner satisfactory to the Depositary). Certain stockholders
(including, among others, all corporations and certain foreign individuals and
entities) are not subject to backup withholding. Noncorporate foreign
stockholders should complete and sign a Form W-8, Certificate of Foreign Status,
a copy of which may be obtained from the Depositary, in order to avoid backup
withholding. See Instruction 9 of the Letter of Transmittal.

     Other Requirements.  Purchaser's acceptance for payment of Shares tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering stockholder and Purchaser upon the terms and
subject to the conditions of the Offer, including the tendering stockholder's
representation and warranty that the stockholder is the holder of the Shares
within the meaning of, and that the tender of the Shares complies with, Rule
14e-4 under the Exchange Act.

     4. WITHDRAWAL RIGHTS.  Tenders of Shares made pursuant to the Offer are
irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn
at any time on or prior to the Expiration Date and, unless theretofore accepted
for payment by Purchaser pursuant to the Offer, may also be withdrawn at any
time after August 16, 1999. If Purchaser extends the Offer, is delayed in its
acceptance for payment of Shares or is unable to purchase Shares validly
tendered pursuant to the Offer for any reason, then without prejudice to
Purchaser's rights under the Offer, the Depositary may nevertheless, on behalf
of Purchaser, retain tendered Shares and such Shares may not be withdrawn except
to the extent that tendering stockholders are entitled to withdrawal rights as
described in this Section 4. Any such delay in acceptance for payment will be
accompanied by an extension of the Offer to the extent required by law.

     For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase. Any notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered such Shares. If Share Certificates to be withdrawn have been delivered
or otherwise identified to the Depositary, then prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and the signatures on the notice of withdrawal must
be guaranteed by an Eligible Institution unless such Shares have been tendered
for the account of an Eligible Institution. If Shares have been tendered
pursuant to the procedure for book-entry transfer as set forth in Section 3, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares, in which
case a notice of withdrawal will be effective if delivered to the Depositary by
any method of delivery described in the first sentence of this paragraph.

     All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Purchaser, in its sole
discretion, whose determination will be final and binding. None of Purchaser,
Parent, any of their affiliates or assigns, the Dealer Manager, the Depositary,
the Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.

     Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time prior to the
Expiration Date by following one of the procedures described in Section 3.

     5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.  The summary of
tax consequences set forth below is for general information only and is based on
the law as currently in effect. The tax treatment of each stockholder will
depend in part upon such stockholder's particular situation. Special tax
consequences not described herein may be applicable to particular classes of
taxpayers, such as financial institutions, broker-dealers, life insurance
companies, stockholders who acquired their Shares through the exercise of an
employee stock option or otherwise as compensation, and persons who received
payments in respect of options to acquire Shares. Unless otherwise indicated,
this summary deals only with stockholders who are "United States persons" (as
defined below) and who hold their Shares as capital assets. For purposes of this
discussion (i) "United States person" means a person who is (a) a citizen or
resident of the United States, (b) a

                                        8
<PAGE>   11

corporation or partnership created or organized in the United States or under
the laws of the United States or any political subdivision thereof, (c) an
estate the income of which is subject to the United States federal income
taxation regardless of its source or (d) a trust which is subject to the
supervision of a court within the United States and the control of one or more
United States persons (as defined in Section 7701 (a)(30) of the Code), and (ii)
the term "Non-U.S. person" means a stockholder who is not a United States
person. ALL STOCKHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE
APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL OR
FOREIGN INCOME AND OTHER TAX LAWS AND CHANGES IN SUCH TAX LAWS.

     The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for U.S. federal income tax purposes, and may also be a taxable
transaction under applicable state, local, foreign income or other tax laws.
Generally, for U.S. federal income tax purposes, a stockholder will recognize
gain or loss in an amount equal to the difference between the cash received by
the stockholder pursuant to the Offer or the Merger and the stockholder's
adjusted tax basis in the Shares exchanged therefor. For U.S. federal income tax
purposes, such gain or loss will be a capital gain or loss if the Shares are a
capital asset in the hands of the stockholder, and a long-term capital gain or
loss if the stockholder's holding period is more than one year as of the date
Purchaser accepts such Shares for payment pursuant to the Offer or the effective
date of the Merger, as the case may be. There are limitations on the
deductibility of capital losses. The long-term capital gains of individuals,
estates and certain trusts generally are eligible for reduced rates of taxation.
Capital losses generally must be used only to offset capital gains.

     Any gain realized by a Non-U.S. person upon an exchange of Shares pursuant
to the Offer or the Merger generally will not be subject to U.S. federal income
or withholding tax unless (i) such gain is effectively connected with a U.S.
trade or business conducted by the Non-U.S. person in the United States or (ii)
in the case of a Non-U.S. person who is an individual, such individual is
present in the United States for 183 days or more in the taxable year during
which the exchange occurs and certain other conditions are met.

     6. PRICE RANGE OF SHARES; NO CASH DIVIDENDS.  The Shares are listed and
traded on the New York Stock Exchange under the symbol "CUI". The Shares were
traded on the Nasdaq National Market from May 14, 1996 until May 7, 1997. Since
May 8, 1997, the Shares have traded on the New York Stock Exchange (the "NYSE").
The following table sets forth, for the quarters indicated, the high and low
sales prices per Share on the NYSE and Nasdaq National Market, as applicable, as
reported in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 (the "1998 Annual Report") with respect to the fiscal years
covered by such Annual Report and as reported by the Dow Jones News Service
thereafter. According to the 1998 Annual Report, the Company has not paid cash
dividends on the Shares and has no plans to do so.

<TABLE>
<CAPTION>
                                                              HIGH       LOW
                                                              ----       ---
<S>                                                           <C>        <C>
Fiscal Year Ended December 31, 1997:
  First Quarter.............................................  $34 1/4    $27 5/8
  Second Quarter............................................   31 1/4     24 1/2
  Third Quarter.............................................   31 7/6     24 7/8
  Fourth Quarter............................................   35 1/6     27
Fiscal Year Ended December 31, 1998:
  First Quarter.............................................   46 7/8     28 15/16
  Second Quarter............................................   48 3/16    42 3/8
  Third Quarter.............................................   51 1/2     21 7/16
  Fourth Quarter............................................   34 7/8     15 1/16
Fiscal Year Ending December 31, 1999:
  First Quarter.............................................   39 9/16    22 7/8
  Second Quarter (through June 17, 1999)....................   41 3/8     20 7/8
</TABLE>

     On June 8, 1999, the last full trading day prior to the Company's
announcement that it was in exclusive discussions regarding a possible business
combination at $42.00 per Share, the closing sale price per Share reported on
the NYSE was $31.0625. On June 11, 1999, the last full trading day prior to
announcement of the Offer, the closing sale price per Share reported on the NYSE
was $38.625. On June 17, 1999, the last full

                                        9
<PAGE>   12

trading day before commencement of the Offer, the closing sale price per Share
reported on the NYSE was $41.375. See Section 10. STOCKHOLDERS ARE URGED TO
OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.

     7. CERTAIN INFORMATION CONCERNING THE COMPANY.  The summary information
concerning the Company in this Section 7 and elsewhere in this Offer to Purchase
is derived from the 1998 Annual Report, the Quarterly Report on Form 10-Q for
the quarter ended March 31, 1999 (the "Quarterly Report") and other publicly
available information. The summary information set forth below is qualified in
its entirety by reference to such reports (which may be obtained and inspected
as described below) and should be considered in conjunction with the more
comprehensive financial and other information in such reports and other publicly
available reports and documents filed by the Company with the Commission and
other publicly available information. Although Purchaser does not have any
knowledge that would indicate that any statements contained herein based upon
such reports are untrue, Purchaser does not assume any responsibility for the
accuracy or completeness of the information contained therein, or for any
failure by the Company to disclose events that may have occurred and may affect
the significance or accuracy of any such information but which are unknown to
Parent and Purchaser.

     General.  Coach USA, Inc., through its operating subsidiaries, is the
largest provider of motorcoach charter, tour and sightseeing services and one of
the largest non-municipal providers of commuter and transit motorcoach services
in the United States. The Company through its subsidiaries also provides airport
ground transportation, paratransit, taxicab and other related passenger ground
transportation services. The Company's operating subsidiaries conduct operations
throughout the United States and Canada with operating locations in over 120
cities. These subsidiaries operate approximately 9,500 motorcoaches, taxicabs
and other high occupancy vehicles which transported passengers across more than
250 million miles in 1998. The Company believes that collectively, its
subsidiaries have one of the most modern motorcoach fleets in the industry, with
50% of the fleet being less than five years old. Its taxicab services, also
provided through subsidiaries, include dispatching and related services to a
fleet of approximately 3,300 vehicles, which are either owned by or leased to
independent contractor drivers.

     The Company was founded in September 1995 to create a nationwide provider
of motorcoach and other ground transportation services. From its initial public
offering in May 1996 through the end of 1997, the Company acquired over 45
motorcoach and taxicab businesses. During 1998, the Company acquired over 25
motorcoach and taxicab businesses. The Company's principal executive offices are
located at One Riverway, Suite 500, Houston, Texas 77056-1921. The telephone
number of the Company at such offices is (713) 888-0104.

     Financial Information.  Set forth below are certain selected consolidated
financial data for the Company's last five fiscal years which were derived from
the 1998 Annual Report and the Quarterly Report. More comprehensive financial
information is included in the reports (including management's discussion and
analysis of financial condition and results of operations) and other documents
filed by the Company with the Commission, and the following financial data are
qualified in their entirety by reference to such reports and other documents
including the financial information and related notes contained therein. Such
reports and other documents may be examined and copies thereof may be obtained
from the offices of the Commission and the NYSE in the manner set forth below.

                                       10
<PAGE>   13

                                COACH USA, INC.

                            SELECTED FINANCIAL DATA

     The Company acquired, simultaneously with the closing of its initial public
offering in May 1996, six founding companies. Through the end of 1998, the
Company has completed in excess of 70 acquisitions, several of which were
accounted for as poolings-of-interests (the "Pooled Companies") and the
remainder of which were accounted for as purchases (the "Purchased Companies").
The Historical Statement of Income Data below includes historical financial
statement data for the six founding companies from May 31, 1996 at historical
cost, the Company (including the Pooled Companies) for all periods presented,
and the Purchased Companies since the dates of their respective acquisition. The
Pro Forma Statement of Income Data Including Compensation Differential and Other
Adjustments includes the historical data above and includes the six founding
companies for all periods presented at historical cost. In addition, the pro
forma data below gives effect to (1) certain reductions in salaries and benefits
to the former owners of the six founding companies and the Pooled Companies
which were agreed to in connection with the mergers of the six founding
companies and the acquisition of the Pooled Companies, as well as a
non-recurring, non-cash charge recorded by the Company (collectively, the
"Compensation Differential"); (2) certain tax adjustments related to the
taxation of certain of the founding companies and Pooled Companies as S
Corporations prior to the consummation of the mergers of the six founding
companies and the acquisitions completed through 1997; (3) the tax impact of the
Compensation Differential in each period; (4) for 1995 and 1996, the conversion
of debt to equity at one of the Pooled Companies; and (5) the elimination of
non-recurring pooling costs associated with the 1996 and 1997 acquisitions. The
Pro Forma for Purchased Companies data below gives effect to all items above and
also gives effect to the acquisitions of the Purchased Companies as if those
acquisitions occurred on January 1, 1997, and gives pro forma effect to (i)
Compensation Differential of the Purchased Companies, (ii) the amortization of
goodwill, (iii) interest expense attributable to cash expended and convertible
and other subordinated notes issued, (iv) an adjustment in 1997 to record
interest expense on the senior subordinated notes and amortization of deferred
financing costs as if the notes had been outstanding for the entire year, (v) an
adjustment to record the pro forma interest savings resulting from the secondary
offering of Common Stock and the conversion of approximately $21.2 million of
convertible subordinated notes in May 1998, as if those transactions had
occurred on January 1, 1997, and (vi) income tax adjustments attributable to the
above adjustments.

<TABLE>
<CAPTION>
                                                        YEAR ENDED DECEMBER 31,
                                          ----------------------------------------------------
                                            1994       1995       1996       1997       1998
                                          --------   --------   --------   --------   --------
                                                 (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                       <C>        <C>        <C>        <C>        <C>
HISTORICAL STATEMENT OF INCOME DATA:
  Total revenues........................  $175,643   $202,786   $325,717   $542,790   $803,563
  Operating expenses....................   133,992    150,578    244,854    398,945    582,917
  Gross profit..........................    41,651     52,208     80,863    143,845    220,646
  General and administrative expenses...    30,810     35,310     43,581     66,344     94,577
  Operating income......................    10,841     16,898     37,282     77,501    126,069
  Income before extraordinary items.....     2,457      4,197     14,140     32,337     54,389
  Extraordinary items...................        --         --      2,648       (929)      (631)
  Net income............................     2,457      4,197     16,788     31,408     53,758
PRO FORMA STATEMENT OF INCOME DATA
  INCLUDING COMPENSATION DIFFERENTIAL
  AND OTHER ADJUSTMENTS:
  Total revenues........................   282,397    316,275    370,781    542,790    803,563
  Operating expenses....................   221,839    241,103    281,924    398,945    582,917
  Gross profit..........................    60,558     75,172     88,857    143,845    220,646
  General and administrative expenses...    37,253     40,527     41,365     62,029     94,577
  Operating income......................    23,305     34,645     47,492     81,816    126,069
  Income before extraordinary items.....     7,961     13,494     20,461     35,682     54,389
</TABLE>

                                       11
<PAGE>   14

<TABLE>
<CAPTION>
                                                        YEAR ENDED DECEMBER 31,
                                          ----------------------------------------------------
                                            1994       1995       1996       1997       1998
                                          --------   --------   --------   --------   --------
                                                 (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                       <C>        <C>        <C>        <C>        <C>
BASIC EARNINGS PER SHARE:
  Income before extraordinary items per
     share..............................                                   $   1.67   $   2.25
  Net income per share..................                                       1.62       2.23
  Weighted average shares(2)............                                     21,412     24,137
DILUTED EARNINGS PER SHARE:
  Income before extraordinary items per
     share..............................                                       1.61       2.14
  Net income per share..................                                       1.57       2.12
  Weighted average shares(2)............                                     22,954     26,250
PRO FORMA FOR PURCHASED COMPANIES:
  Total revenues........................                                    843,207    907,070
  Operating expenses....................                                    616,457    657,456
  Gross profit..........................                                    226,750    249,614
  General and administrative
     expenses(1)........................                                    112,386    111,755
  Operating income......................                                    114,364    137,859
  Income before extraordinary items.....                                     42,988     58,312
BALANCE SHEET DATA (AT END OF PERIOD):
HISTORICAL:
  Working capital (deficit).............  $(15,328)  $(15,101)  $(22,036)  $ (5,311)  $(25,428)
  Total assets..........................   132,244    159,351    366,040    665,870   1,179,243
  Total debt, including current
     portion(3).........................    89,395    106,052    176,478    373,064    624,308
  Stockholders' equity..................     2,876      6,489    114,270    160,555    351,042
</TABLE>

---------------
(1) General and administrative expenses include amortization expense and merger
    related costs.

(2) See Note 11 of the Notes to Consolidated Financial Statements in the 1998
    Annual Report for a reconciliation of weighted average shares outstanding
    for the years ended December 31, 1997 and 1998.

(3) Includes $22.5 million, $52.3 million and $78.8 million of outstanding
    convertible subordinated notes as of December 31, 1996, 1997 and 1998,
    respectively, issued in connection with the acquisitions of the Purchased
    Companies.

                                       12
<PAGE>   15
<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED
                                                                    MARCH 31,
                                                              ----------------------
                                                                1998          1999
                                                              --------      --------
<S>                                                           <C>           <C>
                                                                   (UNAUDITED)

<CAPTION>
                                                                  (IN THOUSANDS,
                                                              EXCEPT PER SHARE DATA)
<S>                                                           <C>           <C>
Revenues....................................................  $149,983      $201,599
Operating Expenses..........................................   117,980       155,946
                                                              --------      --------
  Gross profit..............................................    32,003        45,653
General and Administrative Expenses.........................    18,814        26,038
Amortization Expense........................................     1,439         2,687
                                                              --------      --------
  Operating income..........................................    11,750        16,928
Interest Expense............................................     7,745        10,990
                                                              --------      --------
Income Before Income Taxes, Extraordinary Items and
  Cumulative Effect of Change in Accounting Principle.......     4,005         5,938
Provision for Income Taxes..................................     1,562         2,375
                                                              --------      --------
Income Before Extraordinary Items and Cumulative Effect of
  Change in Accounting Principle............................     2,443         3,563
Extraordinary Items, net of income taxes....................       (88)           --
Cumulative Effect of Change in Accounting Principle, net of
  income taxes..............................................        --        (5,152)
Net Income (Loss)...........................................  $  2,355      $ (1,589)
                                                              --------      --------
Basic Earnings Per Common Share:
  Income Before Extraordinary Items and Cumulative Effect of
     Change in Accounting Principle.........................  $    .11      $    .14
Extraordinary Items.........................................        --            --
Cumulative Effect of Change in Accounting Principle.........        --          (.20)
Net Income (Loss)...........................................  $    .11      $   (.06)
                                                              --------      --------
Diluted Earnings per Common and Common Equivalent Share:
Income Before Extraordinary Items and Cumulative Effect of
  Change in Accounting Principle............................  $    .11      $    .14
Extraordinary Items.........................................      (.01)           --
Cumulative Effect of Change in Accounting Principle.........        --          (.20)
Net Income (Loss)...........................................  $    .10      $   (.06)
                                                              --------      --------
</TABLE>

                                       13
<PAGE>   16
<TABLE>
<CAPTION>
                                                              DECEMBER 31,    MARCH 31,
                                                                  1998           1999
                                                              ------------    ----------
<S>                                                           <C>             <C>
                                                                     (UNAUDITED)

