Greyhound Lines Inc · PRER14A · On 1/28/99

Filed On 1/28/99   ·   SEC File 1-10841   ·   Accession Number 950134-99-497

Revised Preliminary Proxy Solicitation Material   ·   Schedule 14A
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Document/Exhibit                   Description                      Pages   Size 

 1: PRER14A     Revised Preliminary Proxy Solicitation Material      100    536K 

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SCHEDULE 14A

(RULE 14a-101)

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES 

EXCHANGE ACT OF 1934

(AMENDMENT NO. 1) 

Filed by the Registrant [X]                                           

Filed by a Party other than the Registrant [ ]                        

Check the appropriate box:                                            

[X] Preliminary Proxy Statement       [ ] Confidential, for Use of the
                                              Commission Only (as permitted by
                               Rule 14a-6(e)(2))

[ ] Definitive Proxy Statement                                        

[ ] Definitive Additional Materials                                   

[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12     

GREYHOUND LINES, INC. 

--------------------------------------------------------------------------------

(Name of Registrant as specified in its Charter and Person Filing Proxy 
Statement)

Payment of filing fee (Check the appropriate box):                              

[ ] No fee required.                                                  

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.                                                         

(1) Title of each class of securities to which transaction applies:   

Common Stock, $.01 par value per share, of Greyhound Lines, Inc. ("Greyhound    
Common Stock")                                                                  

--------------------------------------------------------------------------------

(2) Aggregate number of securities to which transactions applies:     

75,527,063 shares of Greyhound Common Stock (assuming, solely for purposes of   
calculating the filing fee, that (i) all currently outstanding shares of 8 1/2% 
Convertible Exchangeable Preferred Stock, par value $.01 per share, of Greyhound
Lines, Inc. are converted into shares of Greyhound Common Stock prior to the    
completion of the transaction, and (ii) outstanding options to purchase         
Greyhound Common Stock that may become exercisable prior to the completion of   
the transaction are exercisable prior to the completion of the transaction).    

--------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed  
pursuant to Exchange Act Rule 0-11:                                             

$6.50 

--------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:                  

$490,925,910

--------------------------------------------------------------------------------

(5) Total fee paid:                                                   

$98,186 

--------------------------------------------------------------------------------

[X] Fee paid previously with preliminary materials.                   

    [X] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid   
previously. Identify the previous filing by registration statement number, or   
the form or schedule and the date of its filing.                                

(1) Amount Previously Paid:                                           

$83,987 

--------------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:                     

333-9632

--------------------------------------------------------------------------------

(3) Filing Party:                                                     

Laidlaw Inc.

--------------------------------------------------------------------------------

(4) Date Filed:                                                       

November 13, 1998 

--------------------------------------------------------------------------------

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                                                                · Download Table
                                              
[LOGO]                Greyhound Lines, Inc.   
                      P.O. Box 660362         
                      Dallas, Texas 75266-0362

                                                                February  , 1999

Dear Stockholder:                                                               

You are invited to attend a very important special meeting of the     
stockholders of Greyhound Lines, Inc. to be held on                , 1999.      

At the special meeting you will be asked to consider and vote upon a  
proposal to adopt a merger agreement between Greyhound and Laidlaw Inc. If the  
merger is completed, Greyhound will become a subsidiary of Laidlaw.             

   Upon completion of the merger, the holders of Greyhound common stock will
receive $6.50 per share in cash. Under the terms of the merger agreement,       
Laidlaw had the option to pay up to $4.00 of the merger consideration with      
Laidlaw common shares. However, Laidlaw has irrevocably waived its right to do  
so. As a result the merger consideration will be paid entirely in cash.         

The Greyhound preferred stock will remain outstanding after the merger
unless converted into Greyhound common stock prior to completion of the merger. 
After the merger, the Greyhound preferred stock will no longer be convertible   
into Greyhound common stock. Instead, each share of Greyhound preferred stock   
will be convertible into the right to receive $33.33 in cash.                   

The Board of Directors of Greyhound has, by the unanimous vote of the 
directors present, determined that the merger is fair to and in the best        
interests of Greyhound and its stockholders. ACCORDINGLY, THE BOARD HAS APPROVED
THE MERGER AGREEMENT AND RECOMMENDS THAT YOU VOTE "FOR" THE ADOPTION OF THE     
MERGER AGREEMENT AT THE SPECIAL MEETING.                                        

  In light of the importance of the proposed merger, we urge you to attend
the special meeting in person or participate by proxy. Whether or not you plan  
to attend, after carefully reading and considering the accompanying materials,  
please vote your shares as soon as possible. Your voting materials contain      
detailed information on how to vote.                                            

    The adoption of this merger agreement requires the approval of the holders
of a majority of the outstanding shares of Greyhound common stock and preferred 
stock voting together as one class. Not voting is the same as a vote against the
merger. Regardless of the number of shares you own, your vote is important.     

  Sincerely,

             /s/ CRAIG R. LENTZSCH

         Craig R. Lentzsch

                             President and Chief Executive Officer

This Proxy Statement is first being mailed to stockholders on or about
February   , 1999.                                                              

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                                                                · Download Table
                                              

[LOGO]                Greyhound Lines, Inc.   
                      P.O. Box 660362         
                      Dallas, Texas 75266-0362

------------------

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS 

TO BE HELD ON                         , 1999

------------------

 A special meeting of the holders of common stock and preferred stock of
Greyhound Lines, Inc., a Delaware corporation, will be held on           ,      
          , 1999, at   :    .m., local time, at           , in Dallas,
Texas. The special meeting has been called for the following purposes:          

-   To consider and vote upon a proposal to adopt the Amended and Restated
    Agreement and Plan of Merger among Greyhound, Laidlaw Inc. and Laidlaw
Transit Acquisition Corp.                                         

 -   If necessary, to approve any adjournment of the special meeting without
further notice except by announcement at the special meeting.     

Following the merger, Greyhound will be a subsidiary of Laidlaw. The  
proposed merger is described in detail in the accompanying Proxy Statement. A   
copy of the merger agreement is attached as Appendix A to the Proxy Statement.  

   Greyhound stockholders of record at the close of business on February   ,
1999 are entitled to notice of, and to vote at, the special meeting and any     
adjournment or postponement of the special meeting.                             

Greyhound stockholders who do not vote in favor of adopting the merger
agreement and who otherwise comply with the requirements of Delaware law will be
entitled to appraisal rights. A summary of the applicable Delaware law          
provision, including the requirements a Greyhound stockholder must follow in    
order to exercise his or her appraisal rights, is contained in the accompanying 
Proxy Statement. A copy of the applicable Delaware law provision is attached as 
Appendix C to the Proxy Statement.                                              

  Please complete, date, sign and promptly mail the enclosed proxy card in
the enclosed postage-paid envelope to make sure that your vote will be counted  
and your shares are represented at the special meeting. Record holders of       
Greyhound common stock and preferred stock may also vote their shares by using a
toll free telephone number as described in the voting materials. If you attend  
the special meeting, you may vote your shares in person even if you have        
previously sent in your proxy card or voted by telephone. You may revoke your   
proxy in the manner described in the Proxy Statement at any time before it is   
voted at the special meeting. Signed proxies with no instructions indicated will
be voted "FOR" both the adoption of the merger agreement and the other proposal.

                           By Order of the Board of Directors,

             /s/ MARK E. SOUTHERST

         Mark E. Southerst
 Secretary

Dallas, Texas                                                                   
February   , 1999                                                               

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TABLE OF CONTENTS 

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                                                              PAGE
                                                              ----
                                                                  
QUESTIONS AND ANSWERS ABOUT THE MERGER......................    1 
SUMMARY.....................................................    3 
  The Parties...............................................    3 
  The Merger................................................    3 
  Recommendation of the Greyhound Board.....................    5 
  Opinion of Greyhound's Financial Advisor..................    5 
  Certain Litigation........................................    6 
  Market Price of Greyhound Common Stock....................    6 
  Selected Financial Data of Greyhound......................    7 
THE SPECIAL MEETING.........................................    8 
  General...................................................    8 
  Voting at the Special Meeting.............................    8 
  Required Vote.............................................    8 
  Proxies; Revocation.......................................    9 
  Adjournments..............................................    9 
THE PARTIES.................................................   10 
  Greyhound.................................................   10 
  Laidlaw...................................................   10 
THE MERGER..................................................   11 
  Background of the Merger..................................   11 
  Greyhound's Reasons for the Merger........................   17 
  Opinion of Greyhound's Financial Advisor..................   19 
  Laidlaw's Reasons for the Merger..........................   24 
  The Merger Agreement......................................   25 
  Delisting of Greyhound Common Stock.......................   30 
  Certain Federal Income Tax Consequences...................   30 
  Governmental Approvals....................................   32 
  Interests of Certain Persons in the Merger................   32 
  Appraisal Rights..........................................   37 
  Amendment to Greyhound Rights Agreement...................   39 
  Certain Litigation........................................   39 
BENEFICIAL OWNERSHIP OF GREYHOUND STOCK.....................   41 
AVAILABLE INFORMATION.......................................   44 
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.............   44 
APPENDIX A -- Amended and Restated Agreement and Plan of          
  Merger....................................................  A-1 
APPENDIX B -- Opinion of Bear Stearns & Co. Inc.............  B-1 
APPENDIX C -- Section 262 of the Delaware General                 
  Corporation Law...........................................  C-1 

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QUESTIONS AND ANSWERS ABOUT THE MERGER

The following questions and answers are intended to address briefly some        
commonly asked questions regarding the merger. These questions and answers may  
not address all questions that may be important to you as a Greyhound           
stockholder. Please refer to the more detailed information contained elsewhere  
in this Proxy Statement, the Appendices and the documents referred to or        
incorporated by reference.                                                      

Q:   IF THE MERGER IS COMPLETED, WHAT WILL I RECEIVE FOR MY GREYHOUND COMMON    
STOCK?                                                                

A:   You will receive $6.50 in cash for each share of Greyhound common stock you
own.                                                                  

Q:   HOW WILL THE MERGER AFFECT MY GREYHOUND PREFERRED STOCK?                   

A:   You may continue to own your Greyhound preferred stock after the merger.   
    However, your Greyhound preferred stock will no longer be convertible into
   Greyhound common stock after the merger. Instead, each share of Greyhound
 preferred stock will be convertible into the right to receive $33.33 in
    cash. You may convert your Greyhound preferred stock into Greyhound common
stock at any time before the merger is completed.                     

Q:   WHO IS ENTITLED TO VOTE AT THE SPECIAL MEETING?                            

A:   Holders of record of Greyhound common stock and Greyhound preferred stock  
  as of the close of business on February   , 1999 are entitled to vote at
     the special meeting. Each Greyhound stockholder has one vote for each share
   of Greyhound common stock and Greyhound preferred stock they own. Holders
  of Greyhound common stock and Greyhound preferred stock vote together as
one class.                                                            

Q:   WHAT VOTE IS REQUIRED FOR THE GREYHOUND STOCKHOLDERS TO APPROVE THE MERGER?

A:   In order for the merger to be approved, holders of a majority of the       
outstanding Greyhound common stock and the Greyhound preferred stock, 
voting together as one class, must vote "FOR" the merger.             

Q:   WHAT DO I NEED TO DO NOW?                                                  

A:   After carefully reading and considering the information contained in this  
    Proxy Statement, please vote your shares as soon as possible. You may vote
   your shares either by returning the enclosed proxy or by calling the toll
 free telephone number on your proxy card. Your voting materials include
detailed information on how to vote.                                  

Q:   IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?                                                        

A:   No. Your broker can vote your shares only if you provide instructions to   
   him or her on how to vote. You should instruct your broker on how to vote
your shares, using the instructions provided by your broker.          

Q:   CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY PROXY CARD OR VOTED BY         
TELEPHONE?                                                            

A:   Yes. You can change your vote at any time before your proxy is voted at the
  special meeting. You may revoke your proxy by notifying the Secretary of
   Greyhound in writing or by submitting a new proxy dated after the date of
 the proxy being revoked. You may also revoke your proxy by calling toll
   free 1-800-840-1208, even if you did not previously vote by telephone. In
   addition, your proxy will be revoked by attending the special meeting and
  voting in person. However, simply attending the special meeting will not
revoke your proxy. If you have instructed a broker                    

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  to vote your shares, you must follow the instructions received from your
broker to change your vote.                                           

Q:   DO I NEED TO ATTEND THE GREYHOUND SPECIAL MEETING IN PERSON?               

A:   No. It is not necessary for you to attend the special meeting in order to  
vote your shares, although you are welcome to attend.                 

Q:   WILL I HAVE APPRAISAL RIGHTS AS A RESULT OF THE MERGER?                    

A:   Yes. Both holders of Greyhound common stock and holders of Greyhound       
preferred stock have appraisal rights. If you wish to exercise your   
appraisal rights you must follow the requirements of Delaware law. A  
  summary describing the requirements you must follow in order to exercise
   your appraisal rights is described in "The Merger -- Appraisal Rights" in
this Proxy Statement.                                                 

Q:   WHEN WILL HOLDERS OF GREYHOUND COMMON STOCK RECEIVE THE MERGER             
CONSIDERATION?                                                        

A:   The merger is expected to be completed the day after the special meeting of
the Greyhound stockholders. However, it is possible that delays could 
     require that the merger be completed at a later time. Following the merger,
you will receive instructions on how to receive your cash payment in  
  exchange for your shares of Greyhound common stock. You must return your
Greyhound stock certificate as described in the instructions. You will
 receive your cash payment as soon as practicable after Laidlaw receives
your Greyhound stock certificate.                                     

Q:   SHOULD I SEND IN MY GREYHOUND STOCK CERTIFICATES NOW?                      

A:   No. After the merger is completed, Laidlaw will send the Greyhound         
stockholders written instructions for exchanging their Greyhound stock
certificates.                                                         

Q:   WILL I OWE TAXES AS A RESULT OF THE MERGER?                                

A:   The merger will be a taxable transaction for all holders of Greyhound      
common stock and for holders of Greyhound preferred stock who exercise
    their appraisal rights. As a result, the cash you receive in the merger in
 exchange for your shares of Greyhound common stock and any cash you may
  receive from exercising your appraisal rights will be subject to federal
  income tax and also may be taxed under applicable state, local and other
tax laws. In general, you will recognize gain (or loss) equal to the  
     difference between (a) the amount of cash you receive and (b) the tax basis
     of your shares of Greyhound common stock exchanged in the merger or the tax
basis of your shares subject to appraisal rights. Refer to the section
    entitled "The Merger -- Certain Federal Income Tax Income Consequences" in
this Proxy Statement for a more detailed explanation of the tax       
consequences of the merger, including tax consequences to holders of  
  Greyhound preferred stock. You should consult your tax advisor regarding
the specific tax consequences of the merger applicable to you.        

WHO CAN HELP ANSWER YOUR QUESTIONS?                                             

If you have more questions about the merger after reading this Proxy Statement, 
you should contact:                                                             

Greyhound Lines, Inc.                                                 
15110 N. Dallas Parkway, Suite 600                                    
Dallas, Texas 75248                                                   
Telephone: (972) 789-7297                                             
Attention: Investor Relations                                         

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SUMMARY 

This summary highlights selected information from this Proxy Statement and may  
not contain all of the information that is important to you as a Greyhound      
stockholder. Accordingly, we encourage you to carefully read this entire        
document and the documents to which we have referred you. All references to     
"dollars" or "$" in this Proxy Statement mean U.S. dollars unless otherwise     
indicated.                                                                      

THE PARTIES                                                                     

GREYHOUND. Greyhound is the only nationwide provider of scheduled intercity bus 
transportation services in the United States. Greyhound also provides package   
express delivery services, charter bus service and, in many terminals, food     
service.                                                                        

The principal executive offices of Greyhound are located at 15110 N. Dallas     
Parkway, Suite 600, Dallas, Texas 75248, and its telephone number is (972)      
789-7000.                                                                       

LAIDLAW. Laidlaw is the largest school bus operator in North America and the    
largest ambulance operator in the United States. In October 1997, Laidlaw       
acquired Greyhound Canada Transportation Corp., which operates intercity buses  
in Canada under the "Greyhound" trademark, but is not related to Greyhound.     
Laidlaw also provides services to hospital emergency departments in the United  
States.                                                                         

The principal executive offices of Laidlaw are located at 3221 North Service    
Road, Burlington, Ontario, Canada L7R 3Y8, and its telephone number is (905)    
336-1800.                                                                       

THE MERGER                                                                      

GENERAL. In the merger, a subsidiary of Laidlaw will be merged into Greyhound,  
with Greyhound being the surviving corporation. Upon completion of the merger,  
Greyhound will become a subsidiary of Laidlaw. Subject to satisfaction or waiver
of certain conditions contained in the merger agreement, Greyhound and Laidlaw  
presently intend to file a Certificate of Merger with the Secretary of State of 
the State of Delaware the day after the special meeting if a majority of the    
holders of the outstanding shares of Greyhound common and preferred stock vote  
to adopt the merger agreement. The merger will be effective upon the filing of  
the Certificate of Merger or such later time as is specified in the Certificate 
of Merger (the "Effective Time").                                               

CONDITIONS TO THE MERGER. The obligations of Greyhound and Laidlaw to complete  
the merger are subject to a number of conditions, including:                    

-   adoption of the merger agreement by the holders of a majority of the  
  outstanding shares of Greyhound common stock and Greyhound preferred
stock voting together as one class;                               

-   no court order prohibiting the merger and no law in effect making the 
merger illegal; and                                               

  -   the Bear Stearns fairness opinion not having been modified or withdrawn.

See "The Merger -- The Merger Agreement -- Conditions to the Merger."           

TERMINATION; BREAK-UP FEE. The merger agreement may be terminated at any time   
prior to the Effective Time in any one of the following circumstances:          

-   by the mutual written consent of the Greyhound Board and the Laidlaw  
Board;                                                            

   -   by Greyhound or Laidlaw, if any court or other governmental agency issues
a nonappealable final order or ruling or has taken any action to  
      permanently prevent the merger (but neither party may terminate if their
failure to perform their obligations contained in the merger      

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      agreement materially contributed to the issuance of the order or ruling,
or the taking of such action);                                    

-   by Greyhound or Laidlaw, if Greyhound enters into an agreement with   
      respect to a superior proposal (which means an acquisition proposal that
    the Greyhound Board believes, after consultation with Bear Stearns, is
  more favorable, from a financial point of view, to Greyhound and its
stockholders than the merger);                                    

-   by Laidlaw, if the Greyhound Board withdraws, modifies or changes its 
   approval or recommendation of the merger agreement or the merger in a
manner adverse to Laidlaw;                                        

-   by Greyhound or Laidlaw, if any representation or warranty made by the
other party in the merger agreement was untrue on the date the    
     representation or warranty was made, or the other party fails to comply
   in any material respect with any of the agreements made by such other
       party in the merger agreement (subject to a materiality standard and time
     to correct the error as described in the merger agreement), but neither
party may terminate if they are in material breach of their       
representations, warranties or agreements contained in the merger 
agreement;                                                        

 -   by Greyhound or Laidlaw, if the special meeting was held and the merger
agreement was not adopted by Greyhound stockholders; or           

-   by Greyhound or Laidlaw, if the merger is not completed by March 31,  
     1999, but neither party may terminate if their failure to perform their
    obligations contained in the merger agreement is the reason the merger
was not completed by that date.                                   

Greyhound will be required to pay Laidlaw a termination fee of $20 million (the 
"Termination Fee") if the merger agreement is terminated by Laidlaw because     
either Greyhound entered into an agreement relating to a superior proposal or   
the Greyhound Board withdraws or modifies its recommendation or approval of the 
merger or merger agreement and a superior proposal has been made and is pending.
See "The Merger -- The Merger Agreement -- Termination; Break-Up Fee."          

TREATMENT OF GREYHOUND STOCK OPTIONS. Greyhound will offer holders of an        
outstanding option to purchase shares of Greyhound common stock the right to    
cancel each of their Greyhound stock options in exchange for an amount in cash  
equal to $6.50 less the exercise price of the Greyhound stock option. In the    
event that any Greyhound stock option is not canceled prior to the Effective    
Time, such Greyhound stock option will remain outstanding under the terms of the
applicable Greyhound stock option plan. This offer, however, will not be made   
with respect to the Greyhound stock options issuable under a plan ("Union Option
Plan") for one of the unions that represents certain Greyhound employees.       
Instead, the effects of the merger on the Greyhound stock options granted under 
the Union Option Plan will be governed by the terms of the Union Option Plan.   
See "The Merger -- The Merger Agreement -- Treatment of Greyhound Stock         
Options."                                                                       

INTERESTS OF CERTAIN PERSONS IN THE MERGER. Some of Greyhound's management and  
directors may have interests in the merger that are different from or in        
addition to the interests of stockholders of Greyhound generally. For example,  
each of Greyhound's executive officers has an employment or severance agreement 
with Greyhound that entitles that officer to receive a severance payment if his 
employment with Greyhound is terminated under certain circumstances within two  
years following a "change in control" of Greyhound. In addition, under the terms
of Greyhound's stock incentive plans, all unvested options and unvested grants  
of restricted stock will vest upon a "change in control" of Greyhound. The      
completion of the merger will be a "change in control" for the purposes of both 
these agreements and the stock incentive plans.                                 

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At Laidlaw's request, Mr. Lentzsch, Greyhound's President and Chief Executive   
Officer, and Mr. Haugsland, Greyhound's Executive Vice President and Chief      
Operating Officer, will enter into new employment agreements with Greyhound that
will become effective upon completion of the merger. As a result, it is not     
presently anticipated that these individuals' employment will be terminated     
following the merger. However, the estimated severance payments that would be   
payable to Greyhound's three most highly compensated officers if their          
employment is terminated immediately following the merger are as follows:       

                                                                · Download Table

                                                              SEVERANCE AMOUNT
                                                              ----------------
                                                                              
Craig R. Lentzsch...........................................     $3,622,612   
Jack W. Haugsland...........................................     $2,119,951   
J. Floyd Holland............................................     $  536,299   

The number and value of unvested Greyhound stock options, and the number of     
unvested shares of Greyhound restricted common stock, held by the three most    
highly compensated Greyhound officers, are as follows:                          

                                                        · Enlarge/Download Table

                                              NUMBER OF      VALUE OF         NUMBER OF     
                                              UNVESTED       UNVESTED     UNVESTED SHARES OF
                                            STOCK OPTIONS  STOCK OPTIONS   RESTRICTED STOCK 
                                            -------------  -------------  ------------------
                                                                                            
Craig R. Lentzsch..........................    156,725       $410,563           35,600      
Jack W. Haugsland..........................    122,275       $339,593           22,833      
J. Floyd Holland...........................     86,150       $249,319            9,450      

The value of the unvested stock options is based upon the difference between    
$6.50 per share of Greyhound common stock and the exercise price of the unvested
options. See "The Merger -- Interests of Certain Persons in the Merger."        

GOVERNMENTAL APPROVALS. Laidlaw is required to make application to the Surface  
Transportation Board ("STB") of the Department of Transportation ("DOT") as a   
result of the merger. Laidlaw has submitted an application to the STB for       
approval of the merger and has received tentative STB approval of the           
application, subject to public comment. However, the merger is not conditioned  
upon receiving the STB's final approval prior to the Effective Time. See "The   
Merger -- The Merger Agreement -- Conditions to the Merger" and "The            
Merger -- Governmental Approvals."                                              

RECOMMENDATION OF THE GREYHOUND BOARD                                           

The Board of Directors of Greyhound has, by the unanimous vote of all directors 
present, approved the merger agreement. THE GREYHOUND BOARD BELIEVES THAT THE   
MERGER IS IN THE BEST INTERESTS OF GREYHOUND AND ITS STOCKHOLDERS AND RECOMMENDS
THAT THE GREYHOUND STOCKHOLDERS VOTE "FOR" THE ADOPTION OF THE MERGER AGREEMENT.

OPINION OF GREYHOUND'S FINANCIAL ADVISOR                                        

Bear, Stearns & Co. Inc. was retained by the Greyhound Board to act as its      
exclusive financial advisor to evaluate the merger and the fairness, from a     
financial point of view, of the consideration to be received by the Greyhound   
stockholders. Bear Stearns has delivered its opinion dated as of October 16,    
1998 to the effect that, as of the date of such opinion and based upon and      
subject to the assumptions, limitations and qualifications contained in its     
opinion, the consideration to be received by the Greyhound stockholders in the  
merger is fair, from a financial point of view, to the Greyhound                

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common and preferred stockholders. A copy of the Bear Stearns opinion is        
attached as Appendix B to this Proxy Statement. Greyhound stockholders are urged
to read the Bear Stearns opinion carefully and in its entirety to understand the
procedures followed, assumptions made, matters considered and limitations on the
opinion. See "The Merger -- Opinion of Greyhound's Financial Advisor."          

CERTAIN LITIGATION                                                              

Greyhound has obtained copies of two complaints filed in Delaware Chancery Court
purportedly filed by certain individual Greyhound stockholders on behalf of     
themselves and all other Greyhound stockholders alleging, among other things,   
that Greyhound's directors breached their fiduciary duties in approving the     
merger. These suits name Greyhound, each of its directors and Laidlaw as        
defendants. Greyhound has not filed answers to these suits, as the time period  
for doing so was extended. However, Greyhound intends to defend these suits     
vigorously. See "The Merger -- Certain Litigation."                             

MARKET PRICE OF GREYHOUND COMMON STOCK                                          

Greyhound common stock trades on the American Stock Exchange ("AMEX") under the 
symbol "BUS." The following table sets forth the high and low sale prices per   
share of Greyhound common stock as reported on the AMEX for each quarter        
indicated below.                                                                

                                                                · Download Table

                                                              HIGH     LOW    
                                                              -----   -----   
                                                                              
Quarter Ended:                                                                
  March 31, 1997............................................  $5 1/2  $3 15/16
  June 30, 1997.............................................   5       3 7/1  
  September 30, 1997........................................   4 7/8   3 3/4  
  December 31, 1997.........................................   4 7/1   3 3/8  
Quarter Ended:                                                                
  March 31, 1998............................................  $5 3/4  $3 1/2  
  June 30, 1998.............................................   6 15/1  4 3/8  
  September 30, 1998........................................   6 3/1   3 5/8  
  December 31, 1998.........................................   6 1/1   3 3/8  
Quarter Ended:                                                                
  March 31, 1999(through February   , 1999).................                  

The shares of Greyhound preferred stock are not traded on any national          
securities exchange, the NASDAQ Stock Market or any over-the-counter quotation  
system.                                                                         

On October 16, 1998, the last full trading day prior to the public announcement 
of the merger, the high and low trading prices of Greyhound common stock as     
reported on the AMEX were $4 15/16 and $4 1/2, respectively. On February   ,    
1999, the last full trading day prior to the date of this Proxy Statement, the  
closing price for Greyhound common stock as reported on AMEX was $       .      

Greyhound stockholders are encouraged to obtain current market quotations for   
Greyhound common stock.                                                         

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SELECTED FINANCIAL DATA OF GREYHOUND                                            

The selected historical financial data of Greyhound set forth below has been    
derived from the consolidated financial statements of Greyhound included in     
Greyhound's Annual Report on Form 10-K for the fiscal year ended December 31,   
1997 and Greyhound's Quarterly Report on Form 10-Q for the quarter ended        
September 30, 1998 and should be read in connection with those financial        
statements, which are incorporated by reference in this Proxy Statement. See    
"Incorporation of Certain Documents By Reference."                              

GREYHOUND LINES, INC. 

SELECTED HISTORICAL FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)

                                                        · Enlarge/Download Table

                        NINE MONTHS    NINE MONTHS                                              
                           ENDED          ENDED                YEAR ENDED DECEMBER 31,          
                       SEPTEMBER 30,  SEPTEMBER 30,  -------------------------------------------
                           1998           1997        1997     1996     1995     1994      1993 
                       -------------  -------------  ------   ------   ------   -------   ------
                                                                                                
STATEMENT OF                                                                                    
  OPERATIONS DATA:                                                                              
Revenues.............     $636.1         $571.2      $771.1   $700.9   $657.1   $ 615.3   $665.6
Net income (loss)                                                                               
  attributable to                                                                               
  common                                                                                        
  stockholders.......       27.3          (23.9)      (20.6)    (6.6)   (17.8)    (77.4)     7.5
Net income (loss) per                                                                           
  share attributable                                                                            
  to common                                                                                     
  stockholders.......       0.46          (0.41)      (0.35)   (0.11)   (0.33)    (5.07)    0.57
BALANCE SHEET DATA:                                                                             
Working capital......     $ 10.6         $(35.9)     $(70.5)  $(57.1)  $(54.4)  $ (17.2)  $  9.6
Total assets.........      659.0          586.5       566.6    500.3    480.6     511.5    541.3
Long-term debt.......      257.2          241.0       208.0    192.6    172.7     197.1    260.4
Stockholders'                                                                                   
  equity.............      213.4          177.8       179.6    140.9    149.8     153.2    152.2
Weighted average                                                                                
  common shares......       59.8           58.8        59.0     58.3     54.6      15.3     12.9

The nine months ended September 30, 1998, includes an income tax benefit for net
operating loss carryforwards of $23.9 million, or $0.39 per share. The nine     
months ended September 30, 1997 and twelve months ended December 31, 1997       
include an extraordinary loss of $25.3 million, or $0.43 per share. The twelve  
months ended December 31, 1994 includes $61.9 million, or $4.05 per share, in   
operating charges to recognize pre-bankruptcy claims, an extraordinary gain of  
$41.9 million, or $2.74 per share and an extraordinary loss of 3.6 million, or  
$0.23 per share. The twelve months ended December 31, 1993 includes an          
extraordinary loss of $0.4 million, or $0.03 per share and a loss from the      
cumulative effect of a change in accounting principle of $0.7 million, or $0.05 
per share.                                                                      

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THE SPECIAL MEETING 

GENERAL                                                                         

The special meeting will be held on           ,             , 1999, starting at 
:   .m., local time, at                           , in Dallas, Texas. The   
purpose of the special meeting is for the Greyhound stockholders to consider and
vote upon a proposal to adopt the merger agreement.                             

THE GREYHOUND BOARD BELIEVES THAT THE MERGER IS IN THE BEST INTERESTS OF        
GREYHOUND AND ITS STOCKHOLDERS AND RECOMMENDS THAT GREYHOUND STOCKHOLDERS VOTE  
"FOR" THE ADOPTION OF THE MERGER AGREEMENT.                                     

Greyhound has been advised that a representative of Arthur Andersen LLP,        
Greyhound's independent auditors, will be present at the special meeting. This  
representative will have an opportunity to make a statement if he or she wishes 
and will be available to respond to appropriate questions presented at the      
special meeting.                                                                

VOTING AT THE SPECIAL MEETING                                                   

The holders of record of Greyhound common stock and Greyhound preferred stock as
of the close of business on the record date are entitled to receive notice of,  
and to vote at, the special meeting. On the record date, there were             
shares of Greyhound common stock outstanding held by           stockholders of  
record. On the record date, there were 2,400,000 shares of Greyhound preferred  
stock outstanding held by           stockholders of record.                     

