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                              EMPLOYEE TERM SHEET


1.   Each of Larry King, Frank Gallagher and Gerald Mercadante agrees to enter
     into a new service agreement with Coach USA, Inc. ("Coach") or one of its
     subsidiaries for a fixed term of 3 years from closing; thereafter the
     notice periods in the existing contracts will apply subject to a maximum of
     one year.

2.   Larry King will, following closing, be appointed as a director of
     Stagecoach Holdings plc ("Stagecoach") subject to the articles of
     association of Stagecoach and the rules of London Stock Exchange.

3.   The terms of the new service agreements will be on the same overall terms
     as the existing service contracts of those individuals except where changes
     are reasonably required to conform with the principles of corporate
     governance to which Stagecoach is subject and to remove any provisions
     which are, in the reasonable opinion of Stagecoach, inappropriate for a
     London listed company of the size and nature of Stagecoach.

4.   Larry King, Frank Gallagher, Gerald Mercadante and John Mercadante (the
     "Investors") agree that as soon as reasonably practicable taking into
     account the London Stock Exchange Code on directors dealings and insider
     dealing legislation in the UK, they will invest between them in aggregate
     US$9 million in the purchase of Stagecoach ordinary shares.

5.   For a period of one year from purchase, the Investors will not be permitted
     to dispose of the shares acquired by them. This will be subject to
     customary exceptions to be negotiated. At the end of three years from
     closing, each Investor will be entitled to receive one new ordinary
     Stagecoach share for each 10 ordinary shares purchased under paragraph 4
     above then held. This entitlement will be subject to the relevant Investor
     continuing to be employed by Coach, except where prior termination by the
     employer was without cause and subject to appropriate performance criteria
     being achieved. These arrangements will be subject to the required approval
     of Stagecoach shareholders being obtained.

6.   Stagecoach intends that senior executives of Coach will be entitled to
     participate in the existing Stagecoach executive share option scheme or an
     appropriate equivalent phantom option scheme arrangement.

7.   Existing underwater options will be cancelled.

8.   For an executive who is entitled to terminate his contract on a change of
     control and to receive a lump sum payment:

     (i)  if the executive terminates his employment within a period of three
          years from the date of the change of control, he will be entitled to
          receive the termination payment which would have been due had the
          contract been terminated upon
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            the change of control together with interest on that sum for the
            period from the date of the change of control to the date of
            termination at a rate equivalent to the retail bank rate.

     (ii)   if the executive terminates his employment at any time following the
            3 year period above, the executive will be entitled to an amount
            calculated on the basis of (i) above or to receive a cash payment
            equal to the number of Stagecoach shares which, at the market price
            prevailing on the date of the change of control, could have been
            purchased with the relevant termination payment had the contract
            been terminated upon the change of control, multiplied by the market
            price of Stagecoach shares prevailing on the date of termination of
            the employment, whichever of the two (2) amounts described above is
            the greater amount.

Each of the signatories hereto and Stagecoach agree that this term sheet is a
statement of mutual intent for the purpose of aiding negotiation, and remains
subject to the negotiation of other material terms and the negotiation and
execution of definitive service agreements. The signatories hereto agree to
negotiate definitive service agreements on the basis of the terms herein in good
faith.

/s/ LARRY KING
--------------------------
Larry King

/s/ FRANK GALLAGHER
--------------------------
Frank Gallagher

/s/ GERALD MERCADANTE
--------------------------
Gerald Mercadante

/s/ JOHN MERCADANTE
--------------------------
John Mercadante