<CAPTION>
                                                                    (IN THOUSANDS,
                                                                EXCEPT PER SHARE DATA)
<S>                                                           <C>             <C>
                           ASSETS
Current Assets:
  Cash and cash equivalents.................................   $    8,267     $    8,079
  Accounts receivable, net of allowance of $5,330 and
     $5,149.................................................       76,748         75,782
  Inventories...............................................       35,196         37,769
  Notes receivable, current portion.........................        4,856          5,160
  Prepaid expenses and other current assets.................       23,749         30,416
                                                               ----------     ----------
          Total current assets..............................      148,816        157,206
Property and Equipment, net.................................      574,313        596,349
Notes Receivable, net of allowance of $500 and $500.........       23,658         24,571
Goodwill, net...............................................      404,992        406,344
Other Assets, net...........................................       27,464         19,457
                                                               ----------     ----------
          Total assets......................................   $1,179,243     $1,203,927
                                                               ----------     ----------
            LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Current maturities of long-term obligations...............   $   23,072     $   16,059
  Current maturities of convertible subordinated notes......       12,415         13,250
  Accounts payable and accrued liabilities..................      138,757        144,056
                                                               ----------     ----------
          Total current liabilities.........................      174,244        173,365
Long-Term Obligations, net of current maturities............      372,482        405,453
Senior Subordinated Notes...................................      150,000        150,000
Convertible Subordinated Notes, net of current maturities...       66,339         61,348
Deferred Income Taxes.......................................       65,136         63,957
                                                               ----------     ----------
          Total liabilities.................................   $  828,201     $  854,123
                                                               ----------     ----------
Commitments and Contingencies
Stockholders' Equity:
  Preferred stock $.01 par, 500,000 shares authorized, 1
     share issued and outstanding...........................           --             --
  Common stock $.01 par, 100,000,000 shares authorized,
     25,412,130 and 25,427,140 shares issued and
     outstanding, respectively..............................          254            254
  Additional paid-in capital................................      258,709        259,003
  Cumulative other comprehensive income.....................         (961)          (904)
  Retained earnings.........................................       93,040         91,451
                                                               ----------     ----------
          Total stockholders' equity........................      351,042        349,804
                                                               ----------     ----------
          Total liabilities and stockholders' equity........   $1,179,243     $1,203,927
                                                               ----------     ----------
</TABLE>

     The Shares are registered under the Exchange Act. Accordingly, the Company
is subject to the informational filing requirements of the Exchange Act and in
accordance therewith is obligated to file periodic reports, proxy statements and
other information with the Commission relating to its business, financial
condition and other matters. Information as of particular dates concerning the
Company's directors and officers, their remuneration, options granted to them,
the principal holders of the Company's securities and any material interest of
such persons in transactions with the Company is required to be disclosed in
such proxy statements and distributed to the Company's stockholders and filed
with the Commission. Such reports, proxy statements and other information should
be available for inspection at the public reference facilities of the Commission
located in Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
should also

                                       14
<PAGE>   17

be available for inspection and copying at prescribed rates at the regional
offices of the Commission located at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, Suite 1300,
New York, New York 10048. Such reports, proxy statements and other information
may also be obtained at the Web site that the Commission maintains at
http://www.sec.gov. Copies of this material may also be obtained by mail, upon
payment of the Commission's customary fees, from the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, such
material should also be available for inspection at the library of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005. Except as otherwise
noted in this Offer to Purchase, all of the information with respect to the
Company set forth in this Offer to Purchase has been derived from publicly
available information.

     8. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER.

     Purchaser.  Purchaser is a newly formed Delaware corporation organized at
the direction of Parent in connection with the Offer and the Merger. The address
of Purchaser is c/o Stagecoach Holdings plc, Charlotte House, 30 Charlotte
Street, Perth PH1 5LL, Scotland.

     Parent.  Parent is a public limited company organized under the laws of
Scotland. It was formed in 1980 and registered as a public limited company in
1991. Stagecoach is one of the world's largest providers of public
transportation services through the operation of bus and train services.
Stagecoach has operations in eight countries. Stagecoach's business consists of
five operating divisions: (1) U.K. Bus Division, (2) Overseas Bus Division, (3)
Rail Division, (4) Porterbrook Leasing Division and (5) Aviation Division.
Stagecoach also holds strategic investments in Road King Infrastructure Limited
and Virgin Rail Group Limited.

     The U.K. Bus Division currently operates approximately 7,415 buses and
coaches through 17 regional bus companies in the U.K. The Overseas Bus Division
operates approximately 5,730 buses and coaches through operating companies in
Scandinavia, Hong Kong, New Zealand, Portugal, Australia and China. The Rail
Division operates two rail franchises in the U.K., South West Trains and Island
Line. Porterbrook Leasing Company Ltd owns more than 3,742 units of rolling
stock, and leases these to 18 train operating companies in the U.K. Stagecoach
acquired Prestwick Aviation Holdings Limited on April 30, 1998, which operates
Glasgow Prestwick International Airport. Stagecoach holds a 30% (assuming
conversion of convertible preference shares) equity interest in Road King, which
operates toll highways in China, and a 49% equity interest in Virgin Rail, which
operates two rail franchises in the U.K. Parent's principal executive offices
are located at Charlotte House, 20 Charlotte Street, Perth PH1 5LL, Scotland.
The telephone number of Parent at such offices is ###-##-#### 442-111.

     The name, citizenship, business address, present principal occupation or
employment and five year employment history of each of the directors and
executive officers of Parent and Purchaser are set forth on Schedule I hereto.

     Certain Transactions.  Except as set forth in this Offer to Purchase, none
of Parent or Purchaser or, to the best knowledge of Parent or Purchaser, any of
the persons listed in Schedule I hereto, or any associate or majority-owned
subsidiary of such persons, beneficially owns any equity security of the
Company, and none of Parent or Purchaser or, to the best knowledge of Parent or
Purchaser, any of the other persons referred to above, or any of the respective
directors, executive officers or subsidiaries of any of the foregoing, has
effected any transaction in any equity security of the Company during the past
60 days.

     Simultaneously with the execution of the Merger Agreement, Parent,
Purchaser and each of the Company's directors entered into a Tender Agreement
(the "Tender Agreement") pursuant to which each of such director agreed to
validly tender his respective Shares in the Offer. As of the date of the Tender
Agreement, such directors beneficially owned 1,499,921 Shares (together with any
other Shares acquired by such persons, the "Owned Shares"), representing
approximately 5.9% of the outstanding shares on the date hereof. Each such
person also agreed to: (i) vote the Owned Shares in favor of the Merger; and
(ii) vote the Owned Shares against any action or agreement (other than the
Merger Agreement or the transactions contemplated thereby) that would impede,
interfere with, delay, postpone or attempt to discourage the Merger or the
Offer, including, but not limited to: (A) any extraordinary corporate
transaction, such as a merger,

                                       15
<PAGE>   18

consolidation or other business combination involving the Company and its
subsidiaries; (B) a sale or transfer of a material amount of assets of the
Company and its subsidiaries or a reorganization, recapitalization or
liquidation of the Company and its subsidiaries; (C) any change in the
management or board of directors of the Company, except as otherwise agreed to
in writing by Purchaser; (D) any material change in the present capitalization
or dividend policy of the Company; or (E) any other material change in the
Company's corporate structure or business.

     Except as set forth in this Offer to Purchase, none of Parent or Purchaser
or, to the best knowledge of Parent and Purchaser, any of the persons listed in
Schedule I hereto has any contract, arrangement, understanding or relationship
with any other person with respect to any securities of the Company, including,
without limitation, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any securities of the Company, joint
ventures, loan or option arrangements, puts or calls, guaranties of loans,
guaranties against loss or the giving or withholding of proxies. Except as set
forth in this Offer to Purchase, none of Parent or Purchaser or, to the best
knowledge of Parent and Purchaser, any of the persons listed in Schedule I
hereto has had any transactions with the Company, or any of its executive
officers, directors or affiliates that would be required to be reported under
the rules of the Commission.

     Except as set forth in this Offer to Purchaser, there have been no
contacts, negotiations or transactions between Parent or Purchaser, or their
respective subsidiaries, or, to the best knowledge of Parent and Purchaser, any
of the persons listed in Schedule I hereto, on the one hand, and the Company or
its executive officers, directors or affiliates, on the other hand, concerning a
merger, consolidation or acquisition, tender offer or other acquisition of
securities, election of directors, or a sale or other transfer of a material
amount of assets. See Introduction and Section 11.

                                       16
<PAGE>   19

                            STAGECOACH HOLDINGS PLC

                             CERTAIN FINANCIAL DATA

     Because the only consideration in the Offer and Merger is cash, and in view
of the amount of consideration payable in relation to the financial capability
of Parent and its affiliates, Purchaser believes the financial condition of
Parent and its affiliates is not material to a decision by a holder of Shares
whether to sell, tender or hold Shares pursuant to the Offer. Set forth below is
a summary of certain consolidated financial information with respect to Parent
for the fiscal years ended April 30, 1998 and 1999. The consolidated financial
information is stated in pounds sterling. Such information is provided for
supplemental information purposes only and is neither intended nor required to
comply with the requirements of the Exchange Act. On June 17, 1999, The Wall
Street Journal reported that, as of June 16, 1999, one pound sterling equalled
1.5878 U.S. dollars. The following information was prepared in accordance with
accounting principles generally accepted in the United Kingdom and has not been
reconciled to generally accepted accounting principles in the United States.

<TABLE>
<CAPTION>
                                                               YEAR ENDED APRIL 30,
                                                              -----------------------
                                                                   L            L
                                                                 1999          1998
                                                              -----------    --------
                                                              (UNAUDITED)
                                                              (IN MILLIONS OF POUNDS,
                                                              EXCEPT PER SHARE DATA)
<S>                                                           <C>            <C>
CONSOLIDATED INCOME STATEMENT DATA
Group turnover..............................................    1,548.4       1,347.0
Total operating profit (including shares of joint ventures
  and associates)...........................................      274.7         216.3
Profit on ordinary activities before income taxes...........      210.1         155.7
Profit/(loss) for the year..................................      158.4         113.5
Earnings per ordinary share(1)..............................      12.0p          9.5p
Dividends per ordinary share................................       3.0p          2.4p
CONSOLIDATED BALANCE SHEET DATA
Fixed assets................................................    2,105.8       1,520.1
Current assets..............................................      516.4         331.0
Creditors -- amounts falling due within one year............     (706.3)       (600.0)
Net current liabilities.....................................      189.9         269.0
Total assets less current liabilities.......................    1,915.9       1,251.1
Creditors -- amounts falling due after more than one year...     (950.8)       (741.7)
Provisions..................................................     (234.1)       (239.3)
Net assets..................................................      731.0         270.1
Equity shareholders' funds..................................      731.0         269.8
Minority interests..........................................        0.0           0.3
Capital employed............................................      731.0         270.1
</TABLE>

---------------
(1) All earnings per share data has been restated to reflect the subdivision of
    Parent shares on October 19, 1998, from 2.5p to 0.5p.

     9.  SOURCE AND AMOUNT OF FUNDS.  Purchaser will require approximately $1.35
billion to (i) purchase the Shares (on a fully diluted basis) pursuant to the
Offer and the Merger and (ii) pay fees and expenses to be incurred in connection
with the completion of the Offer and the Merger. All of the funds required to
finance the foregoing will be furnished to Purchaser by Parent. Parent will
obtain such funds from the proceeds from its working capital and other corporate
funds and a $2.25 billion credit facility among Parent and its wholly-owned
subsidiaries, including Purchaser, and Credit Suisse First Boston, J.P. Morgan
Securities Ltd., The Royal Bank of Scotland plc and The Governor and Company of
The Bank of Scotland, as arrangers (together, the "Banks"), and certain other
financial institutions. Parent and the Banks entered into a Commitment Letter
regarding the credit facility on June 11, 1999. The credit facility will include
three facilities -- two term loan facilities and one revolving facility. One
term loan has a principal amount of $1.0 billion, repayable on termination on
December 31, 2000. The second term loan has a principal amount of $750.0
million, repayable

                                       17
<PAGE>   20

by equal, semi-annual installments, beginning six months from the signing of the
credit facility and terminating five years from the signing of the credit
facility. The third facility is a $500.0 million revolving credit facility,
repayable on termination five years from the signing of the credit facility. The
facilities will bear interest at a rate equal to the aggregate of either the
London inter-bank offered rate, the Euribor rate or the Paris inter-bank offered
rate plus 0.75 to 1.125 per cent per annum depending upon the amounts
outstanding under the particular facilities and whether Parent completes an
equity offering by December 31, 1999. The credit facility will include customary
covenants and events of default. Parent intends to refinance any borrowings that
will be made under the credit facility by means of equity and/or debt capital
markets offerings. The term loans will be used to finance the Offer and the
Merger and to refinance certain existing borrowings of Parent and the Company.
The revolving loan will be used to refinance certain existing borrowings and for
general corporate purposes.

     10.  BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.  In November 1998,
Lawrence K. King, Chairman of the Board and Chief Executive Officer of the
Company, contacted Mr. Brian Souter, Executive Chairman of Parent, concerning
the possibility of certain strategic opportunities the two companies might be
able to pursue jointly.

     In March 1999, Mr. King contacted Mr. Souter to request a meeting to
discuss Parent's acquisition strategy in North America and ways in which the two
companies might be able to work together to pursue this strategy.

     On April 26, 1999, Mr. King, Mr. John Mercandante, Jr., President of the
Company, and Mr. Frank P. Gallagher, Executive Vice President and Chief
Operating Officer of the Company, met with Mr. Souter and Mr. Keith Cochrane,
Group Finance Director of Parent, in Perth, Scotland to discuss Parent's
acquisition strategy in North America, ways in which Parent and the Company
might work together as part of that strategy, the motor coach operating market
in North America and other strategic matters.

     On May 17, 1999, Mr. Souter met with Mr. King and certain other Company
management team members in Houston, Texas and expressed an interest in acquiring
the Company or merging the Company into Parent.

     On May 24, 1999, Mr. King and Mr. Souter and other representatives of their
respective companies discussed a possible structure for a business combination
transaction between Parent and the Company, involving consideration consisting
of cash and Parent equity securities to be paid to the Company's stockholders in
a merger. Mr. Souter indicated, however, that Parent did not want to be involved
in an auction of the Company, and therefore needed a period of four weeks of
exclusivity during which it could conduct due diligence and, assuming
satisfaction with the results thereof, negotiate and enter into a definitive
transaction agreement with the Company.

     The next day, Mr. Cochrane and representatives of Parent's legal and
financial advisors met in Houston, Texas, with Mr. King, Mr. Mercadante and
certain other executives of the Company, and the Company's legal advisors, to
discuss the terms of Parent's transaction proposal and the terms of a
confidentiality and standstill agreement and exclusivity agreement proposed by
Parent. Mr. King informed Mr. Cochrane that the Company had received a proposal
for a transaction from another company, and that the Company could not enter
into an exclusivity agreement until the Company's Board of Directors and its
financial advisor had considered Parent's and the other company's proposals. A
Company Board of Directors meeting was scheduled for the next morning. Mr. King
also asked for clarification of the terms of Parent's proposal.

     On May 26, 1999 before the Company's Board of Directors meeting, Parent
submitted a written proposal for a business combination transaction involving
equity securities of Parent and the opportunity for Company shareholders to
receive up to 50% of their consideration in cash, at an increased valuation for
the Company from the valuation that was indicated on May 24. Parent's ongoing
interest in the Company was subject to the condition that Parent would have an
exclusive period to conduct a due diligence investigation of the Company.

     After the Company's Board meeting, Mr. King informed Mr. Cochrane that the
Company was interested in pursuing a transaction with Parent, but that the Board
and its financial advisor would need time to consider valuation and other
matters before the Company would be willing to consider an exclusivity
arrangement with Parent. The Company advised Parent it would be willing to enter
into a confidentiality and standstill

                                       18
<PAGE>   21

agreement with Parent so as to permit Parent to commence promptly its due
diligence investigation of the Company, but Parent indicated it was unwilling to
conduct due diligence without an exclusivity agreement.

     During June 2 and June 3, 1999, Parent and the Company engaged in
negotiations of the terms of a confidentiality and standstill agreement and an
exclusivity agreement. The Company also informed Parent that its Board would be
meeting on June 3 to discuss the Company's progress in evaluating its strategic
alternatives.

     After the Board meeting on June 3, 1999, Mr. King informed Mr. Cochrane
that another company had proposed an all cash transaction, but Mr. King did not
specify the price of such other proposal. Parent continued to insist on an
exclusivity period until June 21, 1999 to conduct due diligence, but indicated a
willingness to accelerate its work to the extent practicable in an effort to
meet a June 14, 1999 transaction announcement date. Parent also indicated that
it was prepared to value the Company at up to $42.00 per Share in cash, subject
to reaching agreement regarding exclusivity, the Company's agreement to the cost
reimbursement provision described below, Parent's satisfaction with its due
diligence investigation and the parties' negotiation of a mutually satisfactory
definitive merger agreement.

     On June 3, 1999, the Company and Parent entered into the confidentiality
and standstill agreement and the exclusivity agreement. The exclusivity
agreement provided that Parent would have the exclusive right until June 18,
1999 to conduct due diligence and negotiate in good faith a definitive
transaction agreement. The agreement further provided that the Company would pay
Parent's reasonable costs, fees and expenses in connection with its review of
the Company and other matters relating to the proposed transaction, up to a
maximum of $5 million, if the parties failed to enter into a definitive
agreement providing for the transaction and the Company executed and delivered a
definitive agreement providing for a competing transaction with any third party
on or prior to the 45th day after the end of the exclusivity period.

     From June 3, 1999 until June 12, 1999 Parent conducted and completed its
due diligence review of the Company, and Parent and the Company negotiated the
terms of the Merger Agreement. During the course of this review, the Company
made available to Parent certain information and discussed the Company's
business and operations.

     On June 9, 1999, in response to unusual market activity in the Shares, the
Company issued a press release to the effect that it was in discussions with a
third party regarding a possible acquisition of the Company for consideration of
$42.00 per Share in cash.

     At a Parent Board of Directors meeting held on the evening of June 11 and
into the early morning of June 12, 1999 (London time) the Board of Directors of
Parent adopted resolutions approving the acquisition of the Company pursuant to
the terms of the Merger Agreement. The Merger Agreement and related agreements
were finalized and executed and delivered on June 12, 1999, and the transaction
was announced before the New York Stock Exchange opened for trading on June 14,
1999.

     11. THE MERGER AGREEMENT AND OTHER AGREEMENTS.  The following is a summary
of the Merger Agreement and certain other agreements which summary is qualified
in its entirety by reference to the copies thereof filed as exhibits to the
Tender Offer Statement on Schedule 14D-1.