The holders of a majority of the outstanding shares of Greyhound common stock   
and Greyhound preferred stock on the record date, represented in person or by   
proxy, will constitute a quorum for purposes of the special meeting. A quorum is
necessary to hold the special meeting. Any shares of Greyhound common stock held
in treasury by Greyhound or by any of its subsidiaries are not considered to be 
outstanding for purposes of determining a quorum. Once a share is represented at
the special meeting, it will be counted for the purpose of determining a quorum 
at the special meeting and any adjournment of the special meeting unless the    
holder is present solely to object to the special meeting. However, if a new    
record date is set for the adjourned meeting, then a new quorum will have to be 
established.                                                                    

REQUIRED VOTE                                                                   

Each outstanding share of Greyhound common stock and Greyhound preferred stock  
on the record date is entitled to one vote at the special meeting. The merger is
conditioned upon, among other things, the adoption of the merger agreement by   
the affirmative vote of the holders of a majority of the outstanding shares of  
Greyhound common stock and Greyhound preferred stock voting together as one     
class. You must vote your shares either in person, by proxy or by telephone in  
order for your shares to be included in the vote. Record holders of Greyhound   
common stock and Greyhound preferred stock may vote by telephone by following   
the instructions shown on the proxy card. Not voting has the same effect as     
voting against adoption of the merger agreement. Your broker or nominee does not
have the right to vote your shares of Greyhound common and preferred stock. You 
must instruct your broker on how to vote in order for your shares to be voted.  
It is important that you instruct your broker or nominee on how to vote your    
shares of Greyhound common and preferred stock in order for your shares to be   
represented at the special meeting.                                             

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Laidlaw has agreed to vote all of their shares of Greyhound common stock "For"  
the adoption of the merger agreement. As of the record date, Laidlaw and its    
subsidiaries owned 1,389,700 shares of Greyhound common stock or approximately  
2.3% of all outstanding shares of Greyhound common stock on such date. As of the
record date, the directors and executive officers of Greyhound and their        
affiliates owned, in the aggregate, 318,234 shares of Greyhound common stock, or
less than 1.0% of the outstanding shares of Greyhound common stock on such date.
All such directors and executive officers have informed Greyhound that they     
intend to vote all of their shares of Greyhound common stock "For" the adoption 
of the merger agreement.                                                        

PROXIES; REVOCATION                                                             

If you vote your shares of Greyhound common and preferred stock by signing a    
proxy, your shares will be voted at the special meeting as you indicate on your 
proxy card. If no instructions are indicated on your signed proxy card, your    
shares of Greyhound common and preferred stock will be voted "For" the adoption 
of the merger agreement.                                                        

You may revoke your proxy at any time before the proxy is voted at the special  
meeting. A proxy may be revoked prior to the vote at the special meeting by     
submitting a written revocation to the Secretary of Greyhound or by submitting a
new proxy dated after the date of the proxy that is being revoked. You may also 
revoke your proxy by calling toll free 1-800-840-1208, even if you did not      
previously vote by telephone. In addition, a proxy may also be revoked by voting
in person at the special meeting. However, simply attending the special meeting 
will not, in itself, revoke a proxy.                                            

Greyhound and Laidlaw will share the costs associated with preparing this Proxy 
Statement. Greyhound will pay the costs of soliciting proxies for the special   
meeting. Further, certain officers and employees of Greyhound may also solicit  
proxies by telephone or in person. Officers and other employees of Greyhound    
will not be paid for soliciting proxies. Greyhound will also request persons and
entities holding shares in their names or in the names of their nominees that   
are beneficially owned by others to send proxy materials to and obtain proxies  
from such beneficial owners and will reimburse such holders for their reasonable
expenses in performing such services. Greyhound has retained Kissel-Blake Inc.  
to assist it in the solicitation of proxies using the means referred to above,  
at an anticipated cost of $11,500, plus reimbursement of out-of-pocket expenses.

ADJOURNMENTS                                                                    

Although it is not expected, the special meeting may be adjourned for the       
purpose of soliciting additional proxies or for other reasons. Any adjournment  
may be made by approval of the holders of a majority of the outstanding shares  
of Greyhound common and preferred stock present in person or represented by     
proxy at the special meeting (whether or not a quorum exists) without notice    
other than by an announcement made at the special meeting. Greyhound does not   
currently intend to seek a postponement or adjournment of the special meeting.  
Any postponement or adjournment of the special meeting for the purpose of       
soliciting additional proxies will allow the Greyhound stockholders who have    
already sent in their proxies to revoke them at any time prior to their use.    

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THE PARTIES 

GREYHOUND                                                                       

Greyhound is the only nationwide provider of scheduled intercity bus            
transportation in the United States. Greyhound serves the value-oriented        
customer by connecting rural and urban areas throughout the United States,      
providing scheduled passenger service to more than 2,600 destinations with a    
fleet of 2,500 buses and 1,650 sales locations. Greyhound also provides package 
express delivery service, charter bus service and, in many terminals, food      
service. For the year ended December 31, 1997 and the nine months ended         
September 30, 1998, Greyhound generated total operating revenues of $771.1      
million and $636.1 million, respectively and net profits (or losses) of $(16.9) 
million and $31.1 million, respectively.                                        

The principal executive offices of Greyhound are located at 15110 N. Dallas     
Parkway, Suite 600, Dallas, Texas 75248, and its telephone number is (972)      
789-7000.                                                                       

LAIDLAW                                                                         

Laidlaw is the largest school bus operator in North America, operating primarily
under the names Laidlaw Transit, Mayflower Contract Services and National School
Bus Services. Laidlaw also operates municipal, intercity transit and charter    
buses. In October 1997, Laidlaw acquired Greyhound Canada Transportation Corp., 
which operates intercity buses in Canada and is unrelated to Greyhound. Laidlaw 
is the largest ambulance operator in the United States, operating primarily     
under the name American Medical Response. Laidlaw also provides services to     
hospital emergency departments in the United States, primarily operating under  
the name EmCare.                                                                

Laidlaw owns approximately 35% of the outstanding shares of common stock of     
Safety-Kleen Corp., formerly Laidlaw Environmental Services, Inc., a hazardous  
waste services company. In April 1998, Laidlaw Environmental Services, Inc.     
acquired Safety-Kleen Corp. in a transaction valued at approximately $2.2       
billion. Prior to this transaction, Laidlaw's ownership was approximately 67%.  
Effective March 1, 1998, Laidlaw ceased to consolidate the hazardous waste      
services business and began to account for it using the equity method.          

For the year ended August 31, 1998, Laidlaw generated revenues of $3,690.2      
million, income from operations of $421.7 million and net income (including a   
dilution gain of $100.7 million) of $346.0 million.                             

The principal executive offices of Laidlaw are located at 3221 North Service    
Road, Burlington, Ontario, Canada L7R 3Y8, and its telephone number is (905)    
336-1800.                                                                       

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THE MERGER

BACKGROUND OF THE MERGER                                                        

Laidlaw owns and operates a number of passenger transportation businesses.      
Laidlaw is the largest school bus operator in North America. Laidlaw also       
operates municipal, intercity and charter buses, as well as ambulances. In      
October 1997, Laidlaw acquired Greyhound Canada Transportation Corp., which is  
unrelated to Greyhound. The Greyhound Canada acquisition significantly expanded 
Laidlaw's intercity bus operations.                                             

Laidlaw has pursued a strategy of acquiring companies to expand its             
transportation businesses, and considered Greyhound as a potential acquisition  
candidate for some time. Laidlaw's interest in acquiring Greyhound increased    
following its acquisition of Greyhound Canada. At meetings of the Laidlaw Board 
held in January and April 1998, James R. Bullock, Laidlaw's President and Chief 
Executive Officer, reviewed with the Laidlaw Board several transportation       
companies, including Greyhound, as potential acquisition candidates. Prior to   
initiating discussions with Greyhound, Laidlaw purchased 1.4 million shares of  
Greyhound common stock in open-market transactions.                             

Greyhound's business is capital intensive and Greyhound has pursued a           
growth-oriented strategy, including acquisitions, since its reorganization in   
1994. From time to time, representatives of Greyhound have considered various   
acquisitions, joint ventures, recapitalizations, business combination           
transactions and other strategic alternatives intended to further its growth    
strategy and to maximize stockholder value, and had discussions with            
representatives of other companies relating to the foregoing. While Greyhound   
was not pursuing a business combination transaction or sale of Greyhound at the 
time Laidlaw initiated discussions with Greyhound, the Greyhound Board was      
willing to consider such a transaction if it appeared to be in the best         
interests of Greyhound and its stockholders.                                    

On May 21, 1998, Mr. Bullock and Craig R. Lentzsch, Greyhound's President and   
Chief Executive Officer, met at Mr. Bullock's request for the stated purpose of 
exchanging views on the intercity bus transportation industry. At that meeting, 
Mr. Bullock also indicated to Mr. Lentzsch that Laidlaw desired to explore a    
possible business combination transaction with Greyhound. However, Mr. Bullock  
did not indicate a proposed price or form of consideration, although he did     
indicate that he contemplated a transaction structure in which Laidlaw common   
shares would be used for all or a substantial part of the consideration. Mr.    
Lentzsch informed Mr. Bullock that, while Greyhound was not for sale, he would  
discuss Mr. Bullock's indication of interest with Thomas G. Plaskett, the       
Chairman of the Board of Greyhound.                                             

From time to time over the next several weeks, Messrs. Lentzsch and Plaskett    
discussed the possibility of entering into discussions with Laidlaw regarding a 
possible business combination transaction. They also had informal discussions   
with the members of the Executive Committee of the Greyhound Board in this      
regard. A committee of the Greyhound Board was then formed to consider any      
proposal that Laidlaw might make. The members of the Greyhound Board Committee  
were Mr. Plaskett, A.A. Meitz and Stephen M. Peck, each of whom is a            
non-employee director of Greyhound and was believed to have experience and      
expertise that could be useful in considering a possible business combination   
transaction. After discussions among the Greyhound Board Committee members,     
Greyhound retained Bear Stearns to serve as Greyhound's financial advisor and   
Jones, Day, Reavis & Pogue to act as Greyhound's legal advisor in connection    
with the matter.                                                                

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Messrs. Lentzsch and Bullock spoke by telephone on a number of occasions        
following their initial meeting in May 1998. On June 26, 1998, Mr. Bullock and  
other senior management personnel of Laidlaw met with the members of the        
Greyhound Board Committee, Mr. Lentzsch and other senior management personnel of
Greyhound to review their respective businesses and strategic plans. The two    
companies' representatives also discussed, in general terms, the manner by which
the two companies could be combined, although no specific terms of such a       
transaction were proposed at this meeting. However, Mr. Bullock continued to    
suggest consideration of a transaction using Laidlaw common shares for all or   
part of the consideration.                                                      

The Greyhound Board met on June 29, 1998. At this meeting, the members of the   
Greyhound Board Committee and Mr. Lentzsch reviewed the discussions to date with
Laidlaw. It was the consensus of the Greyhound Board that a possible business   
combination transaction with Laidlaw should continue to be explored.            

The parties entered into a confidentiality agreement and, over the course of the
next six weeks, representatives of the parties exchanged financial and operating
information relating to their respective businesses. During that period, the    
members of the Greyhound Board Committee were kept apprised of the status of the
discussions between Greyhound and Laidlaw. In light of, among other factors, the
increasing volatility of the securities markets, it was the consensus of the    
Greyhound Board Committee that it would be preferable for the consideration in  
any such transaction to be cash, or if Laidlaw common shares were used, that the
transaction be structured so that Greyhound stockholders would be protected     
against declines in stock market prices to the extent reasonably possible.      

The Laidlaw Board met on July 9, 1998. At this meeting, Mr. Bullock reviewed    
with the Laidlaw Board the status of discussions with Greyhound. The Laidlaw    
Board agreed that Mr. Bullock should continue his discussions with Greyhound's  
representatives.                                                                

On August 13, 1998, Messrs. Plaskett and Lentzsch met with Mr. Bullock.         
Following a general discussion of recent events, including a U.S. tax court     
decision adverse to Laidlaw that had received substantial coverage in the       
financial media, Mr. Bullock outlined a possible business combination           
transaction involving the conversion of each share of Greyhound common stock    
into two-thirds of a Laidlaw common share. Laidlaw common shares were trading at
$9 5/16 per share at that time (based on the closing sale price on August 12,   
1998), making the implied value of Mr. Bullock's indication $6.21 per share of  
Greyhound common stock. The closing sales price of the Greyhound common stock on
August 12, 1998 was $4 13/16. Messrs. Plaskett and Lentzsch indicated that they 
did not believe the Greyhound Board would be willing to continue to pursue      
discussions of a possible business combination transaction on the terms         
indicated by Mr. Bullock in light of, among other factors, the implicit value of
the transaction to Greyhound's stockholders as well as the recent volatility in 
the market price for Laidlaw common shares, in part attributable to the adverse 
U.S. tax court decision and in the securities markets generally. Mr. Bullock    
indicated that he would consider the matter further.                            

On September 8, 1998, Messrs. Bullock, Lentzsch and Plaskett and other          
representatives of Laidlaw and Greyhound, including representatives of Bear     
Stearns, Jones Day and Laidlaw's financial advisor, Merrill Lynch, met to       
determine whether there was a substantial basis to continue discussions of a    
possible business combination transaction involving Laidlaw and Greyhound. In   
that meeting, Mr. Bullock initially indicated a stock-for-stock transaction with
a value of $6.00 to $7.00 per share of Greyhound common stock. After further    
negotiations, he modified his indication to provide for a transaction valued at 
$7.00 per share of Greyhound common stock in cash, with Laidlaw having the      
option to pay up to $4.00 of the purchase price with Laidlaw common shares. In  
response to                                                                     

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Greyhound's continued desire for a transaction structured to preserve the dollar
value of the transaction to the extent reasonably practicable, after discussing 
various alternatives, Laidlaw's representatives proposed, in principle, the     
following structure:                                                            

-   Laidlaw would be required to announce whether it intended to pay any  
     portion of the merger consideration with Laidlaw common shares at least
    five trading days prior to the meeting of Greyhound stockholders to be
called to vote on the transaction;                                

 -   the Laidlaw common shares would be valued based on the weighted average
sale price of the Laidlaw common shares for the five trading days 
immediately prior to the fifth trading day before such stockholder
meeting;                                                          

-   the transaction would close promptly after the vote of the Greyhound  
stockholders; and                                                 

-   the transaction would be taxable to Greyhound stockholders for U.S.   
      federal income tax purposes regardless of whether Laidlaw elected to pay
a portion of the merger consideration in Laidlaw common shares.   

With regard to the taxable nature of the proposed transaction, Laidlaw's        
representatives indicated that a tax-free structure would require that Laidlaw  
substantially reduce the stated value of the merger consideration because of the
adverse effect that a tax-free transaction would have on the post-merger value  
of the transaction to Laidlaw. The structure also was responsive to concerns    
expressed by Messrs. Plaskett and Lentzsch at the August 13, 1998 meeting with  
Mr. Bullock that they believed that the Greyhound Board would prefer a structure
in which the risk that the transaction consideration would materially decline in
value between the time of announcement and completion of a transaction was      
minimized. Messrs. Plaskett and Lentzsch indicated at the September 8th meeting 
that they would be willing to review Laidlaw's proposal with the Greyhound Board
Committee and the parties agreed to continue with their respective due diligence
investigations and consideration of a possible business combination transaction.

Over the succeeding four weeks, representatives of Greyhound and Laidlaw met, in
person and by telephone, to exchange additional information, to carry out due   
diligence reviews and to negotiate the terms of the merger agreement.           

At its regularly scheduled meeting on September 15, 1998, the Greyhound Board   
reviewed the status of the discussions between Greyhound and Laidlaw. At this   
meeting, representatives of Bear Sterns made a presentation regarding the       
financial analysis they had performed to date with respect to a possible        
business combination transaction with Laidlaw. Bear Stearns' presentation also  
included a review of the proposed transaction with Laidlaw, a review of         
Greyhound's financial results over the past several years as well as the recent 
market performance of the Greyhound common stock and a discussion of its views  
of Greyhound's potential opportunities and challenges. At the conclusion of this
meeting, the Greyhound Board authorized continued discussions with Laidlaw.     

On September 30, 1998, the Laidlaw Board met to review the status of the        
discussions between Laidlaw and Greyhound. Mr. Bullock reviewed the results of  
ongoing due diligence investigations and the financial aspects of a possible    
transaction. The Laidlaw Board authorized Mr. Bullock to continue the           
discussions with Greyhound.                                                     

On October 9, 1998, Messrs. Bullock, Plaskett and Lentzsch met at Mr. Bullock's 
request. Mr. Bullock informed Messrs. Plaskett and Lentzsch that, due to the    
continuing volatility in the equity and debt markets, as well as recent changes 
in the outlook for the economy generally, he no                                 

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longer believed that the Laidlaw Board would support a proposal to acquire      
Greyhound valued at $7.00 per share of Greyhound common stock. At that time,    
Greyhound common stock was trading at $3 5/8. Mr. Bullock indicated that he     
believed that the Laidlaw Board probably would support a proposal valued at     
$6.00 per share of Greyhound common stock, so long as it was structured along   
the lines indicated by Mr. Bullock in the September 8, 1998 meeting. Messrs.    
Lentzsch and Plaskett indicated to Mr. Bullock that they did not believe the    
Greyhound Board would approve a transaction at that price level, but that some  
reduction from the $7.00 price might be possible. Messrs. Bullock, Plaskett and 
Lentzsch agreed to further consider the matter.                                 

On October 11, 1998, Messrs. Bullock and Lentzsch again discussed a possible    
business combination transaction. In that discussion, Mr. Lentzsch indicated    
that, based on discussions with the members of the Greyhound Board Committee and
Mr. Plaskett's discussions with other Greyhound Board members, he believed that 
the Greyhound Board Committee and the Greyhound Board might support a           
transaction valued at $6.50 per share of Greyhound common stock, but that he    
personally would not recommend a transaction at a lower price. Mr. Bullock      
indicated that he was not certain what the Laidlaw Board would decide on this   
issue, but indicated that he would discuss the transaction with the Laidlaw     
Board and, if authorized, would make a definitive proposal following a Laidlaw  
Board meeting scheduled for October 14, 1998. Mr. Lentzsch inferred from the    
conversation that Mr. Bullock personally would support a transaction at $6.50   
per share of Greyhound common stock, but it was unclear whether the Laidlaw     
Board would authorize a transaction at that valuation.                          

The Greyhound Board Committee and Mr. Lentzsch considered the alternatives that 
might be available to Greyhound in light of the indication by Mr. Bullock that  
Laidlaw would only be willing to proceed at a price lower than its original     
indication of $7.00 per share. The principal alternatives considered were the   
continued pursuit of Greyhound's business plan as an independent company and the
initiation of discussions with other parties. It was the consensus of the       
Greyhound Board Committee and Greyhound's senior management that the continued  
pursuit of a possible business combination transaction would be desirable in    
light of Greyhound's substantial capital requirements and the recent            
deterioration of the capital markets. Given the nature of Greyhound's business, 
it was believed that the universe of potential parties that would be willing to 
consider a potential transaction with Greyhound was relatively limited and that 
Laidlaw was likely to be the best potential buyer for Greyhound in light of,    
among other factors, its ownership of Greyhound Canada and its school bus       
business, which created possible synergies in a merger with Greyhound. The      
Greyhound Board Committee and senior management of Greyhound also believed that 
it was unlikely that another strategic partner would be willing to pursue a     
business combination transaction on terms superior to those believed to be      
available from Laidlaw. In this regard, in early October 1998, representatives  
of another transportation company had indicated a preliminary interest in       
pursuing discussions regarding a possible business combination transaction with 
Greyhound, but had not received any confidential information relating to        
Greyhound. In addition, representatives of the other party had indicated a price
range substantially below the $7.00 per share of Greyhound common stock price   
indicated by Laidlaw and below the $6.50 price which, based on discussions on   
October 8th and 11th, Greyhound believed would ultimately be proposed by        
Laidlaw. The preliminary discussion with this party did not address whether the 
consideration would be paid in cash, stock or some combination of cash and      
stock. Based on the fact that this other transportation company does not have   
operations in North America and management's assessment of its financial        
condition, it was the consensus of the Greyhound Board Committee and Greyhound's
senior management that the other party did not have sufficient synergies and    
sources of low-cost capital to make reasonably possible a proposal with a value 
greater than that indicated by Laidlaw and that, if Greyhound were to pursue    
substantive discussions with that party, there was a substantial risk that the  
discussions with Laidlaw would be                                               

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adversely affected. Accordingly, it was the consensus of the Greyhound Board    
Committee and Greyhound's senior management not to pursue discussions with the  
other party until the negotiations with Laidlaw were concluded.                 

In order to prepare for the possibility of receiving a definitive proposal from 
Laidlaw, on October 13, 1998, the Greyhound Board held a special meeting in     
which certain members of Greyhound's senior management as well as               
representatives of Bear Stearns and Jones Day participated. The discussions at  
this meeting were wide-ranging and extensive, and included the following:       

  -   a review by Greyhound's senior management of the recent discussions with
representatives of Laidlaw;                                       

-   a presentation by representatives of Bear Stearns regarding the equity
and debt markets generally; and                                   

-   presentations by Greyhound's senior management of the effects of the  
capital markets and economic conditions generally on Greyhound's  
       financial condition and future prospects, as well as its potential impact
on Greyhound's ability to meet its current business plan.         

In that regard, representatives of Bear Stearns commented on the recent         
volatility in the capital markets generally and specifically the debt markets   
for non-investment grade borrowers such as Greyhound. Representatives of        
Greyhound's management advised the Greyhound Board of its views on the impact of
these market conditions on Greyhound's ongoing bus financing program. It was the
consensus of the Greyhound Board that if these market conditions were to exist  
for any significant period of time, there was a risk that Greyhound would be    
unable to meet its business plan.                                               

Representatives of Bear Stearns also reviewed, at the request of the Greyhound  
Board, Bear Stearns' analysis of a possible transaction involving Laidlaw as    
more fully described below under "The Merger -- Opinion of Greyhound's Financial
Advisor." The Greyhound Board also considered other strategic alternatives      
available to Greyhound, including continuing to pursue its strategic plan as an 
independent company, as well as pursuing merger discussions with other potential
parties. Following further discussion, the Greyhound Board agreed to meet again 
on October 15, 1998, Mr. Bullock having indicated to Mr. Lentzsch that the      
Laidlaw Board was expected to consider the matter by October 14, 1998.          

On October 14, 1998, the Laidlaw Board authorized Mr. Bullock to propose a      
business combination transaction with Greyhound in which each share of Greyhound
common stock would be converted into $6.50 in cash, with Laidlaw having an      
option to pay up to $4.00 in Laidlaw common shares on the basis previously      
proposed by Laidlaw, and with the Greyhound preferred stock receiving the same  
consideration as the Greyhound common stock multiplied by the then-current      
conversion ratio for the Greyhound preferred stock. Following the Laidlaw Board 
meeting, Mr. Bullock informed Mr. Lentzsch of the proposal. Mr. Lentzsch        
informed Mr. Bullock that Laidlaw's proposal would be considered by the         
Greyhound Board the next day.                                                   

The Greyhound Board met on October 15, 1998, to review Laidlaw's proposal with  
the assistance of Greyhound's senior management and Greyhound's financial and   
legal advisors, Bear Stearns and Jones Day. All members of the Greyhound Board  
were present at the meeting, except for one director who, due to prior          
commitments, was able to participate by telephone in only a portion of the      
meeting.                                                                        

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At the October 15, 1998 meeting, the Greyhound Board received presentations and 
discussed various matters, including:                                           

-   a review by Greyhound's senior management of the course of the        
   discussions with Laidlaw and other matters pertaining to the proposed
      merger, including the due diligence reviews that had been undertaken and
  management's perspective on Laidlaw's ability to finance the merger;

  -   a review by Greyhound's senior management of its views as to Greyhound's
 business, financial condition, results of operations and prospects;

-   a presentation by Bear Stearns regarding its financial analysis of the
proposed merger, including an analysis of Laidlaw;                

-   a presentation by representatives of Jones Day regarding the duties of
directors in this context; and                                    

   -   a presentation by representatives of Jones Day regarding the terms of the
       draft merger agreement and related documentation, including the so-called
 no-shop and break-up fee provisions and the provisions in the draft
       merger agreement and other aspects of the transaction in which members of
    the Greyhound Board or management could be said to have interests that
were different from or in addition to the interests of Greyhound  
     stockholders generally (see "The Merger -- Interests of Certain Persons
in the Merger").                                                  

The Greyhound Board also received a presentation from representatives of Jones  
Day regarding such firm's review of a U.S. tax case decided in June 1998 adverse
to Laidlaw. The review was primarily based on Jones Day's examination of the    
court filings in the litigation, Laidlaw's public filings relating to the matter
and discussions with Laidlaw's representatives. Jones Day's presentation        
involved a review of the factual circumstances giving rise to the litigation,   
the positions of the parties in the litigation, the adverse U.S. tax court      
decision and the current status of the litigation.                              

The Greyhound Board then discussed the proposed transaction in detail. At the   
conclusion of the discussions, a representative of Bear Stearns orally informed 
the Greyhound Board, which oral advice was subsequently confirmed in writing,   
that, in Bear Stearns' opinion, the consideration to be received by the         
Greyhound stockholders in the merger was fair to the Greyhound common and       
preferred stockholders from a financial point of view. At that point, the       
representatives from Bear Stearns and Jones Day were excused from the meeting   
and the Greyhound Board further discussed the possible transaction. Thereafter, 
the Greyhound Board, by unanimous vote of all directors present (one director   
being absent from the portion of the meeting at which the vote was taken),      
approved the merger agreement and the transactions contemplated thereby.        

The Laidlaw Board approved the merger agreement on October 16, 1998. Thereafter,
the merger agreement was finalized and executed and the transaction was publicly
announced prior to the commencement of trading on October 19, 1998.             

Following the public announcement of the merger, lawsuits were filed by certain 
persons that purport to be Greyhound stockholders on behalf of themselves and   
certain other Greyhound stockholders. In these lawsuits, the plaintiffs allege, 
among other things, that certain provisions of the merger agreement violate     
Delaware law and that the Greyhound Board breached its fiduciary duties in      
approving the merger. See "The Merger -- Certain Litigation."                   

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Following the announcement of the proposed merger, certain holders of Greyhound 
preferred stock contacted representatives of both Greyhound and Laidlaw         
requesting that the merger agreement be modified to permit the Greyhound        
preferred stock to remain outstanding in the merger. While both Laidlaw and     
Greyhound believe that the treatment of the Greyhound preferred stock originally
proposed was in accordance with the terms thereof and applicable law, the       
parties were willing to modify the merger agreement to permit the Greyhound     
preferred stock to remain outstanding following the merger. Inasmuch as such    
modification did not adversely affect the common stockholders of either         
Greyhound or Laidlaw, the modification was approved and publicly announced on   
November 5, 1998. In connection with the approval of the modification of the    
merger agreement, Bear Stearns reissued its opinion as of October 16, 1998      
relating to the fairness, from a financial point of view, of the merger         
consideration to the Greyhound stockholders.                                    

On January 26, 1999, Laidlaw irrevocably waived its right to pay a portion of   
the merger consideration with Laidlaw common shares. As a result, the merger    
consideration will be paid entirely in cash.                                    

GREYHOUND'S REASONS FOR THE MERGER                                              

The Greyhound Board has, by the unanimous vote of all directors present (one    
director being absent from the Greyhound Board meeting at which the merger      
agreement was approved), determined that the merger is fair to and in the best  
interests of Greyhound and its stockholders. Accordingly, the Greyhound Board   
approved the merger agreement and recommended that the Greyhound stockholders   
adopt the merger agreement. Prior to approving the merger, the Greyhound Board  
considered the following factors that it considered material:                   

   -   Greyhound's business plan as an independent company in the context of its
 assessment of Greyhound's business, operations, financial position,
personnel and prospects;                                          

  -   the possible difficulties in continuing to increase Greyhound's revenues
   and earnings if Greyhound were to remain independent as a result of a
      number of factors, including Greyhound's ability to continue funding its
   capital expenditure requirements and acquisitions on favorable terms;

-   presentations by, and discussions with, senior management of Greyhound
      and representatives of Bear Stearns and Jones Day regarding the terms of
 the merger agreement and the results of the due diligence review of
      Laidlaw conducted by Greyhound's management, Bear Stearns and Jones Day;

  -   the advice of Bear Stearns described below under "Opinion of Greyhound's
       Financial Advisor" and its oral opinion (which was subsequently confirmed
    in writing) to the effect that the merger consideration is fair to the
   Greyhound common and preferred stockholders from a financial point of
view;                                                             

-   that the merger consideration to be received by holders of Greyhound  
     common stock was (a) 92.6% higher than the lowest closing sale price of
 the Greyhound common stock over the prior 12-month period, (b) 1.0%
      higher than the highest closing sale price of the Greyhound common stock
      over the prior 12-month period, and (c) 49% higher than the closing sale
     price of the Greyhound common stock at the close of business on October
14, 1998;                                                         

-   that the merger would be a taxable transaction to the holders of      
    Greyhound common stock and that at least $2.50 of the per share merger
       consideration would be paid in cash which could be used to satisfy all or
some portion of any tax liability resulting from the merger;      

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  -   that the merger agreement does not prohibit Greyhound from participating
      in discussions or negotiations with, or furnishing information (pursuant
       to a confidentiality agreement) to, any person or entity if the Greyhound
       Board concludes (after consultation with its financial advisor) that such
   person or entity has made or is reasonably likely to make a bona fide
     proposal for a transaction which it believes may be more favorable than
the merger from a financial point of view (a "Superior Proposal");

   -   the ability of the Greyhound Board to terminate the merger agreement upon
      payment of the Termination Fee if the Greyhound Board decides to approve
a Superior Proposal;                                              

   -   the financial condition of Laidlaw and the ability of Laidlaw to complete
the merger in a timely manner; and                                

-   the regulatory approvals required in connection with the merger,      
including that receipt of STB approval was not a condition to the 
obligations of Laidlaw or Greyhound to complete the merger.       

In addition, the Greyhound Board also considered that under the terms of the    
merger agreement as originally negotiated Laidlaw would have had the option     
(which it subsequently waived) to pay a significant part of the merger          
consideration with Laidlaw common shares. Accordingly, the Greyhound Board      
considered the following additional factors, assuming Laidlaw paid part of the  
merger consideration with Laidlaw common shares:                                

  -   the business, operations, financial position, personnel and prospects of
Laidlaw;                                                          

-   the merger would enable the Greyhound stockholders to own shares in   
    Laidlaw, which is a company with more diverse businesses than those of
   Greyhound. At the same time, ownership of Laidlaw common shares would
      afford Greyhound stockholders the opportunity to continue to participate
in the long-term growth and appreciation of the bus transportation
business;                                                         

-   the trading volume of Laidlaw common shares, which would provide      
    Greyhound stockholders with greater liquidity in their investment than
they have had with their shares of Greyhound common stock;        

-   the fit between the respective businesses of Greyhound and Laidlaw;   

-   the potential for cost savings from combining Greyhound with Laidlaw, 
     which the Greyhound Board believes would have a favorable impact on the
long-term value for the holders of Laidlaw common shares;         

-   certain risks associated with Laidlaw and the merger, including an    
     adverse U.S. tax court decision against Laidlaw and its possible effect
on Laidlaw's future earnings; and                                 

   -   the historical trading prices of Laidlaw common shares and in that regard
the Greyhound Board noted that the Laidlaw common shares were then
trading substantially below its 52-week high.                     

In light of the Greyhound Board's knowledge of the business and operations of   
Greyhound and its business judgment, the Greyhound Board considered and         
evaluated each of the factors listed above during the course of its             
deliberations prior to approving the merger agreement. Each of the factors      
listed above was believed by the Greyhound Board to support the decision to     
adopt the merger agreement, except for the factor relating to the taxable nature
of the merger, which was specifically negotiated in connection with the         
transaction. In view of the wide variety of factors considered in connection    
with its evaluation of the merger, the Greyhound Board found it impracticable   
to, and did                                                                     

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not, quantify or otherwise attempt to assign relative weights to the specific   
factors considered in making its determinations.                                

After considering all of the foregoing factors, the Greyhound Board concluded   
that the merger is fair to and in the best interests of Greyhound and its       
stockholders. The Greyhound Board believes that the factors listed above, when  
considered together, support the fairness of the merger to Greyhound and its    
stockholders. THE GREYHOUND BOARD BELIEVES THAT SUCH FACTORS SUPPORT ITS        
RECOMMENDATION THAT THE GREYHOUND STOCKHOLDERS VOTE "FOR" THE ADOPTION OF THE   
MERGER AGREEMENT.                                                               

OPINION OF GREYHOUND'S FINANCIAL ADVISOR                                        

Greyhound retained Bear Stearns to act as its exclusive financial advisor and to
render an opinion to the Greyhound Board as to the fairness of the merger       
consideration, from a financial point of view, to the Greyhound stockholders.   
Bear Stearns is an internationally recognized investment banking firm that has  
previously provided investment banking services to Greyhound and Laidlaw and is 
continually engaged in the valuation of businesses and their securities in      
connection with mergers and acquisitions and other purposes.                    

