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                             CONFIDENTIALITY LETTER





                                             June 2, 1999



Coach USA, Inc.
One Riverway
Suite 500
Houston, Texas 77056


Attention:  Lawrence King, Chairman of the Board and Chief Executive Officer


Ladies and Gentlemen:

                  In connection with our consideration of a possible Transaction
(as defined below) with Coach USA, Inc. and its subsidiaries (together, the
"Company"), we have requested the Company to provide us with information
concerning the Company. As a condition to our being furnished such information,
we agree to treat any information concerning the Company (whether prepared by
the Company, its advisors or otherwise) which is furnished to us by or on behalf
of the Company, regardless of the form in which it is communicated or maintained
(herein collectively referred to as the "Evaluation Material") in accordance
with the provisions of this letter agreement and to take or abstain from taking
certain other actions herein set forth. "Transaction" shall mean a joint
venture, merger, consolidation, share exchange, purchase of substantially all of
the stock or assets, or other business combination of any nature whatsoever
between the Company and us or one or more than one of our affiliates.

                  The term "Evaluation Material" does not include information
which (i) is in our possession as of the date hereof, provided that such
information was not provided by or on behalf of the Company and is not known by
us to be subject to another confidentiality agreement with or other obligation
of secrecy to the Company or another party, (ii) is or becomes generally
available to the public other than as a result of a disclosure by us or our
Representatives (as defined below), (iii) is or becomes available to us on a
non-confidential basis from a source other than the Company or its advisors or
other representatives, provided that such source is not known by us to be bound
by a confidentiality agreement with or other obligation of secrecy to the
Company or another party or (iv) is independently developed by us or our
Representatives without violating our obligations hereunder. Evaluation Material
shall include all notes, analyses, compilations, studies or other documents,
whether prepared by us or others, which contain or otherwise reflect the
information furnished to us concerning the Company. The term "Representatives"
as used in this letter agreement shall include our directors, executives,
officers,



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employees, legal, financial, accounting or other advisors, affiliates and
representatives of any thereof.

                  1. We hereby agree that the Evaluation Material will be used
solely for the purpose of evaluating a possible Transaction involving the
Company and us, and that, except as required by law or regulation or by legal or
judicial process or by the rules of any applicable securities exchange, such
information will be kept confidential by us in accordance with the terms hereof;
provided, however, that (i) any such information may be disclosed to our
Representatives who need to know such information for the purpose of evaluating
any such possible Transaction by us (it being understood that such
Representatives shall be informed by us of the confidential nature of such
information) and (ii) any disclosure of such information may be made to which
the Company consents in writing. We will be responsible for any breach of this
letter agreement by our Representatives.

                  2. We shall promptly, upon the request of the Company,
destroy, and instruct our Representatives to destroy, all written Evaluation
Material in our possession prepared by the Company or its representatives and
will not retain in any form any copies, extracts or other reproductions in whole
or in part of such written material. Upon the Company's request, any such
destruction shall be certified in writing by one of our responsible officers
supervising such destruction. Notwithstanding the destruction of any Evaluation
Material, we will continue to be bound by our obligation of confidentiality and
other obligations hereunder.

                  3. Without the prior consent of the other party hereto, except
as required by law or regulation, by legal or judicial process or by the rules
of any applicable securities exchange, each party hereto will not disclose to
any person the fact that an evaluation of a possible Transaction with us is
occurring or has occurred, that Evaluation Material is being or has been made
available to us or that discussions or negotiations are occurring or have
occurred concerning the possible Transaction with us, or any of the terms,
conditions or other facts with respect to any such possible Transaction,
including the status thereof. The term "person" as used in this letter agreement
shall be broadly interpreted to include without limitation any corporation,
company, group, partnership or individual.

                  4. In the event that either party hereto receives a request to
disclose any information referred to in paragraph 3 hereof or that we receive a
request to disclose any Evaluation Material, in any such case under any
applicable law or regulation, legal or judicial process or the rules of any
applicable securities exchange, the party receiving such request agrees (i)
promptly to notify the other party hereto in writing thereof, (ii) to consult
with the other party hereto on the advisability of taking steps to resist or
narrow such request, and (iii) if disclosure is required or deemed advisable, to
cooperate reasonably with the other party hereto in, and not to oppose, any
attempt that it may make to obtain an order or other reliable assurance that
confidential treatment will be accorded to designated portions of such
information. If disclosure is required or deemed advisable in the circumstances
described above, disclosure may be made without liability hereunder, subject to
compliance with this paragraph.