     The Offer.  The Merger Agreement provides that no later than five business
days after the announcement of the Merger Agreement, Parent will cause Purchaser
to, and Purchaser will, commence the Offer. The parties to the Merger Agreement
have agreed in the Merger Agreement that the obligation of Purchaser to
consummate the Offer, and to accept for payment and pay for the Shares tendered
pursuant to the Offer, is subject to the conditions of the Offer described in
Section 15 hereof (the "Offer Conditions"). Pursuant to the Merger Agreement,
the Offer will be made by means of an offer to purchase which will contain as
conditions only the Minimum Condition and the other conditions described in
Section 15 hereof, and, subject to the succeeding sentence, will otherwise
contain, and be entirely consistent with, the terms and conditions of the Offer
as described in the Merger Agreement. Under the Merger Agreement, each of
Purchaser and Parent expressly reserved the right, in its sole discretion, to
waive any such condition and to make any other changes to the terms of the
Offer, provided, that, without the consent of the Company, neither Parent nor
Purchaser will (i) amend or waive (A) the Minimum Condition, (B) the HSR
Condition, (C) the STB Condition, or (D) the condition described in paragraph
(c) of Section 15 hereof, (ii) amend any other Offer Condition,

                                       19
<PAGE>   22

(iii) reduce the price per Share payable in the Offer, (iv) change the form of
consideration to be paid in the Offer (other than by adding cash consideration),
(v) reduce the maximum number of Shares to be purchased in the Offer or (vi)
amend any other term of the Offer in a manner which is adverse to the holders of
Shares. The Merger Agreement provides that the price per Share will be net to
the sellers in cash, without interest, subject to reduction only for any
applicable federal back-up withholding taxes.

     Under the Merger Agreement, Purchaser may, without the consent of the
Company, subject to the Company's right to terminate the Merger Agreement, (i)
extend the Offer on one or more occasions for up to ten business days for each
such extension beyond the then-scheduled expiration date, if at the
then-scheduled expiration date of the Offer any of the conditions to Purchaser's
obligation to accept for payment and pay for the Shares will not be satisfied or
waived, until such time as such conditions are satisfied or waived, and, at the
request of the Company, Purchaser will, subject to Parent's right to terminate
the Merger Agreement, extend the Offer for additional periods up to but not
later than January 31, 2000, but will not be required to so extend if any of the
conditions not satisfied or earlier waived on the then-scheduled expiration date
are one or more of the Minimum Condition or the conditions described in
paragraphs (a), (c) or (d) of Section 15 hereof, provided that (x) if the only
condition not satisfied is the Minimum Condition, the satisfaction or waiver of
all other conditions will have been publicly disclosed at least five business
days before termination of the Offer and (y) if the conditions described in
paragraph (a) or (d) of Section 15 hereof has not been satisfied and the failure
to so satisfy can be remedied, the Offer will not be terminated unless the
failure is not remedied within 10 business days after Parent has furnished the
Company with written notice of such failure, (ii) extend the Offer for any
period required by any rule, regulation, interpretation or position of the
Commission or the staff thereof applicable to the Offer, and (iii) extend the
Offer for an aggregate period of not more than five business days beyond the
latest expiration date that would otherwise be permitted under clause (i) or
(ii) of this sentence if there will not have been tendered sufficient Shares so
that the Merger could be effected without a meeting of the Company's
stockholders in accordance with Section 253 of the DGCL. The Merger Agreement
provides that, subject to the terms of the Offer, including the Offer
Conditions, Purchaser will accept for payment and pay for all Shares duly
tendered at the earliest time at which it is permitted to do so under applicable
provisions of the Exchange Act; provided, that, as set forth above, Purchaser
will have the right, in its sole discretion, to extend the Offer for up to five
business days notwithstanding the prior satisfaction of the Offer Conditions, in
order to attempt to satisfy the requirements of Section 253 of the DGCL. The
Merger Agreement further provides that the Offer Conditions other than the
Minimum Condition, the HSR Condition, the STB Condition and the condition
described in paragraph (c) of Section 15 hereof are solely for the benefit of
Purchaser and that all Offer Conditions may be asserted by Purchaser regardless
of the circumstances resulting in a condition not being satisfied (except for
any action or inaction by Purchaser, Merger Sub or Parent constituting a breach
of the Merger Agreement) and, except with respect to the Minimum Condition, the
HSR Condition, the STB Condition and the condition described in paragraph (c) of
Section 15 hereof, may be waived by Purchaser, in whole or in part at any time
and from time to time, in its sole discretion.

     Company Recommendation.  The Merger Agreement provides that the Company
will file with the Commission and mail to its stockholders contemporaneously
with the commencement of the Offer a Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") which will comply in all material respects
with the provisions of applicable federal securities laws. Pursuant to the
Merger Agreement, the Schedule 14D-9 will contain the recommendation of the
Board of Directors of the Company that the holders of Shares accept the Offer,
unless and until the Company's Board of Directors determines in good faith, only
after receipt of and based upon advice from outside legal counsel to the
Company, that it is required by fiduciary duties under applicable law to change
its recommendation in response to a Superior Proposal (as defined under "No
Solicitation" below).

     Directors Following the Offer.  The Merger Agreement provides that,
effective upon the payment by Purchaser for the Shares tendered pursuant to the
Offer in accordance with the terms of the Merger Agreement, and subject to the
provisions of the Interstate Commerce Act, as amended by the ICC Termination Act
(the "ICA"), and the rules, regulations and practices of the STB, the Company
will be required to use its reasonable best efforts to cause to be appointed to
the Board of Directors of the Company an individual designated by Parent, who
will be identified as a suitable candidate by Parent prior to the

                                       20
<PAGE>   23

consummation of the Offer and who will not be a director, officer or employee of
Parent and will be reasonably satisfactory to the Board of Directors of the
Company. The Merger Agreement further provides that the Company's obligations to
appoint such individual to the Board of Directors of the Company will be subject
to the provisions of the ICA and the rules, regulations and practices of the
STB.

     The Merger Agreement provides that promptly upon the later of (x) payment
by Purchaser for the Shares tendered pursuant to the Offer in accordance with
the terms of the Merger Agreement and (y) the date on which Parent is lawfully
permitted to assume control over the Company's common carrier motor coach
subsidiaries pursuant to STB approval or exemption (the later of (x) and (y),
the "Control Date"), Parent will be entitled to designate a number of directors
on the Board of Directors of the Company (including any designated pursuant to
the provision described in the paragraph immediately above) equal to the product
of the total number of the directors on such Board (after giving effect to the
directors elected pursuant to this sentence) multiplied by the percentage that
such number of Shares owned by Purchaser and its affiliates bears to the number
of Shares outstanding, rounded to the nearest whole number, but in no event less
than a majority.

     At the time specified in the preceding two paragraphs, as the case may be,
the Company will, upon request of Parent, use its reasonable best efforts
promptly either to increase the size of the Board of Directors of the Company
or, at the Company's election or at Parent's request, secure the resignations of
such number of its incumbent directors as is necessary to enable Parent's
designees pursuant to the provisions described in the preceding two paragraphs,
as the case may be, to be so elected or appointed to the Company's Board, and
will cause Parent's designees to be so elected or appointed. The Merger
Agreement further provides that the Company will use its reasonable best efforts
to cause directors designated by Parent pursuant to the provisions described in
the preceding paragraph to constitute the same percentage as is on the Board
(but in any event at least one Parent designee) (i) of each committee of the
Board of Directors, (ii) of each board of directors of each subsidiary of the
Company and (iii) of each committee of each such board, in each case only to the
extent permitted by law and the rules of the NYSE to the extent applicable. The
Merger Agreement provides that notwithstanding the foregoing, until the
Effective Time, the Company and Parent will use all reasonable best efforts to
retain as members of the Company's Board of Directors at least two directors who
are directors of the Company on the date of the Merger Agreement and who are not
designated by Parent or employees of the Company or its subsidiaries (the
"Independent Directors"). The Merger Agreement further provides that the
Company's obligations to appoint designees to the Board of Directors will be
subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder.

     The Merger Agreement provides that, following the election or appointment
of Parent's designees, after the payment for the Shares pursuant to the Offer
and prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors (who will act as an independent committee of the Board of
Directors for this purpose) will be required, and alone will be sufficient, to
take action by the Company to (i) amend or terminate the Merger Agreement, (ii)
exercise or waive any of the Company's rights or remedies under the Merger
Agreement, (iii) extend the time for performance of Parent's and Merger Sub's
respective obligations under the Merger Agreement, or (iv) approve any other
action by the Company that could adversely affect the interests of the
stockholders of the Company (other than Parent, Purchaser and their affiliates)
with respect to the transactions contemplated thereby.

     Voting Trust.  Pursuant to the Merger Agreement, the parties agreed that,
(i) immediately upon the purchase by Parent, Purchaser or their affiliates of
Shares pursuant to the Offer or otherwise, such Shares will be deposited in one
or more separate, independent, irrevocable voting trusts in accordance with the
terms and conditions of one or more Voting Trust Agreements, (ii) upon
consummation of the Merger, all outstanding shares of the Surviving Corporation
will be deposited in such Voting Trust and (iii) upon consummation of the
Subsequent Merger (if Parent elects to effectuate that transaction), all
outstanding shares of Purchaser will be deposited in such Voting Trust. The
Merger Agreement provides that, subject to applicable law and to the rules,
regulations and practices of the STB, the Voting Trust Agreements may be
modified or amended at any time by Parent in its sole discretion; provided, that
(i) prior to the Effective Time, the Voting Trust Agreements may not be modified
or amended without the prior written approval of the Company unless such
modification or amendment is not inconsistent with the Merger Agreement and is
not adverse to the Company

                                       21
<PAGE>   24

or its stockholders and would not reasonably be expected to have an adverse
effect on receipt of a favorable informal advisory opinion from the STB and (ii)
the Voting Trust Agreements may not be modified or amended without the prior
written approval of the Company if such modification or amendment would
reasonably be expected to increase the liability exposure of the Board of
Directors of the Surviving Corporation under applicable law. The Merger
Agreement further provides that no power of Parent or Purchaser provided for in
the Voting Trust Agreements may be exercised in a manner which violates the
Merger Agreement. Pursuant to the Merger Agreement, Parent, in consultation with
the Company, will use its reasonable best efforts to take, or cause to be taken,
all actions necessary, proper or advisable to obtain a favorable informal
advisory opinion from the STB staff to the effect that the Voting Trust
effectively insulates Parent from any violation of the ICA and STB rules or
policies against unauthorized acquisition of control of regulated carriers. The
Merger Agreement provides that in furtherance and not in limitation of the
foregoing: (i) Parent will make any filings required by the STB with respect to
the Voting Trust and the Company will make any filings reasonably required by
Parent with respect thereto; (ii) Parent will consult with the Company in
connection with any discussions or proceedings initiated by Parent with the STB
with respect to the Voting Trust; provided, that the Company will not initiate
any such discussions or proceedings without Parent's prior written consent; and
(iii) Parent, with the Company's consent, will change or modify the terms of the
Voting Trust Agreements to the extent required by the STB as a condition to the
issuance of such advisory opinion, so long as the required changes or
modifications do not, in the aggregate, materially affect Parent's rights
thereunder. The Merger Agreement further provides that any Voting Trustee of the
Voting Trust appointed by Parent and Purchaser pursuant to the Voting Trust
Agreements will be reasonably satisfactory to the Board of Directors of the
Company.

     The Merger.  The Merger Agreement provides that, upon the terms and subject
to the conditions of the Merger Agreement, and in accordance with the DGCL, at
the Effective Time, Merger Sub will be merged with and into the Company. The
Merger Agreement provides that as a result of the Merger, the separate corporate
existence of Merger Sub will cease and the Company will continue as the
Surviving Corporation.

     The Merger Agreement provides that at the Effective Time, the Certificate
of Incorporation of the Surviving Corporation will be amended to be identical to
the Certificate of Incorporation of Merger Sub as in effect immediately prior to
the Effective Time; provided, that (i) the name of the Surviving Corporation
will be the name of the Company; (ii) the number of shares of authorized common
stock will be equal to the number of shares of authorized Company Common Stock
set forth in the Certificate of Incorporation of the Company as in effect
immediately prior to the Effective Time; and (iii) the Certificate of
Incorporation of the Surviving Corporation will include the provisions of
Articles Seven and Eight of the Certificate of Incorporation of the Company as
in effect on the date of the Merger Agreement. The Merger Agreement further
provides that at the Effective Time and without any further action on the part
of the Company or Merger Sub, the By-laws of Merger Sub will be the By-laws of
the Surviving Corporation and thereafter may be amended or repealed in
accordance with their terms or the Certificate of Incorporation of the Surviving
Corporation and as provided by law.

     The Merger Agreement provides that the directors of Merger Sub (if the
Effective Time follows the Control Date) or the Company (if the Effective Time
precedes the Control Date), in either case immediately prior to the Effective
Time, will be the initial directors of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and By-laws of the
Surviving Corporation, and the officers of the Company immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation, in
each case until their resignation or removal or until their respective
successors are duly elected or appointed (as the case may be) and qualified.

     The Merger Agreement provides that, following the Effective Time, at
Parent's election, the Surviving Corporation will be merged with and into
Purchaser. The Subsequent Merger will be effected on terms and have effects
substantially similar to the Merger. The Merger Agreement further provides that
at Parent's election the Merger may alternatively be structured so that the
Company is merged with and into Merger Sub, Purchaser or another direct or
indirect wholly owned subsidiary of Parent, or another direct or indirect wholly
owned subsidiary of Parent is merged with and into the Company; provided,
however, that no such change will (i) alter or change the amount or kind of the
consideration to be issued to the Company's stockholders in the

                                       22
<PAGE>   25

Merger or the treatment of the holders of the Company Stock Options, (ii)
materially impede or delay consummation of the Merger, or (iii) release Parent
from any of its obligations under the Merger Agreement; provided, however, that
the Company will be deemed not to have breached any of its representations and
warranties and covenants therein if and to the extent such breach would have
been attributable to such election. In the event of such an election, the
Company agreed to execute any appropriate documentation as may be reasonably
requested by Parent to reflect such election.

     The Merger Agreement provides that at the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, the Company or the
holders of any of the following securities: (i) each Share (other than any
Shares to be canceled pursuant to clause (ii) below and any Dissenting Shares)
will be canceled, extinguished and converted automatically into the right to
receive an amount per share in cash equal to the price per Share paid in the
Offer (the "Per Share Price"), payable to the holder thereof, without interest,
upon surrender of the certificate that prior to the Merger represented such
Share, less any required withholding taxes; (ii) each Share held in the treasury
of the Company and each Share owned by Parent, Purchaser or any other direct or
indirect subsidiary of Parent or of the Company (including the Shares held in
the Voting Trust), in each case immediately prior to the Effective Time, will be
canceled and retired without any conversion thereof and no payment or
distribution will be made with respect thereto; (iii) the shares of common stock
of Merger Sub issued and outstanding immediately prior to the Effective Time
will be converted into and become equal to a number of identical validly issued,
fully paid and nonassessable shares of common stock of the Surviving Corporation
as is equal to the number of Shares immediately prior to the Effective Time;
(iv) each share of preferred or other capital stock of Merger Sub issued and
outstanding immediately prior to the Effective Time will be converted into and
become one validly issued, fully paid and nonassessable share of identical
preferred or other capital stock of the Surviving Corporation and, in the case
of each of (iii) and (iv), if the Effective Time precedes the Control Date, each
such share will be deposited in the Voting Trust and (v) each share of Series A
Voting Preferred Stock, par value $.01 per share, of the Company (the "Voting
Preferred Stock") outstanding immediately prior to the Effective Time will be
canceled and retired without any conversion thereof and no payment or
distribution will be made with respect thereto.

     The Merger Agreement provides that, upon the consummation of the Offer,
except as otherwise agreed between the Company and any holder thereof, each then
outstanding employee stock option and any other stock or stock-based right and
each then outstanding director stock option and any other stock or stock-based
right (a "Company Stock Option"), whether or not then vested or exercisable,
will be (or, if not previously vested and exercisable, will become), consistent
with the plans and agreements applicable to such Company Stock Options, vested
and exercisable and such Company Stock Options immediately thereafter will be
canceled by the Company, and each holder of a canceled Company Stock Option with
an exercise price that is less than the Per Share Price will be entitled to
receive at the consummation of the Offer or as soon as practicable thereafter
(or if the grant of the Company Stock Option does not qualify as an exempt
acquisition pursuant to Rule 16b-3 under the Exchange Act, the date six months
and one day following the grant of such Company Stock Option, if later) from the
Company (and, if necessary, Parent will provide funds to the Company sufficient
for such payments) in consideration for the cancellation of such Company Stock
Option an amount in cash equal to the product of (i) the number of shares of
Company Common Stock previously subject to such Company Stock Option and (ii)
the excess, if any, of the Per Share Price over the exercise price per share of
Company Common Stock previously subject to such Company Stock Option.

     The Merger Agreement provides that the Company will use its reasonable best
efforts to take all such actions as are reasonably necessary to provide that (i)
no further issuance, transfer or grant of any capital stock of the Surviving
Corporation or any interest in respect of any capital stock of the Surviving
Corporation will be made on or after the consummation of the Offer under any
Company Plan and (ii) following the consummation of the Offer, no holder of a
Company Stock Option or any participant in any Company Plan will have the right
thereunder to acquire any capital stock of the Surviving Corporation.

     The Merger Agreement provides that shares of Company Common Stock that are
issued and outstanding immediately prior to the Effective Time and which are
held by stockholders who have not voted in favor of or consented to the Merger
and who have delivered a written demand for appraisal of such shares of Company

                                       23
<PAGE>   26

Common Stock in the time and manner provided in Section 262 of the DGCL and have
not failed to perfect or have not effectively withdrawn or lost their rights to
appraisal and payment under the DGCL will not be converted into the right to
receive the Merger Consideration, but will be entitled to receive the
consideration as will be determined pursuant to Section 262 of the DGCL;
provided, however, that if such holder failed to perfect or has effectively
withdrawn or lost his, her or its right to appraisal and payment under the DGCL,
such holder's shares of Company Common Stock will thereupon be deemed to have
been converted, at the Effective Time, into the right to receive the Merger
Consideration, without any interest thereon, less any required withholding
taxes.

     Representations and Warranties.  The Merger Agreement contains various
customary representations and warranties of the parties thereto including,
without limitation, representations and warranties by the Company as to the
Company's organization, standing and corporate power, subsidiaries, capital
structure, authorization, recommendation and required stockholder vote for the
Merger Agreement, noncontravention of any governing instruments, laws or other
agreements, filings with the Commission, financial statements, and undisclosed
liabilities, information provided in the Offer documents and Schedule 14D-9,
absence of certain changes or events, litigation, labor matters and compliance
with laws, employee benefit plans, taxes, environmental matters, contracts,
absence of rights plan, intellectual property, year 2000 matters, ownership of
assets, insurance, brokers, and opinion of the Company's financial advisor.