At the Greyhound Board meeting held on October 15, 1998, Bear Stearns presented 
its analysis of the merger. Bear Stearns subsequently delivered its written     
opinion to the Greyhound Board dated as of October 16, 1998 to the effect that, 
as of such date, the merger consideration was fair, from a financial point of   
view, to the Greyhound stockholders.                                            

The full text of the Bear Stearns opinion is attached as Appendix B to this     
Proxy Statement. The Bear Stearns opinion is intended for the benefit and use of
the Greyhound Board in its evaluation of the merger. Greyhound stockholders are 
urged to, and should, read the Bear Stearns opinion carefully in its entirety in
conjunction with this Proxy Statement for the assumptions made, matters         
considered and limits of the review by Bear Stearns. The Bear Stearns opinion   
addresses only the fairness of the merger consideration, from a financial point 
of view, to the Greyhound stockholders and does not constitute a recommendation 
to the Greyhound Board or to any Greyhound stockholder as to how to vote in     
connection with the merger. The Bear Stearns opinion does not address           
Greyhound's underlying business decision to pursue the merger. The summary of   
the Bear Stearns opinion set forth in this Proxy Statement is qualified in its  
entirety by reference to the full text of such opinion.                         

In rendering its fairness opinion, Bear Stearns met with certain members of the 
senior management of each of Greyhound and Laidlaw to discuss the respective    
operations, historical financial statements and future prospects of each        
company. In addition, Bear Stearns reviewed the following:                      

-   the merger agreement;                                                 

-   Greyhound's Annual Reports to Shareholders and Annual Reports on Form 
     10-K for the fiscal years ended December 31, 1995 through 1997, and its
      Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998 and
June 30, 1998;                                                    

-   certain operating and financial information relating to Greyhound's   
business and prospects, including internal financial projections, 
   provided to Bear Stearns and reviewed for Bear Stearns by Greyhound's
management;                                                       

  -   Laidlaw's Annual Reports to Shareholders and Annual Reports on Form 10-K
    for the fiscal years ended August 31, 1995 through 1997, its Quarterly
     Reports on form 10-Q for the quarters ended November 30, 1997, February
  28, 1998 and May 31, 1998, and a draft of its consolidated financial
statements for the fiscal year ended August 31, 1998;             

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-   certain operating and financial information relating to Laidlaw's     
business and prospects, including internal financial projections, 
 provided to Bear Stearns and reviewed for Bear Stearns by Laidlaw's
management;                                                       

 -   the historical prices and trading volumes of the Greyhound common stock
and Laidlaw common shares;                                        

-   publicly available financial data, stock market performance data and  
   valuation parameters of companies which Bear Stearns deemed generally
comparable to Greyhound and Laidlaw; and                          

-   the financial terms of recent acquisitions of companies which Bear    
Stearns deemed generally comparable to the merger.                

Bear Stearns also conducted such other studies, analyses, inquiries and         
investigations that it deemed appropriate in connection with rendering its      
fairness opinion.                                                               

In the course of its review, Bear Stearns relied upon and assumed, without      
assuming any responsibility for independent verification, the accuracy and      
completeness of all of the financial and other information (including estimates 
and projections) provided to, discussed with, or reviewed by or for Bear Stearns
by Greyhound and Laidlaw or publicly available for purposes of its opinion,     
including the adequacy of Laidlaw's reserves relating to loss contingencies.    
Bear Stearns further relied upon the assurances of senior management of both    
Greyhound and Laidlaw that they were unaware of any facts that would make the   
information, estimates and projections provided to, discussed with, or reviewed 
by or for Bear Stearns incomplete, inaccurate or misleading. With respect to    
Greyhound's and Laidlaw's internal financial projections and estimates of       
potential synergies that could be achieved upon consummation of the merger, Bear
Stearns assumed that they had been reasonably prepared on bases reflecting the  
best currently available estimates and judgments of the senior managements of   
Greyhound and Laidlaw as to the expected future performance of Greyhound and    
Laidlaw. Bear Stearns expressed no view as to such information, or the          
assumptions on which they were based. In arriving at its opinion, Bear Stearns  
did not perform or obtain any independent appraisal of the assets or liabilities
of Greyhound or Laidlaw, nor had Bear Stearns been furnished with any such      
appraisals. For purposes of rendering its opinion, Bear Stearns assumed, in all 
respects material to its analysis, that the merger will be consummated          
substantially in accordance with the terms set forth in the merger agreement,   
that the representations and warranties of each party contained in the merger   
agreement were true and correct, that each party will perform all of the        
covenants and agreements required to be performed by it under the merger        
agreement and all conditions to the consummation of the merger will be satisfied
without waiver by either Greyhound or Laidlaw. Bear Stearns did not express any 
opinion as to the price or range of prices at which the Laidlaw common shares   
may trade following the merger. The Bear Stearns opinion is necessarily based on
economic, market and other conditions, and the information made available to it,
as of October 16, 1998, except with respect to the merger agreement which was   
amended and restated as of November 5, 1998.                                    

The following is a brief summary of all the material financial analyses used by 
Bear Stearns in connection with rendering its opinion to the Greyhound Board.   

STOCK TRADING HISTORY. Bear Stearns reviewed the historical market prices and   
trading volumes of Greyhound common stock and Laidlaw common shares during the  
12-month period prior to the delivery of the Bear Stearns opinion. Bear Stearns 
observed that the merger consideration to be                                    

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received by the holders of Greyhound common stock represents the following      
premiums to selected closing prices of Greyhound common stock during the prior  
12 months:                                                                      

                                                        · Enlarge/Download Table

                                                          PREMIUM TO:                              
                            -----------------------------------------------------------------------
                            OCTOBER 13, 1998   LOWEST TRAILING 12 MONTH   HIGHEST TRAILING 12 MONTH
                             CLOSING PRICE          CLOSING PRICE               CLOSING PRICE      
                            ----------------   ------------------------   -------------------------
                                                                                                   
Merger Consideration.......       62.5%                  92.6%                 1.0%                

COMPARABLE COMPANY ANALYSIS. Bear Stearns reviewed and compared the financial   
and stock market performance of Greyhound to the financial and stock market     
performance of certain publicly-traded companies in the surface transportation  
industry that Bear Stearns believed were generally comparable to Greyhound (the 
"Comparable Companies"). The Comparable Companies included Laidlaw, Coach USA,  
Inc. ("Coach USA") and Ryder System, Inc. ("Ryder"). Bear Stearns also reviewed 
and compared similar data for a composite of six regional airline companies (the
"Regional Airlines") including ASA Holdings, Inc., Comair Holdings, Inc., Mesa  
Air Group, Inc., Mesaba Holdings, Inc., Midwest Express Holdings, Inc. and      
SkyWest, Inc. While no group is directly comparable to Greyhound, regional      
airlines were included given that (a) they are a transportation-related industry
with certain operating characteristics consistent with those of Greyhound, (b)  
in certain markets they compete with Greyhound and (c) their financial          
performance is impacted by many of the same macroeconomic factors that impact   
Greyhound. For each of the Comparable Companies and the Regional Airlines, Bear 
Stearns reviewed certain publicly available financial data, including revenue,  
earnings before interest, taxes, depreciation and amortization ("EBITDA"),      
earnings before interest and taxes ("EBIT"), net income and earnings per share  
("EPS") over various time periods as well as certain valuation statistics,      
financial ratios, published earnings estimates for 1998 and 1999 and stock      
market information.                                                             

For each of the Comparable Companies and the Regional Airlines composite, Bear  
Stearns calculated the ratio of their equity value plus debt less cash and cash 
equivalents ("Enterprise Value") as of October 13, 1998 to their respective     
EBITDA during the most recent last 12-month period ("LTM") and the ratios of    
their stock prices as of October 13, 1998 to their respective LTM earnings per  
share and projected 1998 and 1999 earnings per share. As shown in the table     
below, Bear Stearns observed that the merger consideration produced multiples   
that exceeded the trading multiples of the Comparable Companies and the Regional
Airlines composite.                                                             

                                                        · Enlarge/Download Table

                         ENTERPRISE VALUE/      PRICE/LTM           PRICE/1998          PRICE/1999    
                            LTM EBITDA      EARNINGS PER SHARE  EARNINGS PER SHARE  EARNINGS PER SHARE
                         -----------------  ------------------  ------------------  ------------------
                                                                                                      
Laidlaw.................       6.7x               12.0x               11.5x                  10.4x    
Coach USA...............       5.9x                9.5x                7.9x                   6.3x    
Ryder...................       4.0x               10.2x                9.6x                   8.1x    
Regional Airlines                                                                                     
  composite.............       5.5x               12.0x               11.2x                   9.4x    
Merger Consideration....       9.5x                  NM               72.2x(1)         21.0x-40.6x(2) 

---------------                                                                 

(1) Fully-taxed earnings per share.                                             

(2) Depending on assumed underlying management forecast.                        

Bear Stearns chose the Comparable Companies and Regional Airlines because they  
have general business, operating and financial characteristics similar to those 
of Greyhound. However, Bear Stearns noted that no company used in the foregoing 
analysis is identical to Greyhound. Accordingly, Bear Stearns did not rely      
solely on the mathematical results of the analysis, but also made qualitative   

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judgments concerning differences in financial and operating characteristics of  
Greyhound, the Comparable Companies and the Regional Airlines that could affect 
the values of each.                                                             

PRESENT VALUE OF HYPOTHETICAL STOCK PRICE ANALYSIS. Bear Stearns performed an   
analysis of what a share of Greyhound common stock could be worth in the future 
if Greyhound continued to operate as a stand-alone entity. Bear Stearns used    
Greyhound's projected earnings per share for 2000 through 2002 based on two     
financial scenarios provided by management. Bear Stearns applied a range of     
assumed future price/earnings multiples based on the trading ranges of the      
Comparable Companies and Regional Airlines. The resulting hypothetical future   
stock prices were then discounted back to the present using a discount rate of  
14.5%, reflecting Bear Stearns' estimate of Greyhound's cost of equity. As shown
in the following table, the analysis yielded a range of values of $1.98 to $6.53
per share, and Bear Stearns observed that the merger consideration was at the   
upper end of this range.                                                        

                                                                · Download Table

                                                                     RANGE         
                                                             ----------------------
                                                                                   
Price/Earnings Multiple Assumption..........................  9.0x    --      13.0x
Implied Equity Value per Share.............................. $1.98    --     $ 6.53

COMPARABLE ACQUISITION ANALYSIS. Bear Stearns reviewed certain                  
publicly-available financial information related to seven merger and acquisition
transactions completed in the passenger services industry that it deemed        
generally comparable to the merger (the "Comparable Transactions"). Of these    
seven transactions, financial data was publicly available for the following five
transactions (acquired company/acquiring company): Greyhound Canada             
Transportation Corp./Laidlaw, Valley Transit Co./ Greyhound, Carolina Coach     
Company/Greyhound, 6 transportation companies/Coach USA (August, 1996) and 6    
transportation companies/Coach USA (founding transactions). For each of these   
five transactions, Bear Stearns reviewed certain publicly available financial   
information for the acquired companies including revenue, EBITDA, EBIT and      
certain valuation statistics. As shown in the table below, Bear Stearns compared
such results and observed that the merger consideration produced multiples that 
compare favorably to the results of the Comparable Transactions analysis.       

                                                        · Enlarge/Download Table

                                          ENTERPRISE VALUE/  ENTERPRISE VALUE/  ENTERPRISE VALUE/
                                            LTM REVENUES        LTM EBITDA          LTM EBIT     
                                          -----------------  -----------------  -----------------
                                                                                                 
Comparable Transactions Harmonic Mean....       1.53x              6.6x                9.6x      
Comparable Transactions Low..............       1.09x              4.9x                8.3x      
Comparable Transactions High.............       2.24x              8.5x               12.9x      
Merger Consideration.....................       0.93x              9.5x               16.4x      

Bear Stearns noted that no transaction used in the foregoing analysis is        
identical to the merger. Accordingly, an analysis of the results of the         
foregoing is not mathematical; rather, it involves a number of considerations   
and judgments concerning differences in financial and operating characteristics 
of the companies and the Comparable Transactions and other factors that could   
affect the value of the companies or transactions to which Greyhound or the     
merger are being compared.                                                      

DISCOUNTED CASH FLOW ANALYSIS. Bear Stearns performed a discounted cash flow    
analysis of Greyhound based upon financial projections prepared by Greyhound's  
management for the fiscal years ending December 31, 1999 through December 31,   
2002. Using a range of discount rates reflecting Bear Stearns' estimate of      
Greyhound's weighted average after-tax cost of capital, Bear Stearns calculated 
the present value of the projected Free Cash Flows (as defined below) for each  
of the fiscal years ending December 31, 1999 through 2002, the present value of 
the terminal value (the "Terminal Value") of Greyhound at December 31, 2002 and 
the present value of expected tax savings from Greyhound's available tax net    
operating loss carryforwards. As used in Bear Stearns'                          

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analysis, "Free Cash Flow" means, for each fiscal year, earnings before interest
and taxes, less estimated taxes, plus depreciation and amortization, less       
capital expenditures and less incremental working capital requirements. The     
Terminal Value was computed by applying a range of assumed growth rates of Free 
Cash Flow into perpetuity. The following table shows the assumed range of       
perpetual growth rates and discount rates, as well as the range of terminal     
multiples of 2002 EBITDA and multiples of 2002 net income that are implied by   
the range of equity values determined in this analysis.                         

                                                                · Download Table

                                                                     RANGE        
                                                             ---------------------
                                                                                  
Discount Rate Assumption....................................  11.5%    --    10.5%
Perpetual Growth Rate of Free Cash Flow Assumption..........   1.5%    --     2.5%
Implied Terminal 2002 EBITDA Multiple.......................   4.2x    --     5.9x
Implied Terminal 2002 Net Income Multiple...................  11.7x    --    20.4x
Implied Equity Value per Share.............................. $ 2.57    --   $ 6.83

To calculate the aggregate net present value of the equity of Greyhound, Bear   
Stearns subtracted total debt minus cash and cash equivalents of Greyhound from 
the sum of the present value of the projected Free Cash Flows, the present value
of the Terminal Value and the present value of the expected tax savings from    
Greyhound's available tax net operating loss carryforwards. Based on this       
analysis and the assumptions set forth above, Bear Stearns calculated the       
implied equity value per fully diluted share of Greyhound Common Stock to be    
between $2.57 and $6.83 per share. Bear Stearns observed that the merger        
consideration was at the upper end of this value range.                         

The preparation of a fairness opinion is a complex process and is not           
necessarily susceptible to partial analysis or summary description. Selecting   
portions of the analyses or of the summary described above, without considering 
the analysis as a whole, could create an incomplete view of the processes       
underlying the Bear Stearns opinion. In arriving at its opinion, Bear Stearns   
considered the results of all the analyses it performed. Such analyses were     
prepared solely for purposes of providing its opinion as to the fairness of the 
merger consideration, from a financial point of view, to the Greyhound          
stockholders and do not purport to be appraisals or necessarily indicate the    
prices at which businesses or securities actually may be sold. Analyses based   
upon forecasts of future results are not necessarily indicative of actual future
results, which may be significantly more or less favorable than those results   
suggested by such analyses. As described above, the Bear Stearns opinion and    
Bear Stearns' presentation to the Greyhound Board were two of many factors taken
into consideration by the Greyhound Board in making its determination to approve
the merger. The foregoing summary does not purport to be a complete description 
of the analyses performed by Bear Stearns in rendering its opinion.             

In the ordinary course of business, Bear Stearns may actively trade the equity  
securities of Greyhound and Laidlaw for its own account and for the accounts of 
its customers and, accordingly, may, at any time, hold a long or short position 
in such securities.                                                             

Under the terms of a letter dated June 18, 1998, Greyhound paid Bear Stearns a  
retainer fee of $100,000 and paid Bear Stearns an additional fee of $100,000 at 
the time negotiations relating to the merger began. Greyhound has also paid Bear
Stearns a fee of $1.0 million for rendering its opinion relating to the merger. 
Greyhound has also agreed to pay Bear Stearns a fee equal to 0.55% of the       
aggregate value of the merger, which includes the assumption of debt, capital   
leases and certain other liabilities. This fee is payable upon completion of the
merger, against which all fees described above would be credited. Greyhound also
agreed to reimburse Bear Stearns for its out-of-pocket expenses, including the  
reasonable fees and disbursements of counsel and to indemnify Bear Stearns and  
certain                                                                         

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related persons against certain liabilities in connection with the engagement of
Bear Stearns, including certain liabilities under the federal and state         
securities laws.                                                                

LAIDLAW'S REASONS FOR THE MERGER                                                

The Laidlaw Board has unanimously determined that the merger is fair to and in  
the best interests of the holders of Laidlaw common shares. Accordingly, the    
Laidlaw Board approved the merger agreement. The Laidlaw Board considered a     
number of factors prior to approving the merger, including:                     

   -   the merger is consistent with Laidlaw's long-term objective of delivering
   shareholder value by growth through acquisitions and internal growth;

   -   the merger will provide entry into significant new geographic markets for
 Laidlaw's existing scheduled intercity bus transportation business,
enhancing the value of the Canadian Greyhound business previously 
     acquired by Laidlaw and Laidlaw's strategic objective of expanding this
business;                                                         

-   the merger will add significant management expertise in Laidlaw's     
scheduled intercity bus transportation business; and              

 -   the combined company will have the potential to realize cost savings in
    administration, insurance and in purchasing supplies and equipment, as
compared to the two companies continuing to operate separately.   

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THE MERGER AGREEMENT                                                            

The following is a summary of the material terms of the merger agreement. This  
summary is not a complete description of the terms and conditions of the merger 
agreement and is qualified in its entirety by reference to the full text of the 
merger agreement, a copy of which is attached as Appendix A to this Proxy       
Statement. Terms used in this section of this Proxy Statement with initial      
capital letters that are not otherwise defined in the Proxy Statement have the  
meaning given to those terms in the merger agreement.                           

THE MERGER. At the Effective Time, a subsidiary of Laidlaw, Laidlaw Acquisition 
Transit Corp., will be merged into Greyhound in accordance with the applicable  
provisions of the DGCL. Following the merger, Laidlaw will own all of the       
outstanding shares of Greyhound common stock.                                   

Upon the satisfaction or waiver of all the conditions contained in the merger   
agreement (other than those to be satisfied at the closing), Greyhound and      
Laidlaw Acquisition will file the Certificate of Merger with the Secretary of   
State of the State of Delaware as required by the DGCL. The merger will become  
effective immediately upon filing of the Certificate of Merger or at such later 
time as is specified in the Certificate of Merger.                              

MERGER CONSIDERATION. At the Effective Time, as a result of the merger and      
without any action on the part of any stockholder:                              

   -   each share of Greyhound common stock outstanding immediately prior to the
  Effective Time (other than those canceled by the terms of the merger
      agreement and any dissenting shares) will be converted into the right to
receive $6.50 in cash;                                            

   -   each share of Greyhound common stock outstanding immediately prior to the
     Effective Time and owned by Greyhound or any Greyhound subsidiary or by
Laidlaw, Laidlaw Acquisition or any other Laidlaw subsidiary will 
automatically be canceled and retired without the payment of any  
consideration;                                                    

  -   each share of Greyhound preferred stock outstanding immediately prior to
      the Effective Time (other than any dissenting shares) will remain issued
 and outstanding and have the identical powers, preferences, rights,
     qualifications, limitations and restrictions as the Greyhound preferred
       stock had prior to the merger. Under the terms of the Greyhound preferred
stock, following the merger, the Greyhound preferred stock will be
   convertible into the same merger consideration paid to the holders of
    Greyhound common stock multiplied by the number of shares of Greyhound
       common stock issuable upon conversion of one share of Greyhound preferred
     stock. Each share of Greyhound preferred stock is currently convertible
       into approximately 5.128 shares of Greyhound common stock, resulting in a
    post-merger conversion price per share of Greyhound preferred stock of
$33.33; and                                                       

   -   each share of common stock of Laidlaw Acquisition outstanding immediately
      prior to the Effective Time will be converted into and exchanged for one
share of Greyhound common stock.                                  

UNDER THE TERMS OF THE MERGER AGREEMENT, LAIDLAW HAD THE OPTION TO PAY UP TO    
$4.00 OF THE MERGER CONSIDERATION WITH LAIDLAW COMMON SHARES. HOWEVER, ON       
JANUARY 26, 1999 LAIDLAW IRREVOCABLY WAIVED ITS RIGHT TO PAY A PORTION OF THE   
MERGER CONSIDERATION WITH LAIDLAW COMMON SHARES. AS A RESULT, THE MERGER        
CONSIDERATION WILL BE PAID ENTIRELY IN CASH.                                    

Laidlaw will designate a bank or trust company (the "Paying Agent") to act as   
the agent for the merger. The Paying Agent will receive the merger consideration
from Laidlaw and distribute the cash                                            

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merger consideration to each holder of Greyhound common stock after they have   
delivered their Greyhound common stock certificates along with a signed letter  
of transmittal to the Paying Agent.                                             

DISSENTING SHARES. In the merger, the holders of Greyhound common stock and     
Greyhound preferred stock have appraisal rights under Section 262 of the DGCL   
("Section 262"). If a Greyhound stockholder exercises his or her appraisal      
rights and complies with the requirements of Section 262 (a "Dissenting         
Stockholder"), the shares of Greyhound common stock owned by the Dissenting     
Stockholder will not be converted into the right to receive the merger          
consideration at the Effective Time. Instead, such Dissenting Stockholder will  
receive the appraised value of his or her shares of Greyhound common stock. The 
shares of Greyhound preferred stock owned by a Dissenting Stockholder will not  
remain outstanding following the merger. Instead, such Dissenting Stockholder   
will receive the appraised value of his or her Greyhound preferred stock. The   
shares of Greyhound common stock or Greyhound preferred stock owned by a        
Dissenting Stockholder are referred to as "Dissenting Shares." If, after the    
Effective Time, the Dissenting Stockholder fails to comply with the requirements
of Section 262, the Dissenting Shares of such Dissenting Stockholder will be    
treated as shares of Greyhound common stock or Greyhound preferred stock, as the
case may be, and will be converted into the right to receive the merger         
consideration in the case of the Greyhound common stock or will remain          
outstanding in the case of the Greyhound preferred stock. At the Effective Time,
a Dissenting Stockholder will not have any rights (including voting rights and  
rights to dividends or distributions) with respect to his or her Dissenting     
Shares other than the rights provided by Section 262. For a summary of the      
requirements that a Greyhound stockholder must follow in order to exercise his  
or her appraisal rights, see "The Merger -- Appraisal Rights."                  

TREATMENT OF GREYHOUND STOCK OPTIONS. Greyhound will offer holders of a         
Greyhound stock option, whether or not the Greyhound stock option is            
exercisable, the right to cancel his or her Greyhound stock option in exchange  
for an amount in cash equal to $6.50 less the exercise price of the Greyhound   
stock option. In the event that any Greyhound stock option is not canceled prior
to the Effective Time, that Greyhound stock option will remain outstanding under
the terms of the applicable Greyhound stock option plan. This offer, however,   
will not be made with respect to Greyhound stock options granted under the Union
Option Plan. Instead, the effects of the merger on the Greyhound stock options  
granted under the Union Option Plan will be governed by the terms of the Union  
Option Plan.                                                                    

REPRESENTATIONS AND WARRANTIES. The merger agreement contains various           
representations and warranties of the parties including their respective        
businesses and organizational documents, capital structure, authority to        
execute, deliver and perform their respective obligations under the merger      
agreement, required filings and consents, compliance with laws, filings with the
Securities and Exchange Commission (the "SEC"), absence of certain changes and  
events, undisclosed liabilities, litigation, employee benefit plans, labor      
matters, taxes, intellectual property and brokers.                              

The representations and warranties made by Greyhound and Laidlaw will not       
survive beyond the Effective Time or the termination of the merger agreement.   
However, if the merger is completed, Laidlaw's obligation to pay the merger     
consideration will survive the Effective Time indefinitely and the agreements   
relating to the treatment of the Greyhound stock options, indemnification and   
insurance and the continuation of certain Greyhound benefits will survive for   
the periods described in the merger agreement. If the merger agreement is       
terminated, the obligation, if any, of Greyhound to pay the Termination Fee will
survive indefinitely.                                                           

CONSENTS, APPROVALS, AND FILINGS. Greyhound and Laidlaw are required to make all
governmental filings necessary to complete the merger, including with the STB.  
Further, Greyhound and Laidlaw                                                  

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will obtain all consents, waivers, approvals, authorizations and orders that are
necessary to complete the merger. Greyhound and Laidlaw have agreed to take, or 
cause to be taken, all appropriate actions, and to do, or cause to be done, all 
things necessary or advisable under applicable laws to complete the merger,     
including furnishing all information required to be included in any application 
or filing necessary to complete the merger. If final approval of the merger by  
the STB is not obtained prior to the special meeting, Laidlaw has agreed to     
enter into a voting trust or similar agreement in order to permit the completion
of the merger before it receives final approval from the STB.                   

NO SOLICITATION. Greyhound has agreed that it will not and will not permit any  
of its subsidiaries or any of its or their officers, directors, employees,      
agents or representatives, to solicit or initiate any inquiries or proposals    
regarding or engage in negotiations or discussions concerning any merger, sale  
of substantial assets, sale of capital stock (including any tender offer) or    
other similar transaction involving Greyhound or its subsidiaries, other than   
the transactions contemplated by the merger agreement (an "Acquisition          
Proposal"). Greyhound has also agreed that it will not provide any nonpublic    
information relating to Greyhound or its subsidiaries to any person who is      
proposing an Acquisition Proposal, except as described below.                   

However, if the Greyhound Board concludes, after consultation with Bear Stearns 
that a person has made or is likely to make a Superior Proposal, Greyhound may  
provide information to and participate in discussions with the person making the
Superior Proposal. Greyhound has agreed to sign a confidentiality agreement with
any person making a Superior Proposal before Greyhound provides that person any 
information or begins discussions with that person regarding the Superior       
Proposal. The confidentiality agreement must be substantially similar to the    
confidentiality agreement between Greyhound and Laidlaw.                        

Greyhound has agreed to notify Laidlaw immediately if it receives any written   
Acquisition Proposal or if any pending Acquisition Proposal has been modified or
amended. Further, Greyhound has agreed to notify Laidlaw if it receives any     
request for information relating to Greyhound or its subsidiaries or for access 
to the properties, books or records of Greyhound or its subsidiaries by any     
person who is considering making or who has made an Acquisition Proposal.       

CONDITIONS TO THE MERGER. The merger agreement provides that the obligations of 
Greyhound, Laidlaw and Laidlaw Acquisition to complete the merger are subject to
the satisfaction or written waiver on or prior to the closing date of the merger
(the "Closing Date") of the following conditions:                               

  -   the merger agreement will have been adopted by the holders of a majority
of the outstanding shares of Greyhound common stock and Greyhound 
preferred stock, voting together as one class;                    

-   no court order prohibiting the merger being in effect, and no action  
 having been taken and no law being in effect which makes the merger
illegal; and                                                      

-   the opinion of Bear Stearns not having been modified in any material  
adverse manner or withdrawn.                                      

The obligations of Laidlaw and Laidlaw Acquisition to complete the merger are   
subject to satisfaction or written waiver on or prior to the Closing Date of the
following additional conditions:                                                

-   the representations and warranties made by Greyhound in the merger    
     agreement were true and correct in all material respects on the date of
 the merger agreement and will be true on and as of the Closing Date
(unless an earlier date is stated);                               

   -   Greyhound will have performed in all material respects all obligations it
    is required to perform under the merger agreement prior to the Closing
Date; and                                                         

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-   Greyhound will have delivered to Laidlaw and Laidlaw Acquisition a    
  certificate of Greyhound signed by an executive officer of Greyhound
certifying to the conditions stated above.                        

The obligations of Greyhound to complete the merger are subject to satisfaction 
or written waiver on or prior to the Closing Date of the following additional   
conditions:                                                                     

-   the representations and warranties made by Laidlaw and Laidlaw        
Acquisition in the merger agreement were true and correct in all  
     materials respects on the date of the merger agreement and will be true
on and as of the Closing Date (unless an earlier date is stated); 

  -   Laidlaw and Laidlaw Acquisition will have each performed in all material
    respects all obligations they are required to perform under the merger
agreement prior to the Closing Date; and                          

-   Laidlaw and Laidlaw Acquisition will have delivered to Greyhound a    
   certificate of Laidlaw and Laidlaw Acquisition signed by an executive
officer of each of them certifying to the conditions stated above.

TERMINATION; BREAK-UP FEE. The merger agreement may be terminated at any time   
prior to the Effective Time in any one of the following circumstances:          

-   by the mutual written consent of the Greyhound Board and the Laidlaw  
Board;                                                            

   -   by Greyhound or Laidlaw, if any court or other governmental agency issues
a nonappealable final order or ruling, or has taken any action to 
   permanently prevent the merger (but neither Laidlaw nor Greyhound may
terminate the merger agreement if they failed to perform their    
 obligations under the merger agreement and their failure materially
       contributed to the issuance of the order or ruling, or the taking of such
action);                                                          

-   by Greyhound or Laidlaw, if Greyhound enters into an agreement with   
respect to a Superior Proposal;                                   

-   by Laidlaw, if the Greyhound Board withdraws, modifies or changes its 
   approval or recommendation of the merger agreement or the merger in a
manner adverse to Laidlaw;                                        

-   by Greyhound or Laidlaw (but only if the terminating party is not in  
     material breach of any of the representations, warranties, covenants or
    agreements made by the terminating party in the merger agreement), if:

         -   the other party failed to comply in any material respect with any
           of the covenants and agreements made by such other party in the
merger agreement; or                                

     -   any representation or warranty made by the other party in the
         merger agreement was untrue on the date the representation or
warranty was made;                                  

        in either case, if such event will have a material adverse effect on the
      other party. If, however, such event can be corrected, then the merger
     agreement may not be terminated under this provision if the breaching
     party uses its reasonable best efforts to correct the event or if the
event is corrected;                                             

 -   by Greyhound or Laidlaw, if the special meeting was held and the merger
       agreement was not adopted by a majority of the Greyhound stockholders; or

-   by Greyhound or Laidlaw, if the merger is not completed by March 31,  
     1999, but neither Greyhound nor Laidlaw may terminate if they failed to
       perform their obligations under the merger agreement and their failure is
the reason the merger was not completed by that date.             

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If the merger agreement is terminated by Laidlaw because Greyhound enters into  
an agreement for a Superior Proposal, Greyhound is required to pay Laidlaw the  
Termination Fee. The Termination Fee is also payable to Laidlaw if the merger   
agreement is terminated by Laidlaw because the Greyhound Board withdraws or     
adversely modifies or changes its approval or recommendation of the merger      
agreement or the merger and a Superior Proposal has been made and is pending.   
The Termination Fee payable to Laidlaw is required to be paid within two        
business days after the termination date. Greyhound will not be required to pay 
any Termination Fee to Laidlaw if, immediately prior to such termination,       
Greyhound could have terminated the merger agreement under certain              
circumstances. Payment of the Termination Fee by Greyhound will be Laidlaw's    
only remedy for the event giving rise to the payment of the Termination Fee.    

SPECIAL MEETING. The merger agreement requires that Greyhound hold a meeting of 
the Greyhound stockholders for the purpose of considering and voting on a       
proposal to adopt the merger agreement. The merger agreement also provides that 
the Greyhound Board recommend to the Greyhound stockholders that they vote "For"
the adoption of the merger agreement at the special meeting. However, the       
Greyhound Board will not be required to make any recommendation to the Greyhound
stockholders if the Greyhound Board determines (after consultation with legal   
counsel) that making the recommendation would be a breach of its fiduciary      
duties to Greyhound and its stockholders.                                       

INDEMNIFICATION AND INSURANCE. For a period of five years after the Effective   
Time, Greyhound and Laidlaw have each agreed to indemnify each current and      
former director, officer and employee of Greyhound or its subsidiaries (each, an
"Indemnified Party") against certain costs and expenses to the extent allowed   
under Delaware law and the Greyhound Certificate or Greyhound Bylaws. The costs 
and expenses may include attorneys' fees, judgments, fines, losses, claims,     
damages and liabilities that relate to any claim, action, suit, proceeding or   
investigation, whether civil, criminal, administrative or investigative (a)     
relating to the merger or the merger agreement or (b) with respect to any acts  
or omissions or alleged acts or omissions of the Indemnified Parties occurring  
at or prior to the Effective Time.                                              

For a period of five years after the Effective Time, Greyhound will be required 
to maintain directors' and officers' liability insurance ("D&O Insurance") for  
all Greyhound directors and officers who are presently covered under Greyhound's
current D&O Insurance policy. The terms of the D&O Insurance to be maintained   
for the benefit of Greyhound's directors and officers must be comparable to the 
terms of the D&O Insurance maintained by Laidlaw for its directors and officers.
However, if the terms of Greyhound's current D&O Insurance is more favorable,   
then Greyhound will be required to maintain D&O Insurance on terms similar to   
the current Greyhound D&O Insurance. Neither Greyhound nor Laidlaw will be      
required to pay premiums on the D&O Insurance to be maintained for the benefit  
of Greyhound's directors and officers in an amount greater than of 300% of the  
annual premium currently paid by Greyhound for its D&O Insurance.               