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                  5. We agree that, for a period of one year from the date of
this letter agreement, we will not, without your prior written consent, unless
we have been specifically invited in writing by the board of directors of the
Company, in any manner, directly or indirectly, (a) effect, offer or propose
(whether publicly or otherwise) to effect or cause or participate in, or in any
way assist any other person to effect, offer or propose (whether publicly or
otherwise) to effect or cause or participate in, (i) any acquisition of any
securities (or beneficial ownership thereof) or material assets of the Company
or any of its subsidiaries, (ii) any tender or exchange offer for securities of
the Company or, any merger or business combination involving the Company
(including, without limitation, any recapitalization, restructuring,
liquidation, dissolution or other extraordinary transaction with respect to the
Company) or (iii) any "solicitation" of "proxies" (as such terms are used in the
proxy rules of the Securities and Exchange Commission) or consents to vote, or
seek to advise or influence any person with respect to the voting of any voting
securities of the Company, (b) form, join or in any way participate in a "group"
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934 and
the rules and regulations thereunder) with respect to any voting securities of
the Company, (c) otherwise act, alone or in concert with others, to seek to
control or influence the management, board of directors or policies of the
Company, (d) take any action which would reasonably be expected to force the
Company to make a public announcement regarding any of the types of matters set
forth in clause (a) above, (e) enter into any discussions or arrangements with
any third party with respect to any of the foregoing or (f) publicly disclose
any intention, plan or arrangement with respect to the foregoing. We also agree
during such period not to request the Company (or its directors, officers,
employees or agents), directly or indirectly, to amend or waive any provision of
this paragraph (including this sentence). Notwithstanding the foregoing
provisions of this paragraph, if the board of directors of the Company approves
a transaction with any person that would result in such person beneficially
owning (i) more than 20% of the outstanding voting securities of the Company or
(ii) any securities convertible into securities of the Company, or any options,
warrants or other rights to acquire securities of the Company, in each case in
this clause (ii) representing more than 20% of the outstanding voting securities
of the Company determined on a fully diluted basis (or a successor to the
Company in a merger or consolidation Transaction) or all or substantially all of
its assets, or any person or "group" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934 and the rules and regulations thereunder) has
commenced or publicly announced its intention to commence a tender or exchange
offer for (i) more than 20% of the outstanding voting securities of the Company
or (ii) any securities convertible into securities of the Company, or any
options, warrants or other rights to acquire securities of the Company, in each
case in this clause (ii) representing more than 20% of the outstanding voting
securities of the Company determined on a fully diluted basis, then we shall not
be prohibited thereafter from taking any of the actions described in the
foregoing provisions of this paragraph.

                  6. Each party hereto agrees that unless and until a definitive
agreement between the Company and us with respect to a possible Transaction
involving the Company has been executed and delivered, neither the Company nor
we will be under any legal obligation of any kind whatsoever with respect to
such a Transaction by virtue of this letter agreement or any written or oral
expression with respect to such a Transaction by any of its representatives
except,



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in the case of this letter agreement or any other written agreement which
purports to be binding, for the matters specifically agreed to herein or
therein. The agreement set forth in this paragraph may be modified or waived
only by a separate writing executed by the Company and us expressly so modifying
or waiving such agreement. We understand that the Company does not make any
representation or warranty as to the accuracy or completeness of the Evaluation
Material, and we agree that neither the Company nor any of its representatives
will have any liability to us or any of our Representatives resulting from the
use of the Evaluation Material supplied by the Company or its representatives.

                  7. We hereby acknowledge that we are aware (and our
Representatives have been or will be advised by us) that United States federal
securities laws restrict persons with material non-public information concerning
a company obtained directly or indirectly from that company from purchasing or
selling securities of such company, or from communicating such information to
any other person under circumstances in which it is reasonably foreseeable that
such person is likely to purchase or sell such securities. We further agree
that, from the date we receive Evaluation Material, we will not purchase or
sell, or permit any Representative to purchase or sell on our behalf, any of the
Company's securities in violation of United States federal securities laws.

                  8. We hereby agree that the Company reserves the right in it
its sole and absolute discretion, to reject any or all proposals, to decline to
furnish further Evaluation Material and to terminate discussions and
negotiations at any time. The exercise by the Company of these rights shall not
affect the enforceability of any provision of this letter agreement.

                  9. Each party hereto acknowledges and agrees that money
damages would not be a sufficient remedy for any breach of any provision of this
letter agreement, and that in addition to all other remedies which the
non-breaching party, its agents or its representatives may have, each of the
non-breaching party, its agents and representatives will be entitled to specific
performance and injunction or other equitable relief as a remedy for any such
breach, and each party hereto further agrees to waive any requirement for the
securing or posting of any bond in connection with such remedy.

                  10. It is understood and agreed that no failure or delay by a
party hereto in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any right, power or
privilege hereunder.

                  11. The invalidity or unenforceability of any provision of
this letter agreement shall not affect the validity or enforceability of any
other provisions of this letter agreement, which shall remain in full force and
effect.

                  12. Except as provided in paragraph 5 above, this letter
agreement shall terminate two years from the date hereof.




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                  13. This letter agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware. This letter agreement may
be executed in separate counterparts, all of which taken together shall
constitute one and the same instrument.



                                   Very truly yours,



                                   STAGECOACH HOLDINGS PLC



                                   By: /s/ KEITH COCHRANE
                                       -----------------------------------
                                       Name: Keith Cochrane
                                       Title: Group Finance Director




Confirmed and agreed to as of
the date first written above:




COACH USA, INC.



By: /s/ LAWRENCE K. KING
    ----------------------------------
    Name: Lawrence K. King
    Title: Chief Executive Officer