     In addition, the Merger Agreement contains representations and warranties
of Parent, Purchaser and Merger Sub concerning their organization and standing,
authorization, recommendation and required stockholder vote for the agreement,
noncontravention of any governing instruments, laws or other agreements,
information provided in the Offer documents and Schedule 14D-9, financing, and
brokers.

     Interim Operations of the Company.  Pursuant to the Merger Agreement, the
Company has covenanted and agreed that, except (i) as expressly provided in the
Merger Agreement, (ii) with the prior written consent of Parent or (iii) as set
forth on a disclosure schedule to the Merger Agreement delivered by the Company,
after the date of the Merger Agreement and prior to the Control Date, the
business of the Company and its subsidiaries will be conducted only in the
ordinary course of business consistent with past practice and each of the
Company and its subsidiaries will use all reasonable efforts to preserve its
business organization intact and preserve and maintain its rights and franchises
and its relationships with its customers, suppliers, employees, independent
contractors, creditors, business partners and others with whom it deals; the
Company, in conducting its business and operations, will have due regard for the
interests of the holders of the Trust Certificates (as defined in the Voting
Trust Agreements) as investors in the Company; and neither the Company nor any
of its subsidiaries will:

          (a) (i) amend its certificate of incorporation or by-laws or similar
     organizational documents; (ii) declare, set aside or pay any dividend or
     other distribution payable in cash, stock or property with respect to any
     of its capital stock other than dividends or distributions by the Company's
     wholly owned subsidiaries; (iii) split, combine or reclassify any of its
     capital stock; or (iii) issue, sell, transfer, pledge, dispose of or
     encumber, or redeem, purchase or otherwise acquire directly or indirectly,
     any shares of, or securities convertible into or exchangeable or redeemable
     for, or options, warrants, calls, commitments or rights of any kind to
     acquire, any shares of capital stock of any class of, or any other
     ownership or equity interest (including, without limitation, any phantom
     interest or stock appreciation rights) in, the Company or its subsidiaries
     other than pursuant to exercises of Company Stock Options, conversions of
     the convertible subordinated notes, redemptions of exchangeable subsidiary
     shares and exercises of warrants;

          (b) transfer, lease, license, sell, mortgage, pledge, dispose of, or
     create or suffer to exist any lien on any assets that are material to the
     Company and its subsidiaries, taken as a whole, other than liens pursuant
     to the Company's primary credit agreement, purchase money security
     interests under certain other indebtedness and related documents and other
     than sales of assets in the ordinary course of business consistent with
     past practice;

          (c) acquire (by merger, consolidation, acquisition of stock or assets
     or otherwise) any corporation, partnership or other business organization
     or division thereof, or any substantial portion of any assets thereof,
     other than acquisitions for total value not in excess of $50 million in the
     aggregate;

                                       24
<PAGE>   27

          (d) (i) grant any increase in the compensation payable or to become
     payable by the Company or any of its subsidiaries to any employee other
     than increases in the ordinary course of business consistent as to timing
     and amount with past practice; (ii) except to the extent currently required
     under applicable law or the terms of the applicable agreement or
     arrangement, adopt any new, or amend or otherwise increase, or accelerate
     the payment or vesting of the amounts payable or to become payable under
     any existing, bonus, incentive compensation, deferred compensation,
     severance, profit sharing, stock option, stock purchase, insurance,
     pension, retirement or other employee benefit plan agreement or
     arrangement; (iii) enter into any, or amend any existing, employment,
     consulting or severance agreement with, or grant any severance or
     termination pay to, any officer, director or employee of the Company or any
     of its subsidiaries, other than pursuant to existing plans or agreements;
     (iv) except with respect to the Company's foreign operations, as required
     by law or existing arrangements, make any additional contributions to any
     grantor trust created by the Company to provide funding for
     non-tax-qualified employee benefits or compensation; or (v) provide any
     severance program to any subsidiary which does not have a severance program
     as of the date of the Merger Agreement;

          (e) enter into or materially modify any collective bargaining
     agreement, including any successor collective bargaining agreement;

          (f) enter into, modify or terminate any material contract except in
     the ordinary course of business consistent with past practice;

          (g) permit any material insurance policy naming it as a beneficiary or
     a loss payable payee to be canceled or terminated, except in the ordinary
     course of business consistent with past practice;

          (h) (i) incur or assume any debt except for borrowings under existing
     credit facilities, debt incurred in connection with permitted acquisitions
     in an aggregate outstanding amount not to exceed $65 million at any one
     time (including no more than $15 million in assumed debt) and additional
     borrowings in an aggregate outstanding amount not to exceed $20 million at
     any time (any newly incurred debt to be on terms no less favorable to the
     Company and its subsidiaries in any material respect than its existing
     credit facilities); (ii) assume, guarantee, endorse, enter into any "keep
     well" or other similar agreement, or otherwise become liable or responsible
     (whether directly, contingently or otherwise) for the obligations or
     financial condition of any person other than the Company or its wholly
     owned subsidiaries, except in the ordinary course of business consistent
     with past practice and where the amount involved, individually or in the
     aggregate, is not material; (iii) make any loans, advances or capital
     contributions to, or investments in, any other person (other than to wholly
     owned subsidiaries of the Company or customary loans or advances to
     employees in accordance with past practice); or (iv) make any capital
     expenditure in excess of $1 million with respect to any individual or
     series of related capital expenditures or $15 million in the aggregate for
     all capital expenditures;

          (i) change any of its material accounting principles, except as
     required by generally accepted accounting principles;

          (j) adopt a plan of complete or partial liquidation, dissolution,
     merger, consolidation, restructuring, recapitalization or other material
     reorganization of the Company or any of its subsidiaries or any agreement
     (other than a confidentiality agreement pursuant to the provisions
     described under "No Solicitation" below) relating to an Acquisition
     Proposal (as defined below);

          (k) engage in any transaction with, or enter into any agreement,
     arrangement, or understanding with, directly or indirectly, any of the
     Company's affiliates, other than the Company or its wholly owned
     subsidiaries, including, without limitation, any transactions, agreements,
     arrangements or understandings with any affiliate or other person covered
     under Item 404 of Regulation S-K under the Securities Act that would be
     required to be disclosed under such Item 404;

          (l) make any material tax election;

          (m) (i) pay, discharge or satisfy any claim, liability or obligation
     (including contingent claims, liabilities and obligations), other than in
     the ordinary course of business consistent with past practice; or (ii)
     settle or compromise any litigation (whether or not commenced prior to the
     date of the Merger Agreement) other than settlements or compromises of
     litigation not relating to the transactions

                                       25
<PAGE>   28

     contemplated hereby and which could not reasonably be expected to prejudice
     materially the Company or its subsidiaries in any other pending or future
     litigation, where the amount paid (after giving effect to insurance
     proceeds actually received) in settlement or compromise does not exceed $1
     million, provided that the aggregate amount paid in connection with the
     settlement or compromise of all such litigation matters will not exceed $5
     million;

          (n) take any action which would make any of the Company's
     representations and warranties in the Merger Agreement untrue or incorrect
     in a manner that would, or any other action that would, result in any of
     the Offer Conditions not being satisfied; or

          (o) enter into an agreement, contract, commitment or arrangement to do
     any of the foregoing, or authorize, recommend, propose or announce an
     intention to do, or to agree to do, any of the foregoing.

     Access to Information.  The Merger Agreement provides that Company will
(and will cause each of its subsidiaries to) afford to the officers, employees,
accountants, counsel, financing sources and other representatives of Parent,
reasonable access, during normal business hours, during the period prior to the
Effective Time, to all of its and its subsidiaries' personnel, properties,
books, contracts, commitments and records (including any tax returns or other
tax related information pertaining to the Company and its subsidiaries) and,
during such period, the Company will (and will cause each of its subsidiaries
to) furnish promptly to Parent (i) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of the federal securities laws or which is otherwise
material to the Company and its subsidiaries and (ii) all other information
concerning its business, properties and personnel as Parent may reasonably
request (including any tax returns or other tax related information pertaining
to the Company and its subsidiaries). The Merger Agreement further provides that
Parent will hold any such information in confidence to the extent required by
and in accordance with the provisions of the existing confidentiality agreement
between the Company and Parent.

     Consents and Approvals.  The Merger Agreement provides that each of the
Company, Parent, Purchaser and Merger Sub will use all reasonable best efforts
to comply promptly with all legal requirements which may be imposed on it with
respect to the Merger Agreement and the transactions contemplated thereby which
actions will include, without limitation, furnishing all information in
connection with approvals of or filings with any Governmental Entity, including,
without limitation, any schedule, or reports required to be filed with the
Commission, and will promptly cooperate with and furnish information to each
other in connection with any such requirements imposed upon any of them or any
of their subsidiaries in connection with the Merger Agreement and the
transactions contemplated thereby. The Merger Agreement further provides that
each of the Company, Parent, Purchaser and Merger Sub will, and will cause its
subsidiaries to, use all reasonable best efforts to obtain any consent,
authorization, order or approval of, or any exemption by, any governmental
entity or other public or private third party, required to be obtained or made
by Parent, Purchaser, Merger Sub, the Company or any of their subsidiaries in
connection with the Offer, the Merger or the taking of any other action
contemplated by the Merger Agreement.

     The Merger Agreement provides that Parent, on the one hand, and the Company
on the other will, and each will cause its subsidiaries to, subject to the
following sentences, (i) cooperate with one another to prepare and present to
the STB, as soon as practicable, all filings and other presentations in
connection with seeking any STB approval, exemption or other authorization
necessary to consummate the transactions contemplated by the Merger Agreement,
(ii) prosecute such filings and other presentations with diligence, (iii)
diligently oppose any objections to, appeals from or petitions to reconsider or
reopen any such STB approval by persons not party to the Merger Agreement, and
(iv) take all such further action as in the reasonable judgment of Parent and
the Company may facilitate obtaining a final order or orders of the STB
approving such transactions consistent with the Merger Agreement and the
transactions contemplated therein. The Merger Agreement further provides that
without in any way limiting Parent's obligations under Section 1.4 of the Merger
Agreement relating to the Voting Trust and subject to consultations with the
Company and, after giving good faith consideration to the views of the Company,
Parent will have final authority over the development, presentation and conduct
of the STB case, including over decisions as to whether to agree to or acquiesce
in conditions.

                                       26
<PAGE>   29

     Employee Matters.  The Merger Agreement provides that for a period of one
year following the Effective Time, Parent will or will cause the Surviving
Corporation to either continue the existing Company employee benefit plans or
provide benefits to employees of the Company and its subsidiaries under
substitute plans or arrangements ("Parent Benefit Plans") that are no less
favorable, in the aggregate, to such employees than those provided under such
existing Company plans.

     The Merger Agreement further provides that with respect to any Parent
Benefit Plan in which the Company's or its subsidiaries' employees participate
effective as of the Merger, Parent will, or will cause the Surviving Corporation
to: (A) waive all limitations as to pre-existing conditions, exclusions and
waiting periods with respect to participation and coverage requirements
applicable to the employees under any Parent Benefit Plan in which such
employees may be eligible to participate after the Effective Time, (B) provide
each employee with credit for any co-payments and deductibles paid prior to the
Effective Time in satisfying any applicable deductible or out-of-pocket
requirements under any Parent Benefit Plan in which such employees may be
eligible to participate after the Effective Time, and (C) recognize all service
of the employees with the Company or any subsidiary for all purposes (excluding
for benefit accrual) in any Parent Benefit Plan in which such employees may be
eligible to participate after the Effective Time, to the same extent taken into
account under a comparable Company plan immediately prior to the Closing Date;
provided, however, that such service will not be recognized to the extent that
such recognition would result in a duplication of benefits.

     No Solicitation.  The Merger Agreement provides that the Company will not,
and it will cause its subsidiaries, directors, officers, employees, financial
and other advisors, agents, representatives, affiliates and others working on
its behalf or at its direction (collectively, "Company Representatives") not to,
initiate, solicit, encourage or facilitate offers, inquiries or proposals with
respect to, or furnish any information relating to or participate in any
negotiations or discussions concerning, any merger, reorganization, share
exchange, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
subsidiaries, or any purchase or sale of more than 10% of the assets (including
stock of subsidiaries) of the Company and its subsidiaries taken as a whole, or
any purchase or sale of, or tender or exchange offer for, 10% or more of the
equity securities of the Company or any of its subsidiaries (an "Acquisition
Proposal"), other than as contemplated by the Merger Agreement.

     The Merger Agreement further provides that notwithstanding the above
paragraph, if the Company is not otherwise in breach or violation of the
provisions described in this subsection, until the Offer has been consummated,
the Board of Directors of the Company may, directly or indirectly through
Company Representatives: (x) furnish information concerning the Company and its
subsidiaries to any person with respect to an Acquisition Proposal pursuant to
appropriate confidentiality agreements with terms substantially similar to those
contained in the confidentiality agreement with Parent (including with respect
to "standstill" provisions), and (y) negotiate and participate in discussions
and negotiations with such person concerning an Acquisition Proposal, if in
either case (x) or (y), (i) such person has submitted a bona fide written
Acquisition Proposal to the Company after the date hereof which constitutes a
Superior Proposal (as defined below) and (ii) in the good faith judgment of the
Board of Directors of the Company, only after receipt of and based upon advice
from outside legal counsel to the Company, the failure to provide such
information or access or to engage in such discussions or negotiations would
cause the Board of Directors to violate its fiduciary duties to the Company's
stockholders under applicable law. In addition, the Merger Agreement will not
restrict the Company Board of Directors from, to the extent required, complying
with Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act with regard to
an Acquisition Proposal, subject to any rights of Parent to terminate the Merger
Agreement and receive payment of any fee due as a result thereof under the
provisions of the Merger Agreement -- described under "Termination" and "Effect
of Termination" below.

     Pursuant to the Merger Agreement, the Company will notify Parent
immediately of any inquiries, proposals or offers received by, information
requested from, or discussions or negotiations sought to be initiated or
continued with, it or any Company Representatives with respect to, or which
could reasonably be expected to lead to, an Acquisition Proposal indicating, in
connection with each such notice, the name of such person (unless the proposed
consideration consists solely of cash) and the material terms, conditions and
other aspects of any such inquiries, proposals, offers, requests, discussions or
negotiations, including promptly

                                       27
<PAGE>   30

forwarding copies of any written Acquisition Proposals (with redactions of the
proposing party's identity, if the proposed consideration consists solely of
cash), and promptly keep Parent informed of the status and terms of any such
proposals or offers and the status and terms of any such discussions or
negotiations. The Merger Agreement provides that the Company immediately cease
and to cause to be terminated any activities, discussions or negotiations
conducted on or prior to the date of the Merger Agreement with any parties other
than Parent with respect to any of the foregoing. The Merger Agreement further
provides that neither the Company nor any subsidiary of the Company will waive
or fail to enforce any provision of any confidentiality or standstill or similar
agreement to which it is a party without the prior written consent of Parent
unless the Company's Board of Directors determines in good faith, only after
receipt of and based upon advice from outside legal counsel to the Company, that
it is required by fiduciary duties under applicable law to take such action in
response to a Superior Proposal.

     A "Superior Proposal" means, for purposes of the Merger Agreement, a bona
fide written Acquisition Proposal made by a third party after the date of the
Merger Agreement:

          (i) as a result of which (A) the Company's stockholders prior to such
     transaction would in the aggregate cease to own at least 50% of the voting
     securities of the ultimate parent entity resulting from such transaction or
     (B) at least 50% of the assets of the Company and its subsidiaries taken as
     a whole would be transferred to an unaffiliated third party; and

          (ii) which the Board of Directors of the Company in its good faith
     judgment, taking into account the various legal, financial and regulatory
     aspects of the proposal and the person making such proposal and after
     consultation with and based on the advice of outside counsel and a
     nationally recognized financial advisor, determines (A) if accepted, is
     reasonably likely to be consummated, and (B) if consummated, is reasonably
     likely to result in a transaction that is financially superior and more
     favorable to the holders of Company Common Stock than the Offer and the
     Merger (taken together).

     Certain Financing Matters.  The Merger Agreement provides that the Company
will provide, and will cause its subsidiaries and its and their respective
officers, employees and advisors to provide, all necessary cooperation in
connection with the arrangement of any financing to be consummated
contemporaneous with or at or after the consummation of the Offer, including
without limitation any financing to be provided to the Company or any of its
subsidiaries by Parent. The Merger Agreement further provides that, in addition,
in conjunction with the obtaining of any such financing, the Company agrees, at
the request of Parent, to call for prepayment or redemption, conduct a tender
offer for, or prepay, redeem and/or renegotiate, as the case may be, any then
existing indebtedness of the Company and its subsidiaries, including, without
limitation, indebtedness under the Credit Agreement, the Senior Subordinated
Notes and the Convertible Subordinated Notes; provided that no such prepayment
or redemption or purchase under any tender offer will themselves actually be
required to be made or consummated until contemporaneously with or after the
consummation of the Offer.

     Reasonable Best Efforts.  The Merger Agreement provides that, subject to
the terms and conditions therein provided, each of the parties thereto agreed to
use all reasonable best efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable, whether
under applicable laws and regulations or otherwise, and to remove any
injunctions or other impediments or delays, legal or otherwise, to consummate
the Offer and make effective the Merger and the other transactions contemplated
by the Merger Agreement as expeditiously as practicable. Pursuant to the Merger
Agreement, in case at any time after the Effective Time any further action
becomes necessary or desirable to carry out the purposes of the Merger
Agreement, the proper officers and directors of the Company, Parent, Purchaser
and Merger Sub will use all reasonable efforts to take, or cause to be taken,
all such necessary actions.

     Publicity.  The Merger Agreement provides that so long as the Merger
Agreement is in effect, neither the Company nor Parent nor their affiliates will
issue or cause the publication of any press release or other public statement or
announcement with respect to the Merger Agreement or the transactions
contemplated thereby without prior consultation with and approval (not to be
unreasonably withheld or delayed) of the other party, except as may be required
by law or by obligations pursuant to any listing agreement with, or the listing
rules of, a national securities exchange, and in such case will use all
reasonable efforts to consult with and obtain approval of the other party prior
to such release or announcement being issued.