Laidlaw will guarantee the obligations of Greyhound to indemnify the Indemnified
Parties and to provide D&O Insurance for the benefit of the Greyhound directors 
and officers from and after the Effective Time. Laidlaw and Greyhound will also 
require any person or entity that purchases the assets or business of Greyhound 
following the merger to assume all of their obligations to indemnify, and to    
provide D&O Insurance for, the Greyhound directors and officers described above.

EMPLOYEE BENEFIT MATTERS. Greyhound has agreed to continue, without amendment or
change (except changes which increase compensation or benefits or that may be   
required by law), all Greyhound employee benefit plans and other policies and   
arrangements which provide compensation or benefits to employees of Greyhound   
and its subsidiaries for a period of at least one year following the merger.    
Greyhound will not be required to maintain any Greyhound employee benefit plans 
that conflict with                                                              

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any collective bargaining agreements to which Greyhound is a party. Greyhound   
may replace any Greyhound employee benefit plan with any other plan or          
arrangement that provides, at minimum, a substantially equivalent level of      
compensation or benefits as currently provided. Greyhound will not be required  
to maintain any Greyhound stock incentive plan if Laidlaw agrees to replace that
Greyhound stock incentive plan with another plan or arrangement that the        
Greyhound Board determines in good faith provides comparable incentive          
compensation opportunities.                                                     

Following the merger, Laidlaw has agreed to cause Greyhound to comply with all  
employment, change-in-control, severance, termination, consulting and unfunded  
retirement and benefit agreements to which Greyhound or any of its subsidiaries 
is a party. Laidlaw has acknowledged that the merger constitutes a change in    
control and any references to a change of control in these agreements will      
include the merger.                                                             

FEES AND EXPENSES. All costs and expenses incurred in connection with the merger
and the merger agreement will be paid by the party incurring the expenses,      
whether or not the merger is completed.                                         

AMENDMENT; WAIVER. Greyhound and Laidlaw may amend the merger agreement at any  
time before the Effective Time. Any amendment must be made in writing and signed
by Greyhound and Laidlaw. However, no amendment may be made after the Greyhound 
stockholders have adopted the merger agreement which by law would require       
further Greyhound stockholder approval. At any time prior to the Effective Time,
either party to the merger agreement may (a) extend the time for the performance
of any of the obligations or other acts of the other party, (b) waive any       
inaccuracies in the representations and warranties made in the merger agreement 
by the other party or (c) waive compliance with any of the agreements or        
conditions contained in the merger agreement. Any extension or waiver must be   
made in writing signed by the party or parties to be bound.                     

DELISTING OF GREYHOUND COMMON STOCK                                             

If the merger is completed, the Greyhound common stock will cease to be listed  
on the AMEX.                                                                    

CERTAIN FEDERAL INCOME TAX CONSEQUENCES                                         

GENERAL. The following is a summary of the material federal income tax          
consequences of the merger to Greyhound stockholders. This summary is based upon
the provisions of the Code, the applicable current and proposed Treasury        
Regulations, judicial authority and administrative rulings and practice.        
Legislative, judicial or administrative rules and interpretations are subject to
change, possibly on a retroactive basis, at any time and therefore could alter  
or modify the following statements and conclusions. It is assumed that the      
shares of Greyhound common stock or Greyhound preferred stock are held as       
capital assets by a United States person (i.e., a citizen or resident of the    
United States or a domestic corporation). This discussion does not address all  
aspects of federal income taxation that may be relevant to a particular         
Greyhound stockholder in light of such Greyhound stockholder's personal         
investment circumstances, or those Greyhound stockholders subject to special    
treatment under the federal income tax laws (for example, life insurance        
companies, tax-exempt organizations, foreign corporations and nonresident alien 
individuals), Greyhound stockholders who hold shares of Greyhound common stock  
or Greyhound preferred stock as part of a conversion transaction under Section  
1258 of the Code, or to Greyhound stockholders who acquired their shares of     
Greyhound common stock through the exercise of employee stock options or other  
compensation arrangements. In addition, the discussion does not address any     
aspect of foreign, state, local or estate and gift taxation that may be         
applicable to a Greyhound stockholder.                                          

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CONSEQUENCES OF THE MERGER TO GREYHOUND STOCKHOLDERS. The receipt of the merger 
consideration in the merger (including any cash amounts received by Dissenting  
Stockholders) will be a taxable transaction for federal income tax purposes (and
also may be a taxable transaction under applicable state, local and other income
tax laws). In general, for federal income tax purposes, a holder of Greyhound   
common stock will recognize gain or loss equal to the difference between his or 
her adjusted tax basis in the Greyhound common stock exchanged in the merger or 
subject to appraisal rights, and the amount of cash received. The gain or loss  
will be capital gain or loss, and will be short-term gain or loss subject to tax
at a maximum rate of 39.6% if, on the Effective Time, the shares of Greyhound   
common stock so exchanged or subject to appraisal rights were held for one year 
or less. If the shares were held for more than one year, the gain or loss would 
be long term, subject to tax at a maximum rate of 20%.                          

The consummation of the merger will not be a taxable transaction for a holder of
Greyhound preferred stock unless that holder converts his or her shares of      
Greyhound preferred stock into shares of Greyhound common stock prior to the    
merger or receives cash as a result of exercising his or her appraisal rights.  
Instead, gain or loss will generally be recognized for federal income tax       
purposes (and also may be recognized under applicable state, local and other    
income tax laws) on conversion of the Greyhound preferred stock into the merger 
consideration. At the time of such conversion of the Greyhound preferred stock, 
a holder of Greyhound preferred stock will recognize gain or loss equal to the  
difference between his or her adjusted tax basis in the Greyhound preferred     
stock, and the amount of cash received. The gain or loss will be capital gain or
loss, and will be short-term gain or loss subject to tax at a maximum rate of   
39.6% if, on the conversion date, the shares of Greyhound preferred stock were  
held for one year or less. If the shares were held for more than one year, the  
gain or loss would be long term, subject to tax at a maximum rate of 20%. If    
there is a dividend arrearage on the Greyhound preferred stock when the         
conversion takes place, a portion of the merger consideration received may be   
treated as a taxable dividend to the extent of such dividend arrearage.         

Under the terms of the Greyhound preferred stock, after April 16, 1999 and      
subject to certain conditions, Greyhound may exchange all, but not less than    
all, of the then outstanding shares of Greyhound preferred stock into its 8 1/2%
Convertible Subordinated Debentures due 2009 (the "Greyhound Exchange           
Debentures"). At the time of conversion of the Greyhound Exchange Debentures, a 
holder of Greyhound Exchange Debentures will recognize gain or loss in the same 
manner as described above on conversion of the Greyhound preferred stock into   
the merger consideration. If there is accrued but unpaid interest with respect  
to the Greyhound Exchange Debentures when the conversion takes place, a portion 
of the merger consideration received would be taxed as a payment of such accrued
interest.                                                                       

BACKUP TAX WITHHOLDING. Under the federal income tax backup withholding rules,  
unless an exemption applies, Laidlaw is required to and will withhold 31% of all
payments to which a Greyhound stockholder or other payee is entitled in the     
merger or on the conversion of Greyhound preferred stock or Greyhound Exchange  
Debentures, unless the Greyhound stockholder or other payee provides a tax      
identification number (social security number, in the case of an individual, or 
employer identification number in the case of other stockholders) and certifies 
under penalties of perjury that such number is correct. Each Greyhound          
stockholder and, if applicable, each other payee, should complete and sign the  
substitute Form W-9 which will be part of the letter of transmittal to be       
returned to the Paying Agent (or other agent) in order to provide the           
information and certification necessary to avoid backup withholding, unless an  
applicable exception exists and is proved in a manner satisfactory to the Paying
Agent (or other agent). The exceptions provide that certain Greyhound           
stockholders (including, among others, all corporations and certain foreign     
individuals) are not subject to these backup withholding and reporting          
requirements. In order for a                                                    

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foreign individual to qualify as an exempt recipient, however, he or she must   
submit a signed statement (i.e., Certificate of Foreign Status on Form W-8)     
attesting to his or her exempt status. Any amounts withheld will be allowed as a
credit against the holder's federal income tax liability for such year.         

THE FEDERAL INCOME TAX DISCUSSION DESCRIBED ABOVE IS INCLUDED FOR GENERAL       
INFORMATION PURPOSES ONLY. GREYHOUND STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX  
ADVISORS TO DETERMINE THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF 
THE MERGER TO THEM IN VIEW OF THEIR OWN PARTICULAR CIRCUMSTANCES.               

GOVERNMENTAL APPROVALS                                                          

SURFACE TRANSPORTATION BOARD. Greyhound and Laidlaw are subject to regulation by
the STB. The current laws relating to motor carriers contain a comprehensive    
system of control over corporate combinations involving motor carriers or       
entities controlling motor carriers (including the merger).                     

On November 17, 1998, Laidlaw filed an application with the STB seeking approval
of the merger. On December 17, 1998 (the "Publication Date") the STB published a
summary of the application and provided its tentative grant of approval of the  
merger. This publication also served as a notice to the general public of the   
proposed merger. The tentative grant of approval will automatically become      
effective on February 1, 1999 if no comments are filed by any third party       
opposing the STB application. If comments are submitted in opposition to the STB
application during such period, the tentative grant of approval will be void.   
Laidlaw will have 60 days from the Publication Date to respond to any comments, 
and may request an expedited decision on the issues raised by the comments. All 
evidentiary proceedings on the comments must be completed within 240 days of the
Publication Date. The STB must render a final decision on the STB application   
within 180 days of completion of the evidentiary proceedings. The STB may, in   
some circumstances, extend the time for rendering its decision on the           
application for an additional 90 days.                                          

Laidlaw has agreed to enter into a voting trust agreement, if necessary, in     
order to allow Laidlaw to acquire all shares of Greyhound common stock pursuant 
to the merger prior to the receipt of final approval from the STB. As a result, 
final STB approval is not a condition to the merger. However, Laidlaw is        
required to obtain STB approval prior to exercising control over Greyhound. If  
the STB does not approve the STB application and denies the merger, the         
Greyhound common stock owned by Laidlaw must be disposed of within two years    
following notification from STB that the merger has been denied. This time      
limitation may be extended with the STB's approval. Any such disposition could  
result in a significant loss to Laidlaw.                                        

OTHER GOVERNMENTAL FILINGS AND APPROVALS. Contemporaneously with the filing of  
the STB application, Laidlaw filed copies of the STB application with the       
Federal Trade Commission (the "FTC") and the Antitrust Division of the          
Department of Justice (the "Antitrust Division"). Filing of the STB application 
with the FTC and the Antitrust Division and approval by the STB of the STB      
application and the merger, exempts the merger from federal and state antitrust 
laws. Additionally, the parties are required to make other filings with certain 
governmental agencies in connection with the merger, but neither Greyhound nor  
Laidlaw believe these filings are material.                                     

INTERESTS OF CERTAIN PERSONS IN THE MERGER                                      

GENERAL. Some of the members of Greyhound's management and the Greyhound Board  
may have certain interests in the merger that are different from or in addition 
to the interests of stockholders of                                             

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Greyhound generally. These additional interests relate to provisions in the     
merger agreement regarding:                                                     

-   certain employment agreements for two executive officers of Greyhound,

-   the benefits under existing change-in-control agreements and severance
plans,                                                            

-   certain actions to be taken in respect of employee benefit plans,     

-   the treatment of outstanding Greyhound stock options,                 

-   the vesting of certain benefits by reason of the merger,              

-   the payment of the remaining annual retainer fees for non-employee    
directors, and                                                    

  -   the indemnification and provision of D&O Insurance for the directors and
officers of Greyhound.                                            

All such additional interests, to the extent material, are described below.     
Except as described below, such persons have, to the knowledge of Greyhound, no 
material interest in the merger apart from those of the Greyhound stockholders  
generally. The Greyhound Board was aware of these interests and considered them,
among other matters, in approving the merger agreement and the transactions     
contemplated thereby.                                                           

EMPLOYMENT AGREEMENTS. Greyhound is a party to an employment agreement with     
Craig R. Lentzsch, President and Chief Executive Officer of Greyhound ("Lentzsch
Agreement"). The Lentzsch Agreement has an initial term that expires in November
2001 and renews automatically for additional two-year periods unless either     
party gives notice of termination at least 90 days prior to an expiration date. 
The Lentzsch Agreement provides for an annual base salary of at least $469,500, 
which is subject to annual review and adjustment by the Greyhound Board, annual 
incentive bonuses, options to purchase Greyhound common stock and various       
employee benefits. The annual incentive bonus will be provided under Greyhound's
Management Incentive Plan ("MIP") with an annual target award of at least 55% of
Mr. Lentzsch's annual base salary for the applicable year. Under the terms of   
the MIP as currently in effect, Mr. Lentzsch's annual incentive bonus may not   
exceed 110% of his base salary. Employee benefits to be provided include        
participation in Greyhound's Section 401(k) plan, medical, dental and vision    
plan coverage, participation in Greyhound's supplemental executive retirement   
plan ("SERP"), reimbursement for estate, tax and financial planning expenses,   
automobile allowance, country club allowance, vacation, life insurance and      
long-term disability insurance. Greyhound is required to establish and fully    
fund a trust for Mr. Lentzsch's benefit to secure the SERP benefits.            

If Mr. Lentzsch is terminated by Greyhound "Without Good Cause" or by           
"Non-Renewal Without Good Cause" or if Mr. Lentzsch resigns for "Good Reason"   
(as such terms are defined in the Lentzsch Agreement), Mr. Lentzsch will receive
a lump-sum cash payment equal to two times the sum of (a) his annual base salary
and (b) the greater of (1) the applicable annual payout of incentive            
compensation under the MIP for the plan year immediately prior to the date of   
termination or (2) the full annual target award under the MIP based on Mr.      
Lentzsch's annual base salary for the plan year in which the termination occurs.
In addition, certain employee benefits previously provided to Mr. Lentzsch will 
continue for a two-year period. If at any time prior to a Change of Control (as 
defined in the Lentzsch Agreement) Mr. Lentzsch is terminated by reason of "Good
Cause" or "Non-Renewal for Good Cause" or Mr. Lentzsch terminates his employment
"Without Good Reason" (as such terms are defined in the Lentzsch Agreement), Mr.
Lentzsch has agreed that he will not compete with Greyhound in the manner       
specified in the Lentzsch Agreement for a period of one year following the date 
of termination.                                                                 

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If at any time within two years after a Change of Control Mr. Lentzsch is       
terminated by Greyhound Without Good Cause or by Non-Renewal Without Good Cause 
or if Mr. Lentzsch resigns for Good Reason or resigns (whether with or without  
Good Reason) within 30 days of the first anniversary of the Change of Control   
(the "walk at will right"), Mr. Lentzsch will receive a lump-sum cash payment   
equal to three times the sum of the amounts described in clauses (a) and (b)    
above. In addition, certain employee benefits previously provided to Mr.        
Lentzsch will continue for a three-year period. Upon a Change of Control, all   
stock options and other incentive awards previously granted to Mr. Lentzsch will
immediately vest and become exercisable. If any payments or benefits provided to
Mr. Lentzsch are determined to be "excess parachute payments" under the Code,   
Mr. Lentzsch will be entitled to receive an additional payment (net of income   
taxes) to compensate him for any excise tax imposed by the Code. Mr. Lentzsch   
has agreed that he will not solicit any of Greyhound's employees to terminate   
employment with Greyhound or any of its subsidiaries or to solicit any such     
employees to become employed by another entity for a period of one year         
following the termination of his employment.                                    

Greyhound is also a party to an employment agreement with John W. Haugsland,    
Executive Vice President and Chief Operating Officer of Greyhound ("Haugsland   
Agreement"). The term of employment of the Haugsland Agreement is the same as   
the term described in the Lentzsch Agreement. The Haugsland Agreement provides  
for an annual base salary of $305,000, which is subject to annual review and    
adjustment by the Greyhound Board, annual incentive bonuses, options to purchase
Greyhound common stock and various employee benefits. The annual incentive bonus
will be provided under the MIP with an annual target award of at least 45% of   
Mr. Haugsland's annual base salary for the applicable year. Under the terms of  
the MIP as currently in effect, Mr. Haugsland's annual incentive bonus may not  
exceed 90% of his base salary. The Haugsland Agreement has provisions regarding 
Change of Control, severance, employee benefits, noncompetition and             
nonsolicitation substantially similar to those contained in the Lentzsch        
Agreement.                                                                      

At Laidlaw's request, prior to the merger, Greyhound and Messrs. Lentzsch and   
Haugsland will enter into new employment agreements which will become effective 
at the Effective Time replacing their existing employment agreements. If the    
merger agreement is terminated prior to the Effective Time, the new employment  
agreements will not take effect and the Lentzsch Agreement and Haugsland        
Agreement will continue in effect. Mr. Lentzsch's new employment agreement will 
provide for an annual base salary of $500,000 and a limitation that his maximum 
annual incentive bonus under the MIP (or any successor plan) will not exceed    
110% of his base salary. Mr. Haugsland's new employment agreement will provide  
for continuation of an annual base salary of $305,000 and a limitation that his 
maximum annual incentive bonus under the MIP (or any successor plan) will not   
exceed 90% of his base salary. Both new employment agreements provide for the   
following:                                                                      

-   the expansion of their responsibilities after the merger;             

 -   a pro-rated annual bonus for the period beginning on the Effective Time
and ending August 31, 1999;                                       

  -   continuation of existing employee benefits (except for increases) for at
       least 12 months following the Effective Time, after which a substantially
equivalent level of benefits must be provided;                    

 -   a revised definition of "Change of Control," which excludes the merger;

-   the elimination of the walk at will right with respect to the merger; 

 -   increased severance benefits (other than in connection with a Change of
Control); and                                                     

-   the SERP trust may be funded with a Laidlaw letter of credit.         

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In all other significant respects, the new employment agreements will be the    
same as the existing employment agreements.                                     

CHANGE IN CONTROL AGREEMENTS. Greyhound has entered into Change in Control      
Agreements ("CIC Agreements") with all officers at the vice president level or  
higher (other than Messrs. Lentzsch and Haugsland). Under the CIC Agreements, if
a "Change in Control" (as defined in the CIC Agreements) of Greyhound occurs and
the employment of the employee is terminated within two years after the Change  
in Control either for "Good Reason" by the employee or "Without Cause" (as such 
terms are defined in the CIC Agreements) by Greyhound (or any successor or      
assignee), the employee will receive severance benefits, including:             

   -   base salary and benefits earned and payable through the termination date;

   -   the dollar amount of the target payout under the MIP prorated through the
  termination date for the year in which employment is terminated; and

-   a lump-sum cash payment of two times the sum of (x) the employee's    
       current annual base salary and (y) the dollar amount of the annual target
  payout under the MIP in effect on the date of the Change in Control.

In addition, certain employee benefits (including medical, dental and vision    
plan coverage) will continue for a period of two years after the date of        
termination. Under the CIC Agreements, if any amount to be paid or provided is  
determined to be nondeductible by reason of Section 280G of the Code, the       
severance benefits will be reduced to the minimum extent necessary so that      
Section 280G does not cause any amount to be nondeductible. Benefits under the  
CIC Agreements replace benefits, if any, under any other Greyhound severance    
plans. The merger will constitute a Change in Control under the CIC Agreements. 

POSSIBLE SEVERANCE PAYMENTS. As discussed above, each of Greyhound's executive  
officers has an employment or change in control agreement with Greyhound that   
entitles that officer to receive a severance payment if his employment is       
terminated under certain circumstances within two years following the merger. As
of the date of the Proxy Statement, Laidlaw has not informed Greyhound of its   
intention to terminate any of its executive officers following the merger.      
However, the estimated severance payments that would be payable to Greyhound's  
executive officers if their employment is terminated immediately following the  
merger are as follows:                                                          

                                                                · Download Table

                                                              SEVERANCE AMOUNT
                                                              ----------------
                                                                              
Craig R. Lentzsch...........................................     $3,622,612   
Jack W. Haugsland...........................................     $2,119,951   
J. Floyd Holland............................................     $  536,299   
Frederick F. Richards, III..................................     $  599,127   
Ralph J. Borland............................................     $  453,615   
Teddy F. Burk...............................................     $  386,116   
T. Scott Kirksey............................................     $  431,622   
Jeffrey W. Sanders..........................................     $  391,331   
Mark E. Southerst...........................................     $  484,865   
John E. Taylor..............................................     $  393,693   

EFFECT OF THE MERGER ON EMPLOYEE BENEFITS AND STOCK PLANS. In addition to the   
provisions relating to employment agreements and the CIC Agreements, the merger 
agreement contemplates that certain additional actions will be taken in respect 
of employee benefits and stock plans in which executive officers of Greyhound   
are eligible to participate. Those actions are summarized below.                

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Annual bonuses payable under the 1998 MIP for 1998 were paid to Greyhound's     
officers prior to December 31, 1998. Greyhound will provide an annual bonus     
program substantially similar to Greyhound's 1998 MIP for the 1999 calendar year
and for at least five calendar years thereafter.                                

Under the terms of the merger agreement, Laidlaw has agreed to continue the SERP
in effect for the 1999 calendar year and for at least five calendar years       
thereafter. Under the terms of the merger agreement and as required by the      
Lentzsch Agreement and the Haugsland Agreement, Greyhound is establishing and   
funding a rabbi trust to secure the payment of the obligations of Greyhound     
under the SERP for the benefit of all participants in the SERP. After the       
merger, Greyhound will transfer to the rabbi trust an amount not less than the  
present value of the SERP obligations secured by such trust and the additional  
administrative expenses, in each case, attributable to each fiscal year.        

Greyhound has agreed to continue, without any amendment or change (except       
changes that will increase compensation or benefits or which may be required by 
law), all Greyhound employee benefit plans and any other practices and          
arrangements that provide compensation or benefits to employees of Greyhound for
a period of at least one year following the merger. See "The Merger -- The      
Merger Agreement -- Employee Benefit Matters."                                  

In the merger agreement, Laidlaw acknowledges that the merger will constitute a 
change in control for purposes of any policy, practice, program or arrangement  
that contains a provision relating to a change in control of Greyhound. In      
accordance with the terms of the Greyhound stock options, as of the Effective   
Time, all Greyhound stock options will vest and become fully exercisable.       

Greyhound has agreed to use its reasonable best efforts to cause the holders of 
Greyhound stock options (other than Greyhound stock options granted under the   
Union Option Plan), whether or not exercisable, to cancel their Greyhound stock 
options in exchange for an amount in cash equal to $6.50 less the exercise price
of the Greyhound stock options. See "The Merger -- The Merger                   
Agreement -- Treatment of Greyhound Stock Options."                             

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The number and value of unvested Greyhound stock options, and the number of     
unvested shares of Greyhound restricted common stock, held by each of           
Greyhound's directors and executive officers, are as follows:                   

                                                        · Enlarge/Download Table

                                              NUMBER OF      VALUE OF          NUMBER OF     
                                              UNVESTED       UNVESTED       UNVESTED SHARES  
                                            STOCK OPTIONS  STOCK OPTIONS  OF RESTRICTED STOCK
                                            -------------  -------------  -------------------
                                                                                             
Thomas G. Plaskett.........................          0              0                0       
Richard J. Caley...........................     13,333       $ 31,249                0       
Linda Chavez...............................     13,333       $ 31,249                0       
Craig R. Lentzsch..........................    156,725       $410,563           35,600       
A. A. Meitz................................     13,333       $ 31,249                0       
Frank L. Nageotte..........................          0              0                0       
Alfred E. Osborne, Jr. ....................      6,667       $ 15,001                0       
Stephen M. Peck............................      6,667       $ 15,001                0       
Ernest P. Werlin...........................      6,667       $ 15,001                0       
Jack W. Haugsland..........................    122,275       $339,593           22,833       
J. Floyd Holland...........................     86,150       $249,319            9,450       
Frederick F. Richards, III.................     84,450       $222,375                0       
Ralph J. Borland...........................     69,450       $200,967            7,600       
Teddy F. Burk..............................     42,350       $120,578            6,200       
T. Scott Kirksey...........................     61,950       $162,140            7,600       
Jeffrey W. Sanders.........................     88,200       $236,906                0       
Mark E. Southerst..........................     66,950       $180,890            7,600       
John E. Taylor.............................     42,350       $120,578            6,200       

The value of the unvested stock options is based on the difference between $6.50
per share of Greyhound common stock and the exercise price of the unvested      
options.                                                                        

PAYMENT OF REMAINING ANNUAL RETAINER FEES. Subject to approval of the Greyhound 
Board, Greyhound expects to pay all of its non-employee directors their annual  
retainer for each year remaining on the term of their current directorship. The 
annual retainer for non-employee directors is $25,000 (other than the Chairman  
of the Board of Directors who receives $45,000). As a result, the non-employee  
directors of Greyhound will receive the following amounts: Thomas G. Plaskett   
(Chairman), $90,000; Richard J. Caley, $25,000; Linda Chavez, $25,000; A. A.    
Meitz, $25,000; Frank L. Nageotte, $50,000; Alfred Osborne, Jr., $0; Stephen M. 
Peck, $0; and Ernest P. Werlin, $0.                                             

FUTURE GRANTS OF LAIDLAW OPTIONS. At the Effective Time, Laidlaw will grant     
options to purchase Laidlaw common shares to officers and other employees of    
Greyhound. The options to be granted will have an exercise price equal to the   
market value of Laidlaw common shares on the date of grant, vest over a         
five-year period and expire on the tenth anniversary of the date of grant. The  
number of options granted to each person will be comparable to the number of    
options granted annually to Laidlaw's officers and employees in similar         
positions and as reasonably agreed to by Greyhound and Laidlaw.                 

APPRAISAL RIGHTS                                                                

Under the DGCL, holders of Greyhound common stock and Greyhound preferred stock 
are entitled to appraisal rights in connection with the merger. Any holder of   
record of Greyhound common stock or Greyhound preferred stock who objects to the
merger may elect to have his or her shares of Greyhound common stock or         
Greyhound preferred stock appraised under the procedures of the DGCL and to be  
paid the appraised value of his or her shares. The appraised value of the shares
will not include any value arising from the merger but may include a fair rate  
of interest. It is possible that the fair value determined may be more or less  
than the merger consideration.                                                  

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Any holder of Greyhound common stock or Greyhound preferred stock who is        
considering exercising his or her appraisal rights is urged to review carefully 
the provisions of Section 262 (a copy of which is attached as Appendix C to this
Proxy Statement), particularly with respect to the procedural steps required to 
perfect the right of appraisal. The right of appraisal may be lost if the       
procedural requirements of Section 262 are not followed exactly. The following  
is a summary of the procedures relating to exercise of the right of appraisal,  
which should be read in conjunction with the full text of Section 262.          

Under Section 262, Greyhound is required to notify each Greyhound stockholder   
entitled to appraisal rights at least 20 days prior to the special meeting that 
such appraisal rights are available. The notice should include a copy of Section
262. THIS PROXY STATEMENT CONSTITUTES SUCH NOTICE TO THE HOLDERS OF GREYHOUND   
COMMON STOCK AND GREYHOUND PREFERRED STOCK.                                     

A Greyhound stockholder electing to exercise his or her appraisal rights under  
Section 262 must deliver to Greyhound a written demand for appraisal before the 
vote is taken at the special meeting. The written demand must identify the      
Greyhound stockholder and state that the Greyhound stockholder intends to demand
appraisal of his or her shares of Greyhound common stock or Greyhound preferred 
stock. A vote against the adoption of the merger agreement or an abstention will
not constitute a demand for appraisal. A Greyhound stockholder electing to take 
any of those actions must do so by a separate written demand to Greyhound.      
Demands should be mailed or delivered to Greyhound Lines, Inc., 15110 N. Dallas 
Parkway, Suite 600, Dallas, Texas 75248, Attention: Secretary. Within 10        
calendar days after the Effective Time, Greyhound will notify each Greyhound    
stockholder who has made a proper written demand for appraisal and who has not  
voted for the adoption of the merger agreement that the merger has been         
completed. A vote "For" the adoption of the merger agreement will have the      
effect of waiving all appraisal rights.                                         

Within 120 calendar days after the Effective Time, Greyhound or any Greyhound   
stockholder who has complied with the foregoing notice requirement and the other
requirements of Section 262 may file a petition in the Delaware Court of        
Chancery (the "Court") demanding a determination of the fair value of his or her
shares of Greyhound common stock or Greyhound preferred stock. Greyhound has no 
obligation to file a petition and does not currently intend to do so. As a      
result, any Dissenting Stockholder who wishes to file a petition is advised to  
do so on a timely basis. If a petition for appraisal is not filed during the    
120-day period, all appraisal rights relating to the Greyhound common stock or  
Greyhound preferred stock will terminate. Any Greyhound stockholder may withdraw
a demand for appraisal at any time within 60 calendar days after the Effective  
Time (or thereafter with the written consent of Greyhound).                     

If a holder of Greyhound common stock either withdraws his or her demand for    
appraisal or has his or her appraisal rights terminated as described above, the 
holder of Greyhound common stock will only be entitled to receive the merger    
consideration for his or her shares of Greyhound common stock as provided under 
the terms of the merger agreement. If a holder of Greyhound preferred stock     
either withdraws his or her demand for appraisal or has his or her appraisal    
rights terminated as described above, his or her shares of Greyhound preferred  
stock will remain outstanding. However, the Greyhound preferred stock will no   
longer be convertible into shares of Greyhound common stock after the merger.   
Instead, the Greyhound preferred stock will be convertible into the right to    
receive $33.33 in cash.                                                         

Within 120 calendar days after the Effective Time, any stockholder who has      
complied with the above-described notice requirements and the other requirements
of Section 262 may request in writing a list of the aggregate number of shares  
of Greyhound common stock and Greyhound                                         

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preferred stock for which demands for appraisal have been made and the aggregate
number of holders demanding appraisal rights.                                   

If a petition is filed by a Dissenting Stockholder, Greyhound will receive      
notice from the Court of such filing. Within 20 calendar days after Greyhound   
receives notice from the Court, Greyhound must file with the office of the      
Register in Chancery in which the petition was filed, a list containing the     
names and addresses of all Greyhound stockholders who have demanded appraisal   
rights and the names of all Greyhound stockholders who have disagreements with  
Greyhound regarding the value of their shares of Greyhound common stock or      
Greyhound preferred stock. If a petition is filed by Greyhound, the petition    
will be accompanied by a similar list. If ordered by the Court, the Register in 
Chancery will give notice of the time and place of the hearing by registered or 
certified mail to Greyhound and to each Greyhound stockholder shown on the list.
The notice will also be given by publishing the notice in a newspaper of general
circulation published in Wilmington, Delaware (or any other location the Court  
may determine), at least one week before the hearing. The forms of the notices  
to be used will be approved by the Court, and all costs related to the          
distribution of the notices will be paid by Greyhound.                          

After the Court determines which of the Greyhound stockholders are entitled to  
an appraisal under Section 262, the Court will appraise the shares of the       
Greyhound common stock and/or Greyhound preferred stock. Following determination
by the Court of the fair value of the shares, Greyhound will pay all Dissenting 
Stockholders the appraised value of their shares, together with interest, if    
any, upon surrender to Greyhound of their certificates representing Greyhound   
common stock or Greyhound preferred stock. The costs of the appraisal proceeding
may be determined by the Court and charged to the parties as the Court deems    
equitable in the circumstances. Upon application of a Dissenting Stockholder,   
the Court may order all or a portion of the expenses incurred by any Dissenting 
Stockholder in connection with the appraisal proceeding, including reasonable   
attorneys' fees and the fees and expenses of experts, to be charged pro rata    
against the value of all of the shares entitled to an appraisal.                