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<PAGE>   31

     Notification of Certain Matters.  The Merger Agreement provides that the
Company will give prompt notice to Parent, and Parent will give prompt notice to
the Company, of (a) the occurrence or non-occurrence of any event which would be
likely to cause any representation or warranty of the Company or Parent,
Purchaser and Merger Sub, as the case may be, contained in the Merger Agreement
to be untrue or inaccurate in any material respect at or prior to the Effective
Time and (b) any material failure or inability of the Company or Parent, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this provision will not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.

     Directors' and Officers' Insurance and Indemnification.  The Merger
Agreement provides that at all times after the Effective Time, Parent and the
Surviving Corporation will jointly and severally indemnify each person who was
at the date of the Merger Agreement, or at any time prior to the date thereof, a
director or officer of the Company or of any of the Company's subsidiaries or
person entitled to indemnification (individually an "Indemnified Party" and
collectively the "Indemnified Parties"), subject to applicable law, to the same
extent and in the same manner as was being provided in the respective
certificates of incorporation or by-laws or similar organizational documents of
the Company and such subsidiaries or otherwise in effect on the date thereof.
The Merger Agreement further provides that the Surviving Corporation will
maintain in effect for not less than six years after consummation of the Merger
the policies of directors' and officers' liability insurance maintained by the
Company and its subsidiaries on the date of the Merger Agreement or policies
having comparable coverage, terms and conditions, with respect to matters
existing or occurring at or prior to the Effective Time, to the extent
available; provided, that in no event will the Surviving Corporation be required
to expend in any one year an amount in excess of 200% of the annual premiums
paid by the Company for such insurance (as disclosed to Parent in writing prior
to the date of the Merger Agreement), although it will be obligated to obtain a
policy with the greatest coverage available for a cost not exceeding such
amount.

     The Merger Agreement provides that, without limitation of the foregoing, in
the event any such Indemnified Party is or becomes involved in any capacity in
any action, proceeding or investigation in connection with any matter,
including, without limitation, the transactions contemplated by the Merger
Agreement, Parent will pay as incurred such Indemnified Party's legal and other
expenses (including the cost of any investigation and preparation) incurred in
connection therewith, subject to the provision by such Indemnified Party of an
undertaking to reimburse such payments in the event of a final determination by
a court of competent jurisdiction that such Indemnified Party is not entitled
thereto. The Merger Agreement further provides that Parent will pay all
expenses, including attorneys' fees, that may be incurred by any Indemnified
Party in enforcing the indemnity and other obligations provided for in the
above-described provisions or any action involving an Indemnified Party
resulting from the transactions contemplated by the Merger Agreement.

     The Merger Agreement provides that any determination to be made as to
whether any Indemnified Party has met any standard of conduct imposed by law
will be made by legal counsel reasonably acceptable to such Indemnified Party,
Parent and the Surviving Corporation, retained at Parent's and the Surviving
Corporation's expense.

     The Merger Agreement provides that the provisions described above are
intended to benefit and will be enforceable by the Indemnified Parties and their
respective heirs, executors and personal representatives and will be binding on
and enforceable against Parent, Purchaser, Merger Sub and the Surviving
Corporation and their successors and assigns in accordance with Delaware law.

     Proxy Statement; Company Stockholders Meeting.  The Merger Agreement
provides that as soon as practicable following the date thereof at the request
of Parent, the Company will prepare and file with the Commission a proxy or
information statement with respect to the required Company stockholder approval
of the Merger Agreement (the "Proxy Statement") and will use all reasonable
efforts to resolve any comments of the Commission with respect to the Proxy
Statement as promptly as practicable. The Merger Agreement further provides that
Parent will cooperate with the Company in the preparation of the Proxy
Statement. The Merger Agreement also provides that Company will give Parent and
its counsel a reasonable opportunity to review the Proxy Statement prior to its
being filed with the Commission and will give Parent and its counsel a

                                       29
<PAGE>   32

reasonable opportunity to review all amendments and supplements to the Proxy
Statement and all responses to requests for additional information and replies
to comments prior to their being filed with, or sent to, the Commission, all of
which filings and responses will be subject to Parent's prior consent, not to be
unreasonably withheld. The Company will provide to Parent promptly copies of all
correspondence between it or any of its representatives and the Commission.
Pursuant to the Merger Agreement, Parent will furnish all information concerning
it required to be included in the Proxy Statement, and as promptly as
practicable, the Proxy Statement will be mailed to the stockholders of the
Company. The Merger Agreement provides that the Company will advise Parent
promptly after it receives notice thereof of any request or demand by the
Commission or the NYSE for amendment of the Proxy Statement.

     The Merger Agreement provides that if Company stockholder approval is
required under the DGCL to consummate the Merger and is required to be given at
a duly held meeting of stockholders, the Company will, as promptly as reasonably
practicable following the execution of the Merger Agreement, duly call, give
notice of, convene and hold a meeting of its stockholders (the "Company
Stockholders Meeting") for the purpose of obtaining the Company stockholder
approval and will take all lawful action to solicit the Company stockholder
approval. The Merger Agreement further provides that unless otherwise required
by their fiduciary duties under applicable law, the Board of Directors of the
Company will (i) recommend adoption of the Merger Agreement by the stockholders
of the Company, and (ii) not withdraw, modify or qualify in any manner adverse
to Parent such recommendation (or its recommendation that holders of Shares
tender their Shares in the Offer) or take any action or make any statement in
connection with the Company Stockholders Meeting (or the Offer) inconsistent
with such recommendation (collectively, an "Adverse Change in the Company
Recommendation"). Pursuant to the Merger Agreement, the Company will use all
reasonable efforts to obtain any necessary approvals to permit the Company
stockholder approval to be effected by written consent. The Merger Agreement
provides that, subject to its right to terminate the Merger Agreement in
accordance with its terms, the Company will be required to take the actions
specified in the provisions described above, and satisfy all its other
obligations under the Merger Agreement, whether or not the Company Board of
Directors makes an Adverse Change in the Company Recommendation after the date
thereof.

     The Merger Agreement provides that Parent will vote at the Company
Stockholders' Meeting or give consents with respect to, or cause to be voted or
to have consents given with respect of (including, prior to the Control Date, by
causing the Voting Trustees to vote pursuant to the Voting Trust Agreements),
all Shares then owned by it or Purchaser or any of Parent's other subsidiaries
and affiliates (including any shares held in the Voting Trust) in favor of the
adoption of the Merger Agreement.

     The Merger Agreement provides that, notwithstanding the foregoing, in the
event that Purchaser has acquired at least 90% of the then-outstanding Shares,
the parties will, at the request of Purchaser, subject to the conditions to the
Merger, the DGCL, the ICA and the rules and regulations of the STB, to take (and
prior to the Control Date to cause the Voting Trustees to take) all necessary
and appropriate action to cause the Merger to become effective, in accordance
with Section 253 of the DGCL, as soon as reasonably practicable after such
acquisition, without a meeting of the stockholders of the Company.

     Parent Circular; Parent Shareholders Meeting.  The Merger Agreement
provides that as soon as practicable following the date of the Merger Agreement,
Parent will prepare and obtain the approval of the London Stock Exchange of a
circular (the "Parent Circular") to be sent to Parent's shareholders in
connection with the Parent Shareholder Meeting (as defined below). The Company
will cooperate with Parent in the preparation of the Parent Circular. The Merger
Agreement further provides that Parent will give the Company and its counsel a
reasonable opportunity to review the Parent Circular prior to its being lodged
with the LSE for approval and will give the Company and its counsel a reasonable
opportunity to review all amendments and supplements to the Parent Circular and
all responses to requests for additional information and replies to comments
prior to their being filed with, or sent to, the LSE. The Merger Agreement also
provides that Parent will provide to the Company promptly copies of all
correspondence between it or any of its representatives and the LSE. Pursuant to
the Merger Agreement, the Company will furnish all information concerning it
required to be included in the Parent Circular, and as promptly as practicable,
the Parent Circular will be mailed to the shareholders of Parent. The Merger
Agreement provides that Parent will advise the Company promptly after it
receives notice thereof of any request or demand by the LSE for amendment of

                                       30
<PAGE>   33

the Parent Circular. The Merger Agreement further provides that the Parent
Circular and any supplements thereto and any other circulars or documents issued
to shareholders or employees of Parent will contain all particulars relating to
Parent and the Company required to comply in all material respects with all
United Kingdom statutory and other legal provisions (including, without
limitation, the Companies Act of 1985 of the United Kingdom, as amended, the
Financial Services Act 1986 and the rules and regulations made thereunder, and
the rules and requirements of the LSE and the City Code) and, at the date filed
with the LSE or distributed to Parent's shareholders or at the time of the
Parent Shareholders Meeting, all such information contained in such documents
will be substantially in accordance with the facts and will not omit anything
material likely to affect the import of such information.

     (b) The Merger Agreement provides that Parent will, as promptly as
reasonably practicable following the execution of the Merger Agreement, duly
call, give notice of, convene and hold a meeting of its shareholders (the
"Parent Shareholders Meeting") for the purpose of obtaining the approval of the
Merger by Parent's shareholders (the "Parent Shareholder Approval") and will
take all lawful action to solicit such Parent Shareholder Approval. The Merger
Agreement further provides that Parent will use its reasonable best efforts to
hold the Parent Shareholders Meeting on or before July 26, 1999. Pursuant to the
Merger Agreement, unless otherwise required by their fiduciary duties under
applicable law, the Board of Directors of Parent will (i) recommend that the
shareholders of Parent vote in favor of the resolution to be proposed at the
Parent Shareholders Meeting and required for the implementation of the Offer and
the Merger, and (ii) not withdraw, modify or qualify in any manner adverse to
the Company such recommendation or take any action or make any statement in
connection with the Parent Shareholders Meeting inconsistent with such
recommendation (collectively, an "Adverse Change in the Parent Recommendation").
The Merger Agreement provides that, subject to its right to terminate the Merger
Agreement in accordance with its terms, Parent will be required to take the
actions specified in clause (a) above and the first sentence of this clause (b),
and satisfy all its other obligations under the Merger Agreement, whether or not
Parent's Board of Directors makes an Adverse Change in the Parent Recommendation
after the date of the Merger Agreement.

     Registration Rights for Shares Deposited in Voting Trust.  The Merger
Agreement provides that the Company will, if requested by any Voting Trustee at
any time and from time to time within three years after the termination of the
Merger Agreement while any securities of the Company or any of its subsidiaries
remain in the Voting Trust, as expeditiously as possible prepare and file up to
three registration statements under the Securities Act of 1933, as amended, if
such registration is necessary in order to permit the sale or other disposition
of any or all securities that have been deposited in the Voting Trust, in
accordance with the intended method of sale or other disposition stated by the
Voting Trustee, including a "shelf" registration statement under Rule 415 under
the Securities Act or any successor provision; and the Company will use its
reasonable best efforts to qualify such securities under any applicable state
securities laws. The Merger Agreement further provides that the Voting Trustee
and Parent will use reasonable efforts to cause, and to cause any underwriters
of any sale or other disposition to cause, any sale or other disposition
pursuant to such registration statement to be effected on a widely distributed
basis. The Merger Agreement also provides that the Company will use reasonable
efforts to cause each such registration statement to become effective, to obtain
all consents or waivers of other parties which are required therefore, and to
keep such registration statement effective for such period not in excess of 180
calendar days from the day such registration statement first becomes effective
as may be reasonably necessary to effect such sale or other disposition.
Pursuant to the Merger Agreement, the obligations of the Company thereunder to
file a registration statement and to maintain its effectiveness may be suspended
for one or more periods of time not exceeding 60 calendar days in the aggregate
with respect to any registration statement if the Board of Directors of the
Company determines that the filing of such registration statement or the
maintenance of its effectiveness would require disclosure of nonpublic
information that would materially and adversely affect the Company. Pursuant to
the Merger Agreement, the costs of any registration statement prepared and filed
under the provisions described hereby, and any sale covered thereby, will be
shared equally by the Company and Parent except for underwriting discounts or
commission, brokers' fees and the fees and disbursements of the Voting Trustee's
and Parents' counsel related thereto (which will be paid by Parent). The Merger
Agreement provides that the Voting Trustee and Parent will provide all
information reasonably requested by the Company for inclusion in any
registration statement to be filed hereunder. The Merger Agreement further
provides that if, during the time

                                       31
<PAGE>   34

periods referred to in the first sentence of this paragraph, the Company effects
a registration under the Securities Act of the Company's securities for its own
account or for any other of its stockholders (other than on Form S-4, Form S-8,
or any successor form), it will allow the Voting Trustee the right to
participate in such registration, and such participation will not affect the
obligation of the Company to effect demand registration statements for the
Voting Trustee under the Section described hereby; provided, that, if the
managing underwriters of such offering advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering, the Company
will include the securities requested to be included therein by the Voting
Trustee only after including all securities intended to be included therein by
the Company. The Merger Agreement also provides that in connection with any
registration pursuant to the Section described hereby, the Company and Parent
will provide each other and any underwriter of the offering with customary
representations, warranties, covenants, indemnification, and contribution in
connection with such registration.

     Dividend Access Shares.  The Merger Agreement provides that prior to the
commencement of the Offer, the Company will enter into an agreement (the
"Dividend Access Share Purchase Agreements") with each holder of Dividend Access
Shares of par value $.01 per share (the "Dividend Access Shares"), of 3376249
Canada, Inc., a subsidiary of the Company (the "Canadian Subsidiary") which will
be substantially in the form previously furnished to Parent, and take any other
necessary action to ensure that none of the Company, the Canadian Subsidiary,
the Surviving Corporation, Parent or any other affiliate of Parent will be
required under the terms of the Dividend Access Shares, the Support Agreement
with respect to the Dividend Access Shares (the "Support Agreement") or
otherwise, to, and none of them will bear any liability or other obligation for
failing to: (i) permit the holders of Dividend Access Shares to retract their
Dividend Access Shares as against the Canadian Subsidiary and receive Shares in
exchange therefor for the sole purpose of tendering such Shares in the Offer,
effective and conditional only upon the consummation of the Offer, all as
contemplated by the Support Agreement (it being understood that Purchaser will
not be required to accept tenders of, nor will Parent or Purchaser otherwise be
required to acquire, Dividend Access Shares in the Offer or otherwise); or (ii)
following the Effective Time, issue or otherwise deliver any shares in the
capital stock of the Company, the Surviving Corporation, the Canadian
Subsidiary, Parent or any other affiliate of Parent or any other securities or
property other than a sum in United States Dollars equal to the Per Share Price,
without any interest thereon, in respect of or in exchange for, whether pursuant
to a retraction or otherwise, any Dividend Access Share. Pursuant to the Merger
Agreement, true and complete copies of all executed Dividend Access Share
Purchase Agreements will be provided to Parent upon execution thereof.

     Conditions.  The Merger Agreement provides that the obligations of the
Company, on the one hand, and Parent and Merger Sub, on the other hand, to
consummate the Merger are subject to the satisfaction (or, if permissible,
waiver by the party for whose benefit such conditions exist) of the following
conditions: (1) Purchaser shall have purchased the Shares pursuant to the Offer
(provided that the purchase of Shares pursuant to the Offer will not be a
condition to the obligations of Parent and Merger Sub hereunder if Purchaser
fails to accept for payment and pay for Shares pursuant to the Offer in
violation of the terms hereof or of the Merger Agreement); (2) if required under
the DGCL, Company stockholder approval for the Merger shall have been obtained;
and (3) no court, arbitrator or other governmental entity shall have issued any
order, injunction, decree or ruling, and there will not be any other judgment,
order, decree, arbitration award, statute, law, ordinance, rule, or regulation
("Law"), restraining, enjoining or prohibiting the consummation of the Merger.

     Termination.  The Merger Agreement provides that notwithstanding anything
to the contrary in the Merger Agreement, it may be terminated and the
transactions contemplated therein may be abandoned at any time prior to the
Effective Time, whether before or after stockholder approval thereof:

          (a) by the mutual written consent of Parent and the Company;

          (b) by either of the Company or Parent:

             (i) if (A) the Offer expires or terminates in accordance with the
        terms thereof without the purchase of any Shares thereunder or (B)
        Purchaser has not purchased Shares under the Offer prior to January 31,
        2000; provided, however, that the right to terminate the Merger
        Agreement under this

                                       32
<PAGE>   35

        clause will not be available to any party to the extent that the delay
        in consummating the Offer is due to such party's material breach of the
        Merger Agreement;

             (ii) if any governmental entity has issued an order, decree or
        ruling or taken any other action (which order, decree, ruling or other
        action the parties thereto will use their reasonable best efforts to
        lift), in each case permanently restraining, enjoining or otherwise
        prohibiting the transactions contemplated by the Merger Agreement and
        such order, decree, ruling or other action will have become final and
        non-appealable;

             (iii) prior to the consummation of the Offer, if the other party
        has breached any of its representations, warranties, covenants or
        agreements set forth herein such that any of the Offer Conditions would
        not be satisfied, which breach, to the extent curable, is not cured
        within ten business days of receipt of written notice of breach by the
        breaching party; or

             (iv) the Parent Shareholder Approval has not been obtained at the
        Parent Shareholders Meeting;

          (c) by the Company, prior to consummation of the Offer, upon three
     business days' prior written notice to Parent (which notice will entitle
     Parent to terminate the Merger Agreement pursuant to clause (d) below), in
     order to accept a proposal which its Board of Directors will have
     determined as of the date of such notice is a Superior Proposal and such
     Board of Directors will have concluded in good faith, only after receipt of
     and based on advice of its outside legal counsel, that its fiduciary duties
     would require it to accept such Superior Proposal; provided, however, that
     (i) any financing with respect thereto is committed for the full amount
     required, (ii) the Company will have fully complied with its obligations
     described under "No Solicitation" above, (iii) such notice will include a
     copy of any proposed or definitive documentation relating to such Superior
     Proposal, and will otherwise indicate all material terms and conditions
     with respect thereto, (iv) prior to any such termination, the Company will,
     if requested by Parent in connection with any revised proposal Parent might
     make, negotiate in good faith for such three business day period with
     Parent, (v) the Board of Directors of the Company will have concluded in
     good faith, only after receipt of and based on advice of its outside legal
     counsel and a nationally recognized financial advisor, as of the effective
     date of such termination, after taking into account any revised proposal by
     Parent during such three business day period, that such third party
     proposal remains a Superior Proposal (and such financing remains so
     committed) which the Board of Directors of the Company is obligated to
     accept under its fiduciary duties and (vi) immediately following such
     termination, the Company enters into definitive and binding documentation
     with respect to such Superior Proposal; and provided, further, that it will
     be a condition to termination pursuant to this clause (c) that the Company
     will have made the payment of the fee to Parent described under "Effect of
     Termination" below;

          (d) by Parent if prior to the consummation of the Offer: (i) the
     Company delivers the notice described in clause (c) above, (ii) the Board
     of Directors of the Company effects an Adverse Change in the Company
     Recommendation or approves or recommends another Acquisition Proposal or
     fails to reconfirm its recommendation, if so requested by Parent, within
     fifteen days following such request, or (iii) the Company engages in
     negotiations with a third party after the date of the Merger Agreement with
     respect to any Acquisition Proposal and has not fully and unconditionally
     rejected such proposal (including, if such Acquisition Proposal was
     publicly announced or known, by publicly announcing such rejection) within
     three business days of first engaging in any negotiations with respect to
     such Acquisition Proposal; or

          (e) by Parent if prior to the consummation of the Offer any person or
     group (within the meaning of Section 13(d)(3) of the Exchange Act) acquires
     beneficial ownership (within the meaning of Rule 13d-3 under the Exchange
     Act) of more than 20% of the combined voting power of the Company Common
     Stock and the Voting Preferred Stock.