After the Effective Time, no Greyhound stockholder who has demanded his or her  
appraisal rights as set forth above will be entitled to vote his or her shares  
for any purpose or to receive payment of dividends or other distributions on his
shares (except dividends or other distributions payable to Greyhound            
stockholders of record at a date prior to the Effective Time). However, after   
either withdrawal by a holder of Greyhound preferred stock of his or her demand 
for appraisal or the termination of his or her appraisal rights as described    
above, such holder will be entitled to vote his or her shares and receive       
payment of dividends and other distributions.                                   

AMENDMENT TO GREYHOUND RIGHTS AGREEMENT                                         

Greyhound amended the Amended and Restated Rights Agreement, dated April 8,     
1997, between Greyhound and Mellon Securities Trust Company, as Rights Agent    
(the "Greyhound Rights Plan") on October 16, 1998. The amendment provides that  
neither the merger nor the merger agreement will cause the rights issued under  
the Greyhound Rights Plan to become exercisable.                                

CERTAIN LITIGATION                                                              

Greyhound has obtained copies of two complaints filed in Delaware Chancery Court
purportedly filed by certain individual Greyhound stockholders on behalf of     
themselves and all other Greyhound stockholders. These suits name Greyhound,    
each of its directors and Laidlaw as defendants. In the complaints, the         
plaintiffs allege, among other things, that (a) the provisions of the merger    
agreement                                                                       

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permitting Laidlaw to make the election to pay a portion of the merger          
consideration in Laidlaw common shares prior to the fifth trading day before the
special meeting violates Delaware law, (b) the defendant directors breached     
their fiduciary duties in approving the merger, and (c) Laidlaw aided and       
abetted the breach by members of the Greyhound Board of their fiduciary duties. 
The plaintiffs purport to seek orders enjoining the consummation of the merger  
or the rescission of the transaction if the merger is completed, damages, costs,
including attorneys' and experts' fees, and other relief. The absence of an     
injunction, among other things, is a condition to Greyhound's and Laidlaw's     
obligation to complete the merger. See "The Merger -- The Merger Agreement --   
Conditions to the Merger." Greyhound has not filed answers to these suits, as   
the time period for doing so has been extended. Greyhound intends to defend     
these suits vigorously.                                                         

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BENEFICIAL OWNERSHIP OF GREYHOUND STOCK 

The following table sets forth the beneficial ownership of the outstanding      
shares of Greyhound common stock and Greyhound preferred stock as of January 31,
1999 (except as noted below), held by persons believed by Greyhound to          
beneficially own more than 5% of the outstanding shares of the Greyhound common 
stock or Greyhound preferred stock, by directors of Greyhound, by Greyhound's   
chief executive officer and its other four most highly compensated executive    
officers and by all the directors and executive officers of Greyhound as a      
group, and the percentage of the outstanding shares of Greyhound common stock   
and Greyhound preferred stock represented thereby. Except as otherwise noted    
below, each of the directors, executive officers and 5% stockholders has sole   
voting and investment power with respect to all shares beneficially owned by    
them.                                                                           

                                                        · Enlarge/Download Table

                                    AMOUNT OF                      AMOUNT OF                              
                                    GREYHOUND                      GREYHOUND                    PERCENT   
                                  COMMON STOCK       PERCENT    PREFERRED STOCK    PERCENT     OF VOTING  
NAME OF BENEFICIAL OWNER      BENEFICIALLY OWNED(A)  OF CLASS  BENEFICIALLY OWNED  OF CLASS  SECURITIES(B)
------------------------      ---------------------  --------  ------------------  --------  -------------
                                                                                                          
Snyder Capital Management,                                                                                
  L.P.(c)....................      12,364,667          19.5%        639,800         26.7%        15.5%    
Greenway Partners, L.P.(d)...       4,361,700           7.3%              0                       7.0%    
Thomas G. Plaskett...........         169,834             *               0                         *     
Richard J. Caley.............          94,977             *               0                         *     
Linda Chavez.................          29,134             *               0                         *     
Craig R. Lentzsch............       1,053,412           1.7%          1,000             *         1.7%    
A. A. Meitz..................          27,167             *               0                         *     
Frank L. Nageotte............          42,500             *               0                         *     
Alfred E. Osborne, Jr. ......          61,499             *               0                         *     
Stephen M. Peck..............          85,566             *               0                         *     
Ernest P. Werlin.............          51,666             *               0                         *     
Jack W. Haugsland............         488,425             *               0                         *     
J. Floyd Holland.............         290,979             *               0                         *     
Frederick F. Richards, III...          48,461             *               0                         *     
Mark E. Southerst............         146,749             *               0                         *     
All directors and executive                                                                               
  officers of Greyhound as a                                                                              
  group (18 persons).........       3,119,373           5.2%          1,000             *         5.0%    

---------------                                                                 

*   Less than 1%.                                                               

(a) Includes: (i) shares of restricted Greyhound common stock; and (ii) shares  
  of Greyhound common stock issuable under options, warrants or other rights
    currently exercisable or exercisable within 60 days of January 31, 1999; and
(iii) shares of Greyhound common stock issuable upon the conversion of  
  Greyhound preferred stock. The Greyhound preferred stock is convertible at
    any time into shares of Greyhound common stock, presently at a rate of 5.128
shares of Greyhound common stock per share of Greyhound preferred stock.

(b) Calculated based on the holders of Greyhound common stock and Greyhound     
preferred stock voting together as a single class with each holder of   
Greyhound common stock having one vote per share and each holder of     
    Greyhound preferred stock having one vote per share. Does not give effect to
the conversion of the Greyhound preferred stock.                        

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(c) The information is based on a Schedule 13G filed with the SEC on May 12,    
1998 on behalf of Snyder Capital Management, L.P. and Snyder Capital    
Management, Inc. (collectively "Snyder") and subsequent discussions with
    Snyder representatives. As of that date, with respect to 9,083,642 Greyhound
common stock held, Snyder reported that it had sole voting power with   
respect to 498,262 shares, shared voting power with respect to 7,999,813
shares, sole dispositive power with respect to 498,262 shares and shared
dispositive power with respect to 8,585,380 shares. In addition, Snyder 
    reported that it held 639,800 shares of Greyhound preferred stock (presently
   convertible into 3,281,025 shares of Greyhound common stock) and that, with
respect to the Greyhound preferred stock, it had sole voting power with 
respect to 30,100 shares, shared voting power with respect to 571,900   
shares, sole dispositive power with respect to 30,100 shares and shared 
dispositive power with respect to 609,700 shares. The principal business
  address of Snyder Capital Management, L.P. is 350 California Street, Suite
1460, San Francisco, California 94104.                                  

(d) The information is based on a Schedule 13D filed with the SEC on November   
  25, 1998 on behalf of Greenway Partners, L.P. and related entities, Alfred
D. Kingsley and Gary K. Duberstein. The principal business address of   
  Greenway Partners, L.P. is 277 Park Avenue, 27th Floor, New York, New York
10017.                                                                  

(e) The following table sets forth, as of January 31, 1999, the details of      
Greyhound common stock deemed beneficially owned by each of Greyhound's 
 directors, Greyhound's chief executive officer and each of its other four
most highly compensated executive officers and by all directors and     
executive officers of Greyhound as a group:                             

                                                        · Enlarge/Download Table

                                                                                   TOTAL       
                                                               GREYHOUND         GREYHOUND     
                                               GREYHOUND      COMMON STOCK      COMMON STOCK   
                                            COMMON STOCK(1)  EQUIVALENTS(2)  BENEFICIALLY OWNED
                                            ---------------  --------------  ------------------
                                                                                               
Thomas G. Plaskett.........................       3,000           166,834           169,834    
Richard J. Caley...........................       5,000            89,977            94,977    
Linda Chavez...............................       4,967            24,167            29,134    
Craig R. Lentzsch(3).......................      97,709           955,703         1,053,412    
A. A. Meitz................................       3,000            24,167            27,167    
Frank L. Nageotte..........................       1,666            40,834            42,500    
Alfred E. Osborne, Jr.(4)..................      12,999            48,500            61,499    
Stephen M. Peck............................      51,400            34,166            85,566    
Ernest P. Werlin...........................       5,000            46,666            51,666    
Jack W. Haugsland..........................      46,000           442,425           488,425    
J. Floyd Holland(5)........................      16,929           274,050           290,979    
Frederick F. Richards, III.................         311            48,150            48,461    
Mark E. Southerst(5).......................      28,599           118,150           146,749    
All directors and executive officers of                                                        
  Greyhound as a group (18 persons)........     318,234         2,801,139         3,119,373    

---------------                                                                 

(1) Includes shares of restricted Greyhound common stock.                       

(2) Includes: (i) shares of Greyhound common stock issuable under options,      
    warrants or other rights currently exercisable or exercisable within 60 days
    of January 31, 1999; and (ii) shares of Greyhound common stock issuable upon
the conversion of Greyhound preferred stock.                            

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(3) Includes: (i) options currently exercisable or exercisable within 60 days of
January 31, 1999 for 950,575 shares of Greyhound common stock; and (ii) 
    5,128 shares of Greyhound common stock issuable upon the conversion of 1,000
shares of Greyhound preferred stock held by Mr. Lentzsch.               

(4) Includes 6,835 shares for which Dr. Osborne disclaims beneficial ownership. 

(5) Includes shares currently held by the Greyhound Lines 401(k) trust for the  
  account of Mr. Holland (2,120 shares) and Mr. Southerst (1,499 shares) for
which they disclaim beneficial ownership.                               

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AVAILABLE INFORMATION 

Greyhound is subject to the informational requirements of the Exchange Act.     
Greyhound files reports, proxy statements and other information with the SEC.   
You may read and copy such reports, proxy statements and other information at   
the public reference facilities maintained by the SEC at:                       

450 Fifth Street N.W.                                                           
Room 1024                                                                       
Washington, D.C. 20549                                                          
7 World Trade Center                                                            
Suite 1300                                                                      
New York, New York 10048                                                        
Citicorp Center                                                             
500 West Madison Street                                                     
Suite 1400                                                                  
Chicago, Illinois 60661                                                     

You may also obtain copies of such reports, proxy statements and other          
information from the Public Reference Section of the SEC, 450 Fifth Street,     
N.W., Washington, D.C. 20549, at prescribed rates. You may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains an Internet website, located at http://www.sec.gov, that 
contains reports, proxy statements and other information regarding registrants  
that file electronically with the SEC.                                          

You may also read reports, proxy statements and other information relating to   
Greyhound at the offices of The American Stock Exchange, at 86 Trinity Place,   
New York, New York 10006.                                                       

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 

Greyhound hereby incorporates by reference into this Proxy Statement the        
following documents which have been filed with the SEC: (a) Annual Report on    
Form 10-K for the year ended December 31, 1997; (b) Quarterly Reports on Form   
10-Q for the periods ended March 31, 1998, June 30, 1998 and September 30, 1998;
and (c) Current Reports on Form 8-K dated October 16, 1998 and January 26, 1999.

All documents and reports filed by Greyhound pursuant to Section 13(a), 13(c),  
14, or 15(d) of the Exchange Act after the date of this Proxy Statement and on  
or prior to the date of the special meeting are deemed to be incorporated by    
reference in this Proxy Statement from the date of filing of such documents or  
reports. Any statement contained in a document incorporated or deemed to be     
incorporated by reference herein shall be deemed to be modified or superseded   
for purposes of this Proxy Statement to the extent that a statement contained   
herein or in any other subsequently filed document which also is or is deemed to
be incorporated by reference in this Proxy Statement modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except  
as so modified or superseded, to constitute a part of this Proxy Statement.     

Any person receiving a copy of this Proxy Statement may obtain, without charge, 
upon written or oral request, a copy of any of the documents incorporated by    
reference except for the exhibits to such documents (other than the exhibits    
expressly incorporated in such documents by reference). Requests should be      
directed to: Greyhound Lines, Inc., 15110 N. Dallas Parkway, Suite 600, Dallas, 
Texas 75248, Attention: Investor Relations (telephone number 972-789-7297). A   
copy will be provided by first class mail or other equally prompt means within  
one business day after receipt of your request.                                 

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                                                                      APPENDIX A

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

AMENDED AND RESTATED

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

LAIDLAW INC.

LAIDLAW TRANSIT ACQUISITION CORP. 

and 

GREYHOUND LINES, INC. 

Dated as of November 5, 1998

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

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Table of Contents 

                                                                · Download Table
                                                                                  
ARTICLE I                                                                         
  THE MERGER.................................................................  A-6
  SECTION 1.1    The Merger..................................................  A-6
  SECTION 1.2    Effective Time..............................................  A-6
  SECTION 1.3    Effect of the Merger........................................  A-7
  SECTION 1.4    Certificate of Incorporation, By-Laws.......................  A-7
  SECTION 1.5    Directors and Officers......................................  A-7
  SECTION 1.6    Effect on Capital Stock.....................................  A-7
  SECTION 1.7    Exchange of Certificates....................................  A-8
  SECTION 1.8    Stock Transfer Books........................................ A-10
  SECTION 1.9    No Further Ownership Rights in Company Common Shares........ A-10
  SECTION 1.10   Lost, Stolen or Destroyed Certificates...................... A-10
  SECTION 1.11   Taking of Necessary Action; Further Action.................. A-11
  SECTION 1.12   Stockholders' Meeting....................................... A-11
  SECTION 1.13   Material Adverse Effect..................................... A-11
ARTICLE II                                                                        
  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................. A-12
  SECTION 2.1    Organization and Qualification; Subsidiaries................ A-12
  SECTION 2.2    Certificate of Incorporation and By-Laws.................... A-12
  SECTION 2.3    Capitalization.............................................. A-12
  SECTION 2.4    Authority Relative to this Agreement........................ A-13
  SECTION 2.5    No Conflict; Required Filings and Consents.................. A-13
  SECTION 2.6    Compliance.................................................. A-14
  SECTION 2.7    SEC Filings; Financial Statements........................... A-15
  SECTION 2.8    Absence of Certain Changes or Events........................ A-15
  SECTION 2.9    No Undisclosed Liabilities.................................. A-15
  SECTION 2.10   Absence of Litigation....................................... A-16
  SECTION 2.11   Employee Benefit Plans, Employment Agreements............... A-16
  SECTION 2.12   Labor Matters............................................... A-17
  SECTION 2.13   Restrictions on Business Activities......................... A-17
  SECTION 2.14   Taxes....................................................... A-17
  SECTION 2.15   Intellectual Property....................................... A-19
  SECTION 2.16   Rights Agreement............................................ A-19
  SECTION 2.17   Opinion of Financial Advisor................................ A-19
  SECTION 2.18   Brokers..................................................... A-19
  SECTION 2.19   Section 203 of the Delaware Law Not Applicable.............. A-19

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                                                                · Download Table
                                                                                  
ARTICLE III                                                                       
  REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION................... A-20
  SECTION 3.1    Organization and Qualification; Subsidiaries................ A-20
  SECTION 3.2    Certificate and Articles of Amalgamation and By-Laws........ A-20
  SECTION 3.3    Capitalization.............................................. A-20
  SECTION 3.4    Authority Relative to this Agreement........................ A-21
  SECTION 3.5    No Conflict, Required Filings and Consents.................. A-21
  SECTION 3.6    Compliance.................................................. A-22
  SECTION 3.7    SEC Filings; Financial Statements........................... A-22
  SECTION 3.8    Absence of Certain Changes or Events........................ A-22
  SECTION 3.9    No Undisclosed Liabilities.................................. A-23
  SECTION 3.10   Absence of Litigation....................................... A-23
  SECTION 3.11   Labor Matters............................................... A-23
  SECTION 3.12   Restrictions on Business Activities......................... A-23
  SECTION 3.13   No Prior Activities; Financing.............................. A-23
  SECTION 3.14   Taxes....................................................... A-24
  SECTION 3.15   Intellectual Property....................................... A-25
  SECTION 3.16   Brokers..................................................... A-25
ARTICLE IV                                                                        
  ADDITIONAL AGREEMENTS...................................................... A-25
  SECTION 4.1    Preparation of Form S-4; Proxy Statement/Prospectus......... A-25
  SECTION 4.2    Company Information......................................... A-25
  SECTION 4.3    Parent Information.......................................... A-26
  SECTION 4.4    Meeting of the Company's Stockholders....................... A-26
  SECTION 4.5    Reasonable Best Efforts..................................... A-26
  SECTION 4.6    Letter of the Company's Accountants......................... A-26
  SECTION 4.7    Letter of Parent's Accountants.............................. A-26
  SECTION 4.8    Stock Exchange Listings..................................... A-27
  SECTION 4.9    Stock Options............................................... A-27
  SECTION 4.10   Access to Information; Confidentiality...................... A-27
  SECTION 4.11   Consents; Approvals......................................... A-28
  SECTION 4.12   Indemnification and Insurance............................... A-28
  SECTION 4.13   Continuation of Company Employee Plans...................... A-30
  SECTION 4.14   Notification of Certain Matters............................. A-30
  SECTION 4.15   Further Action.............................................. A-30
  SECTION 4.16   Public Announcements........................................ A-31
  SECTION 4.17   Conveyance Taxes............................................ A-31
  SECTION 4.18   Company Preferred Shares.................................... A-31

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                                                                · Download Table
                                                                                   
ARTICLE V                                                                          
  CONDUCT OF BUSINESS PENDING THE MERGER.....................................  A-31
  SECTION 5.1    Conduct of Business by the Company Pending the Merger.......  A-31
  SECTION 5.2    No Solicitation.............................................  A-33
ARTICLE VI                                                                         
  CONDITIONS TO THE MERGER...................................................  A-34
  SECTION 6.1    Conditions to Obligation of Each Party to Effect the              
                 Merger......................................................  A-34
  SECTION 6.2    Conditions to Obligations of Parent and Acquisition.........  A-35
  SECTION 6.3    Conditions to Obligation of the Company.....................  A-35
ARTICLE VII                                                                        
  TERMINATION................................................................  A-35
  SECTION 7.1    Termination.................................................  A-35
  SECTION 7.2    Effect of Termination.......................................  A-36
  SECTION 7.3    Fees and Expenses...........................................  A-36
ARTICLE VIII                                                                       
  GENERAL PROVISIONS.........................................................  A-37
  SECTION 8.1    Effectiveness of Representations, Warranties and Agreements;      
                 Knowledge, Etc..............................................  A-37
  SECTION 8.2    Notices.....................................................  A-37
  SECTION 8.3    Certain Definitions.........................................  A-38
  SECTION 8.4    Amendment...................................................  A-39
  SECTION 8.5    Waiver......................................................  A-39
  SECTION 8.6    Headings....................................................  A-39
  SECTION 8.7    Severability................................................  A-39
  SECTION 8.8    Entire Agreement............................................  A-39
  SECTION 8.9    Assignment; Guarantee of Acquisition Obligations............  A-39
  SECTION 8.10   Parties in Interest.........................................  A-39
  SECTION 8.11   Failure or Indulgence Not Waiver; Remedies Cumulative.......  A-40
  SECTION 8.12   Governing Law...............................................  A-40
  SECTION 8.13   Consent to Jurisdiction and Service of Process..............  A-40
  SECTION 8.14   Counterparts................................................  A-41

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Table of Schedules

Company Disclosure Schedule                                                     

                                                                · Download Table
                                                                         
Section 1.5      -- Directors and Officers                               
Section 2.1      -- Organization and Qualification; Subsidiaries         
Section 2.3      -- Capitalization                                       
Section 2.5(a)   -- Material Contracts                                   
Section 2.5(b)   -- Conflicts                                            
Section 2.5(c)   -- Required Filings and Consents                        
Section 2.6(a)   -- Compliance                                           
Section 2.6(b)   -- Company Permits                                      
Section 2.7      -- SEC Filings                                          
Section 2.8      -- Changes and Events                                   
Section 2.9      -- Undisclosed Liabilities                              
Section 2.10     -- Litigation                                           
Section 2.11(a)  -- Employee Benefit Plans                               
Section 2.11(b)  -- Retiree Welfare Benefits; Prohibited Transactions and
                    Compliance                                           
Section 2.11(c)  -- Employee Stock Options                               
Section 2.11(d)  -- Employment/Severance Agreements                      
Section 2.12     -- Labor Matters                                        
Section 2.13     -- Restrictions on Business Activities                  
Section 2.14(b)  -- Taxes                                                
Section 2.15     -- Intellectual Property                                
Section 4.13(c)  -- Continuation of Company Employee Benefit Plans       
Section 5.1      -- Conduct of Business by the Company Pending the Merger
Section 5.1(e)   -- Permitted Acquisitions                               
Section 5.1(f)   -- Compensation Increases to Officers or Employees      

Parent Disclosure Schedule                                                      

                                                                · Download Table
                                                       
Section 3.5(a)   -- Conflicts                          
Section 3.5(b)   -- Required Filings and Consents      
Section 3.6      -- Compliance                         
Section 3.7      -- SEC Filings                        
Section 3.8      -- Changes and Events                 
Section 3.9      -- Undisclosed Liabilities            
Section 3.10     -- Litigation                         
Section 3.11     -- Labor Matters                      
Section 3.12     -- Restrictions on Business Activities
Section 3.14     -- Taxes                              
Section 3.15     -- Intellectual Property              

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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER 

    THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this "Agreement"),
dated as of October 16, 1998 and amended and restated as of November 5, 1998, is
among Greyhound Lines, Inc., a Delaware corporation (the "Company"), Laidlaw    
Inc., a Canadian corporation ("Parent"), and Laidlaw Transit Acquisition Corp., 
a Delaware corporation and a wholly owned subsidiary of Parent ("Acquisition"). 
For the purposes of this Agreement, the date of this Agreement shall be deemed  
to be October 16, 1998.                                                         

WHEREAS, the Boards of Directors of Parent and Acquisition have each  
approved the merger of Acquisition with and into the Company (the "Merger") upon
the terms and subject to the conditions set forth herein;                       

     WHEREAS, the Board of Directors of the Company (the "Board") (i) determined
that the Merger and the transactions contemplated thereby are fair to and in the
best interests of the Company and its stockholders and (ii) on the terms and    
subject to the provisions hereinafter set forth, approved this Agreement and the
transactions contemplated hereby and resolved to recommend the adoption of this 
Agreement by the stockholders of the Company; and                               

  WHEREAS, the Company, Parent and Acquisition desire to amend and restate
the Agreement on the terms and subject to the conditions set forth below.       

    NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the  
Company, Parent and Acquisition hereby agree as follows:                        

ARTICLE I 

THE MERGER

SECTION 1.1  The Merger.                                              

   (a) Effective Time. At the Effective Time (as defined below), and subject
to and upon the terms and conditions of this Agreement and the Delaware General 
Corporation Law (the "Delaware Law"), Acquisition shall be merged with and into 
the Company, the separate corporate existence of Acquisition shall cease, and   
the Company shall continue as the surviving corporation. The Company as the     
surviving corporation after the Merger is hereinafter sometimes referred to as  
the "Surviving Corporation."                                                    

(b) Closing. Unless this Agreement shall have been terminated and the 
transactions herein contemplated shall have been abandoned pursuant to Section  
7.1, and subject to the satisfaction or waiver of the conditions set forth in   
Article VI, the consummation of the Merger will take place as promptly as       
practicable (and in any event within one business day) after satisfaction or    
waiver of the conditions set forth in Article VI, at the offices of Jones, Day, 
Reavis & Pogue, Dallas, Texas, unless another date, time or place is agreed to  
in writing by the parties hereto (the "Closing Date").                          

SECTION 1.2  Effective Time. As promptly as practicable after the     
satisfaction or waiver of the conditions set forth in Article VI, the parties   
hereto shall cause the Merger to be consummated by filing a certificate of      
merger as contemplated by the Delaware Law (the "Certificate of Merger"),       
together with any required related certificates, with the Secretary of State of 
the State of Delaware,                                                          

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in such form as required by, and executed in accordance with the relevant       
provisions of, the Delaware Law (the time of such filing being the "Effective   
Time").                                                                         

     SECTION 1.3  Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of the Delaware Law. Without limiting the generality of   
the foregoing, and subject thereto, at the Effective Time all the property,     
rights, privileges, powers and franchises of the Company and Acquisition shall  
vest in the Surviving Corporation, and all debts, liabilities, obligations and  
duties of the Company and Acquisition shall become the debts, liabilities,      
obligations and duties of the Surviving Corporation.                            

SECTION 1.4  Certificate of Incorporation, By-Laws.                   

 (a) Certificate of Incorporation. Unless otherwise determined by Parent
prior to the Effective Time, at the Effective Time the Certificate of           
Incorporation of the Surviving Corporation shall be amended to become identical 
to the Certificate of Incorporation of Acquisition, as in effect immediately    
prior to the Effective Time; provided, however, that such amendment to the      
Certificate of Incorporation of the Surviving Corporation shall not amend (i)   
the name of the Surviving Corporation (ii) the terms of the Company Preferred   
Shares (as defined in Section 1.6(a)(ii)) provided in the Certificate of        
Designations with respect to the Company Preferred Shares, (iii) the voting     
rights as specified in Article Fourth of the Certificate of Incorporation of the
Company with respect to the Company Preferred Shares and (iv) the provisions    
regarding indemnification and insurance as described in Section 4.12.           

    (b) By-Laws. The By-Laws of Acquisition, as in effect immediately prior to
the Effective Time, shall be the By-Laws of the Surviving Corporation until     
thereafter amended as provided by the Delaware Law, the Certificate of          
Incorporation of the Surviving Corporation and such By-Laws.                    

SECTION 1.5  Directors and Officers. The directors of Acquisition     
immediately prior to the Effective Time shall 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, except as set forth
in Section 1.5 of the Company Disclosure Schedule, the officers of the Company  
immediately prior to the Effective Time shall be the initial officers of the    
Surviving Corporation, in each case until their respective successors are duly  
elected or appointed and qualified.                                             

   SECTION 1.6  Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Acquisition, the       
Company or the holders of any of the following securities:                      

(a) Conversion of Securities.                               

               (i) Each share of common stock, par value $.01 per share of
the Company (each a "Company Common Share" and collectively, the
        "Company Common Shares") issued and outstanding immediately prior to the
  Effective Time (excluding any Company Common Shares to be canceled
        pursuant to Section 1.6(c)) shall be converted into the right to receive
     $6.50 in value (the "Merger Consideration"). The Merger Consideration
      shall be payable in cash, subject to Parent's option in Section 1.6(b)
below.                                                          

                (ii) Each share of 8 1/2% Convertible Exchangeable Preferred
Stock, par value $.01 per share, of the Company (each a "Company
  Preferred Share" and collectively, the "Company Preferred Shares")
    issued and outstanding immediately prior to the Effective Time shall
        remain issued and outstanding and have, as to the Surviving Corporation,
the                                                             

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      identical powers, preferences, rights, qualifications, limitations and
restrictions as such Company Preferred Shares presently have.   

(b) Option to Substitute Parent Common Shares. Parent, in its sole    
discretion, may elect to satisfy up to $4.00 of the Merger Consideration with   
shares of common stock, no par value, of Parent ("Parent Common Shares"), having
a value determined by reference to the Parent Share Price (as defined below)    
equal to the portion of the Merger Consideration to be satisfied with such      
shares (the "Stock Election Value"). Parent must make such election prior to the
opening for trading on the fifth trading day prior to the date of the Special   
Meeting (as defined in Section 1.12) by issuing a press release to the Dow Jones
News Service indicating such election. Parent will substantially simultaneously 
notify the Company of such election. "Parent Share Price" shall mean the        
weighted average price (rounded to the nearest one hundred thousandth) of Parent
Common Shares on the Toronto Stock Exchange (the "TSE") and the New York Stock  
Exchange (the "NYSE") for the five trading days immediately preceding the fifth 
trading day prior to the date of the Special Meeting. For purposes of           
determining the Parent Share Price, transactions occurring on the TSE shall be  
translated into U.S. dollars based on the noon buying rate in New York City for 
cable transfers payable in foreign currencies as certified for customs purposes 
by the Federal Reserve Bank of New York on the date of such transaction. The    
number of Parent Common Shares (rounded to the nearest one hundred thousandth)  
having a value equal to the Stock Election Value is referred to as the "Stock   
Merger Consideration," and the amount of cash equal to $6.50 less the Stock     
Election Value is referred to as the "Cash Merger Consideration."               

 (c) Cancellation. Each Company Common Share held in the treasury of the
Company and each Company Common Share owned by Parent, Acquisition or any direct
or indirect wholly owned subsidiary of the Company or Parent immediately prior  
to the Effective Time shall, by virtue of the Merger and without any action on  
the part of the holder thereof, cease to be outstanding, be canceled and retired
without payment of any consideration therefor and cease to exist.               

(d) Capital Stock of Acquisition. Each share of common stock, $.01 par
value, of Acquisition issued and outstanding immediately prior to the Effective 
Time shall be converted into and exchanged for one validly issued, fully paid   
and nonassessable share of common stock, $.01 par value, of the Surviving       
Corporation.                                                                    

SECTION 1.7  Exchange of Certificates.                                

 (a) Paying Agent and Procedures. Prior to the Effective Time, a bank or
trust company shall be designated by Parent (the "Paying Agent") to act as agent
in connection with the Merger to receive the Merger Consideration to which      
holders of Company Common Shares shall become entitled pursuant to Section 1.6. 
Promptly after the Effective Time, the Surviving Corporation shall cause to be  
mailed to each record holder, as of the Effective Time, of a certificate or     
certificates (the "Certificates") that, prior to the Effective Time, represented
Company Common Shares, a customary form of letter of transmittal and            
instructions for use in effecting the surrender of the Certificates for payment 
of the Merger Consideration in exchange therefor. Upon the surrender of each    
such Certificate which represented Company Common Shares, together with such    
letter of transmittal, duly completed and validly executed in accordance with   
the instructions thereto, the Paying Agent shall deliver to the holder of such  
Certificate in exchange therefor (i) the Cash Merger Consideration multiplied by
the number of Company Common Shares formerly represented by such Certificate and
(ii) if applicable, and subject to Section 1.7(f), the Stock Merger             
Consideration multiplied by the number of Company Common Shares formerly        
represented by such Certificate, and such Certificate shall forthwith be        
canceled. Until so surrendered and exchanged, each such Certificate (other than 

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Certificates representing Company Common Shares canceled pursuant to Section    
1.6(c)) shall represent solely the right to receive the Merger Consideration. No
interest shall be paid or accrue on the Merger Consideration. If the Merger     
Consideration (or any portion thereof) is to be delivered to any person other   
than the person in whose name the Certificate surrendered in exchange therefor  
is registered, it shall be a condition to such exchange that the Certificate so 
surrendered shall be properly endorsed or otherwise be in proper form for       
transfer and that the person requesting such exchange shall pay to the Paying   
Agent any transfer or other taxes required by reason of the payment of the      
Merger Consideration to a person other than the registered holder of the        
Certificate surrendered, or shall establish to the satisfaction of the Paying   
Agent that such tax has been paid or is not applicable.                         

(b) Consideration. At the Effective Time, Parent or Acquisition shall 
deposit, or cause to be deposited, in trust with the Paying Agent for the       
benefit of the holders of Company Common Shares the Merger Consideration to     
which holders of Company Common Shares shall be entitled at the Effective Time  
pursuant to Section 1.6 hereof.                                                 

     (c) Investment of Merger Consideration. The Cash Merger Consideration shall
be invested by the Paying Agent, as directed by Parent, provided such           
investments shall be limited to direct obligations of the United States of      
America, obligations for which the full faith and credit of the United States of
America is pledged to provide for the payment of principal and interest,        
commercial paper rated of the highest quality by Moody's Investors Service, Inc.
or Standard & Poor's Corporation, or certificates of deposit issued by a        
commercial bank having at least $25,000,000,000 in assets.                      

    (d) Termination of Duties. Promptly following the date which is six months
after the Effective Time, Parent will cause the Paying Agent to deliver to the  
Surviving Corporation all cash and documents in its possession relating to the  
transactions described in this Agreement, and the Paying Agent's duties shall   
terminate. Thereafter, each holder of a Certificate may surrender such          
Certificate to Parent and (subject to applicable abandoned property, escheat and
similar laws) receive in exchange therefor the Merger Consideration, without any
interest thereon.                                                               

(e) No Liability. Neither Parent, Acquisition nor the Company shall be
liable to any holder of Company Common Shares for any Merger Consideration      
delivered to a public official pursuant to any applicable abandoned property,   
escheat or similar law.                                                         

(f) No Certificates For Small Lots or Fractional Shares.              

      (i) No certificates or scrip representing (A) less than 100 Parent
   Common Shares or (B) fractional Parent Common Shares shall be issued upon
  the surrender for exchange of Certificates that immediately prior to the
    Effective Time represented Company Common Shares which have been converted
pursuant to Section 1.6, and such interests will not entitle the      
   surrendering Certificate holder to vote or to any rights of a shareholder
of Parent.                                                            

     (ii) As promptly as practicable following the Effective Time, the
   Paying Agent shall determine the aggregate number of Parent Common Shares
    with respect to which certificates or scrip will not be issued pursuant to
   Section 1.7(f)(i)(A) or (B) (after taking into account all Company Common
Shares held at the Effective Time by such holder) (collectively, the  
"Excess Shares") and, on behalf of former holders of Certificates     
representing Company Common Shares shall sell the Excess Shares at    
   then-prevailing prices on the NYSE, all in the manner provided in Section
1.7(f)(iii).                                                          

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    (iii) The sale of the Excess Shares by the Paying Agent shall be
     executed on the NYSE through one or more member firms of the NYSE and shall
     be executed in round lots to the extent practicable. The Paying Agent shall
use reasonable efforts to complete the sale of the Excess Shares as   
promptly following the Effective Time as, in the Paying Agent's sole  
  judgment, is practicable consistent with obtaining the best execution of
     such sales in light of prevailing market conditions. Until the net proceeds
    of such sale or sales have been distributed to the holders of Certificates
  formerly representing Company Common Shares, the Paying Agent shall hold
     such proceeds in trust for such holders (the "Excess Shares Trust"). Parent
shall pay all commissions, transfer taxes and other out-of-pocket     
  transaction costs, including the expenses and compensation of the Paying
Agent, incurred in connection with such sale of the Excess Shares.    

          (iv) The Paying Agent shall determine the portion of the Excess Shares
    Trust to which each former holder of Company Common Shares is entitled, if
     any, by multiplying the amount of the aggregate net proceeds comprising the
 Excess Shares Trust by the quotient (rounded to the nearest one hundred
 thousandth) of the number of Parent Common Shares such former holder of
Company Common Shares would have been entitled to receive pursuant to 
    Section 1.6 hereof but for the provisions of Section 1.7(f) hereof divided
     by the aggregate number of Excess Shares. As soon as practicable after such
   determination, the Paying Agent shall make available such amounts to such
     holders of Certificates formerly representing Company Common Shares subject
to and in accordance with the terms of this Agreement.                

 (g) Withholding Rights. Parent or the Paying Agent shall be entitled to
deduct and withhold from the Merger Consideration otherwise payable pursuant to 
this Agreement to any holder of Company Common Shares such amounts as Parent or 
the Paying Agent is required to deduct and withhold with respect to the making  
of such payment under the Internal Revenue Code of 1986, as amended (the        
"Code"), or any provision of state, local or foreign tax law. Any such withheld 
amounts shall be treated for all purposes of this Agreement as having been paid 
to the holder of the Company Common Shares in respect of which such deduction   
and withholding was made by Parent or the Paying Agent.                         

SECTION 1.8  Stock Transfer Books. At the Effective Time, the stock   
transfer books of the Company shall be closed, and there shall be no further    
registration of transfers of the Company Common Shares thereafter on the records
of the Company or the Surviving Corporation. If, after the Effective Time,      
Certificates are presented to the Surviving Corporation for any reason, they    
shall be canceled and exchanged as provided in this Article I.                  

SECTION 1.9  No Further Ownership Rights in Company Common Shares. The
Merger Consideration delivered upon the surrender for exchange of Certificates  
in accordance with the terms hereof shall be deemed to have been issued and/or  
paid, as the case may be, in full satisfaction of all rights pertaining to the  
Company Common Shares formerly represented by such Certificates.                

SECTION 1.10  Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Paying Agent shall  
deliver in exchange for such lost, stolen or destroyed Certificates, upon the   
making of an affidavit of that fact by the holder thereof, the Merger           
Consideration as may be required pursuant to Section 1.6; provided, however,    
that Parent may, in its discretion and as a condition precedent to the issuance 
of the Merger Consideration, require the owner of such lost, stolen or destroyed
Certificates to deliver a bond in such sum as it may reasonably direct as       
indemnity against any claim that may be made against Parent or the Paying Agent 
with respect to the Certificates alleged to have been lost, stolen or destroyed.

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SECTION 1.11  Taking of Necessary Action; Further Action. Subject to  
Sections 1.12 and 5.2 and Article VII hereof, each of Parent, Acquisition and   
the Company will take all such reasonable and lawful action as may be necessary 
or appropriate in order to effectuate the Merger in accordance with this        
Agreement as promptly as possible. If, at any time after the Effective Time, any
such further action is necessary or desirable to carry out the purposes of this 
Agreement and to vest the Surviving Corporation with full right, title and      
possession to all assets, property, rights, privileges, powers and franchises of
the Company and Acquisition, the officers and directors of the Company and      
Acquisition immediately prior to the Effective Time are fully authorized in the 
name of their respective corporations or otherwise to take, and will take, all  
such lawful and necessary action.                                               

     SECTION 1.12  Stockholders' Meeting. The Company, acting through the Board,
shall in accordance with applicable law and subject to the fiduciary duties of  
the Board (as determined by the Board after consultation with counsel), as soon 
as practicable following the date of this Agreement:                            

        (a) duly call, give notice of, convene and hold an annual or special
 meeting of its stockholders on a date to be determined by the Board and
 reasonably satisfactory to Parent, but in no event later than March 31,
1999 (the "Special Meeting") for the purpose of considering and taking
action upon this Agreement;                                           

        (b) include in the Proxy Statement/Prospectus (as defined in Section
    4.1) the recommendation of the Board that stockholders of the Company vote
in favor of the adoption of this Agreement; and                       

     (c) use its reasonable best efforts (i) to obtain and furnish the
     information required to be included by it in the Proxy Statement/Prospectus
    and, after consultation with Parent, respond promptly to any comments made
   by the Securities and Exchange Commission (the "SEC") with respect to the
  Proxy Statement/Prospectus and any preliminary version thereof and cause
the Proxy Statement/Prospectus to be mailed to its stockholders at the
     earliest practicable time and (ii) to obtain the necessary approvals by its
stockholders of this Agreement.                                       

At the Special Meeting, Parent and Acquisition will vote all Company Common     
Shares owned by them in favor of the adoption of this Agreement.                

 SECTION 1.13  Material Adverse Effect. When used in connection with the
Company or any of its subsidiaries, or Parent or any of its subsidiaries, as the
case may be, the term "Material Adverse Effect" means any change, effect or     
circumstance that is materially adverse to the business, financial condition or 
results of operations of the Company and its subsidiaries, or Parent and its    
subsidiaries, as the case may be, in each case taken as a whole, other than any 
such changes, effects or circumstances: (i) set forth or contemplated by the    
written disclosure schedule delivered on or prior to the date hereof by the     
Company to Parent (the "Company Disclosure Schedule") or the written disclosure 
schedule delivered on or prior to the date hereof, by Parent to the Company (the
"Parent Disclosure Schedule"), as the case may be; (ii) set forth or described  
in the Company Filed SEC Reports (as defined in Section 2.8) or the Parent Filed
SEC Reports (as defined in Section 3.8), as the case may be; or (iii) affecting 
the scheduled intercity bus transportation industry or the North American       
economy generally.                                                              

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ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY 

     Except as disclosed in the Company Filed SEC Reports or as set forth in the
Company Disclosure Schedule, the Company hereby represents and warrants to      
Parent and Acquisition that:                                                    

    SECTION 2.1  Organization and Qualification; Subsidiaries. The Company and
each of its significant subsidiaries (as that term is defined in Rule 1-02 of   
Regulation S-X) is a corporation or other legal entity duly organized, validly  
existing and in good standing under the laws of the jurisdiction of its         
organization and has the corporate or similar power and authority necessary to  
own, lease and operate the properties it purports to own, operate or lease and  
to carry on its business as it is now being conducted, except where the failure 
to be so organized, existing and in good standing or to have such power and     
authority would not have a Material Adverse Effect. The Company and each of its 
significant subsidiaries is duly qualified or licensed to do business, and is in
good standing (with respect to jurisdictions that recognize such concept), in   
each jurisdiction where the character of its properties owned, leased or        
operated by it or the nature of its activities makes such qualification or      
licensing necessary, except for such failures to be so duly qualified or        
licensed and in good standing that would not in the aggregate have a Material   
Adverse Effect. A true and complete list of all of the Company's subsidiaries,  
together with the jurisdiction of organization of each subsidiary and the       
percentage of each significant subsidiary's outstanding capital stock owned by  
the Company or another subsidiary, is set forth in Section 2.1 of the Company   
Disclosure Schedule. Except as set forth in Section 2.1 of the Company          
Disclosure Schedule, the Company does not directly or indirectly own any equity 
or similar interest in, or any interest convertible into or exchangeable or     
exercisable for, any equity or similar interest in, any corporation,            
partnership, joint venture or other business association or legal entity, with  
respect to which interest the Company or any of its subsidiaries has invested or
is required to invest $1,000,000 or more, excluding securities held by trusteed 
benefit plans and trusts.                                                       

SECTION 2.2  Certificate of Incorporation and By-Laws. The Company has
heretofore furnished to Parent a complete and correct copy of its Certificate of
Incorporation and By-Laws, and has furnished or made available to Parent the    
Certificate of Incorporation and By-Laws (or equivalent organizational          
documents) of each of its subsidiaries (the "Subsidiary Documents"), in each    
case as amended to the date of this Agreement. Such Certificate of              
Incorporation, By-Laws and Subsidiary Documents are in full force and effect.   
Neither the Company nor any of its subsidiaries is in violation of any of the   
provisions of such documents.                                                   

  SECTION 2.3  Capitalization. The authorized capital stock of the Company
consists of (i) 100,000,000 Company Common Shares and (ii) 10,000,000 shares of 
preferred stock, $.01 par value per share, including (A) 2,760,000 Company      
Preferred Shares, and (B) 2,000,000 shares of Series A Junior Preferred Stock,  
$.01 par value. As of September 30, 1998: (i) 60,137,650 Company Common Shares  
were issued and outstanding, all of which are validly issued, fully paid and    
nonassessable, and 109,192 Company Common Shares were held in treasury, (ii) no 
Company Common Shares were held by subsidiaries of the Company, (iii) 6,769,021 
Company Common Shares were reserved for future issuance pursuant to outstanding 
stock options granted under the Company Stock Option Plans (as defined in       
Section 4.9), 12,307,692 Company Common Shares were reserved for issuance upon  
conversion of the Company Preferred Shares and 792,242 Company Common Shares    
were reserved for issuance upon conversion of the Company's 8 1/2% Convertible  
Subordinated Debentures due March 31, 2007, (iv) 2,400,000 Company Preferred    
Shares were issued and outstanding, and (v) no shares of the Company's Series A 
Junior Preferred Stock were issued                                              

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and outstanding. No material change in such capitalization has occurred between 
September 30, 1998 and the date hereof. Except as set forth in this Section 2.3 
or Section 2.11 or in the related sections of the Company Disclosure Schedule,  
there are no options, warrants or other similar rights, agreements, arrangements
or commitments of any character relating to the issued or unissued capital stock
of the Company or any of its subsidiaries or obligating the Company or any of   
its subsidiaries to issue or sell any shares of capital stock of, or other      
equity interests in, the Company or any of its subsidiaries. All of the Company 
Common Shares subject to issuance as aforesaid, upon issuance on the terms and  
conditions specified in the instruments pursuant to which they are issuable,    
shall be duly authorized, validly issued, fully paid and nonassessable. Except  
as disclosed in Section 2.3 of the Company Disclosure Schedule, there are no    
obligations, contingent or otherwise, of the Company or any of its subsidiaries 
to repurchase, redeem or otherwise acquire any Company Common Shares or Company 
Preferred Shares or the capital stock of any subsidiary or to provide funds to  
or make any investment (in the form of a loan, capital contribution or          
otherwise) in any such subsidiary or any other entity other than guarantees of  
leases and bank obligations of subsidiaries entered into in the ordinary course 
of business. Except as set forth in Sections 2.1 and 2.3 of the Company         
Disclosure Schedule, all of the outstanding shares of capital stock of each of  
the Company's subsidiaries is duly authorized, validly issued, fully paid and   
nonassessable, and all such shares are owned by the Company or another          
subsidiary of the Company free and clear of all security interests, liens,      
pledges, agreements, limitations in the Company's voting rights, charges or     
other encumbrances of any nature whatsoever.                                    

SECTION 2.4  Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement   
and to perform its obligations hereunder and to consummate the transactions     
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action, and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions so contemplated (other than the     
adoption of this Agreement by the holders of at least a majority of the         
outstanding Company Common Shares and the outstanding Company Preferred Shares  
(voting together as one class) entitled to vote in accordance with the Delaware 
Law and the Company's Certificate of Incorporation and By-Laws). As of the date 
of this Agreement, the Board of Directors of the Company has determined that the
Merger and the transactions contemplated thereby, upon the terms and subject to 
the conditions of this Agreement, are fair to and in the best interests of the  
Company and its stockholders. This Agreement has been duly and validly executed 
and delivered by the Company and, assuming the due authorization, execution and 
delivery by Parent and Acquisition, and adoption of the Agreement by the        
requisite vote of the stockholders of the Company, constitutes a valid and      
binding obligation of the Company enforceable against the Company in accordance 
with its terms.                                                                 

SECTION 2.5  No Conflict; Required Filings and Consents.              

  (a) Section 2.5(a) of the Company Disclosure Schedule includes a list of
all agreements to which the Company or any of its subsidiaries is a party or by 
which any of them is bound which, as of the date of this Agreement: (i) are     
required to be filed as "material contracts" with the SEC pursuant to the       
requirements of the Exchange Act; (ii) under which the consequences of a        
default, nonrenewal or termination would have a Material Adverse Effect on the  
Company; or (iii) pursuant to which payments might be required or acceleration  
of benefits may be required upon a "change of control" of the Company           
(collectively, the "Material Contracts").                                       

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(b) Except as set forth in Section 2.5(b) of the Company Disclosure   
Schedule, the execution and delivery of this Agreement by the Company does not, 
and the performance of this Agreement by the Company will not, (i) conflict with
or violate the Certificate of Incorporation or By-Laws of the Company, (ii)     
conflict with or violate any law, rule, regulation, order, judgment or decree in
effect as of the date of this Agreement applicable to the Company or any of its 
subsidiaries or by which its or any of their respective properties is bound or  
affected, or (iii) result in any breach of or constitute a default (or an event 
that with notice or lapse of time or both would become a default) under, or     
impair the Company's or any of its subsidiaries' rights or alter the rights or  
obligations of any third party under, or give to others any rights of           
termination, amendment, acceleration or cancellation of, any Material Contract, 
or result in the creation of a lien or encumbrance on any of the properties or  
assets of the Company or any of its subsidiaries pursuant to any note, bond,    
mortgage, indenture, contract, agreement, lease, license, permit, franchise or  
other instrument or obligation to which the Company or any of its subsidiaries  
is a party or by which the Company or any of its subsidiaries or its or any of  
their respective properties is bound or affected, except in any such case for   
any such conflicts, violations, breaches, defaults or other occurrences that    
would not have a Material Adverse Effect.                                       

(c) Except as set forth in Section 2.5(c) of the Company Disclosure   
Schedule, the execution and delivery of this Agreement by the Company does not, 
and the performance of this Agreement by the Company will not, require any      
consent, approval, authorization or permit of, or filing with or notification   
to, any governmental or regulatory authority, domestic or foreign, except (i)   
for applicable requirements, if any, of the Securities Act, the Exchange Act,   
state securities laws ("Blue Sky Laws"), the Hart-Scott-Rodino Antitrust        
Improvements Act of 1976, as amended ("HSR Act"), and the filing and recordation
of appropriate merger or other documents as required by the Delaware Law, (ii)  
the applicable requirements of the United States Department of Transportation   
Surface Transportation Board ("STB"), and (iii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or      
notifications, would not prevent or delay consummation of the Merger, or        
otherwise prevent or delay the Company from performing its obligations under    
this Agreement, and would not otherwise in the aggregate have a Material Adverse
Effect.                                                                         

SECTION 2.6  Compliance.                                              

(a) Except as disclosed in Section 2.6(a) of the Company Disclosure   
Schedule, neither the Company nor any of its subsidiaries is in conflict with,  
or in default or violation of, (i) any law (including, without limitation,      
environmental laws), rule, regulation, order, judgment or decree applicable to  
the Company or any of its subsidiaries or by which its or any of their          
respective properties is bound or affected or (ii) any Material Contract to     
which the Company or any of its subsidiaries is a party or by which the Company 
or any of its subsidiaries or its or any of their respective properties is bound
or affected, except for any such conflicts, defaults or violations which would  
not in the aggregate have a Material Adverse Effect.                            

    (b) Section 2.6(b) of the Company Disclosure Schedule sets forth a list of
all motor carrier operating authorities from governmental authorities that are  
material to the operation of the business of the Company and its subsidiaries   
taken as a whole as it is being conducted as of the date of this Agreement      
(collectively, the "Company Permits"). The Company and its subsidiaries are in  
compliance with the terms of the Company Permits, except where the failure to be
in such compliance would not, individually or in the aggregate, have a Material 
Adverse Effect.                                                                 

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SECTION 2.7  SEC Filings; Financial Statements.                       

    (a) Except as set forth in Section 2.7 of the Company Disclosure Schedule,
the Company has filed all forms, reports and documents required to be filed with
the SEC and has made available to Parent (i) its Annual Reports on Form 10-K for
the fiscal years ended December 31, 1996 and 1997, (ii) its Quarterly Reports on
Form 10-Q for the periods ended March 31, 1998 and June 30, 1998, (iii) all     
proxy statements relating to the Company's meetings of stockholders (whether    
annual or special) held since January 1, 1998, (iv) all other reports or        
registration statements filed by the Company with the SEC since January 1, 1998,
and (v) all amendments and supplements to all such reports and registration     
statements filed by the Company with the SEC since January 1, 1998              
(collectively, the "Company SEC Reports"). Except as disclosed in Section 2.7 of
the Company Disclosure Schedule, the Company SEC Reports (i) were prepared in   
all material respects in accordance with the requirements of the Securities Act 
or the Exchange Act, as the case may be, as in effect on the date such Company  
SEC Reports were filed, and (ii) did not at the time they were filed (or if     
amended or superseded by a filing prior to the date of this Agreement, then on  
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to 
make the statements therein, in the light of the circumstances under which they 
were made, not misleading. Except as set forth in Section 2.7 of the Company    
Disclosure Schedule, none of the Company's subsidiaries is required to file any 
forms, reports or other documents with the SEC.                                 

     (b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Reports was prepared in 
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes  
thereto), and each fairly presents in all material respects the consolidated    
financial position of the Company and its subsidiaries as at the respective     
dates thereof and the consolidated results of its operations and cash flows for 
the periods indicated, except that the unaudited interim financial statements   
were or are subject to normal and recurring year-end adjustments which were not 
or are not expected to be material in amount.                                   

   SECTION 2.8  Absence of Certain Changes or Events. Except as set forth in
Section 2.8 of the Company Disclosure Schedule or the Company SEC Reports filed 
and publicly available prior to the date of this Agreement (the "Company Filed  
SEC Reports"), since January 1, 1998, the Company has conducted its business in 
the ordinary course and there has not occurred: (i) any Material Adverse Effect;
(ii) any amendments or changes in the Certificate of Incorporation or By-laws of
the Company; (iii) any damage to, destruction or loss of any asset of the       
Company (whether or not covered by insurance) that would have a Material Adverse
Effect; (iv) any material change by the Company in its accounting methods,      
principles or practices; (v) any material revaluation by the Company of any of  
its assets, including, without limitation, writing down the value of inventory  
or writing off notes or accounts receivable other than in the ordinary course of
business; (vi) any other action or event that would have required the consent of
Parent pursuant to Section 5.1 had such action or event occurred after the date 
of this Agreement; or (vii) any sale of a material amount of property of the    
Company or any of its subsidiaries, except in the ordinary course of business.  

    SECTION 2.9  No Undisclosed Liabilities. Except as is disclosed in Section
2.9 of the Company Disclosure Schedule, neither the Company nor any of its      
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise,   
including, without limitation, environmental liabilities arising under          
environmental laws), except liabilities (i) in the aggregate adequately provided
for in the Company's unaudited balance sheet (including any related notes       
thereto) as of June 30, 1998 (the "1998 Company Balance Sheet"), (ii) incurred  
in the ordinary course of business and not required under                       

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generally accepted accounting principles to be reflected on the 1998 Company    
Balance Sheet, (iii) incurred since June 30, 1998 in the ordinary course of     
business consistent with past practice, (iv) incurred in connection with this   
Agreement, (v) disclosed in the Company Filed SEC Reports or (vi) which would   
not have a Material Adverse Effect.                                             

     SECTION 2.10  Absence of Litigation. Except as set forth in Section 2.10 of
the Company Disclosure Schedule, there are no claims, actions, suits,           
proceedings or investigations pending or, to the knowledge of the Company,      
overtly threatened against the Company or any of its subsidiaries, or any       
properties or rights of the Company or any of its subsidiaries, before any      
court, arbitrator or administrative, governmental or regulatory authority or    
body, domestic or foreign, that would have a Material Adverse Effect.           

SECTION 2.11  Employee Benefit Plans, Employment Agreements.          

(a) Section 2.11 (a) of the Company Disclosure Schedule lists (i) all 
employee pension plans (as defined in Section 3(2) of the Employee Retirement   
Income Security Act of 1974, as amended ("ERISA")), all material employee       
welfare plans (as defined in Section 3(1) of ERISA) and all other material      
bonus, stock option, stock purchase, incentive, deferred compensation,          
supplemental retirement and severance plans, programs or arrangements, and any  
material employment, executive compensation, consulting or severance agreements,
written or otherwise, for the benefit of, or relating to, any employee of or    
consultant to the Company or any subsidiary of the Company other than a         
multiemployer plan as defined in Section 3(37) of ERISA ("Multiemployer Plan")  
(collectively the "Company Employee Plans") and (ii) each Multiemployer Plan to 
which the Company or any subsidiary of the Company has an obligation to         
contribute. There have been made available to Parent copies of (A) each such    
written Company Employee Plan (other than those referred to in Section 4(b)(4)  
of ERISA), (B) the most recent annual report on Form 5500 series, with          
accompanying schedules and attachments, filed with respect to each Company      
Employee Plan required to make such a filing, and (C) the most recent actuarial 
valuation for each Company Employee Plan subject to Title IV of ERISA. For      
purposes of this Section 2.11(a), the term "material," used with respect to any 
Company Employee Plan, shall mean that the Company or a subsidiary of the       
Company has incurred or may incur obligations in an annual amount exceeding     
$1,000,000 with respect to such Company Employee Plan.                          

  (b) (i) Except as set forth in Section 2.11(b) of the Company Disclosure
Schedule, none of the Company Employee Plans promises or provides retiree       
medical or other retiree welfare benefits to any person; (ii) to the knowledge  
of the Company, there has been no "prohibited transaction," as such term is     
defined in Section 406 of ERISA and Section 4975 of the Code, with respect to   
any Company Employee Plan, which could result in any material liability of the  
Company or any of its subsidiaries; (iii) all Company Employee Plans are in     
compliance in all material respects with the requirements prescribed by any and 
all statutes (including ERISA and the Code), orders, or governmental rules and  
regulations currently in effect with respect thereto and the Company and each of
its subsidiaries have performed all material obligations required to be         
performed by them under, are not in any material respect in default under or    
violation of, and have no knowledge of any default or violation by any other    
party to, any of the Company Employee Plans; (iv) each Company Employee Plan    
intended to qualify under Section 401(a) of the Code and each trust established 
under such a Company Employee Plan intended to be exempt from tax under Section 
501(a) of the Code is the subject of a favorable determination letter from the  
Internal Revenue Service ("IRS"), and nothing has occurred which may reasonably 
be expected to impair such determination; (v) all contributions required to be  
made to any Company Employee Plan pursuant to Section 412 of the Code, or the   
terms of the Company Employee Plans or any collective bargaining agreement, have

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been made on or before their due dates; (vi) with respect to each Company       
Employee Plan, no "reportable event" within the meaning of Section 4043 of ERISA
(excluding any such event for which the 30 day notice requirement has been      
waived under the regulations to Section 4043 of ERISA) nor any event described  
in Section 4062, 4063 or 4041 of ERISA has occurred; and (vii) neither the      
Company nor any subsidiary of the Company has incurred, nor reasonably expects  
to incur, any liability under Title IV of ERISA (other than liability for       
premium payments to the Pension Benefit Guaranty Corporation ("PBGC") arising in
the ordinary course).                                                           

  (c) Section 2.11(c) of the Company Disclosure Schedule sets forth a true
and complete list of each current or former employee, officer or director of the
Company or any of its subsidiaries who holds any Stock Option (as defined in    
Section 4.9) as of the date of this Agreement, together with the number of      
shares of Company Common Stock subject to such Stock Option, the option price of
such Stock Option (to the extent determined as of the date hereof), whether such
Stock Option is intended to qualify as an incentive stock option within the     
meaning of Section 422(b) of the Code (an "ISO"), and the expiration date of    
such Stock Option.                                                              

  (d) Section 2.11(d) of the Company Disclosure Schedule sets forth a true
and complete list of (i) all written employment agreements with officers of the 
Company or any of its subsidiaries; (ii) all agreements with consultants who are
individuals obligating the Company or any of its subsidiaries to make annual    
cash payments in an amount exceeding $200,000; (iii) all severance agreements,  
programs and policies of the Company or any of its subsidiaries with or relating
to its employees, in each case with outstanding commitments exceeding $300,000  
to any individual, excluding programs and policies required to be maintained by 
law; and (iv) all plans, programs, agreements and other arrangements of the     
Company or any of its subsidiaries with or relating to its employees which      
contain change in control provisions.                                           

 SECTION 2.12  Labor Matters. Except as set forth in Section 2.12 of the
Company Disclosure Schedule, (i) neither the Company nor any of its subsidiaries
is a party to any collective bargaining agreement or other labor union contract 
applicable to persons employed by the Company or its subsidiaries, nor does the 
Company or any of its subsidiaries know of any activities or proceedings of any 
labor union to organize any such employees; and (ii) neither the Company nor any
of its subsidiaries has any knowledge of any strikes, slowdowns, work stoppages,
lockouts or threats thereof, by or with respect to any employees of the Company 
or any of its subsidiaries which would in the aggregate have a Material Adverse 
Effect.                                                                         

SECTION 2.13  Restrictions on Business Activities. Except for this    
Agreement or as set forth in Section 2.13 of the Company Disclosure Schedule,   
there is no agreement, judgment, injunction, order or decree binding upon and   
specifically applicable to the Company or any of its subsidiaries which has or  
could reasonably be expected to have the effect of prohibiting or impairing any 
material business practice of the Company or any of its subsidiaries, any       
acquisition of property by the Company or any of its subsidiaries or the conduct
of business by the Company or any of its subsidiaries as currently conducted or 
as proposed to be conducted by the Company, except for any prohibitions or      
impairments as would not in the aggregate have a Material Adverse Effect.       

SECTION 2.14  Taxes.                                                  

    (a) For purposes of this Agreement, (i) "Tax" or "Taxes" shall mean taxes,
fees, levies, duties, tariffs, imposts, and governmental impositions or charges 
of any kind in the nature of (or similar to) taxes, payable to any federal,     
state, local or foreign taxing authority, including (without limitation) income,
franchise, profits, gross receipts, ad valorem, net worth, value added, sales,  
use, service, real or personal property, special assessments, capital stock,    
license, payroll, withholding, employment,                                      

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social security, workers' compensation, unemployment compensation, utility,     
severance, production, excise, stamp, occupation premiums, windfall profits,    
transfer and gains taxes and interest, penalties, additional taxes and additions
to tax imposed with respect thereto and (ii) "Tax Returns" shall mean returns,  
reports, estimates and information returns and statements with respect to Taxes 
required to be filed with the IRS or any other taxing authority, domestic or    
foreign, including, without limitation, consolidated, combined and unitary tax  
returns.                                                                        

  (b) Other than as disclosed in Section 2.14(b) of the Company Disclosure
Schedule:                                                                       

          (i) The Company and each of its subsidiaries (for such periods as each
   subsidiary was owned, directly or indirectly, by the Company), have filed
    all federal income Tax Returns and all other material Tax Returns required
    to be filed by it (taking into account all applicable extensions), and all
such Tax Returns are complete and correct in all material respects, or
  requests for extensions to file such Tax Returns have been timely filed,
  granted and have not expired, except to the extent that such failures to
   file, to be complete or correct or to have extensions granted that remain
in effect, individually or in the aggregate, would not have a Material
     Adverse Effect on the Company. The Company and each of its subsidiaries has
 paid, or the Company has paid or caused to be paid on its subsidiaries'
   behalf, all Taxes shown as due on such Tax Returns and all material Taxes
     for which no Tax Return was required to be filed. The most recent financial
     statements contained in the Company SEC Reports reflect an adequate reserve
in accordance with GAAP for all Taxes payable by the Company and its  
    subsidiaries for all taxable periods and portions thereof through the date
of such financial statements.                                         

         (ii) No material Tax Return of the Company or any of its subsidiaries
     is under audit or examination by any taxing authority or the subject of any
pending court proceeding, and no written notice of such an audit or   
  examination has been received by the Company or any of its subsidiaries.
   Each material deficiency resulting from any audit or examination relating
 to Taxes by any taxing authority has been paid, except for deficiencies
 being contested in good faith. No material issue relating to Taxes were
 raised in writing by the relevant taxing authority during any presently
     pending audit or examination. None of the federal income Tax Returns of the
     Company or any of its subsidiaries consolidated in such Tax Returns for any
period have been examined by the IRS.                                 

          (iii) There is no agreement or other document extending, or having the
     effect of extending, the period of assessment or collection of any material
    Taxes and no power of attorney with respect to any material Taxes has been
executed or filed with any taxing authority.                          

        (iv) No material liens for Taxes exist with respect to any assets or
    properties of the Company or any of its subsidiaries, except for statutory
liens for Taxes not yet due.                                          

      (v) The accruals and reserves for Taxes (including deferred taxes)
  reflected in the 1998 Company Balance Sheet are in all material respects
     adequate (and until the Closing Date will continue to be adequate) to cover
all Taxes required to be accrued through the date thereof (including  
interest and penalties, if any, thereon and Taxes being contested) in 
accordance with generally accepted accounting principles.             

       (vi) The Company and its subsidiaries have complied in all material
  respects with all applicable laws, rules and regulations relating to the
 payment and withholding of Taxes and have timely withheld from employee
wages and paid over to the proper governmental authorities all amounts
required to be so withheld and paid over under all applicable laws.   