     Effect of Termination.  The Merger Agreement provides that in the event of
the termination of the Merger Agreement as described above, written notice
thereof will forthwith be given to the other party or parties specifying the
provision thereof pursuant to which such termination is made, and the Merger
Agreement will forthwith become null and void, and there will be no liability on
the part of Parent, Purchaser,

                                       33
<PAGE>   36

Merger Sub or the Company except (i) for fraud or for breach of the Merger
Agreement or the confidentiality agreement and (ii) the provisions described
under "Registration Rights for Shares Deposited in Voting Trust" above, "Effect
of Termination" herein, and "Costs and Expenses" below and in the last sentence
of under "Access to Information" above.

     The Merger Agreement provides that the Company will pay Parent the sum of
$35 million if the Merger Agreement is terminated solely as follows:

          (i) by Parent pursuant to clause (b)(iii) under "Termination"
     described above if the breach giving rise to such termination right
     occurred at a time after the Company will have received or become aware of
     an Acquisition Proposal (other than any such proposal submitted prior to
     the date of the Merger Agreement) and within twelve months of such
     termination, the Company enters into a definitive agreement with respect to
     an Acquisition Proposal or an Acquisition Proposal is consummated (which
     fee will be payable immediately upon the earlier of execution of such
     agreement or consummation of an Acquisition Proposal); or

          (ii) by the Company pursuant to clause (c) under "Termination" above
     (which fee will be payable as a condition to such termination) or by Parent
     pursuant to clause (d)(i) under "Termination" above (which fee will be
     payable immediately upon such termination); or

          (iii) (A) by Parent or the Company pursuant to clause (b)(i)(A) under
     "Termination" above (provided that (1) prior to such termination an
     Acquisition Proposal with respect to the Company will have been publicly
     announced or otherwise become public, (2) on the date of expiration or
     termination of the Offer the Minimum Condition has not been satisfied, and
     (3) on such date there is no other condition to the Offer which has failed
     to be satisfied as a result of a material breach of the Merger Agreement by
     Parent, Purchaser or Merger Sub), or (B) by Parent pursuant to clause
     (d)(ii) or (iii) or clause (e) under "Termination" above, if, in the case
     of either clause (A) or (B), within twelve months of any such termination,
     the Company enters into a definitive agreement with respect to an
     Acquisition Proposal or an Acquisition Proposal is consummated (which fee
     will be payable immediately upon the earlier of execution of such agreement
     or consummation of an Acquisition Proposal); or

          (iv) by Parent pursuant to clause (e) under "Termination" above, if
     prior to or within twelve months after any such termination, any person or
     group acquired or acquires beneficial ownership of more than 40% of the
     combined voting power of the Company Common Stock, the Voting Preferred
     Stock and any other voting capital stock of the Company (which fee will be
     payable immediately upon the later of such acquisition or such
     termination).

     The Merger Agreement provides that Parent will pay the Company the sum of
$25 million if the Merger Agreement is terminated by either party pursuant to
clause (b)(iv) under "Termination" above and prior to the Parent Shareholders
Meeting there has been an Adverse Change in the Parent Recommendation.

     The Merger Agreement further provides that if the Merger Agreement is
terminated by either party pursuant to clause (b)(i)(A) under "Termination"
above (provided that (1) on the date of expiration or termination of the Offer
the Minimum Condition has not been satisfied and (2) on such date all other
conditions to the Offer have been satisfied or waived), then upon and following
such termination the Company will be required to reimburse Parent and its
affiliates for all reasonable out-of-pocket fees and expenses actually incurred
by any of them or on their behalf in connection with the Offer and the Merger,
any financing thereof or in respect therewith, and the negotiation, preparation,
execution and diligence in respect of the Merger Agreement (including, without
limitation, fees and disbursements payable to banks, investment banking firms,
dealer managers and other financial institutions, and their respective agents
and counsel, and all fees of counsel, accountants, financial printers,
depositaries, information agents, experts and consultants) ("Expenses") up to an
aggregate maximum reimbursement of $5 million. The Merger Agreement also
provides that the Company will pay the amounts requested within three business
days of such requests (accompanied by a submission of statements therefor).
Pursuant to the Merger Agreement, the maximum aggregate amount that the Company
will be required to pay pursuant to the provisions described in this paragraph
and the second preceding paragraph will be $35 million.

                                       34
<PAGE>   37

     The Merger Agreement provides that if the Merger Agreement is terminated by
either party pursuant to clause (b)(iv) under "Termination" above and prior to
the Parent Shareholders Meeting there has not been an Adverse Change in the
Parent Recommendation, then upon and following such termination Parent will be
required to reimburse the Company and its affiliates for all Expenses actually
incurred by any of them or on their behalf up to an aggregate maximum
reimbursement of $5 million. The Merger Agreement further provides that Parent
will pay the amounts requested within three business days of such requests
(accompanied by a submission of statements therefor). Pursuant to the Merger
Agreement, the maximum aggregate amount that Parent will be required to pay
pursuant to the provisions described in this paragraph and the second preceding
paragraph will be $25 million.

     The Merger Agreement provides that in addition to the above described
provisions, in the event a fee or Expenses is or becomes payable pursuant to the
above-described provision, the party required to pay such fee or Expenses will
promptly, but in no event later than three business days following written
notice thereof, together with related bills or receipts, to reimburse the other
party for all reasonable out-of-pocket costs, fees and expenses, including,
without limitation, the reasonable fees and disbursements of counsel and the
expenses of litigation, incurred in connection with collecting such fee or
Expenses as a result of any breach by the party required to pay such fee or
Expenses of its obligations under Section 7.2 of the Merger Agreement described
hereby.

     Costs and Expenses.  The Merger Agreement provides that except as expressly
otherwise provided in the Merger Agreement, all costs and expenses incurred in
connection with the Merger Agreement and the consummation of the transactions
contemplated thereby will be paid by the party incurring such expenses.

     Amendment and Modification.  The Merger Agreement provides that, subject to
applicable law, the Merger Agreement may be amended, modified and supplemented
in any and all respects, whether before or after any vote of the stockholders of
the Company or the shareholders of Parent contemplated thereby, only by written
agreement of the parties thereto, pursuant to action taken by their respective
Boards of Directors, at any time prior to the Effective Time with respect to any
of the terms contained therein; provided, however, that after the approval of
the Merger Agreement by the stockholders of the Company or the shareholders of
Parent, no such amendment, modification or supplement which by law requires
prior approval of the stockholders of the Company or shareholders of Parent will
be made unless such approval has been obtained.

     Waiver; Remedies Cumulative.  The Merger Agreement provides that at any
time prior to the Effective Time, any party to the Merger Agreement may with
respect to any other party thereto: (i) extend the time for the performance of
any of the obligations or other acts; (ii) waive any inaccuracies in the
representations and warranties contained therein or in any document delivered
pursuant thereto; or (iii) waive compliance with any of the agreements or
conditions contained therein. Pursuant to the Merger Agreement, any such
extension or waiver will be valid only if set forth in an instrument in writing
signed by the party or parties to be bound. The Merger Agreement provides that
no failure or delay on the part of any party to the Merger Agreement in the
exercise of any right thereunder shall impair such right or be construed to be a
waiver of, or acquiescence in, any breach of any representation, warranty or
agreement therein, nor shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. Pursuant to
the Merger Agreement, all rights and remedies existing under the Merger
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.

     TENDER AGREEMENT.  Concurrently with the execution and delivery of the
Merger Agreement, Parent and Merger Sub entered into a Tender Agreement (the
"Tender Agreement") with each of the directors of the Company (each, a
"Stockholder" and, together, the "Stockholders") who together beneficially own
1,499,921 shares of Company Common Stock (the "Existing Shares" and, together
with any shares of Company Common Stock acquired after the date of the Tender
Agreement and prior to the termination thereof, whether upon the exercise of
options, conversion of convertible securities or otherwise, the "Subject
Shares"). Pursuant to the Tender Agreement, each of the Stockholders agreed,
among other things, to validly tender (and not withdraw) his Subject Shares to
Purchaser pursuant to the Offer.

     Additionally, pursuant to the Tender Agreement, each of the Stockholders
agreed that, during the time that the Tender Agreement is in effect, at any
meeting of the stockholders of the Company, however called, or in any written
consent in lieu thereof, such Stockholder will (i) vote the Subject Shares owned
by him in favor

                                       35
<PAGE>   38

of the Merger; and (ii) vote the Subject Shares owned by him against any action
or agreement (other than the Merger Agreement or the transactions contemplated
thereby) that could reasonably be expected to impede, interfere with, delay,
postpone or attempt to discourage the Merger or the Offer, including, but not
limited to: (A) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company and its
subsidiaries; (B) a sale or transfer of a material amount of assets of the
Company and its subsidiaries or a reorganization, recapitalization or
liquidation of the Company and its subsidiaries; (C) any change in the
management or board of directors of the Company, except as otherwise agreed to
in writing by Purchaser; (D) any material change in the present capitalization
or dividend policy of the Company; or (E) any other material change in the
Company's corporate structure or business.

     The Tender Agreement provides that, from and after the date of the Tender
Agreement, each of the Stockholders will not, and will cause his financial and
other advisors, agents, representatives, affiliates and others working on its
behalf or at its direction not to, initiate, solicit, encourage or facilitate
offers, inquiries or proposals with respect to, or furnish any information
relating to or participate in any negotiations or discussions concerning, any
merger, reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries, or any purchase or sale of more than 10% of
the assets (including stock of subsidiaries) of the Company and its subsidiaries
taken as a whole, or any purchase or sale of, or tender or exchange offer for,
10% or more of the equity securities of the Company or any of its subsidiaries
other than as contemplated or permitted by the Merger Agreement.

     Pursuant to the Tender Agreement, each of the Stockholders agreed, while
the Tender Agreement is in effect, and except as contemplated thereby, not to
(i) sell, transfer, pledge, encumber, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect to
the sale, transfer, pledge, encumbrance, assignment or other disposition of, any
of the Subject Shares or (ii) grant any proxies, deposit any Subject Shares into
a voting trust or enter into a voting agreement with respect to any Subject
Shares or (iii) take any action that would make any representation or warranty
of such Stockholder contained herein untrue or incorrect or have the effect of
preventing or disabling such Stockholder from performing his obligations under
the Tender Agreement.

     The Tender Agreement provides that each of the Stockholders will, while the
Tender Agreement is in effect, promptly notify Parent of the number of any new
shares of Company Common Stock acquired by such Stockholder, if any, after the
date thereof.

     IRREVOCABLE UNDERTAKINGS.  Each of Brian Souter and Ann Gloag has signed an
irrevocable undertaking dated June 12, 1999, pursuant to which each of them has
agreed to vote his or her shares of voting stock of Parent in favor of the
Merger. Mr. Souter and Ms. Gloag together beneficially own approximately 24% of
the shares of Parent.

     EMPLOYEE TERM SHEET. Pursuant to an Employee Term Sheet dated June 12, 1999
and delivered to Parent and subject to the good faith negotiation and execution
of definitive service agreements, (1) each of Lawrence K. King, Frank Gallagher
and Gerald Mercanante agreed to enter into new service agreements with the
Company or one of its subsidiaries for three years from the closing of the
Merger, (2) Lawrence K. King will be appointed as a director of Parent (subject
to Parent's articles of association and the rules of the LSE) and (3) Lawrence
K. King, Frank Gallagher, Gerald Mercadante and John Mercadante, Jr.
(collectively, the "Investors"), agreed to invest between them $9 million in the
purchase of Parent ordinary shares, as soon as reasonably practicable, and,
subject to certain customary exceptions, not dispose of the shares acquired by
them for a period of one year from the purchase. Subject to the Investors
continuing to be employed by the Company (except where prior termination by the
employer was without cause), certain performance criteria being achieved and the
approval of Parent's shareholders being obtained, three years after the
Effective Time each Investor will be entitled to receive one Parent ordinary
share for every ten Parent ordinary shares purchased under (3) above. The
Company has indicated to Parent that certain additional executives would be
prepared to invest an additional $1 million in the purchase of Parent ordinary
shares on the terms described above.

                                       36
<PAGE>   39

12. PURPOSE OF THE OFFER; THE MERGER; PLANS FOR THE COMPANY

     Purpose.  The purpose of the Offer and the Merger is to acquire the entire
equity interest in the Company and, subject to receipt of STB approval, control
of the Company. The Offer is being made pursuant to the Merger Agreement. As
promptly as practicable following consummation of the Offer and after
satisfaction or waiver of all conditions to the Merger set forth in the Merger
Agreement, Parent intends to acquire the remaining equity interest in the
Company not acquired in the Offer by consummating the Merger.

     Vote Required to Approve the Merger.  The Board of Directors of the Company
has approved the Merger Agreement in accordance with the DGCL. If required for
approval of the Merger, the Company has agreed, subject to the satisfaction of
the conditions to the Merger set forth in the Merger Agreement, in accordance
with and subject to the DGCL, to duly convene a meeting of its stockholders as
promptly as practicable following the purchase of Shares pursuant to the Offer
for the purpose of considering and taking action on the Merger Agreement. If
stockholder approval is required, the Merger Agreement must generally be
approved by the vote or consent of the holders of a majority of the outstanding
Shares. As a result, if the Minimum Condition is satisfied, Purchaser will have
the power to approve the Merger Agreement without the affirmative vote of any
other stockholder.

     Pursuant to the terms of the Voting Trust Agreements, the Voting Trustees
will vote, give consent and take all other actions with respect to all Shares
held in the Voting Trust at any meeting of Company shareholders or otherwise in
favor of the Merger, in favor of any proposal or action necessary or desirable
to effect, or consistent with the effectuation of, the Merger and in favor of a
slate of nominees for director of the Company which favors the Merger and
against any other acquisition transaction involving the Company but not
involving Parent or one of its subsidiaries or affiliates.

     Appraisal Rights.  Stockholders do not have appraisal rights as a result of
the Offer. However, if the Merger is consummated, stockholders of the Company at
the time of the Merger who do not vote or consent in favor of the Merger and
comply with all statutory requirements will have the right under the DGCL to
demand appraisal of, and receive payment in cash of the fair value of, their
Shares outstanding immediately prior to the effective date of the Merger in
accordance with Section 262 of the DGCL.

     Under the DGCL, stockholders who properly demand appraisal and otherwise
comply with the applicable statutory procedures will be entitled to receive a
judicial determination of the fair value of their Shares (exclusive of any
element of value arising from the accomplishment or expectation of the Merger)
and to receive payment of such fair value in cash. Any such judicial
determination of the fair value of such Shares could be based upon
considerations other than or in addition to the price paid in the Offer and the
Merger and the market value of the Shares. In Weinberger v. UOP, Inc., the
Delaware Supreme Court stated, among other things, that "proof of value by any
techniques or methods which are generally considered acceptable in the financial
community and otherwise admissible in court" should be considered in an
appraisal proceeding. Stockholders should recognize that the value so determined
could be equal to or higher or lower than the price per Share paid pursuant to
the Offer or the consideration per Share to be paid in the Merger.

     In addition, several decisions by Delaware courts have held that in certain
circumstances a controlling stockholder of a corporation involved in a merger
has a fiduciary duty to other stockholders that requires that the merger be fair
to other stockholders. In determining whether a merger is fair to minority
stockholders, Delaware courts have considered, among other things, the type and
amount of the consideration to be received by the stockholders and whether there
was fair dealing among the parties. The Delaware Supreme Court stated in
Weinberger and Rabkin v. Philip A. Hunt Chemical Corp. that the remedy
ordinarily available to minority stockholders in a cash-out merger is the right
to appraisal described above. However, a damages remedy or injunctive relief may
be available if a merger is found to be the product of unfairness, including
fraud, misrepresentation or other misconduct.

     THE FOREGOING SUMMARY OF THE RIGHTS OF STOCKHOLDERS DOES NOT PURPORT TO BE
A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS DESIRING
TO EXERCISE ANY AVAILABLE APPRAISAL RIGHTS. THE PRESENTATION AND EXERCISE OF
APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE
DELAWARE LAW.

                                       37
<PAGE>   40

     The foregoing description of certain provisions of the DGCL is not
necessarily complete and is qualified in its entirety by reference to the DGCL.

     Rule 13e-3.  The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may under
certain circumstances be applicable to the Merger following the purchase of
Shares pursuant to the Offer in which Purchaser seeks to acquire any remaining
Shares. Rule 13e-3 should not be applicable to the Merger if the Merger is
consummated within one year after the expiration or termination of the Offer and
the price paid in the Merger is not less than the per Share price paid pursuant
to the Offer. However, in the event that Purchaser is deemed to have acquired
control of the Company pursuant to the Offer and the Merger is consummated more
than one year after completion of the Offer or an alternative acquisition
transaction is effected whereby stockholders of the Company receive
consideration less or in a different form than that paid pursuant to the Offer,
in either case at a time when the Shares are still registered under the Exchange
Act, Purchaser may be required to comply with Rule 13e-3 under the Exchange Act.
If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the Merger or such alternative transaction and the consideration
offered to minority stockholders in the Merger or such alternative transaction,
be filed with the Commission and disclosed to stockholders prior to consummation
of the Merger or such alternative transaction. The purchase of a substantial
number of Shares pursuant to the Offer may result in the Company being able to
terminate its Exchange Act registration. See Section 14. If such registration
were terminated, Rule 13e-3 would be inapplicable to any such future Merger or
such alternative transaction.