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        (vii) Neither the Company nor any of its subsidiaries has engaged in
  any inter-company transactions within the meaning of Treasury Regulation
 Section 1.1502-13 for which any income or gain will be recognized (as a
   result of the Merger or otherwise) during any taxable period ending on or
before the Closing Date.                                              

     SECTION 2.15  Intellectual Property. Except as set forth in Section 2.15 of
the Company Disclosure Schedule, neither the Company nor any of its subsidiaries
owns any material patents, trademarks, trade names, service marks, copyrights,  
and any applications therefor ("Intellectual Property"). Except as set forth in 
Section 2.15 of the Company Disclosure Schedule, the Company and/or each of its 
subsidiaries owns, or is licensed or otherwise possesses legally enforceable    
rights to use all Intellectual Property used in the business of the Company and 
its subsidiaries as currently conducted, except as would not have a Material    
Adverse Effect.                                                                 

SECTION 2.16  Rights Agreement. Concurrently with the execution and   
delivery of this Agreement, the Company has taken all action necessary in order 
to (i) render the Amended and Restated Rights Agreement dated as of April 18,   
1997 between the Company and Mellon Securities Trust Company, as Rights Agent   
(the "Rights Agreement") inapplicable to the Merger and the other transactions  
contemplated by this Agreement and (ii) ensure that (a) neither Parent or       
Acquisition is an Acquiring Person (as defined in the Rights Agreement) pursuant
to the Rights Agreement and (b) a Distribution Date (as defined in the Rights   
Agreement) does not occur solely by reason of the execution of this Agreement,  
the consummation of the Merger or the consummation of the other transactions    
contemplated by this Agreement.                                                 

SECTION 2.17  Opinion of Financial Advisor. The Board has received the
opinion of the Company's financial advisor, Bear, Stearns & Co. Inc. ("Bear     
Stearns"), to the effect that, as of the date of this Agreement, the Merger     
Consideration to be received by the holders of Company Common Shares and Company
Preferred Shares (other than Parent and its affiliates) pursuant to the Merger  
is fair, from a financial point of view, to such holders.                       

   SECTION 2.18  Brokers. No broker, finder or investment banker (other than
Bear Stearns) is entitled to any brokerage, finder's or other fee or commission 
in connection with the transactions contemplated by this Agreement based upon   
arrangements made by or on behalf of the Company. The Company has heretofore    
furnished to Parent a complete and correct copy of all agreements between the   
Company and Bear Stearns pursuant to which such firm would be entitled to any   
payment relating to the transactions contemplated hereunder.                    

     SECTION 2.19  Section 203 of the Delaware Law Not Applicable. The Board has
taken all actions so that the provisions contained in Section 203 of the        
Delaware Law applicable to a "business combination" (as defined in Section 203) 
will not apply to the execution, delivery or performance of this Agreement or   
the consummation of the Merger or the other transactions contemplated by this   
Agreement.                                                                      

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ARTICLE III 

REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION

    Except as disclosed in the Parent Filed SEC Reports or as set forth in the
Parent Disclosure Schedule, Parent and Acquisition hereby, jointly and          
severally, represent and warrant to the Company that:                           

    SECTION 3.1  Organization and Qualification; Subsidiaries. Parent and each
of its significant subsidiaries (as that term is defined in Rule 1-02 of        
Regulation S-X) is a corporation or other legal entity duly organized, validly  
existing and in good standing under the laws of the jurisdiction of its         
organization and has the corporate or similar power and authority necessary to  
own, lease and operate the properties it purports to own, operate or lease and  
to carry on its business as it is now being conducted, except where the failure 
to be so organized, existing and in good standing or to have such power and     
authority would not have a Material Adverse Effect. Parent and each of its      
significant subsidiaries is duly qualified or licensed to do business, and is in
good standing (with respect to jurisdictions that recognize such concept), in   
each jurisdiction where the character of its properties owned, leased or        
operated by it or the nature of its activities makes such qualification or      
licensing necessary, except for such failures to be so duly qualified or        
licensed and in good standing that would not in the aggregate have a Material   
Adverse Effect.                                                                 

   SECTION 3.2  Certificate and Articles of Amalgamation and By-Laws. Parent
has heretofore furnished to the Company a complete and correct copy of its      
Certificate and Articles of Amalgamation and By-Laws, in each case as amended to
the date of this Agreement. Such Certificate and Articles of Amalgamation and   
By-Laws are in full force and effect. Parent is not in violation of any of the  
provisions of such documents.                                                   

SECTION 3.3  Capitalization. As of September 30, 1998, the authorized 
capital stock of Parent consisted of (i) an unlimited number of Parent Common   
Shares, of which 330,156,836 shares were issued and outstanding; (ii) an        
unlimited number of Preference Shares, of which 558,070 shares of 5% Cumulative 
Convertible First Preference Shares Series G (the "Parent Preferred Shares")    
were issued and outstanding. As of September 30, 1998, 8,722,800 Parent Common  
Shares were reserved for issuance upon the exercise of stock options, 575,999   
Parent Common Shares were reserved for issuance upon the exercise of certain    
warrants, and no Parent Common Shares were held by Parent in its treasury. No   
material change in such capitalization has occurred between September 30, 1998  
and the date hereof. All outstanding Parent Common Shares and Parent Preferred  
Shares are validly issued, fully paid, non-assessable and free of preemptive    
rights. Except as set forth above, there are no options, warrants or other      
rights, agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of Parent or any of its subsidiaries or        
obligating Parent or any of its subsidiaries to issue or sell any shares of     
capital stock of, or other equity interests in, Parent or any of its            
subsidiaries. Except for Parent's market support obligations to purchase up to  
20,000 Parent Preferred Shares per year at a price of up to $20 per share, there
are no obligations, contingent or otherwise, of Parent to repurchase, redeem or 
otherwise acquire any of the capital stock of Parent or the capital stock of any
subsidiary or to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any such subsidiary other than guarantees 
of bank obligations of subsidiaries entered into in the ordinary course of      
business. All of the outstanding shares of capital stock of each of Parent's    
subsidiaries are duly authorized, validly issued, fully paid and nonassessable, 
and all such shares are owned by Parent or another subsidiary of Parent free and
clear of all security interests, liens, claims, pledges, agreements, limitations
on Parent's voting rights, charges or other encumbrances of any nature          
whatsoever. The Parent Common Shares issuable in                                

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connection with the Merger are duly authorized and reserved and, when issued in 
accordance with the terms of this Agreement, will be validly issued, fully paid,
nonassessable and free of preemptive rights.                                    

SECTION 3.4  Authority Relative to this Agreement. Each of Parent and 
Acquisition has all necessary corporate power and authority to execute and      
deliver this Agreement and to perform its obligations hereunder and to          
consummate the transactions contemplated hereby. The execution and delivery of  
this Agreement by Parent and Acquisition and the consummation by Parent and     
Acquisition of the transactions contemplated hereby have been duly and validly  
authorized by all necessary corporate action on the part of Parent and          
Acquisition, and no other corporate proceedings on the part of Parent or        
Acquisition are necessary to authorize this Agreement or to consummate the      
transactions contemplated hereby. As of the date of this Agreement, the Board of
Directors of Parent has determined that the Merger, upon the terms and subject  
to the conditions of this Agreement, is advisable and in the best interest of   
Parent's stockholders. This Agreement has been duly and validly executed and    
delivered by Parent and Acquisition and adopted by Parent as the sole           
stockholder of Acquisition and, assuming the due authorization, execution and   
delivery by the Company and adoption of the Agreement by the requisite vote of  
the stockholders of the Company, constitutes a valid and binding obligation of  
Parent and Acquisition enforceable against each of them in accordance with its  
terms.                                                                          

SECTION 3.5  No Conflict, Required Filings and Consents.              

  (a) Except as set forth in Section 3.5(a) of Parent Disclosure Schedule,
the execution and delivery of this Agreement by Parent and Acquisition do not,  
and the performance of this Agreement by Parent and Acquisition will not, (i)   
conflict with or violate the Certificate and Articles of Amalgamation,          
Certificate of Incorporation or By-Laws (or other constituent instruments) of   
Parent or Acquisition, (ii) conflict with or violate any law, rule, regulation, 
order, judgment or decree in effect as of the date of this Agreement applicable 
to Parent or any of its subsidiaries or by which its or any of their respective 
properties is bound or affected, or (iii) result in any breach of or constitute 
a default (or an event that with notice or lapse of time or both would become a 
default) under, or impair Parent's or any of its subsidiaries' rights or alter  
the rights or obligations of any third party under, or give to others any rights
of termination, amendment, acceleration or cancellation of, any Material Parent 
Contract (as defined in Section 3.6), or result in the creation of a lien or    
encumbrance on any of the properties or assets of Parent or any of its          
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,        
agreement, lease, license, permit, franchise or other instrument or obligation  
to which Parent or any of its subsidiaries is a party or by which Parent or any 
of its subsidiaries or its or any of their respective properties are bound or   
affected, except in any such case for any such conflicts, violations, breaches, 
defaults or other occurrences that would not in the aggregate have a Material   
Adverse Effect.                                                                 

(b) Except as set forth in Section 3.5(b) of the Parent Disclosure    
Schedule, the execution and delivery of this Agreement by Parent and Acquisition
does not, and the performance of this Agreement by Parent and Acquisition will  
not, require any consent, approval, authorization or permit of, or filing with  
or notification to, any governmental or regulatory authority, domestic or       
foreign, except (i) for applicable requirements, if any, of the Securities Act, 
the Exchange Act, the Blue Sky Laws, the HSR Act, and the filing and recordation
of appropriate merger or other documents as required by the Delaware Law, (ii)  
the applicable requirements of the STB, and (iii) where the failure to obtain   
such consents, approvals, authorizations or permits, or to make such filings or 
notifications, would not prevent or delay consummation of the Merger, or        
otherwise prevent or delay                                                      

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Parent or Acquisition from performing their respective obligations under this   
Agreement, and would not otherwise in the aggregate have a Material Adverse     
Effect.                                                                         

   SECTION 3.6  Compliance. Except as disclosed in Section 3.6 of the Parent
Disclosure Schedule, neither Parent nor any of its subsidiaries is in conflict  
with, or in default or violation of, (i) any law (including, without limitation,
environmental laws), rule, regulation, order, judgment or decree applicable to  
Parent or any of its subsidiaries or by which its or any of their respective    
properties is bound or affected or (ii) any agreement (A) required to be filed  
as "material contracts" with the SEC pursuant to the requirements of the        
Exchange Act or (B) under which the consequences of a default, nonrenewal or    
termination would have a Material Adverse Effect on the Parent (collectively,   
the "Material Parent Contracts") to which Parent or any of its subsidiaries is a
party or by which Parent or any of its subsidiaries or its or any of their      
respective properties is bound or affected, except for any such conflicts,      
defaults or violations which would not in the aggregate have a Material Adverse 
Effect.                                                                         

SECTION 3.7  SEC Filings; Financial Statements.                       

   (a) Except as set forth in Section 3.7 of the Parent Disclosure Schedule,
Parent has filed all forms, reports and documents required to be filed with the 
SEC and has made available to the Company (i) its Annual Reports on Form 10-K   
for the fiscal years ended August 31, 1996 and 1997, (ii) its Quarterly Reports 
on Form 10-Q for the periods ended November 30, 1997, February 28, 1998 and May 
31, 1998, (iii) all other reports or registration statements filed by Parent    
with the SEC since September 1, 1997, and (iv) all amendments and supplements to
all such reports and registration statements filed by Parent with the SEC since 
September 1, 1997 (collectively, the "Parent SEC Reports"). Except as disclosed 
in Section 3.7 of the Parent Disclosure Schedule, the Parent SEC Reports (i)    
were prepared in all material respects in accordance with the requirements of   
the Securities Act or the Exchange Act, as the case may be, as in effect on the 
date such Parent SEC Reports were filed (including the reconciliation of all    
financial statements to United States generally accepted accounting principles),
and (ii) did not at the time they were filed (or if amended or superseded by a  
filing prior to the date of this Agreement, then on the date of such filing)    
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements      
therein, in the light of the circumstances under which they were made, not      
misleading. Except as set forth in Section 3.7 of the Parent Disclosure         
Schedule, none of the Parent's subsidiaries is required to file any forms,      
reports or other documents with the SEC.                                        

     (b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Parent SEC Reports was prepared in  
accordance with Canadian generally accepted accounting principles applied on a  
consistent basis throughout the periods involved (except as may be indicated in 
the notes thereto), and each fairly presents in all material respects the       
consolidated financial position of Parent and its subsidiaries as at the        
respective dates thereof and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim financial    
statements were or are subject to normal and recurring year-end adjustments     
which were not or are not expected to be material in amount.                    

   SECTION 3.8  Absence of Certain Changes or Events. Except as set forth in
Section 3.8 of Parent Disclosure Schedule or the Parent SEC Reports filed and   
publicly available prior to the date of this Agreement (the "Parent Filed SEC   
Reports"), since September 1, 1997, Parent has conducted its business in the    
ordinary course and there has not occurred: (i) any Material Adverse Effect;    
(ii) any amendments or changes in the Certificate and Articles of Amalgamation  
or By-Laws                                                                      

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of Parent; (iii) any damage to, destruction or loss of any asset of the Parent  
(whether or not covered by insurance) that would have a Material Adverse Effect;
(iv) any material change by Parent in its accounting methods, principles or     
practices; (v) any material revaluation by Parent of any of its assets,         
including, without limitation, writing down the value of the inventory or       
writing off notes or accounts receivable other than in the ordinary course of   
business; or (vi) any sale of a material amount of property of Parent or any of 
its subsidiaries, except in the ordinary course of business.                    

    SECTION 3.9  No Undisclosed Liabilities. Except as is disclosed in Section
3.9 of the Parent Disclosure Schedule, neither Parent nor any of its            
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise,   
including, without limitation, environmental liabilities arising under          
environmental laws), except liabilities (i) in the aggregate adequately provided
for in Parent's unaudited balance sheet (including any related notes thereto) as
of May 31, 1998 (the "1998 Parent Balance Sheet"), (ii) incurred in the ordinary
course of business and not required under Canadian generally accepted accounting
principles to be reflected on the 1998 Parent Balance Sheet, (iii) incurred     
since May 31, 1998 in the ordinary course of business consistent with past      
practice, (iv) incurred in connection with this Agreement, (v) disclosed in the 
Parent Filed SEC Reports or (vi) which would not have a Material Adverse Effect.

     SECTION 3.10  Absence of Litigation. Except as set forth in Section 3.10 of
the Parent Disclosure Schedule, there are no claims, actions, suits, proceedings
or investigations pending or, to the knowledge of Parent, overtly threatened    
against Parent or any of its subsidiaries, or any properties or rights of Parent
or any of its subsidiaries, before any court, arbitrator or administrative,     
governmental or regulatory authority or body, domestic or foreign, that would   
have a Material Adverse Effect.                                                 

 SECTION 3.11  Labor Matters. Except as set forth in Section 3.11 of the
Parent Disclosure Schedule, neither Parent nor any of its subsidiaries has any  
knowledge of any strikes, slowdowns, work stoppages, lockouts or threats        
thereof, by or with respect to any employees of Parent or any of its            
subsidiaries which would in the aggregate have a Material Adverse Effect.       

SECTION 3.12  Restrictions on Business Activities. Except for this    
Agreement or as set forth in Section 3.12 of the Parent Disclosure Schedule,    
there is no agreement, judgment, injunction, order or decree binding upon and   
specifically applicable to Parent or any of its subsidiaries which has or could 
reasonably be expected to have the effect of prohibiting or impairing any       
material business practice of Parent or any of its subsidiaries, any acquisition
of property by Parent or any of its subsidiaries or the conduct of business by  
Parent or any of its subsidiaries as currently conducted or as proposed to be   
conducted by Parent, except for any prohibitions or impairments as would not in 
the aggregate have a Material Adverse Effect.                                   

SECTION 3.13  No Prior Activities; Financing.                         

(a) Acquisition was formed solely for the purpose of engaging in the  
transactions contemplated by this Agreement. As of the date hereof and the      
Effective Time, except for obligations or liabilities incurred in connection    
with its incorporation or organization and the transactions contemplated by this
Agreement and except for this Agreement and any other agreements or arrangements
contemplated by this Agreement, Acquisition has not and will not have incurred, 
directly or indirectly, through any subsidiary or affiliate, any obligations or 
liabilities or engaged in any business activities of any type or kind whatsoever
or entered into any agreements or arrangements with any person.                 

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   (b) Acquisition has (and Parent will cause Acquisition to have) available
to it funds necessary to satisfy its obligations hereunder including, without   
limitation, the obligation to pay the Cash Merger Consideration pursuant to the 
Merger and to pay all related fees and expenses in connection with the Merger.  

    SECTION 3.14  Taxes. Other than as disclosed in Section 3.14 of the Parent
Disclosure Schedule:                                                            

(a) Parent and each of its subsidiaries (for such periods as each     
subsidiary was owned, directly or indirectly, by Parent), have filed all federal
income Tax Returns and all other material Tax Returns required to be filed by   
it, (taking into account all applicable extensions) and all such Tax Returns are
complete and correct in all material respects, or requests for extensions to    
file such Tax Returns have been timely filed, granted and have not expired,     
except to the extent that such failures to file, to be complete or correct or to
have extensions granted that remain in effect, individually or in the aggregate,
would not have a Material Adverse Effect on Parent. Parent and each of its      
subsidiaries has paid, or the Parent has paid or caused to be paid on its       
subsidiaries' behalf, all Taxes shown as due on such Tax Returns and all        
material Taxes for which no Tax Return was required to be filed. The most recent
financial statements contained in the Parent Filed SEC Reports reflect an       
adequate reserve in accordance with Canadian generally accepted accounting      
principles for all Taxes payable by Parent and its subsidiaries for all taxable 
periods and portions thereof through the date of such financial statements.     

  (b) No material Tax Return of Parent or any of its subsidiaries is under
audit or examination by any taxing authority or the subject of any pending court
proceeding, and no written notice of such an audit or examination has been      
received by Parent or any of its subsidiaries. Each material deficiency         
resulting from any audit or examination relating to Taxes by any taxing         
authority has been paid, except for deficiencies being contested in good faith. 
No material issue relating to Taxes were raised in writing by the relevant      
taxing authority during any presently pending audit or examination. None of the 
federal income Tax Returns of Parent or any of its subsidiaries consolidated in 
such Tax Returns for any period have been examined by the IRS.                  

     (c) There is no agreement or other document extending, or having the effect
of extending, the period of assessment or collection of any Taxes and no power  
of attorney with respect to any Taxes has been executed or filed with any taxing
authority.                                                                      

(d) No material liens for Taxes exist with respect to any assets or   
properties of Parent or any of its subsidiaries, except for statutory liens for 
Taxes not yet due.                                                              

(e) The accruals and reserves for Taxes (including deferred taxes)    
reflected in the 1998 Parent Balance Sheet are in all material respects adequate
(and until the Closing Date will continue to be adequate) to cover all Taxes    
required to be accrued through the date thereof (including interest and         
penalties, if any, thereon and Taxes being contested) in accordance with        
Canadian generally accepted accounting principles.                              

     (f) Parent and its subsidiaries have complied in all material respects with
all applicable laws, rules and regulations relating to the payment and          
withholding of Taxes and have timely withheld from employee wages and paid over 
to the proper governmental authorities all amounts required to be so withheld   
and paid over under all applicable laws.                                        

(g) Neither Parent nor any of its subsidiaries has engaged in any     
inter-company transactions within the meaning of Treasury Regulation Section    
1.1502-13 for which any income or gain will be                                  

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recognized (as a result of the Merger or otherwise) during any taxable period   
ending on or before the Closing Date.                                           

     SECTION 3.15  Intellectual Property. Except as set forth in Section 3.15 of
the Parent Disclosure Schedule, neither Parent nor any of its Subsidiaries owns 
any material Intellectual Property. Except as set forth in Section 3.15 of the  
Parent Disclosure Schedule, Parent and/or each of its subsidiaries owns, or is  
licensed or otherwise possesses legally enforceable rights to use all           
Intellectual Property used in the business of Parent and its subsidiaries as    
currently conducted, except as would not have a Material Adverse Effect.        

   SECTION 3.16  Brokers. No broker, finder or investment banker (other than
Merrill Lynch, Pierce, Fenner & Smith Incorporated) is entitled to any          
brokerage, finder's or other fee or commission in connection with the           
transactions contemplated by this Agreement based upon arrangements made by or  
on behalf of Parent.                                                            

ARTICLE IV

ADDITIONAL AGREEMENTS 

   SECTION 4.1  Preparation of Form S-4; Proxy Statement/Prospectus. As soon
as practicable following the date of this Agreement, the Company and Parent     
shall jointly prepare and the Company shall file with the SEC a preliminary     
proxy statement relating to the Special Meeting, and Parent shall prepare and   
file with the SEC a registration statement on Form S-4 (the "Form S-4"), in     
which such preliminary proxy statement will be included as a preliminary        
prospectus (such proxy statement, together with the prospectus relating to      
Parent Common Shares, in each case as amended or supplemented from time to time,
is referred to herein as the "Proxy Statement/Prospectus"). Parent shall use its
reasonable best efforts to have the Form S-4 declared effective under the       
Securities Act as promptly as practicable after such filing. The Company will   
use its reasonable best efforts to cause the Proxy Statement/Prospectus to be   
mailed to the Company's stockholders as promptly as practicable after the Form  
S-4 is declared effective under the Securities Act. Parent shall also take any  
action (other than qualifying to do business in any jurisdiction in which it is 
not now so qualified) required to be taken under any applicable state securities
laws in connection with the issuance of Parent Common Shares in the Merger, if  
applicable, and the Company shall furnish all information concerning the Company
and the holders of the Company Common Shares and Company Preferred Shares as may
be reasonably requested in connection with any such action.                     

SECTION 4.2  Company Information. The Company agrees that none of the 
information supplied or to be supplied by the Company specifically for inclusion
or incorporation by reference in (i) the Form S-4 will, at the time the Form S-4
is filed with the SEC, at any time it is amended or supplemented or at the time 
it becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein  
or necessary to make the statements therein not misleading and (ii) the Proxy   
Statement/Prospectus will, at the date it is first mailed to the Company's      
stockholders or at the time of the Special Meeting, contain any untrue statement
of a material fact or omit to state any material fact required to be stated     
therein or necessary in order to make the statements therein, in the light of   
the circumstances under which they are made, not misleading. The Proxy          
Statement/Prospectus will comply as to form in all material respects with the   
requirements of the Exchange Act and the rules and regulations thereunder,      
except with respect to statements made or incorporated by reference therein     
based on information supplied by Parent specifically for inclusion or           
incorporation by reference in the Proxy Statement/Prospectus.                   
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     SECTION 4.3  Parent Information. Parent agrees that none of the information
supplied or to be supplied by Parent specifically for inclusion or incorporation
by reference in (i) the Form S-4 will, at the time the Form S-4 is filed with   
the SEC, at any time it is amended or supplemented or at the time it becomes    
effective under the Securities Act, contain any untrue statement of a material  
fact or omit to state any material fact required to be stated therein or        
necessary to make the statements therein not misleading, and (ii) the Proxy     
Statement/Prospectus will, at the date the Proxy Statement/Prospectus is first  
mailed to the Company's stockholders or at the time of the Special Meeting,     
contain any untrue statement of a material fact or omit to state any material   
fact required to be stated therein or necessary in order to make the statements 
therein, in the light of the circumstances under which they are made, not       
misleading. The Form S-4 will comply as to form in all material respects with   
the requirements of the Securities Act and the rules and regulations promulgated
thereunder, and the Proxy Statement/Prospectus will comply as to form in all    
material respects with the requirements of the Exchange Act and the rules and   
regulations promulgated thereunder, except with respect to statements made or   
incorporated by reference in either the Form S-4 or the Proxy                   
Statement/Prospectus based on information supplied by the Company specifically  
for inclusion or incorporation by reference therein.                            

   SECTION 4.4  Meeting of the Company's Stockholders. The Company will take
all action necessary in accordance with applicable law and its Certificate of   
Incorporation and By-laws to convene the Special Meeting to consider and vote   
upon the adoption of this Agreement. Subject to Section 1.12, the Company will, 
through the Board, recommend to its stockholders adoption of this Agreement.    
Without limiting the generality of the foregoing, the Company agrees that,      
subject to its right to terminate this Agreement pursuant to Section 7.1, its   
obligations pursuant to the first sentence of Section 4.4 shall not be affected 
by (i) the commencement, public proposal, public disclosure or communication to 
the Company of any Acquisition Proposal (as defined in Section 5.2(a)) or (ii)  
the withdrawal or modification by the Board of its approval or recommendation of
this Agreement or the Merger. Subject to Section 1.12 hereof, the Company will  
use its reasonable best efforts to obtain the favorable vote of its stockholders
as soon as practicable after the date hereof.                                   

 SECTION 4.5  Reasonable Best Efforts. Upon the terms and subject to the
conditions and other agreements set forth in this Agreement, each of the parties
agrees to use its reasonable best efforts to take, or cause to be taken, all    
actions, and to do, or cause to be done, and to assist and cooperate with the   
other parties in doing, all things necessary, appropriate or advisable to       
consummate and make effective, in the most expeditious manner practicable, the  
Merger and the other transactions contemplated by this Agreement.               
Notwithstanding any other provision hereof, the Company's obligations under this
Section 4.5 and any other provision hereof will in all events be subject to its 
right to terminate this Agreement in accordance with Section 7.1, whereupon the 
Company will have no further obligations hereunder or otherwise, including,     
without limitation, under Sections 1.11, 4.1, 4.4, 4.10, 4.11, 4.14, 4.15 and   
this Section 4.5.                                                               

     SECTION 4.6  Letter of the Company's Accountants. The Company shall use its
reasonable best efforts to cause to be delivered to Parent a letter of Arthur   
Andersen LLP, the Company's independent public accountants, dated a date within 
two business days before the date on which the Form S-4 shall become effective  
and a letter of Arthur Andersen LLP dated a date within two business days before
the date of the Special Meeting, addressed to Parent, in form and substance     
reasonably satisfactory to Parent and customary in scope and substance for      
letters delivered by independent public accountants in connection with          
registration statements similar to the Form S-4.                                

SECTION 4.7  Letter of Parent's Accountants. Parent shall use its     
reasonable best efforts to cause to be delivered to the Company a letter of     
PricewaterhouseCoopers LLP, Parent's independent                                

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public accountants, dated a date within two business days before the date on    
which the Form S-4 shall become effective and a letter of PricewaterhouseCoopers
LLP dated a date within two business days before the date of the Special        
Meeting, addressed to the Company, in form and substance reasonably satisfactory
to the Company and customary in scope and substance for letters delivered by    
independent public accountants in connection with registration statements       
similar to the Form S-4.                                                        

    SECTION 4.8  Stock Exchange Listings. Parent shall use its best efforts to
cause the Parent Common Shares to be issued in the Merger to be approved for    
listing on the NYSE, subject to official notice of issuance, prior to the       
Closing Date.                                                                   

    SECTION 4.9  Stock Options. On or prior to the Effective Time, the Company
will use its reasonable best efforts to cause holders of options to purchase    
Company Common Shares (a "Stock Option") outstanding under the Company's 1995   
Long Term Stock Incentive Plan, the Company's 1998 Non-Officer Long Term Stock  
Incentive Plan, the Company's 1991 Management Stock Option Plan, the Company's  
1998 Directors' Stock Incentive Plan, the Company's 1993 Management Incentive   
Stock Option Plan, the Company's 1993 Non-Employee Director Stock Option Plan,  
the Company's 1995 Director Stock Incentive Plan, the Charles A. Lynch Stock    
Option Plan, the Robert B. Gill Stock Option Plan and the Thomas F. Meagher     
Stock Option Plan (the "Company Stock Option Plans") or pursuant to any other   
stock option plan or agreement entered into by the Company with any employee of 
or consultant to the Company or any subsidiary thereof listed on Section 2.11(c)
of the Company Disclosure Schedule, whether or not then exercisable, to enter   
into an agreement to cancel such Stock Options in exchange for an amount in cash
equal to the product of (i) the number of Company Common Shares previously      
subject to such Stock Option multiplied by (ii) the excess, if any, of $6.50    
over the exercise price per share of Company Common Shares previously subject to
such Stock Option less applicable withholding taxes. Notwithstanding anything   
contained in this Agreement to the contrary, (i) the options to purchase Company
Common Shares granted under the Company's 1998 Stock Option Plan for ATU        
Represented Drivers and Mechanics (the "ATU Option Plan") will be treated in the
Merger in the manner provided in the ATU Option Plan and (ii) the Company shall 
not be obligated to use its reasonable best efforts to seek to cause a holder of
a Stock Option having an exercise price of more than $6.50 to enter into an     
agreement as contemplated by this Section 4.9.                                  

SECTION 4.10  Access to Information; Confidentiality.                 

     (a) So long as this Agreement remains in effect, upon reasonable notice and
subject to restrictions contained in any applicable confidentiality agreements  
to which such party is subject, the Company shall (and shall cause each of its  
subsidiaries to) afford to the officers, employees, accountants, counsel and    
other representatives of Parent or Acquisition reasonable access, during normal 
business hours, to all its properties, books, contracts, commitments and records
and, the Company shall (and shall cause each of its subsidiaries to) furnish as 
promptly as practicable to Parent or Acquisition all information concerning its 
business, properties and personnel as such other party may reasonably request,  
and each shall make available to the other the appropriate individuals          
(including attorneys, accountants and other professionals) for discussion of the
other's business, properties and personnel as either Parent or the Company may  
reasonably request. Parent and Acquisition shall keep such information          
confidential in accordance with the terms of the confidentiality letter dated   
June 30, 1998 (the "Confidentiality Letter"), between Parent and the Company.   

     (b) So long as this Agreement remains in effect, upon reasonable notice and
subject to restrictions contained in any applicable confidentiality agreements  
to which such party is subject,                                                 

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Parent shall (and shall cause each of its subsidiaries to) afford to the        
officers, employees, accountants, counsel and other representatives of the      
Company reasonable access, during normal business hours, to all its properties, 
books, contracts, commitments and records and, Parent shall (and shall cause    
each of its subsidiaries to) furnish as promptly as practicable to the Company  
all information concerning its business, properties and personnel as such other 
party may reasonably request, and each shall make available to the other the    
appropriate individuals (including attorneys, accountants and other             
professionals) for discussion of the other's business, properties and personnel 
as either Parent or the Company may reasonably request. The Company shall keep  
such information confidential in accordance with the terms of the               
Confidentiality Letter.                                                         

  SECTION 4.11  Consents; Approvals. The Company and Parent shall each use
their reasonable best efforts to obtain all consents, waivers, approvals,       
authorizations or orders (including, without limitation, the STB approval and   
all other United States and foreign governmental and regulatory rulings and     
approvals), and the Company and Parent shall make all filings (including,       
without limitation, all filings with the STB and other United States and foreign
governmental or regulatory agencies) required in connection with the            
authorization, execution and delivery of this Agreement by the Company and      
Parent and the consummation by them of the transactions contemplated hereby. If 
applicable, as promptly as practicable after the date of this Agreement, the    
Company and Parent shall file notifications under the HSR Act in connection with
the Merger and the transactions contemplated hereby and shall respond as        
promptly as practicable to any inquiries received from the STB, the Federal     
Trade Commission (the "FTC") and the Antitrust Division of the Department of    
Justice (the "Antitrust Division") for additional information or documentation  
and shall respond as promptly as practicable to all inquiries and requests      
received from any State Attorney General or other governmental authority in     
connection with antitrust matters. The Company and Parent shall furnish all     
information required to be included in any application or other filing to be    
made pursuant to the rules and regulations of any United States or foreign      
governmental body in connection with the transactions contemplated by this      
Agreement.                                                                      

SECTION 4.12  Indemnification and Insurance.                          