     Plans for the Company.  If Purchaser consummates the Offer, Parent expects
to conduct a detailed review of the Company and its businesses, assets,
corporate structure, capitalization, operations, properties, policies,
management and personnel and to consider what, if any, changes would be
desirable in light of the circumstances that then exist. Parent does not,
however, currently anticipate making any such changes, other than changes
contemplated by the Merger Agreement. Parent currently intends to support and
build on the Company's existing strategy to expand and enhance its position as a
leading provider of motorcoach, airport ground transportation and taxicab
services in the United States.

     Except as described in this Offer to Purchase, neither Parent nor Purchaser
has any present plans or proposals that would relate to or result in an
extraordinary corporate transaction such as a merger, reorganization or
liquidation involving the Company or any of its subsidiaries or a sale or other
transfer of a material amount of assets of the Company or any of its
subsidiaries, any material change in the capitalization or dividend policy of
the Company or any other material change in the Company's corporate structure or
business or the composition of its Board of Directors or management.

     13. DIVIDENDS AND DISTRIBUTIONS.  If the Company should, on or after the
date of the Merger Agreement (except as contemplated thereby), split, combine or
otherwise change the Shares or its capitalization, or disclose that it has taken
any such action, then without prejudice to Purchaser's rights under Section 15,
Purchaser may make such adjustments to the purchase price and other terms of the
Offer as it deems appropriate to reflect such split, combination or other
change.

     If on or after the date of the Merger Agreement (except as contemplated
thereby), the Company should declare or pay any cash or stock dividend or other
distribution on, or issue any right with respect to, the Shares that is payable
or distributable to stockholders of record on a date prior to the transfer to
the name of Purchaser, the Voting Trustees or the nominee or transferee of
Purchaser on the Company's stock transfer records of such Shares that are
purchased pursuant to the Offer, then without prejudice to Purchaser's rights
under Section 15, (i) the purchase price payable per Share by Purchaser pursuant
to the Offer will be reduced to the extent any such dividend or distribution is
payable in cash and (ii) any non-cash dividend, distribution (including
additional Shares) or right received and held by a tendering stockholder shall
be required to be promptly remitted and transferred by the tendering stockholder
to the Depositary for the account of Purchaser, accompanied by appropriate
documentation of transfer. Pending such remittance or appropriate assurance
thereof, Purchaser will, subject to applicable law, be entitled to all rights
and privileges as owner of any such non-cash dividend, distribution or right and
may withhold the entire purchase price or deduct from the purchase price the
amount or value thereof, as determined by Purchaser in its sole discretion.

                                       38
<PAGE>   41

     14. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, NEW YORK STOCK
EXCHANGE LISTING AND EXCHANGE ACT REGISTRATION.  The purchase of Shares pursuant
to the Offer will reduce the number of Shares that might otherwise trade
publicly and will reduce the number of holders of Shares. This could adversely
affect the liquidity and market value of the remaining Shares held by the
public.

     According to the NYSE's published guidelines, the NYSE would consider
delisting the Shares if, among other things, the number of record holders of at
least 100 Shares should fall below 1,200, the number of publicly held Shares
(exclusive of holdings of officers, directors and their families and other
concentrated holdings of 10% or more (the "NYSE Excluded Holdings")) should fall
below 600,000 or the aggregate market value of publicly held Shares (exclusive
of NYSE Excluded Holdings) should fall below $5,000,000. If the Shares no longer
meet the requirements of the NYSE for continued listing and the listing of the
Shares is discontinued, the market for the Shares could be adversely affected.

     If the NYSE were to delist the Shares, it is possible that the Shares would
continue to trade on another securities exchange or in the over-the-counter
market and that price or other quotations would be reported by such exchange or
through Nasdaq or other sources. The extent of the public market therefor and
the availability of such quotations would depend, however, upon such factors as
the number of shareholders and/or the aggregate market value of such securities
remaining at such time, the interest in maintaining a market in the Shares on
the part of securities firms, the possible termination of registration under the
Exchange Act as described below and other factors. Purchaser cannot predict
whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for or
marketability of the Shares or whether it would cause future market prices to be
higher or lower than the Offer price.

     The Shares are currently registered under the Exchange Act. The purchase of
Shares pursuant to the Offer may result in the Shares becoming eligible for
deregistration under the Exchange Act. Registration of the Shares may be
terminated upon application of the Company to the Commission if the Shares are
not listed on a national securities exchange and there are fewer than 300 record
holders. The termination of the registration of the Shares under the Exchange
Act would substantially reduce the information required to be furnished by the
Company to holders of the Shares and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), the requirement of furnishing a proxy statement in connection with
stockholders' meetings and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions, no longer applicable to the
Shares. Furthermore, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of the
securities pursuant to Rule 144 under the Securities Act of 1933.

     15. CERTAIN CONDITIONS OF THE OFFER.  Notwithstanding any other provisions
of the Offer, and in addition to the conditions that (i) at the expiration of
the Offer there will have been validly tendered and not properly withdrawn prior
to the expiration of the Offer a number of Shares which constitutes more than
50% of the voting power (determined on a fully-diluted basis) on the date of
purchase, of all the securities of the Company entitled to vote generally in the
election of directors or in a merger (for purposes of determining at any time
whether the Minimum Condition has been met, each outstanding Share legally or
beneficially owned by Parent or Purchaser or any of its affiliates at the
commencement of the Offer will be deemed validly tendered under the Offer and
not withdrawn), (ii) any and all applicable waiting periods under the HSR Act
having expired or been terminated and (iii) the staff of the STB having given
Parent a favorable informal advisory opinion to the effect that the proposed use
of the Voting Trust will effectively insulate Parent from acquiring unlawful
control of the Company and such advisory opinion not having been withdrawn or
the STB having approved Parent's and Purchaser's acquisition of the federally
regulated carriers controlled by the Company, Purchaser will not be required to
accept for payment, or subject to applicable rules and regulations of the
Commission, including Rule 14e-1(c) under the Exchange Act (relating to
Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), purchase or pay for any Shares tendered
pursuant to the Offer, may postpone the acceptance for payment of Shares
tendered, and subject to the terms and conditions of the Merger Agreement may
terminate the Offer, if at any time on or

                                       39
<PAGE>   42

after June 12, 1999 and at or before the time of payment for any such Shares any
of the following conditions occurs or has occurred:

          (a) (i) the representations and warranties of the Company set forth in
     the Merger Agreement shall not have been true and correct as of the date of
     the Merger Agreement, or shall not be true and correct (in all material
     respects, in the case of representations and warranties not already
     qualified as to materiality or Material Adverse Effect (as defined below)
     by their terms) as of the expiration of the Offer as though made on and as
     of the expiration of the Offer (except to the extent that such
     representations and warranties speak as of a specific date, which
     representations and warranties will have been true and correct as of such
     date), or (ii) the Company will have breached in any material respect any
     covenants contained in the Merger Agreement;

          (b) there shall have been any Law promulgated, enacted, entered,
     enforced or issued by any governmental entity which would have the effect
     of (i) making the purchase of, or payment for, some or all of the Shares by
     Parent or Purchaser or their affiliates pursuant to the Offer or the Merger
     illegal, or making the Voting Trust illegal, (ii) otherwise preventing
     consummation of the Offer or Merger; (iii) except for the Voting Trust,
     prohibiting the ownership or operation by the Company or any of its
     subsidiaries, or Parent or any of its subsidiaries, of all or any material
     portion of the business or assets of the Company or any of its
     subsidiaries, taken as a whole, or Parent or its subsidiaries, taken as a
     whole; (iv) except for the Voting Trust, materially limiting the ownership
     or operation by the Company or any of its subsidiaries, or Parent or any of
     its subsidiaries, of all or any material portion of the business or assets
     of the Company or any of its subsidiaries, taken as a whole, or Parent or
     its subsidiaries, taken as a whole, as a result of the transactions
     contemplated by the Offer or the Merger; (v) except for the Voting Trust,
     imposing limitations on the ability of Parent, Purchaser or any of Parent's
     affiliates effectively to acquire or hold or to exercise full rights of
     ownership of the Shares, including, without limitation, the right to vote
     any Shares acquired or owned by Parent or Purchaser or any of its
     affiliates on all matters properly presented to the stockholders of the
     Company, including, without limitation, the adoption of the Agreement or
     the right to vote any shares of capital stock of any significant subsidiary
     (as defined in Regulation S-X), directly or indirectly owned by the
     Company; or (vi) requiring divestiture by Parent or Purchaser or any of
     their affiliates of any Shares; and, in each case, no action or proceeding
     seeking to do any of the foregoing which has been instituted by any
     governmental entity or other person shall be pending;

          (c) the Merger Agreement shall have been terminated by the Company or
     Parent in accordance with its terms;

          (d) there shall have occurred or exist any condition, event or
     occurrence which, individually or in the aggregate, could reasonably be
     expected to have a Material Adverse Effect;

          (e) any approval or filing required to be obtained from or made with
     Governmental Entities or third parties in connection with the Offer or the
     Merger shall not have been obtained or made or will not be in full force
     and effect, other than any the failure of which to obtain or make,
     individually or in the aggregate, could not reasonably be expected to have
     a Material Adverse Effect or to materially reduce the benefits to Parent of
     ownership of the Company and its subsidiaries; or

          (f) the Parent Shareholder Approval shall not have been obtained.

     The foregoing conditions are for the sole benefit of Purchaser and may be
asserted by Purchaser regardless of the circumstances giving rise to such
condition. The foregoing conditions (other than the Minimum Condition, the HSR
Condition, the STB Condition and the condition set forth in clause (c) above)
may be waived by Purchaser in whole or in part at any time and from time to time
in its sole discretion. The failure by Purchaser at any time to exercise any of
the foregoing rights will not be deemed a waiver of any such right, the waiver
of any such right with respect to particular facts and other circumstances will
not be deemed a waiver with respect to any other facts and circumstances, and
each such right will be deemed an ongoing right that may be asserted at any time
and from time to time.

     Pursuant to the Merger Agreement, a "Material Adverse Effect" means an
effect or change that either individually or in the aggregate with all other
such effects or changes is or would be materially adverse to the

                                       40
<PAGE>   43

business, assets, operations, properties, financial condition or results of
operations of the Company and its subsidiaries taken as a whole, or would
prevent, hinder or materially delay the consummation of the transactions
contemplated by the Merger Agreement; provided that (i) any adverse effect or
change after the date of the Merger Agreement resulting from or relating to
general business or economic conditions shall be disregarded, (ii) any adverse
effect or change after the of the Merger Agreement resulting from or relating to
conditions generally affecting the industry in which the Company competes shall
be disregarded, (iii) any adverse effect or change resulting from or relating to
the announcement or pendency of the Offer, the Merger or any other transaction
contemplated by the Merger Agreement (other than any default of the Company
under its primary credit agreement or any related agreement, its senior
subordinated notes, or the terms of any other indebtedness of the Company or its
subsidiaries resulting from such announcement or pendency or from the
negotiation, execution or announcement of the Merger Agreement) shall be
disregarded, and (iv) any adverse effect or change resulting from compliance
with any limitation on the Company's and its subsidiaries' operations imposed by
the Merger Agreement shall be disregarded.

     16. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.

     General.  Except as set forth below, neither Purchaser nor Parent is aware
of any licenses or other regulatory permits that appear to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by Purchaser's acquisition of Shares (and the indirect
acquisition of the stock of the Company's subsidiaries) as contemplated herein,
or of any filings, approvals or other actions by or with any domestic (federal
or state), foreign or supranational governmental authority or administrative or
regulatory agency that would be required prior to the acquisition of Shares (or
the indirect acquisition of the stock of the Company's subsidiaries) by
Purchaser pursuant to the Offer as contemplated herein. Should any such approval
or other action be required, it is Parent's present intention to seek such
approval or action. There can be no assurance that any such approval or other
action, if needed, would be obtained without substantial conditions or that
adverse consequences might not result to the business of the Company, Parent or
Purchaser or that certain parts of the businesses of the Company, Parent or
Purchaser might not have to be disposed of or held separate or other substantial
conditions complied with in order to obtain such approval or other action or in
the event that such approval was not obtained or such other action was not
taken, any of which could cause Purchaser to elect (subject to the terms of the
Merger Agreement) to terminate the Offer without the purchase of the Shares
thereunder. Purchaser's obligation under the Offer to accept for payment and pay
for Shares is subject to certain conditions, including conditions relating to
the legal matters discussed in this Section 16.

     State Takeover Laws.  A number of states have adopted takeover laws and
regulations which purport to varying degrees to be applicable to attempts to
acquire securities of corporations which are incorporated in such states or
which have or whose business operations have substantial economic effects in
such states, or which have substantial assets, security holders, principal
executive offices or principal places of business therein. In 1982, the Supreme
Court of the United States, in Edgar v. Mite Corp., invalidated on
constitutional grounds the Illinois Business Takeovers Act, which as a matter of
state securities law made takeovers of corporations meeting certain requirements
more difficult, and the reasoning in such decision is likely to apply to certain
other state takeover statutes. However, in 1987, in CTS Corp. v. Dynamics Corp.
of America, the Supreme Court of the United States held that the State of
Indiana could, as a matter of corporate law and in particular those aspects of
corporate law concerning corporate governance, constitutionally disqualify a
potential acquiror from voting on the affairs of a target corporation without
the prior approval of the remaining stockholders, provided that such laws were
applicable only under certain conditions. Subsequently, in TLX Acquisition Corp.
v. Telex Corp., a federal district court in Oklahoma ruled that the Oklahoma
statutes were unconstitutional insofar as they applied to corporations
incorporated outside Oklahoma in that they would subject such corporations to
inconsistent regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a
federal district court in Tennessee ruled that four Tennessee takeover statutes
were unconstitutional as applied to corporations incorporated outside Tennessee.
This decision was affirmed by the United States Court of Appeals for the Sixth
Circuit. In December 1988, a federal district court in Florida held in Grand
Metropolitan PLC v. Butterworth that the provisions of the Florida Affiliated
Transactions Act and the Florida Control Share Acquisition Act were
unconstitutional as applied to corporations incorporated outside of Florida.

                                       41
<PAGE>   44

     In the Merger Agreement, the Company represents that its Board of Directors
has taken all actions necessary to render the provisions of Section 203 of the
DGCL inapplicable to the Merger Agreement, the Offer, the Merger and the Tender
Agreement. Except as described herein, Purchaser has not attempted to comply
with any state takeover statutes in connection with the Offer. Purchaser
reserves the right to challenge the validity or applicability of any state law
allegedly applicable to the Offer and nothing in this Offer to Purchase nor any
action taken in connection herewith is intended as a waiver of that right. In
the event that any state takeover statute is found applicable to the Offer,
Purchaser might be unable to accept for payment or purchase Shares tendered
pursuant to the Offer or be delayed in continuing or consummating the Offer. In
such case, Purchaser may not be obligated to accept for purchase or pay for, any
Shares tendered. See Section 16.

     Antitrust.  Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission ("FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the FTC and certain waiting period requirements have been
satisfied.

     On June 18, 1999, Parent filed with the FTC and the Antitrust Division a
Premerger Notification and Report Form in connection with the purchase of Shares
pursuant to the Offer. Under the provisions of the HSR Act applicable to the
Offer, the purchase of Shares pursuant to the Offer may not be consummated until
the expiration of a 15-calendar day waiting period following the filing by
Parent, unless both the Antitrust Division and the FTC terminate the waiting
period prior thereto. If, within such 15-calendar day waiting period, either the
Antitrust Division or the FTC requests additional information or documentary
material from Parent, the waiting period would be extended for an additional 10
calendar days following substantial compliance by Parent with such request.
Thereafter, the waiting period could be extended only by court order. If the
acquisition of Shares is delayed pursuant to a request by the FTC or the
Antitrust Division for additional information or documentary material pursuant
to the HSR Act, the Offer may, but need not (except as otherwise provided in the
Merger Agreement), be extended and in any event the purchase of and payment for
Shares will be deferred until 10 days after the request is substantially
complied with, unless the waiting period is sooner terminated by the FTC and the
Antitrust Division. See Section 2. Only one extension of such waiting period
pursuant to a request for additional information is authorized by the HSR Act
and the rules promulgated thereunder, except by court order. Any such extension
of the waiting period will not give rise to any withdrawal rights not otherwise
provided for by applicable law. See Section 4.

     The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the purchase by
Purchaser of Shares pursuant to the Offer, either of the FTC and the Antitrust
Division could take such action under the antitrust laws as it deems necessary
or desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking the divestiture of Shares purchased by
Purchaser or the divestiture of substantial assets of Parent, its subsidiaries
or the Company. Private parties and state attorneys general may also bring legal
action under federal or state antitrust laws under certain circumstances.

     Based upon an examination of publicly available information relating to the
businesses in which the Company and its subsidiaries are engaged, and because
Parent does not presently conduct any operations in the United States, Parent
and Purchaser believe that the acquisition of Shares pursuant to the Offer would
not violate the antitrust laws. There can be no assurance, however, that a
challenge to the Offer on antitrust grounds will not be made or, if such
challenge is made, what the outcome will be. See Section 15 for certain
conditions to the Offer, including conditions with respect to litigation and
certain government actions.

     Competition Act of Canada and Investment Canada Act.  Subject to certain
thresholds, Canada's Competition Act requires prenotification to the
Commissioner of Competition (the "Commissioner") of an acquisition of voting
shares of a corporation that directly or through subsidiaries conducts an
operating business in Canada where the parties to the transaction and their
affiliates have assets in Canada, or annual gross revenues from sales in, from
or into Canada, in excess of C$400 million, and where the corporation whose
shares are being acquired or its affiliates own Canadian assets the value of
which exceeds C$35 million or the gross revenues from sales in or from Canada
generated from such assets exceeds C$35 million in the

                                       42
<PAGE>   45

last fiscal year. The Company's Canadian assets and revenues fall below the
threshold; therefore, no prenotification was made to the Commissioner.

     The Investment Canada Act requires that notice of the acquisition of
"control" by "non-Canadians" (as defined in the Investment Canada Act) be
furnished to Investment Canada, a Canadian governmental agency (the "Agency"),
and that certain of these investments to acquire control of a Canadian business
be reviewed and approved by the Minister (as defined in the Investment Canada
Act) as investments that are likely to be of net benefit to Canada based upon
criteria set forth in the Investment Canada Act. Transactions which involve the
acquisition of control of "transportation services" may be subject to review and
approval under the Investment Canada Act. An indirect acquisition of a
corporation in Canada carrying on a Canadian business through the purchase of
voting shares of a corporation incorporated outside of Canada may be implemented
without prior approval but the application for review must be filed not later
than 30 days after the acquisition. Accordingly, the Offer and the Merger can be
completed without securing prior approval from Investment Canada. While being
subject to review will not preclude completion of the Offer or the Merger, there
is some risk that the Minister may reject the application as not being a "net
benefit" to Canada. The Minister may alternatively, require that additional
representations and undertakings be given.

     STB Matters; The Voting Trust.  Certain activities of subsidiaries of the
Company are regulated by the STB. Provisions of subtitle IV, title 49 of the
United States Code require approval of, or the granting of an exemption from
approval by, the STB for the acquisition of control of two or more carriers
subject to the jurisdiction of the STB ("Carriers") by a person that is not a
Carrier and for the acquisition or control of a Carrier by a person that is not
a Carrier but that controls any number of Carriers. STB approval or exemption is
required for, among other things, Parent's acquisition of control of the
Company. Purchaser intends, immediately upon the acquisition of the Shares
pursuant to the Offer, to deposit the Shares purchased pursuant to the Offer in
the Voting Trust in order to ensure that Parent and its affiliates do not
acquire and directly or indirectly exercise control over the Company and its
affiliates prior to obtaining necessary STB approvals or exemptions. STB
approval of the acquisition by Parent of control of the Company and its
subsidiaries is not a condition to the Offer. On June 15, 1999, Parent requested
from the staff of the STB an informal, non-binding opinion that the use of one
or more voting trusts substantially as set forth in the Voting Trust Agreement
is consistent with the policies of the STB against unauthorized acquisition of
control of a regulated carrier. Under STB regulations that have been in effect
since 1979, the STB staff has the power to issue such opinions. The proposed
Voting Trust Agreement is modeled closely upon voting trust agreements that have
been approved by the STB. However, there can be no assurance that the STB will
not seek changes in, or request public comment regarding, the proposed Voting
Trust Agreement.

     Pursuant to the terms of the Voting Trust Agreements, the Voting Trustees
will hold such Shares until (i) the receipt of STB approval or (ii) the Shares
are sold to a third party or otherwise disposed of or (iii) the Voting Trust is
otherwise terminated. The Voting Trust Agreements provide that the Voting
Trustees will have sole power to vote the Shares in the Voting Trust, will vote,
give consent and take all other action with respect to those Shares in favor of
the Merger, in favor of any proposal or action necessary or desirable to effect,
or consistent with the effectuation of, the Merger and in favor of a slate of
nominees for director of the Company which favors the Merger, and against any
other acquisition transaction involving the Company but not involving Parent or
one of its subsidiaries or affiliates, will vote the Shares in favor of any
permitted disposition of the Shares and, on all other matters, will vote the
Shares in accordance with its best judgment concerning the interests of the
Company. The Voting Trust Agreements contain certain other terms and conditions
designed to ensure that neither Purchaser nor Parent will control the Company
during the pendency of the STB control proceedings. In addition, the Voting
Trust Agreements provide that Purchaser or its successor in interest will be
entitled to receive any cash dividends paid by the Company.

     STB Matters: Acquisition of Control.  Set forth below is information
relating to approval by the STB of the acquisition of control over the Company
by Parent and Purchaser. Parent and Purchaser plan to file an application (the
"STB Application") seeking approval of the STB for the acquisition of control
over the Company and its affiliates by Parent and Purchaser. Under applicable
law and regulations, the STB will provide interested persons the opportunity to
file written comments on the proposed transaction. The statute requires the STB
to approve and authorize a control transaction when it finds the transaction is
consistent with

                                       43
<PAGE>   46

the public interest. In determining whether the proposed transaction is
consistent with the public interest, the STB is expected to consider at least
the following: (a) the effect of the proposed control transaction on the
adequacy of transportation to the public; (b) the total fixed charges that
result from the proposed transaction, and (c) the interest of carrier employees
affected by the proposed transaction. The STB has the authority to impose
conditions on its approval of a control transaction to alleviate competitive or
other concerns. If such conditions are imposed and would result in a failure of
any Offer Condition, Purchaser can elect, subject to the terms and conditions
hereof, to consummate the Offer subject to the STB conditions or can elect not
to consummate the Offer.

     Parent and Purchaser will present to the STB their case that acquisition of
control of the Company and its motor passenger carrier subsidiaries by Parent
and Purchaser, satisfies this public interest standard. Applicants will seek to
show that the transaction will result in significant benefits to the traveling
public largely by assisting the Company in the form of additional financial and
management resources in making its existing carrier subsidiaries stronger and
more efficient competitors, expanding the scope of their services to the public
and facilitating the Company's plan to acquire additional carriers and extend
the same benefits to them. Because Parent does not presently conduct any
operations in the United States, the transaction is expected to have no adverse
impact on competition or any adverse impact on the employees of the Company's
carrier subsidiaries. As for the effect on fixed charges, the capital structure
of the Surviving Company will be sufficiently strong that this factor is
unlikely, in Purchaser's view, to be given weight by the STB in its
consideration of the proposed transaction.

     Parent and Purchaser plan to file the STB Application shortly. The STB will
review the application and if it finds that such application is complete, will
publish notice of its acceptance of the application and issue a tentative grant
of control authority to applicants. Under existing law, if no written comments
are filed with the STB, control authority automatically becomes effective 45
days after the publication of the notice of acceptance. Other motorcoach
operators and other interested parties may oppose the STB Application or seek
conditions on STB approval. If written comments are filed with the STB, the STB
is required to enter a final order with respect to the STB Application within
approximately 13 months after such application is accepted. However, the STB can
process such cases more quickly under its current regulations. Applicants, in
such circumstances, would request an expedited decision on the issues raised by
the comments. In addition, any appeals from the STB final order might not be
resolved for a substantial period of time after the entry of such order by the
STB.

     Pending receipt of the STB approval, it is expected that the business and
operations of the Company will be conducted in the usual and ordinary course of
business, and the Company's employees and management will continue in their
present positions.

     RECEIPT OF STB APPROVAL IS NOT A CONDITION TO THE OFFER OR THE MERGER. IF
THE STB APPROVAL IS NOT OBTAINED OR THE STB IMPOSES UNACCEPTABLE CONDITIONS,
PURCHASER WILL BE REQUIRED TO USE ITS BEST EFFORTS TO SELL OR OTHERWISE DISPOSE
OF THE SHARES DEPOSITED IN THE VOTING TRUST AFTER THE STB ORDER DENYING SUCH
APPROVAL BECOMES FINAL OR PARENT DETERMINES NOT TO CONSUMMATE THE PROPOSED
CONTROL TRANSACTION BECAUSE OF UNACCEPTABLE CONDITIONS. IN SUCH CASE, PARENT
WOULD BE ENTITLED TO ANY PROCEEDS OF SUCH SALE OR OTHER DISPOSITION.

     Margin Credit Regulations.  Federal Reserve Board Regulations G, T, U and X
(the "Margin Credit Regulations") restrict the extension or maintenance of
credit for the purpose of buying or carrying margin stock, including the Shares,
if the credit is secured directly or indirectly thereby. Such secured credit may
not be extended or maintained in an amount that exceeds the maximum loan value
of the margin stock. Under the Margin Credit Regulations, the Shares are
presently margin stock and the maximum loan value thereof is generally 50% of
their current market value. The definition of "indirectly secured" contained in
the Margin Credit Regulations provides that the term does not include an
arrangement with a customer if the lender in good faith has not relied upon
margin stock as collateral in extending or maintaining the particular credit.

     17.  FEES AND EXPENSES.  JP Morgan is acting as Dealer Manager in
connection with the Offer, and its affiliate, J.P. Morgan Securities Ltd., is
providing certain financial advisory services to Parent in connection

                                       44
<PAGE>   47

with the Offer. Parent has agreed to pay J.P. Morgan Securities Ltd. a fee of
L650,000 upon announcement of the Offer and an additional fee of L3.85 million
if the Offer is consummated. Parent will also reimburse J.P. Morgan and J.P.
Morgan Securities Ltd. for reasonable out-of-pocket expenses including
reasonable attorney's fees and has also agreed to indemnify J.P. Morgan and J.P.
Morgan Securities Ltd. against certain liabilities and expenses in connection
with the Offer, including certain liabilities under the federal securities laws.

     Purchaser has retained MacKenzie Partners, Inc. to act as the Information
Agent and IBJ Whitehall Bank & Trust Company to act as the Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telex, telegraph and personal interview and may request
brokers, dealers and other nominee stockholders to forward the Offer materials
to beneficial owners. The Information Agent and the Depositary will receive
reasonable and customary compensation for services relating to the Offer and
will be reimbursed for certain out-of-pocket expenses. Purchaser and Parent have
also agreed to indemnify the Information Agent and the Depositary against
certain liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws.

     Purchaser will not pay any fees or commissions to any broker or dealer or
any other person for soliciting tenders of Shares pursuant to the Offer (other
than to the Dealer Manager, the Information Agent and the Depositary). Brokers,
dealers, commercial banks and trust companies will, upon request, be reimbursed
by Purchaser for customary mailing and handling expenses incurred by them in
forwarding offering materials to their customers.

     18.  MISCELLANEOUS.  The Offer is being made solely by this Offer to
Purchase and the related Letter of Transmittal and is being made to all holders
of Shares. Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of Shares pursuant thereto, Purchaser will
make a good faith effort to comply with any such state statute. If after such
good faith effort, Purchaser cannot comply with such state statute, the Offer
will not be made to nor will tenders be accepted from or on behalf of the
holders of Shares in such state. In any jurisdiction where the securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of Purchaser by the Dealer
Manager or one or more registered brokers or dealers that are licensed under the
laws of such jurisdiction.

     Purchaser and Parent have filed with the Commission a Schedule 14D-1
(including exhibits) pursuant to Rule 14d-3 under the Exchange Act, furnishing
certain additional information with respect to the Offer. Such statement and any
amendments thereto, including exhibits, may be inspected and copies may be
obtained from the offices of the Commission (except that they will not be
available at the regional offices of the Commission) in the manner set forth in
Section 8 of this Offer to Purchase.

     NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.

                                          SCH HOLDINGS CORP.

June 18, 1999

                                       45
<PAGE>   48

                                                                      SCHEDULE I

                        DIRECTORS AND EXECUTIVE OFFICERS
                            OF PARENT AND PURCHASER

     1. Directors and executive officers of Parent.  The name, age, present
principal occupation or employment and five-year employment history of each
director and executive officer of Parent (also referred to hereafter as
Stagecoach) and Purchaser are set forth below. All directors and executive
officers listed below are citizens of the United Kingdom. The business address
of Messrs. Souter, Kinski, Cochrane, Hinkley, Cox and Scott and Ms. Gloag is
Charlotte House, 20 Charlotte Street, Perth PH1 5LL Scotland. The business
address of Mr. Brown is Noble Grossart, 48 Queen Street, Edinburgh, EH2 3NR
Scotland. The business address of Mr. Sealey is 4 Castlelaw Road, Edinburgh,
EH13 ODN Scotland. The business address of Mr. Speirs is 17 Kings Cresent,
Helensburgh, G84 7RS Scotland.

<TABLE>
<CAPTION>
                                          PRESENT PRINCIPAL OCCUPATION OR
NAME AND POSITION                   EMPLOYMENT AND FIVE YEAR EMPLOYMENT HISTORY
-----------------                   -------------------------------------------
<S>                         <C>
Brian Souter............    Mr. Brian Souter (45) became Executive Chairman of
  Executive Chairman        Stagecoach in 1986. Mr. Souter is a co-founder of Stagecoach
                            and has responsibility for business developments, management
                            philosophy and strategy.
Mike Kinski.............    Mr. Mike Kinski (47) became Group Chief Executive in April
  Group Chief Executive     1998. Prior to joining Stagecoach, Mr. Kinski was Chief
                            Executive, Power Distribution and Water Operations and on
                            the board of Scottish Power from 1997. From 1995 to 1996,
                            Mr. Kinski served as Chief Executive of Manweb. Mr. Kinski
                            is responsible for the management of the Stagecoach
                            businesses and for the integration of new businesses into
                            the group. He is also non-executive director of the Post
                            Office.
Keith Cochrane..........    Mr. Keith Cochrane (34) became Group Finance Director in
  Group Finance Director    1996. Mr. Cochrane joined Stagecoach in 1993 as Financial
                            Controller and Company Secretary. Mr. Cochrane is
                            responsible for the overall financial policy and treasury
                            management and supports the Executive Chairman in investor
                            relations and business development.
Ann Gloag...............    Ms. Ann Gloag (56) became an Executive Director of
  Executive Director        Stagecoach in 1986. Ms. Gloag is a co-founder of Stagecoach,
                            and is responsible for property management.
Barry Hinkley...........    Mr. Barry Hinkley (50) became an Executive Director of
  Executive Director        Stagecoach in 1992 and has over 30 years experience in the
                            bus industry. Mr. Hinkley is the U.K. Bus Division chairman
                            and is also responsible for restructuring new acquisitions,
                            engineering and group purchasing.
Brian Cox...............    Mr. Brian Cox (52) became an Executive Director of
  Executive Director        Stagecoach in 1992. Mr. Cox joined Stagecoach in 1987 and
                            was Managing Director of Stagecoach (South) Ltd. from 1987
                            to 1993. Mr. Cox currently serves as Chairman of South West
                            Trains and is Group Commercial Director with responsibility
                            for identifying integrated transport opportunities and other
                            commercial developments across the group.
Derek Scott.............    Mr. Derek Scott (46) became Company Secretary in 1996. Mr.
  Company Secretary         Scott was Group Finance Director from 1986 to 1995 and
                            chairs Stagecoach's pensions trustees and supports the
                            Chairman in corporate affairs.
Ewan Brown..............    Mr. Ewan Brown (57) became a Non-Executive Director of
  Non-Executive Director    Stagecoach in 1988. Mr. Brown is an Executive Director of
                            Noble Grossart Ltd and a non-executive director of Lloyds
                            TSB Bank plc.
</TABLE>

                                       I-1
<PAGE>   49

<TABLE>
<CAPTION>
                                          PRESENT PRINCIPAL OCCUPATION OR
NAME AND POSITION                   EMPLOYMENT AND FIVE YEAR EMPLOYMENT HISTORY
-----------------                   -------------------------------------------
<S>                         <C>
Barry Sealey............    Mr. Barry Sealey (63) became a Non-Executive Director of
  Non-Executive Director    Stagecoach in 1992. Mr. Sealey is Chairman of the Audit
                            Committee. Mr. Sealey was Managing Director of Christian
                            Salvesen from 1981 to 1989. He is currently non-executive
                            director of Scottish Equitable plc and Scottish American
                            Investment Company plc.
Robert Speirs...........    Mr. Robert Speirs (62) became a Non-Executive Director of
  Non Executive Director    Stagecoach in 1995. Mr. Speirs is Chairman of the
                            Remuneration Committee. Until 1998 Mr. Speirs was Group
                            Finance Director of The Royal Bank of Scotland and Chairman
                            of Direct Line Insurance. He has over 20 years experience in
                            the oil and property sectors.
</TABLE>

     2. Directors and executive officers of Purchaser.  The name, age, present
principal occupation or employment and five-year employment history of each
director and executive officer of Purchaser are set forth below. All directors
and executive officers listed below are citizens of the United Kingdom. The
business address of Messrs. Cochrane, Guest, Griffiths and Whitnall is Charlotte
House, 20 Charlotte Street, Perth PH1 5LL Scotland.

<TABLE>
<CAPTION>
                                          PRESENT PRINCIPAL OCCUPATION OR
NAME AND POSITION                   EMPLOYMENT AND FIVE YEAR EMPLOYMENT HISTORY
-----------------                   -------------------------------------------
<S>                         <C>
Keith Cochrane..........    Mr. Keith Cochrane (34) became Group Finance Director of
  President/Director        Stagecoach in 1996. Mr. Cochrane joined Stagecoach in 1993
                            as Financial Controller and Company Secretary.
Nick Guest..............    Mr. Nick Guest (32) became Group Finance Manager of
  Vice President/           Stagecoach in 1998. From May 1997 to September 1998, Mr.
  Treasurer/Director        Guest was Head of Finance at DX Communications Limited, from
                            September 1995 to May 1997, Mr. Guest was Head of Internal
                            Audit at Scottish Amicable Life Assurance Society.
Martin Griffiths........    Mr. Martin Griffiths (33) became Group Business Development
  Vice                      Manager of Stagecoach in 1997. Prior to joining Stagecoach,
President/Director          he was a senior manager at Arthur Andersen with particular
                            responsibility in corporate advisory, due diligence and
                            finance raising services.
Alan Whitnall...........    Mr. Alan Whitnall (51) became Group Administration Manager
  Secretary                 in June 1992. Mr. Whitnall joined Stagecoach in 1987 as
                            Company Secretary of Stagecoach South Ltd.
</TABLE>

                                       I-2
<PAGE>   50

     Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary as follows:

                     The U.S. Depositary for the Offer is:
                       IBJ WHITEHALL BANK & TRUST COMPANY

<TABLE>
<S>                                            <C>
                   By Mail:                         By Hand/Overnight Carrier Delivery:
                 P.O. Box 84                                  One State Street
            Bowling Green Station                            New York, NY 10004
           New York, NY 10274-0084                                 Attn:
          Attn: Reorganization Dept.                 Securities Processing Window, SC-1
</TABLE>

                           By Facsimile Transmission:
                                 (212) 858-2611
                             Confirm by Telephone:
                                 (212) 858-2103

     Any questions and requests for assistance may be directed to the
Information Agent or the Dealer Manager at their respective telephone numbers
and addresses listed below. Additional copies of this Offer to Purchase, the
Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained
from the Information Agent. You may also contact your broker, dealer, commercial
bank or trust company for assistance concerning the Offer.

                    The Information Agent for the Offer is:

                        [MACKENZIE PARTNERS, INC. LOGO]

                                156 Fifth Avenue
                               New York, NY 10010
                          Call Collect (212) 929-5500
                                       or
                         Call Toll Free (800) 322-2885

                      The Dealer Manager for the Offer is:

                               J.P. MORGAN & CO.

                                 60 Wall Street
                               New York, NY 10260
                         (212) 929-5500 (Call Collect)
                                       or
                         Call Toll-Free (800) 322-2885