(a) The Certificate of Incorporation and By-Laws of the Surviving     
Corporation shall contain the provisions with respect to indemnification,       
exculpation and advancement of expenses set forth in the Certificate of         
Incorporation and By-Laws of the Company, which provisions shall not be amended,
repealed or otherwise modified for a period of three years from the Effective   
Time in any manner that would adversely affect the rights thereunder of         
individuals who at the Effective Time were present or former directors,         
officers, employees or agents of the Company, unless such modification is       
required by law.                                                                

     (b) The Company shall, to the fullest extent permitted under applicable law
or under the Company's Certificate of Incorporation or By-Laws and regardless of
whether the Merger becomes effective, indemnify and hold harmless, and, after   
the Effective Time, the Parent and the Surviving Corporation shall, jointly and 
severally, to the fullest extent permitted under applicable law or under the    
Surviving Corporation's Certificate of Incorporation or By-Laws, indemnify and  
hold harmless, each present and former director, officer or employee of the     
Company or any of its subsidiaries (collectively, the "Indemnified Parties")    
against any costs or expenses (including attorneys' fees), judgments, fines,    
losses, claims, damages and liabilities incurred in connection with, and amounts
paid in settlement of, any claim, action, suit, proceeding or investigation,    
whether civil, criminal, administrative or investigative and wherever asserted, 
brought or filed, (x) arising out of or pertaining to the transactions          
contemplated by this Agreement or (y) otherwise with respect to any acts or     
omissions or alleged acts or omissions occurring at or prior to the Effective   
Time, to the same extent                                                        

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as provided in the respective Certificate of Incorporation or By-Laws of the    
Company or the subsidiaries or any applicable contract or agreement as in effect
on the date of this Agreement, in each case for a period of five years after the
date hereof. In the event of any such claim, action, suit, proceeding or        
investigation (whether arising before or after the Effective Time), (i) any     
counsel retained by the Indemnified Parties for any period after the Effective  
Time shall be reasonably satisfactory to the Surviving Corporation, (ii) after  
the Effective Time, the Surviving Corporation shall (and Parent shall cause the 
Surviving Corporation to) pay the reasonable fees and expenses of such counsel, 
promptly after statements therefor are received, and (iii) the Surviving        
Corporation will cooperate in the defense of any such matter; provided, however,
that the Surviving Corporation shall not be liable for any settlement effected  
without its written consent (which consent shall not be unreasonably withheld or
delayed); and provided, further, that, in the event that any claim or claims for
indemnification are asserted or made within such five-year period, all rights to
indemnification in respect of any such claim or claims shall continue until the 
disposition of any and all such claims. The Indemnified Parties as a group may  
retain only one law firm to represent them with respect to any single action    
unless there is, under applicable standards of professional conduct, a conflict 
on any significant issue between the positions of any two or more Indemnified   
Parties. The indemnity agreements of Parent and the Surviving Corporation in    
this Section 4.12(b) shall extend on the same terms to, and shall inure to the  
benefit of and shall be enforceable by, each person or entity who controls, or  
in the past controlled, any present or former director, officer or employee of  
the Company or any of its subsidiaries.                                         

   (c) The Surviving Corporation shall (and Parent shall cause the Surviving
Corporation to) honor and fulfill in all respects the obligations of the Company
pursuant to indemnification agreements with the Company's directors and officers
existing at or before the Effective Time.                                       

     (d) For a period of five years after the Effective Time, Parent shall cause
the Surviving Corporation to maintain in effect, directors' and officers'       
liability insurance covering those persons who are currently covered by the     
Company's directors' and officers' liability insurance policy (a copy of which  
has been made available to Parent) on terms (including the amounts of coverage  
and the amounts of deductibles, if any) that are comparable to the terms now    
applicable to directors and officers of Parent, or, if more favorable to the    
Company's directors and officers, the terms now applicable to them under the    
Company's current policies; provided, however, that in no event shall Parent or 
the Surviving Corporation be required to expend in excess of 300% of the annual 
premium currently paid by the Company for such coverage; and provided further,  
that if the premium for such coverage exceeds such amount, Parent or the        
Surviving Corporation shall purchase a policy if available with the greatest    
coverage available for such 300% of the annual premium.                         

(e) From and after the Effective Time, Parent shall guarantee the     
obligations of the Surviving Corporation under this Section 4.12.               

   (f) This Section 4.12 shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, the Surviving Corporation   
and the Indemnified Parties, shall be binding on all successors and assigns of  
the Surviving Corporation and shall be enforceable by the Indemnified Parties.  
In the event that Parent or the Surviving Corporation or any of their successors
or assigns (i) consolidates or merges into any other person or entity and shall 
not be the continuing or surviving corporation or entity in such consolidation  
or merger or (ii) transfers all or substantially all of its properties and      
assets to any person or entity, then and in such case, proper provisions shall  
be made so that the successors and assigns of Parent or the Surviving           
Corporation (as the case may be) assume the obligations of Parent and the       
Surviving Corporation set forth in this Section 4.12.                           

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SECTION 4.13  Continuation of Company Employee Plans.                 

   (a) Except as may be otherwise required or permitted under any collective
bargaining agreement to which the Company is a party, the Surviving Corporation 
will (and Parent shall cause the Surviving Corporation to), for a period of not 
less than 12 months following the Effective Time, continue without amendment or 
change, except changes which increase compensation or benefits paid or payable  
thereunder or as may be required by law, the Company Employee Plans and other   
policies, practices, programs and arrangements which provide compensation or    
benefits to employees of the Company or its subsidiaries. Notwithstanding the   
foregoing, (i) the Surviving Corporation may replace any of such individual     
plans, policies, practices, programs or arrangements with another plan, policy, 
practice, program or arrangement providing, in the aggregate, not less than a   
substantially equivalent level of compensation or benefits, as the case may be, 
and (ii) the Surviving Corporation shall not be required to maintain any Company
Employee Plan that provides for the issuance of Company Common Shares or any    
other stock-based award plan or program ("Stock Plans"); provided that Parent   
replaces such Stock Plans with another plan, policy, practice, program or       
arrangement that the Board of Directors of the Surviving Corporation determines 
in good faith provides comparable incentive compensation opportunities.         

(b) Except as may be expressly provided in a valid written waiver     
voluntarily signed by an affected employee, the Company will honor and, on and  
after the Effective Time, Parent will cause the Surviving Corporation to honor  
in accordance with the terms thereof, without offset, deduction, counterclaim,  
interruption or deferment (other than withholdings under applicable law) all    
Company Benefit Plans, including all employment, change-in-control, severance,  
termination, consulting and unfunded retirement or benefit agreements to which  
the Company or any of its subsidiaries is a party. For the purpose of any such  
policy, practice, program or arrangement that contains a provision relating to a
change in control of the Company, Parent acknowledges that the consummation of  
the Merger constitutes such a change in control.                                

(c) The Company and Parent will or may, as the case may be, take the  
actions indicated in Section 4.13(c) of the Company Disclosure Schedule at or   
prior to the times specified therein.                                           

SECTION 4.14  Notification of Certain Matters. The Company shall give 
prompt notice to Parent, and Parent shall give prompt notice to the Company, of 
(i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence
of which would reasonably be expected to cause any representation or warranty   
contained in this Agreement to be materially untrue or inaccurate, or (ii) any  
failure of the Company, Parent or Acquisition, as the case may be, materially 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 Section 4.14 shall not limit or otherwise affect the remedies  
available hereunder to the party receiving such notice.                         

    SECTION 4.15  Further Action. Upon the terms and subject to the provisions
hereof, each of the parties hereto shall use all reasonable efforts to take, or 
cause to be taken, all actions, and to do, or cause to be done, all other things
necessary, appropriate or advisable to consummate and make effective as promptly
as practicable the Merger and the other transactions contemplated by this       
Agreement, including (i) obtaining in a timely manner all necessary waivers,    
consents and approvals from all federal, state, and foreign courts and other    
governmental entities ("Governmental Entities") and to effect all necessary     
registrations and filings, and the taking of all reasonable steps as may be     
necessary, appropriate or advisable to obtain an approval or waiver from, or to 
avoid an action or proceeding by, any Governmental Entity, (ii) the obtaining of
all necessary consents, approvals or waivers from third parties, (iii) the      
defending of any lawsuits or other legal proceedings, whether                   

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judicial or administrative, challenging this Agreement or the consummation of   
the transactions contemplated by this Agreement, including seeking to have any  
stay or temporary restraining order entered by any Governmental Entity vacated  
or reversed, and (iv) the execution and delivery of any additional instruments  
necessary to consummate the transactions contemplated by, and to fully carry out
the purposes of, this Agreement, and otherwise to satisfy or cause to be        
satisfied all conditions precedent to its obligations under this Agreement,     
including, on the part of Parent and Acquisition, entering into a voting trust  
or similar agreement on customary terms to permit the consummation of the Merger
prior to the receipt of final approval from the STB of the transactions         
contemplated by this Agreement. The foregoing covenant shall not include any    
obligations by Parent or the Company to agree to divest, abandon, license or    
take similar action with respect to any assets of Parent or the Company except  
such actions that would be immaterial to Parent and its subsidiaries or the     
Company and its subsidiaries, in each case taken as a whole.                    

  SECTION 4.16  Public Announcements. Parent and the Company shall consult
with each other before issuing any press release with respect to the Merger or  
this Agreement and shall not issue any such press release or make any similar   
public statement without the prior consent of the other party, which shall not  
be unreasonably withheld; provided, however, that a party may, without the prior
consent of the other party, issue such press release or make such public        
statement as may upon the advice of counsel be required by law or the rules and 
regulations of the NYSE or the American Stock Exchange, if it has used all      
reasonable efforts to consult with the other party.                             

   SECTION 4.17  Conveyance Taxes. Parent and the Company shall cooperate in
the preparation, execution and filing of all returns, questionnaires,           
applications, or other documents regarding any real property transfer or gains, 
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes which become      
payable in connection with the transactions contemplated hereby that are        
required or permitted to be filed on or before the Effective Time.              

SECTION 4.18  Company Preferred Shares. Promptly after Effective Time,
Parent shall take such action as may be necessary to register under the         
Securities Act the issuance, if any, of the Parent Common Shares issuable upon  
conversion of the Company Preferred Shares after the Effective Time.            

ARTICLE V 

CONDUCT OF BUSINESS PENDING THE MERGER

 SECTION 5.1  Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, during the period from the date of this      
Agreement and continuing until the earlier of the termination of this Agreement 
or the Effective Time, unless Parent shall otherwise agree in writing, which    
agreement shall not be unreasonably withheld or delayed, the Company shall      
conduct its business and shall cause the businesses of its subsidiaries to be   
conducted only in, and the Company and its subsidiaries shall not take any      
action except in, the ordinary course of business and in the manner             
substantially consistent with past practice; and the Company shall use          
reasonable commercial efforts to preserve substantially intact the business     
organization of the Company and its subsidiaries, to keep available the services
of the present officers of the Company and to preserve the present material     
relationships of the Company and its subsidiaries with customers, suppliers and 
other persons with which the Company or any of its subsidiaries has significant 
business relations. Except as set forth in Section 5.1 of the Company Disclosure
Schedule or as otherwise contemplated by this Agreement, neither the Company nor
any of its subsidiaries shall, during the period from the date of               
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this Agreement and continuing until the earlier of the termination of this      
Agreement or the Effective Time, directly or indirectly do, any of the following
without the prior written consent of Parent, which consent shall not be         
unreasonably withheld or delayed:                                               

   (a) amend or otherwise change the Certificate of Incorporation or By-Laws
of the Company;                                                                 

     (b) issue, sell, pledge, dispose of or encumber, or authorize the issuance,
sale, pledge, disposition or encumbrance of, any shares of capital stock of any 
class, or any options, warrants, convertible securities or other rights of any  
kind to acquire any shares of capital stock, or any other ownership interest    
(including, without limitation, any phantom interest) in the Company, any of its
subsidiaries or affiliates (except for (i) the issuance of Company Common Shares
issuable pursuant to Stock Options listed in Section 2.11(c) of the Company     
Disclosure Schedule, (ii) the grant of options under the Company Stock Option   
Plans consistent with past practice to purchase up to 100,000 Company Common    
Shares at the market value on the date of the grant to newly hired employees and
the issuance of shares upon exercise thereof, (iii) the issuance of Company     
Common Shares upon conversion of the Company Preferred Shares, or (iv) the      
issuance of Company Common Shares upon conversion of the Company's 8 1/2%       
Convertible Subordinated Debentures;                                            

   (c) sell, pledge, dispose of or encumber any assets of the Company or any
of its subsidiaries (except for (i) sales of assets in the ordinary course of   
business and in a manner substantially consistent with past practice, including 
sale and leaseback transactions and the disposal of surplus real property, (ii) 
disposition of obsolete or worthless assets, (iii) sales of immaterial assets   
not in excess of $1,000,000 and (iv) encumbrances on assets pursuant to the     
Company's existing bank credit facility or to secure purchase money financings  
of equipment and capital improvements and in connection with the financing of   
Permitted Acquisitions (as defined in Section 5.1(e)));                         

    (d) (i) declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of   
any of its capital stock (other than regular quarterly cash dividends with      
respect to the Company Preferred Shares), except that a wholly owned subsidiary 
of the Company may declare and pay a dividend or make advances to its parent or 
the Company, (ii) split, combine or reclassify any of its capital stock or issue
or authorize or propose the issuance of any other securities in respect of, in  
lieu of or in substitution for shares of its capital stock, or (iii) amend the  
terms or change the period of exercisability of, purchase, repurchase, redeem or
otherwise acquire, or permit any subsidiary to purchase, repurchase, redeem or  
otherwise acquire, any of its securities or any securities of its subsidiaries, 
including, without limitation, Company Common Shares or any option, warrant or  
right, directly or indirectly, to acquire Company Common Shares, or propose to  
do any of the foregoing; except for the acceleration of options pursuant to the 
terms of the Company Stock Option Plans and the exercise of such options;       

(e) (i) acquire (by merger, consolidation, or acquisition of stock or 
assets) any corporation, partnership or other business organization or division 
thereof other than those listed on Section 5.1(e) of the Company Disclosure     
Schedule or otherwise consented to by Parent in writing ("Permitted             
Acquisitions"), (ii) incur any indebtedness for borrowed money or debt          
securities or assume, guarantee or endorse or otherwise as an accommodation     
become responsible for, the obligations of any person or, except in the ordinary
course of business consistent with past practice (including borrowings under the
Company's existing revolving credit facility) or in connection with purchases of
equipment or capital improvements or in Permitted Acquisitions, make any loans  
or advances (other than loans or advances to or from direct or indirect wholly  
owned subsidiaries), (iii) enter into or amend any material contract other than 
in the ordinary course of business or where such contract would not have a      
Material Adverse Effect; (iv) authorize any capital expenditures or purchases of

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fixed assets which are, in the aggregate, in excess of the amounts set forth in 
Section 5.1(e) of the Company Disclosure Schedule for the Company and its       
subsidiaries taken as a whole; or (v) enter into or amend any contract,         
agreement, commitment or arrangement to effect any of the matters prohibited by 
this Section 5.1(e);                                                            

(f) except as set forth in Section 5.1(f) of the Company Disclosure   
Schedule, increase the compensation payable or to become payable to any of its  
officers or its general pay scale for other employees, except for increases in  
salary or wages of employees of the Company or its subsidiaries in accordance   
with past practice or, except in the ordinary course of business or pursuant to 
agreements, plans or policies in effect prior to the date of this Agreement,    
grant any severance or termination pay to, or enter into any employment or      
severance agreement with, any director or officer of the Company, or establish, 
adopt, enter into or amend in any material respect any bonus, profit sharing,   
thrift, compensation, stock option, restricted stock, pension, retirement,      
deferred compensation, employment, termination, severance or other plan,        
agreement, trust, fund, policy or arrangement for the benefit of any current or 
former directors or officers of the Company, except, in each case, as may be    
required by law;                                                                

(g) except to conform to GAAP, take any action to change accounting   
policies or procedures (including, without limitation, procedures with respect  
to revenue recognition, payments of accounts payable and collection of accounts 
receivable);                                                                    

(h) make any material tax election inconsistent with past practice or 
settle or compromise any material federal, state, local or foreign tax          
liability, except to the extent the amount of any such settlement has been      
reserved for in the financial statements contained in the Company Filed SEC     
Reports;                                                                        

(i) pay, discharge or satisfy any claims, liabilities or obligations  
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and   
consistent with past practice of liabilities reflected or reserved against in   
the financial statements contained in the Company Filed SEC Reports or incurred 
in the ordinary course of business and consistent with past practice; or        

(j) take, or agree in writing or otherwise to take, any of the actions
described in Sections 5.1(a) through (i) above, or any action which would make  
any of the representations or warranties of the Company contained in this       
Agreement untrue or incorrect in any material respects or prevent the Company   
from performing in all material respects or cause the Company not to perform its
covenants hereunder.                                                            

SECTION 5.2  No Solicitation.                                         

(a) The Company shall not, directly or indirectly through any officer,
director, employee, representative or agent of the Company or any of its        
subsidiaries, (i) solicit or initiate any inquiries or proposals regarding any  
merger, sale of substantial assets, sale of shares of capital stock (including  
without limitation by way of a tender offer, but not in connection with         
Permitted Acquisitions) or similar transactions involving the Company or any    
subsidiaries of the Company other than the Merger (any of the foregoing         
inquiries or proposals being referred to herein as an "Acquisition Proposal"),  
(ii) engage in negotiations or discussions concerning, or provide any nonpublic 
information to any person relating to, any Acquisition Proposal or (iii) agree  
to approve or recommend any Acquisition Proposal. Nothing contained in this     
Section 5.2(a) shall prevent the Company or any representative thereof from     
furnishing or causing to be furnished, information and directing the Company,   
its directors, officers, employees, representatives or agents to furnish        
information, in each case pursuant                                              

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to confidentiality agreements similar to the one then in effect between the     
Company and Parent, and participating in discussions or negotiations with any   
person or entity concerning any Acquisition Proposal if the Board shall conclude
after consultation with its financial advisor, that such person or entity has   
made or is reasonably likely to make a bona fide Acquisition Proposal for a     
transaction which it believes may be more favorable to the Company's            
stockholders from a financial point of view than the transactions contemplated  
hereby (any such Acquisition Proposal being referred to herein as a "Superior   
Proposal").                                                                     

   (b) The Company shall promptly notify Parent after receipt of any written
Acquisition Proposal, or any modification of or amendment to any written        
Acquisition Proposal, or any request for nonpublic information relating to the  
Company or any of its subsidiaries in connection with an Acquisition Proposal or
for access to the properties, books or records of the Company or any subsidiary 
by any person or entity that informs the Board that it is considering making, or
has made, an Acquisition Proposal. Such notice to Parent shall be made orally   
and in writing, and shall indicate, if known, whether the Company is providing  
or intends to provide the person making the Acquisition Proposal with access to 
information concerning the Company as provided in Section 5.2(c).               

   (c) The Company shall immediately cease and, subject to the terms hereof,
cause to be terminated any existing discussions or negotiations with any person 
(other than Parent and Acquisition) conducted heretofore with respect to any    
Acquisition Proposal in effect as of the date of this Agreement. The Company    
agrees not to release any third party from the confidentiality provisions of any
confidentiality agreement to which the Company is a party.                      

 (d) The Company shall take what it determines to be reasonable steps to
provide reasonable assurance that the officers, directors and employees of the  
Company and its subsidiaries and any investment banker or other advisor or      
representative retained by the Company are aware of the restrictions described  
in this Section 5.2.                                                            

ARTICLE VI

CONDITIONS TO THE MERGER

SECTION 6.1  Conditions to Obligation of Each Party to Effect the     
Merger. The respective obligations of each party to effect the Merger shall be  
subject to the satisfaction at or prior to the Effective Time of the following  
conditions:                                                                     

     (a) Company Stockholder Approval. This Agreement shall have been adopted by
an affirmative vote of the holders of a majority of the outstanding Company     
Common Shares and outstanding Company Preferred Shares (voting together as one  
class);                                                                         

(b) HSR Act. The waiting period applicable to the consummation of the 
Merger under the HSR Act, if applicable, shall have expired or been terminated; 

(c) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the   
consummation of the Merger shall be in effect; and there shall not be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or  
deemed applicable to the Merger which makes the consummation of the Merger      
illegal;                                                                        

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     (d) Form S-4. If Parent elects to issue Parent Common Shares as part of the
Merger Consideration, the Form S-4 shall have become effective under the        
Securities Act and shall not be the subject of any stop order or proceedings    
seeking a stop order; and                                                       

    (e) Fairness Opinions. The opinion of Bear Stearns dated October 16, 1998,
that as of that date the terms of the Merger are fair to the stockholders of the
Company from a financial point of view, shall not have been modified in any     
materially adverse respect or withdrawn.                                        

SECTION 6.2  Conditions to Obligations of Parent and Acquisition. The 
obligations of Parent and Acquisition to effect the Merger are further subject  
to the following conditions:                                                    

   (a) Representations and Warranties. The representations and warranties of
the Company contained in this Agreement shall be true and correct in all        
material respects on the date hereof and (except to the extent specifically     
given as of an earlier date) on and as of the Closing Date as though made at the
Closing Date, and the Company shall have delivered to Parent a certificate dated
as of the Closing Date signed by an executive officer to the effect set forth in
this Section 6.2(a).                                                            

(b) Performance of Obligations of the Company. The Company shall have 
performed in all material respects all obligations required to be performed by  
it under this Agreement at or prior to the Closing Date, and the Company shall  
have delivered to Parent a certificate dated as of the Closing Date signed by an
executive officer to the effect set forth in this Section 6.2(b).               

     SECTION 6.3  Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is further subject to the following conditions:    

   (a) Representations and Warranties. The representations and warranties of
Parent and Acquisition contained in this Agreement shall be true and correct in 
all material respects on the date hereof and (except to the extent specifically 
given as of an earlier date) on and as of the Closing Date as though made on the
Closing Date, and Parent and Acquisition shall have delivered to the Company a  
certificate dated as of the Closing Date, signed by an executive officer of each
of them and to the effect set forth in this Section 6.3(a).                     

  (b) Performance of Obligations of Parent and Acquisition. Each of Parent
and Acquisition shall have performed in all material respects all obligations   
required to be performed by it under this Agreement at or prior to the Closing  
Date, and Parent and Acquisition shall have delivered to the Company a          
certificate dated as of the Closing Date, signed by an executive officer of each
of them and to the effect set forth in this Section 6.3(b).                     

 (c) Exchange Listing. If Parent elects to issue Parent Common Shares as
part of the Merger Consideration, the Parent Common Shares issuable to the      
Company's stockholders pursuant to this Agreement shall have been approved for  
listing on the NYSE, subject to official notice of issuance.                    

ARTICLE VII 

TERMINATION 

SECTION 7.1  Termination. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding adoption by the stockholders of the
Company or Parent:                                                              

     (a) by mutual written consent duly authorized by the Boards of Directors of
Parent and the Company; or                                                      

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     (b) by either Parent or the Company if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have      
issued a nonappealable final order, decree or ruling or taken any other action  
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger (provided that the right to terminate this Agreement under this      
Section 7.1(b) shall not be available to any party who has not complied with its
obligations under Section 4.5 and such noncompliance materially contributed to  
the issuance of any such order, decree or ruling or the taking of such action); 

  (c) by Parent, prior to the Effective Time, if the Board shall withdraw,
modify or change its approval or recommendation of this Agreement or the Merger 
in a manner adverse to Parent;                                                  

  (d) by Parent or the Company, prior to the Effective Time (provided that
the terminating party is not then in material breach of any representation,     
warranty, covenant or other agreement contained in this Agreement), (i) if any  
representation or warranty of the Company or Parent, respectively, set forth in 
this Agreement shall be untrue when made, or (ii) upon a breach in any material 
respect of any covenant or agreement on the part of the Company or Parent,      
respectively, set forth in this Agreement, in each case where such untruth or   
breach would have a Material Adverse Effect on the Company or Parent, as the    
case may be (either (i) or (ii) above being a "Terminating Breach"), provided,  
that, if such Terminating Breach is curable by the Company or Parent, as the    
case may be, through the exercise of its reasonable best efforts, then for so   
long as the Company or Parent, as the case may be, continues to exercise such   
reasonable best efforts, or if the Terminating Breach is cured, neither Parent  
nor the Company, respectively, may terminate this Agreement under this Section  
7.1(d);                                                                         

   (e) by Parent or the Company, prior to the Effective Time, if the Company
enters into a written agreement providing for the consummation of a transaction 
that constitutes a Superior Proposal;                                           

   (f) by Parent or the Company, if the Special Meeting shall have been held
and this Agreement shall not have been adopted by the affirmative vote of the   
holders of the requisite number of outstanding Company Common Shares and        
outstanding Company Preferred Shares; or                                        

     (g) by Parent or the Company, if the Effective Time shall have not occurred
on or before March 31, 1999; provided, however, that neither Parent nor the     
Company may terminate this Agreement pursuant to this Section 7.1(g) if such    
party's failure to fulfill any of its obligations under this Agreement shall be 
a reason that the Effective Time shall not have occurred on or before such date.

     SECTION 7.2  Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.1, this Agreement shall forthwith become void   
and there shall be no liability on the part of any party hereto or any of its   
affiliates, directors, officers or stockholders except (i) as set forth in      
Section 7.3 and Section 8.1 hereof, and (ii) except as otherwise provided in    
Section 7.3, nothing herein shall relieve any party from liability for any      
Terminating Breach hereof by such party.                                        

SECTION 7.3  Fees and Expenses.                                       

     (a) Except as set forth in this Section 7.3, all fees and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses, whether or not the Merger is      
consummated.                                                                    

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    (b) The Company shall pay Parent a fee of $20 million (the "Company Fee"),
upon the first to occur of the following events:                                

        (i) the termination of this Agreement pursuant to Section 7.1(e); or

        (ii) the termination of this Agreement pursuant to Section 7.1(c) if
     prior to such termination a Superior Proposal has been made and is pending.

     (c) The Company Fee payable pursuant to Section 7.3(b) shall be paid within
two (2) business days after the first to occur of any of the events described in
Section 7.3(b)(i) or (ii); provided, that, in no event shall the Company be     
required to pay the Company Fee to Parent if, immediately prior to the          
termination of this Agreement, the Company would have been entitled to terminate
this Agreement pursuant to Section 7.1(b), 7.1(g) or 7.1(d) on account of a     
Terminating Breach by Parent. The payment of the Company Fee shall be Parent's  
sole and exclusive remedy for the event giving rise to the payment of the       
Company Fee.                                                                    

ARTICLE VIII

GENERAL PROVISIONS

   SECTION 8.1  Effectiveness of Representations, Warranties and Agreements;
Knowledge, Etc.                                                                 

    (a) Except as otherwise provided in this Section 8.1, the representations,
warranties and agreements of each party hereto shall remain operative and in    
full force and effect regardless of any investigation made by or on behalf of   
any other party hereto, any person controlling any such party or any of their   
officers or directors, whether prior to or after the execution of this          
Agreement. The representations, warranties and agreements in this Agreement     
shall terminate at the Effective Time or upon the termination of this Agreement 
pursuant to Section 7.1, as the case may be, except that (i) if the Merger is   
consummated the agreements set forth in Article I shall survive the Effective   
Time indefinitely, (ii) the agreements in Sections 4.9, 4.12 and 4.13 shall     
survive in accordance with their respective terms and (iii) the agreements set  
forth in Section 7.3 shall survive termination indefinitely. The Confidentiality
Letter shall survive termination of this Agreement as provided therein.         

   (b) Any representation and warranty made in this Agreement by the Company
will be deemed for all purposes to be qualified by the disclosures made in any  
Company Disclosure Schedule specifically referred to in such representation or  
warranty and by the information disclosed in any other Company Disclosure       
Schedule if the relevance of such information to such representation and        
warranty is reasonably apparent on its face.                                    

  SECTION 8.2  Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given 
or made if and when delivered personally or by overnight courier to the parties 
at the following addresses or sent by electronic                                

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transmission, with confirmation received, to the telecopy numbers specified     
below (or at such other address or telecopy number for a party as shall be      
specified by like notice):                                                      

(a) If to Parent or Acquisition:                                      
Laidlaw Inc.                                                  
3221 N. Service Road                                          
P.O. Box 5028                                                 
Burlington, Ontario                                           
Canada L7R 3Y8                                                
Attention: Ivan R. Cairns, Senior Vice President              
and General Counsel                   
Telecopier No.: (905) 332-6550                                
Telephone No.: (905) 336-1800                                 

(b) If to the Company:                                                
Greyhound Lines, Inc.                                         
15110 N. Dallas Parkway                                       
Dallas, Texas 75248                                           
Attention: Craig R. Lentzsch, President and                   
Chief Executive Officer               
Telecopier No.: (972) 387-1874                                
Telephone No.: (972) 789-7000                                 

With a copy to:                                             

Jones, Day, Reavis & Pogue                                  
599 Lexington Avenue                                        
New York, New York 10022                                    
Attention: Robert A. Profusek, Esq.                         
Telecopier No.: (212) 755-7306                              
Telephone No.: (212) 326-3939                               

SECTION 8.3  Certain Definitions.  For purposes of this Agreement, the
term:                                                                           

(a) "$" or "dollars" means the lawful currency of the United States of
America.                                                                        

     (b) "affiliates" means a person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control     
with, the first mentioned person;                                               

 (c) "business day" means any day other than a day on which banks in New
York City are required or authorized to be closed;                              

(d) "control" (including the terms "controlled by" and "under common  
control with") means the possession, directly or indirectly or as trustee or    
executor, of the power to direct or cause the direction of the management or    
policies of a person, whether through the ownership of stock, as trustee or     
executor, by contract or credit arrangement or otherwise;                       

  (e) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act); and                                              

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(f) "subsidiary" or "subsidiaries" of the Company, the Surviving      
Corporation, Parent or any other person means any corporation, partnership,     
joint venture or other legal entity of which the Company, the Surviving         
Corporation, Parent or such other person, as the case may be (either alone or   
through or together with any other subsidiary), owns, directly or indirectly,   
more than 50% of the stock or other equity interests the holders of which are   
generally entitled to vote for the election of the board of directors or other  
governing body of such corporation or other legal entity.                       

     SECTION 8.4  Amendment. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors at any  
time prior to the Effective Time; provided, however, that, after adoption of    
this Agreement by the stockholders of the Company, no amendment may be made     
which by law requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing  
signed by the parties hereto.                                                   

 SECTION 8.5  Waiver. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto (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 herein or in any document       
delivered pursuant hereto; or (iii) waive compliance with any of the agreements 
or conditions contained herein. Any such extension or waiver shall be valid if  
set forth in an instrument in writing signed by the party or parties to be bound
thereby.                                                                        

 SECTION 8.6  Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or          
interpretation of this Agreement.                                               

     SECTION 8.7  Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of   
the transactions contemplated hereby is not affected in any manner materially   
adverse to any party. Upon such determination that any term or other provision  
is invalid, illegal or incapable of being enforced, the parties hereto shall    
negotiate in good faith to modify this Agreement so as to effect the original   
intent of the parties as closely as possible in an acceptable manner to the end 
that transactions contemplated hereby are fulfilled to the fullest extent       
possible.                                                                       

SECTION 8.8  Entire Agreement. This Agreement constitutes the entire  
agreement and supersedes all prior agreements and undertakings (other than the  
Confidentiality Letter), both written and oral, among the parties, or any of    
them, with respect to the subject matter hereof and, except as otherwise        
expressly provided herein.                                                      

SECTION 8.9  Assignment; Guarantee of Acquisition Obligations. This   
Agreement shall not be assigned or delegated by operation of law or otherwise,  
except that Acquisition may assign all or any of its rights hereunder to any    
other direct or indirect wholly owned subsidiary of Parent that is a corporation
organized under Delaware Law provided that no such assignment shall relieve the 
assigning party of its obligations hereunder. Parent guarantees the full and    
punctual performance by Acquisition or any such assignees of all the obligations
hereunder of Acquisition or any such assignees.                                 

     SECTION 8.10  Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any    
right, benefit or remedy of any nature whatsoever under or by reason of this    
Agreement, including, without limitation, by way of subrogation, other than     
Section 4.9 (which is intended to be for the benefit of the holders of Stock    
Options and may be enforced by such                                             

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holders), Section 4.12 (which is intended to be for the benefit of the          
Indemnified Parties and may be enforced by such Indemnified Parties), and 4.13  
(which is intended to be for the benefit of the employees of the Company and its
subsidiaries and may be enforced by any person who is an officer of the Company 
as of the Effective Time on behalf of such officer and the other employees of   
the Company).                                                                   

 SECTION 8.11  Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right   
hereunder shall impair such right or be construed to be a waiver of, or         
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or    
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or     
remedies otherwise available.                                                   

SECTION 8.12  Governing Law. This Agreement shall be governed by, and 
construed in accordance with, the internal laws of the State of Delaware        
applicable to contracts executed and fully performed within the State of        
Delaware.                                                                       

SECTION 8.13  Consent to Jurisdiction and Service of Process.         

   (a) Parent consents to the non-exclusive jurisdiction of any court of the
State of Delaware or any United States federal court sitting in the State of    
Delaware, United States, and any appellate court from any thereof, and waives   
any immunity from the jurisdiction of such courts over any suit, action or      
proceeding that may be brought in connection with this Agreement. Parent        
irrevocably waives, to the fullest extent permitted by law, any objection to any
suit, action or pr